[Federal Register Volume 78, Number 132 (Wednesday, July 10, 2013)]
[Notices]
[Pages 41460-41462]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-16531]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69932; File No. SR-BYX-2013-024]
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.
July 3, 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 28, 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 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 amend the fee schedule applicable to
Members \5\ and non-members of the Exchange pursuant to BYX Rules
15.1(a) and (c). While changes to the fee schedule pursuant to this
proposal will be effective upon filing, the changes will become
operative on July 1, 2013.
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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 purpose of the proposed rule change is to begin charging a
monthly fee for the Multicast PITCH Spin Server Port and GRP Port, each
of which are logical ports \6\ used to receive data from
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the Exchange.\7\ Currently, the Exchange charges a monthly fee for all
other port types used to enter orders in the Exchange's system and to
receive data from the Exchange; \8\ however, the Exchange provides 32
primary Multicast PITCH Spin Server Ports free of charge (32 ports
currently makes a complete set of Spin Server Ports) and, if such ports
are used, one free primary GRP Port. In addition, all redundant
Multicast PITCH Spin Server Ports and GRP Ports are provided free of
charge.\9\ Currently, the Exchange charges $400 per month per
additional set of primary Multicast PITCH Spin Server Ports and $400
per month per additional primary GRP Port.
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\6\ A logical port is commonly referred to as a TCP/IP port, and
represents a port established by the Exchange within the Exchange's
system for trading and billing purposes. Each logical port
established is specific to a Member or non-member and grants that
Member or non-member the ability to operate a specific application,
such as FIX order entry or Multicast PITCH data receipt. Logical
port fees are limited to logical ports in the Exchange's primary
data center and no logical port fees are assessed for redundant
secondary data center ports.
\7\ BYX FIX ports are the only ports that may be used to send
orders and related instructions to the Exchange. All other port
types, including the Multicast PITCH Spin Server Port and GRP Port,
permit Members and non-members to receive information from the
Exchange.
\8\ The Exchange currently charges a monthly fee for all other
Exchange FIX, FIXDROP, BOE, DROP, TCP PITCH, and TOP ports.
\9\ Exchange Multicast PITCH data feed is currently offered
through two primary feeds, identified as the ``A feed'' and the ``C
feed'', which contain the same information but differ only in the
way such feeds are received. The Exchange offers for free the ports
necessary to receive the Exchange's redundant Multicast ``B feed''
and ``D feed'', as well as all ports made available in the
Exchange's secondary data center. Accordingly, this proposal only
applies to ports used to receive an Exchange primary Multicast Feed
at the Exchange's primary data center.
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Beginning July 1, 2013, the Exchange proposes to charge $400 per
month per set of primary Multicast PITCH Spin Server Ports and $400 per
month per primary GRP Port. The Exchange is also proposing to eliminate
the reference to the exact number of ports that makes a complete set of
Multicast Spin Server Ports, as this number has changed in the past and
could again change in the future. A complete set of Multicast Spin
Server Ports is the number of ports necessary to get one full set of
information from the Exchange based on load balancing by the
Exchange.\10\ The Exchange believes that this concept is clearly
understood amongst recipients of Multicast data, and, therefore, does
not believe that eliminating the fee schedule reference to the exact
number of ports necessary to receive Exchange PITCH data via Multicast
will cause confusion amongst recipients of Multicast data.
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\10\ The Exchange load balances information regarding securities
traded on the Exchange across multiple channels (today 32) with each
channel requiring a separate Multicast PITCH Spin Server Port.
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Based on the proposal, the change applies to Members that obtain
ports for direct access to the Exchange, Sponsored Participants
sponsored by Members to receive direct access to the Exchange, non-
member service bureaus that act as a conduit for orders entered by
Exchange Members that are their customers, and market data recipients.
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.\11\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\12\ 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.
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\11\ 15 U.S.C. 78f.
\12\ 15 U.S.C. 78f(b)(4).
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The Exchange operates in a highly competitive market in which
exchanges offer connectivity services as a means to facilitate the
trading activities of members and other participants. Accordingly, fees
charged for connectivity are constrained by the active competition for
the order flow of such participants as well as demand for market data
from the Exchange. If a particular exchange charges excessive fees for
connectivity, affected members will opt to terminate their connectivity
arrangements with that exchange, and adopt a possible range of
alternative strategies, including routing to the applicable exchange
through another participant or market center or taking that exchange's
data indirectly. Accordingly, the exchange charging excessive fees
would stand to lose not only connectivity revenues but also revenues
associated with the execution of orders routed to it by affected
members, and, to the extent applicable, market data revenues. The
Exchange believes that this competitive dynamic imposes powerful
restraints on the ability of any exchange to charge unreasonable fees
for connectivity.
The Exchange believes that its proposed changes to logical port
fees are reasonable in light of the benefits to Exchange participants
of direct market access and receipt of data.\13\ In addition, the
Exchange believes that its fees are equitably allocated among Exchange
constituents based upon the number of access ports that they require to
receive data from the Exchange. Further, the Exchange believes that its
fees are not unreasonably discriminatory because all market
participants are charged standard fees for port usage. The Exchange
notes that it believes its prior fee structure, under which ports
necessary for receipt of Multicast data were provided free of charge,
was reasonable, equitably allocated and not unreasonably discriminatory
because it was available to all market participants and was intended to
encourage the use of Multicast PITCH. However, by moving towards a more
uniform approach to ports billing, the Exchange believes that its fees
are even more equitably allocated and nondiscriminatory. The Exchange
also believes that its fees for access services will enable it to
better cover its infrastructure costs and to improve its market
technology and services.
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\13\ Through a different filing, beginning July 1, 2013, the
Exchange has proposed to implement fees for the BYX PITCH (including
both TCP PITCH and Multicast PITCH) TOP, and Last Sale Feed data
products.
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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. As discussed above, the
Exchange believes that fees for connectivity are constrained by the
robust competition for order flow among exchanges and non-exchange
markets. Further, excessive fees for connectivity, including logical
port fees, would serve to impair an exchange's ability to compete for
order flow rather than burdening 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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \14\ and paragraph (f) of Rule 19b-4
thereunder.\15\ 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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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
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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-2013-024 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-2013-024. 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-2013-024 and should be
submitted on or before July 31, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16531 Filed 7-9-13; 8:45 am]
BILLING CODE 8011-01-P