[Federal Register Volume 78, Number 128 (Wednesday, July 3, 2013)]
[Notices]
[Pages 40241-40243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-15929]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69877; File No. SR-BATS-2013-036]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Introduce a Connectivity Option
Through Points of Presence
June 27, 2013.
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 June 19, 2013, 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
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposed rule change to offer a new means of
connecting to the Exchange via physical connections in a data center
other than the data centers where the Exchange's servers are located.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to offer new physical
connections to Members and non-Members of the Exchange.
The Exchange currently maintains a presence in two third-party data
centers: (i) The primary data center where the Exchange's business is
primarily conducted on a daily basis, and (ii) a secondary data center,
which is predominantly maintained for business continuity purposes.
Exchange participants, including participants trading on the Exchange
and market data recipients, are required to connect directly to the
Exchange at the data centers where the Exchange maintains servers. If
an Exchange participant does not have a presence within the same data
centers as the Exchange then such connection necessarily involves
acquiring connectivity from a participant's location or data center to
the data centers where the Exchange's servers are located. The Exchange
is proposing to provide market participants with the ability to access
the Exchange's network through data center entry points at one or more
data centers other than the Exchange's primary or secondary data center
(``Remote Data Centers''), or Points of Presence (``PoPs'').
PoP ports will be located at Remote Data Centers in order to
provide participants that may not have a presence at the Exchange's
primary or secondary data center with connectivity to such data
centers. Connectivity established via PoP ports at any data center
where the Exchange offers them will allow market participants to
perform all operations that they would typically perform when
connecting directly to the Exchange at the Exchange's primary or
secondary data
[[Page 40242]]
center, including order entry and receipt of market data. In providing
this service, participants will establish a physical connection to the
PoP ports in the Remote Data Center, from which point the Exchange will
provide the requisite connectivity for the participants to access the
Exchange's primary and/or secondary data centers through one or more
third party telecommunications carriers.
PoP access will not provide any market participant a connectivity
option from the PoP data center to the Exchange's primary or secondary
data center that the Exchange can guarantee is any faster or more
reliable than can be achieved through independently established
connections to the Exchange's primary or secondary data center.
However, the Exchange does believe that some participants may choose to
connect to the Exchange at a PoP to the extent the Exchange's service
offering makes connecting to the Exchange in this way more easily
established (i.e., rather than separately establishing relationships
with one or more connectivity providers) or more cost effective. While
PoP access will be available to all participants, the Exchange believes
it will be most attractive to smaller market participants that
otherwise may not connect to the Exchange at all.
As noted above, participants that do not maintain a presence in
either of the Exchange's data centers must establish connectivity to
such data centers and currently must do so through third party
telecommunications providers. By making PoP entry points available, the
Exchange is adding additional entry points to the Exchange's network
and reducing the need for such connectivity for participants located in
the same data center as such PoPs. Thus, the optional means of access
to the Exchange via PoPs at other data centers will provide market
participants with another means of accessing the Exchange.
The Exchange proposes to provide the option to connect to the
Exchange via physical ports at data centers where the Exchange
maintains PoPs to any Member or non-member that has been approved to
connect to the Exchange. Specifically, a PoP connection could be used
by any Member, non-member service bureau that acts as a conduit for
orders entered by Exchange Members, Sponsored Participant, or market
data recipient. This new access option is in response to industry
demand. Clients opting not to access the Exchange at a PoP point of
entry will still be able to access the Exchange in the existing data
centers in the same way as they do currently. The Exchange does not
anticipate that demand will exceed the capacity planned for PoP access.
In the event that demand does exceed the capacity planned for PoP
access, the Exchange will expand its infrastructure as necessary in
order to meet demand.
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.\3\
Specifically, the Exchange believes the proposal furthers the
objectives of Section 6(b)(5) \4\ of the Act in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest and is not designed to permit unfair discrimination between
customer, issuers, brokers and dealers.
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\3\ 15 U.S.C. 78f.
\4\ 15 U.S.C. 78f(b)(5).
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Competition for customers and order flow amongst exchanges and
other non-exchange market participants is considerable and the Exchange
believes that the proposal to offer PoP connectivity clearly evidences
such competition. The Exchange is offering this new connectivity option
to keep pace with changes in the industry and evolving customer needs.
PoP connectivity will be available to all Exchange constituents to whom
such connectivity will be useful and cost-effective. The offering is
entirely optional, and is geared towards attracting new customers, as
well as retaining existing customers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, this proposal
will promote competition through the offering of an optional,
additional mechanism to connect to the Exchange. The proposed rule
change will enhance competition among service providers offering
connections between market participants and the data centers. The
offering will expand the multiple means of connectivity available,
allowing customers to compare the benefits and costs connectivity with
reference to numerous variables. The Exchange, and presumably its
competitors, selects service providers on a competitive basis in order
to pass along price advantages to their customers, and to win and
maintain their business. The offering is consistent with the Exchange's
own incentives to facilitate as many market participants as possible in
connecting to its market.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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-2013-036 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 20549-1090.
All submissions should refer to File Number SR-BATS-2013-036. 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/
[[Page 40243]]
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 the 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-2013-036 and should be submitted on or before July 24, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15929 Filed 7-2-13; 8:45 am]
BILLING CODE 8011-01-P