[Federal Register Volume 77, Number 182 (Wednesday, September 19, 2012)]
[Notices]
[Pages 58198-58199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23101]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67854; File No. SR-BATS-2012-036]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Related to
Fees Applicable to the Exchange's Competitive Liquidity Provider
Program.
September 13, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 31, 2012, BATS Exchange, Inc. (the ``Exchange'' or
``BATS'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a due, fee, or other charge imposed by the Exchange under
Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to institute a fee change in connection with
an incentive program for Exchange-registered market makers (``Market
Makers'') in securities listed on the Exchange. Changes to the
Exchange's fees pursuant to this proposal will be effective upon
filing. The text of the proposed rule change is available at the
Exchange's Web site at http://www.batstrading.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On August 30, 2011, the Exchange received approval of rules
applicable to the qualification, listing and delisting of securities of
issuers on the Exchange.\5\ More recently, the Exchange received
approval to operate a program that is designed to incentivize certain
market makers registered with the Exchange as Competitive Liquidity
Providers (``CLPs'') to enhance liquidity on the Exchange in Exchange-
listed securities (``Competitive Liquidity Provider Program'' or ``CLP
Program'').\6\ The Exchange subsequently adopted financial incentives
for the Competitive Liquidity Provider Program.\7\ These incentives
include daily rebates to CLPs awarded based on competitive quoting
activity and the waiver of applicable execution fees in Exchange
auctions of Exchange-listed securities. The Exchange proposes to
eliminate the waiver of fees for executions in Exchange auctions by
CLPs, as further described below. The Exchange also proposes to correct
a typographical error in its rules relating to the numbering of the
financial incentives for the CLP Program. Specifically, when the CLP
Program was originally proposed, the Exchange numbered the section
applicable to financial incentives as section (k), and reserved that
section for later.\8\ However, when such financial incentives were
adopted, they were adopted as section (j).\9\ Accordingly, the Exchange
proposes re-numbering the financial incentives section as (k), as was
originally intended, and eliminating the reference to ``Reserved.''
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\5\ See Securities Exchange Act Release No. 65225 (August 30,
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
\6\ See Securities Exchange Act Release No. 66307 (February 2,
2012), 77 FR 6608 (February 8, 2012) (SR-BATS-2011-051) (``CLP
Program Approval'').
\7\ See Securities Exchange Act Release No. 66427 (February 21,
2012), 77 FR 11608 (February 27, 2012) (SR-BATS-2012-011) (``CLP
Financial Incentives Filing'').
\8\ See CLP Program Approval, supra note 6.
\9\ See CLP Financial Incentives Filing, supra note 7.
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In order to incentivize Members to participate in the CLP Program,
the Exchange currently waives applicable execution fees in Exchange
auctions for any CLP that receives a daily rebate for a specific
Exchange-listed security on at least two (2) trading days during a
calendar month. Based on the Exchange's experience in operating the CLP
Program, the Exchange proposes to eliminate the waiver of applicable
execution fees for CLPs. This financial incentive has very rarely been
applicable, as the majority of the orders entered to date by CLPs that
have participated in Exchange auctions have been order types that are
not subject to a charge when entered by any Member (certain orders,
including orders entered into the Exchange's order book not explicitly
designated for the auction process, are exempt from fees). In light of
this fact, the burden upon the Exchange in administering the fee waiver
exceeds the benefit provided to CLPs pursuant to the current pricing
structure, particularly in light of the fact that all other financial
incentives to CLPs will remain unchanged.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities
[[Page 58199]]
exchange, and, in particular, with the requirements of Section 6 of the
Act.\10\ Specifically, the Exchange believes that the proposed rule
change is consistent with Sections 6(b)(4) and (b)(5) of the Act,\11\
in that it provides for the equitable allocation of reasonable dues,
fees and other charges among members and issuers, and it does not
unfairly discriminate between customers, issuers, brokers or dealers.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(4) and (b)(5).
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The Exchange believes that the elimination of the waiver of auction
fees is equitable and not unreasonably discriminatory because it will
equally affect all CLPs and because CLPs will be charged the same rates
for auction executions as are charged to all other Members. The
Exchange believes that the elimination of the waiver of auction fees is
reasonable because the waiver has not resulted in significant savings
to CLPs nor has it provided the intended incentive to participate in
the CLP Program.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change imposes
any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) of the Act \12\ and Rule 19b-
4(f)(2) thereunder,\13\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge applicable to the
Exchange's Members and non-members, which renders the proposed rule
change effective upon filing.
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BATS-2012-036 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
All submissions should refer to File Number SR-BATS-2012-036. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BATS-2012-036 and should be
submitted on or before October 10, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-23101 Filed 9-18-12; 8:45 am]
BILLING CODE 8011-01-P