[Federal Register Volume 78, Number 161 (Tuesday, August 20, 2013)]
[Notices]
[Pages 51250-51251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20203]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70199; File No. SR-BATS-2013-036]
Self-Regulatory Organizations; BATS Exchange, Inc.; Order
Approving a Proposed Rule Change To Introduce a Connectivity Option
Through Points of Presence
August 14, 2013.
I. Introduction
On June 19, 2013, BATS Exchange, Inc. (``Exchange'' or ``BATS'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
introduce a connectivity option through Points of Presence (PoPs). The
proposed rule change was published for comment in the Federal Register
on July 3, 2013.\3\ The Commission received no comment letters on the
proposal. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 69877 (June 27, 2013),
78 FR 40241 (``Notice'').
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II. Description of the Proposal
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 primary or secondary data centers where the Exchange
currently maintains servers. If an Exchange participant does not have a
presence within these data centers, then the participant is required to
obtain connectivity from the 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 via physical ports at data center entry points,
or PoPs, at data centers other than the Exchange's primary or secondary
data center (``Remote Data Centers'').
PoP ports will be located at Remote Data Centers in order to
provide participants connectivity to the Exchange. In the Notice, the
Exchange represented that connectivity established via PoP ports will
allow market participants to perform all of the operations that they
would typically perform when connecting directly to the Exchange,
including order entry and receipt of market data. Participants would
establish a physical connection to a PoP port in the Remote Data
Center, from which the Exchange would provide the requisite
connectivity to allow participants to access the Exchange's servers.\4\
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\4\ The Exchange would contract with a third party
telecommunications provider to supply connectivity to the Exchange
to its participants.
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Participants that do not maintain a presence in either of the
Exchange's data centers must currently establish connectivity to such
data centers themselves through third party telecommunications
providers. By making PoP entry points available, the Exchange is
reducing or eliminating the need for participants to contract
themselves for third party connectivity located in the same data center
as such PoP ports. The Exchange believes that some participants may
choose to connect to the Exchange at a PoP location to the extent that
the Exchange's service offering makes connecting to the Exchange in
this manner more easily established or more cost effective. In the
Notice, the Exchange suggested that the PoPs may be most attractive to
smaller market participants that otherwise may not connect to the
Exchange.
The Exchange proposes to provide the option to connect to the
Exchange via PoPs to any member or non-member that has been approved to
connect to the Exchange. Any member or non-member opting not to access
the Exchange at a PoP location would still be able to access the
Exchange in the existing data centers as they do currently.
III. Discussion and Commission's Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of Section 6 of the Act \5\
and the rules and regulations thereunder applicable to a national
securities exchange. Additionally, in approving this proposed rule
change, the Commission
[[Page 51251]]
has considered the proposed rule's impact on efficiency, competition,
and capital formation.\6\ The Commission finds that the proposed rule
change is consistent with Section 6(b)(5) of the Act,\7\ which
requires, among other things, that the Exchange's rules be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, 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 are not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\5\ 15 U.S.C. 78f.
\6\ See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange notes that competition for customers and order flow
amongst exchanges and other non-exchange market participants is
considerable and that the Exchange is offering this new connectivity
option to keep pace with changes in the industry and evolving customer
needs. The Exchange further states that the offering is entirely
optional and is geared towards attracting new customers, as well as
retaining existing customers. Additionally, the Exchange has
represented that it will make PoPs equally available to any Exchange
member or non-member that has been approved to connect to the
Exchange.\8\ Finally, the Exchange does not believe that demand will
exceed the capacity planned for PoP access. However, in the event that
demand does exceed the capacity planned for PoP access, the Exchange
represented that it would expand its infrastructure as necessary in
order to meet demand.\9\ For the reasons noted above, the Commission
finds that the proposal is consistent with Section 6(b)(5) of the Act.
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\8\ See Notice, supra note 3, at 40242. The Exchange notes that
this would include any Member, non-member service bureau that acts
as a conduit for orders entered by Exchange Members, Sponsored
Participant, or market data recipient. Id.
\9\ Id.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-BATS-2013-036) be, and it
hereby is, approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
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\11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2013-20203 Filed 8-19-13; 8:45 am]
BILLING CODE 8011-01-P