[Federal Register Volume 78, Number 32 (Friday, February 15, 2013)]
[Notices]
[Pages 11255-11256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03520]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68895; File No. SR-BYX-2013-004]
Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Related to
Fees for Use of BATS Y-Exchange, Inc.
February 11, 2013.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19-4 thereunder,\2\ notice is hereby given
that on January 29, 2013, BATS Y-Exchange, Inc. (the ``Exchange'' or
``BYX'') 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 member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19-4(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 240.19-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19-4(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 amend the fee schedule applicable to
Members \5\ and non-members of the Exchange pursuant to BYX Rules
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal
will be effective upon filing.
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\5\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange.
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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
The Exchange proposes to modify its fee schedule in order to amend
the fee structure related to its Retail Price Improvement (``RPI'')
program. Under the RPI program as currently constituted, the Exchange
generally provides a rebate of $0.0025 per share for Retail Orders that
remove liquidity from the BYX Exchange order book in certain specified
securities and provides a rebate of $0.0010 per share for a Retail
Order that removes liquidity from the BYX Exchange order book in other
specified securities. For executions of Type 2 Retail Orders that
remove displayed liquidity, however, the Exchange's fee schedule states
that it applies standard removal pricing (i.e., either a $0.0002 per
share liquidity removal rebate or an execution free of charge) rather
than specific RPI pricing.
The Exchange wishes to note that the standard removal pricing
applied to Type 2 Retail Orders that remove displayed liquidity
includes Type 2 Retail Orders that remove displayed orders at a price
more aggressive than the displayed price of such orders--this includes
displayed orders subject to display-price sliding and displayed
discretionary orders. The Exchange proposes to modify the fee schedule,
including a related footnote, to extend the application of its standard
removal pricing to include Type 1 Retail Orders that remove displayed
liquidity, including orders that are displayed at a less aggressive
price, but are willing to execute at a non-displayed and more
aggressive price (again, displayed orders subject to display-price
sliding and displayed discretionary orders).
As proposed, all Retail Orders (both Type 1 and Type 2 Retail
Orders) that remove displayed liquidity would be, in all cases, subject
to the Exchange's standard removal fees or rebates, as applicable.
Under the proposed pricing structure, a Member that qualifies for the
Exchange's $0.0002 per share liquidity removal rebate will receive such
rebate for any Retail Order that removes displayed liquidity, and a
Member that does not qualify for the liquidity removal rebate would not
receive such rebate, but would instead
[[Page 11256]]
receive the execution of a Retail Order that removes displayed
liquidity free of charge. With this in mind, the Exchange believes that
providing a lower rebate or a free execution for incoming Retail Orders
that interact with displayed liquidity at price improving prices is
reasonable due to the price improvement received; such price
improvement will help to offset and likely exceed the reduction in
rebates for such orders. Further, the Exchange believes that this
change will ensure that Members are properly incented to continue to
add aggressively priced, displayed liquidity to the Exchange.
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 exchange, and,
in particular, with the requirements of Section 6 of the Act.\6\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\7\ in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among members and other persons using any facility or system which the
Exchange operates or controls. The Exchange notes that it operates in a
highly competitive market in which market participants can readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposal to modify the fee schedule
and footnote related to the RPI program is reasonable, equitably
allocated and not unfairly discriminatory because this change will
result in the application of standard pricing to remove displayed
liquidity. The Exchange is concerned that applying higher pricing to
displayed orders that are aggressively priced to the extent such orders
are displayed by the Exchange and interact with incoming Retail Orders
may result in reduced levels of aggressively priced, displayed
liquidity on the Exchange. Additionally, the Exchange believes that
providing a lower rebate or no rebate to incoming Retail Orders that
interact with displayed liquidity is reasonable because, to the extent
that such orders interact with displayed liquidity at more aggressive,
non-displayed prices, the price improvement received for such
executions will help to offset or exceed the reduction in rebates for
such orders. Accordingly, the Exchange believes it is reasonable to
apply standard pricing to any order displayed by the Exchange, even if
removed by a Retail Order pursuant to the RPI program.
B. Self-Regulatory Organization's Statement on Burden on Competition
Because the market for order execution is extremely competitive,
Members may choose to preference other market centers ahead of the
Exchange if they believe that they can receive better fees or rebates
elsewhere. The Exchange does not believe that the proposed rule change
will result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange believes that its pricing for displayed orders is
appropriately competitive vis-[agrave]-vis the Exchange's competitors.
Further, the Exchange believes that continuing to incentivize the entry
of aggressively priced, displayed liquidity fosters intra-market
competition to the benefit of all market participants that enter orders
to the Exchange, including Retail Orders.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19-4
thereunder.\9\ 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.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 17 CFR 240.19-4(f)(2).
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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-BYX-2013-004 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 20549-1090.
All submissions should refer to File Number SR-BYX-2013-004. 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-BYX-2013-004, and should be
submitted on or before March 8, 2013.
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\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03520 Filed 2-14-13; 8:45 am]
BILLING CODE 8011-01-P