[Federal Register Volume 80, Number 73 (Thursday, April 16, 2015)]
[Notices]
[Pages 20520-20522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-08697]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74703; File No. SR-BYX-2015-21]
Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of BATS Y-Exchange, Inc.
April 10, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 1, 2015, BATS Y-Exchange, Inc. (the ``Exchange'' or ``BYX'')
filed with the Securities and Exchange Commission (``SEC'' or
``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 Substance
of the Proposed Rule Change
The Exchange filed a proposal 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
are effective upon filing.
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\5\ The term ``Member'' is defined as ``any registered broker or
dealer that has been admitted to membership in the Exchange.'' See
Exchange Rule 1.5(n).
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The text of the proposed rule change is available at the Exchange's
Web site at 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
[[Page 20521]]
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 amend the fees charged for and description
of the logical ports \6\ offered by the Exchange.
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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.
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Currently, the Exchange maintains logical ports for order entry,
drop copies and the receipt of market data for which it currently
charges $400 per month per port with the exception of Multicast PITCH
Spin Server Ports and GRP Ports.\7\ Multicast PITCH Spin Server Ports
and GRP Ports are used to request and receive a retransmission of data
from the Exchange's Multicast PITCH data feed. The Exchange does charge
$400 per month for such ports, however, the Exchange separately
delineates such fees because of various details related to the use of
such ports. Specifically, Multicast PITCH Spin Server Ports are offered
as a complete set, including one logical port for each channel of the
Exchange's Multicast PITCH data feed, and can be taken for either of
the Exchange's primary Multicast PITCH data feeds.\8\ Similarly,
Multicast PITCH GRP Ports can be taken for either of the Exchange's
primary Multicast PITCH data feeds. The Exchange offers Multicast PITCH
Spin Server Ports for a fee of $400 per month for a set of primary
ports (A or C feed) and Multicast PITCH GRP Ports for a fee of $400 per
month per primary port (A or C feed). The Exchange offers and will
continue to offer 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.
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\7\ FIX and BOE 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's primary Multicast PITCH data feeds are
identified as the ``A feed'' and the ``C feed'' and contain the same
information. The A feed and the C feed differ only in the way such
feeds are received. The Exchange also offers two redundant feeds,
identified as the ``B feed'' and the ``D feed''.
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In early 2014, the Exchange and its affiliate, BATS Exchange, Inc.
(``BZX''), received approval to effect a merger (the ``Merger'') of the
Exchange's parent company, BATS Global Markets, Inc., with Direct Edge
Holdings LLC, the indirect parent of EDGX and EDGA (together with the
Exchange, BZX and EDGX, the ``BGM Affiliated Exchanges'').\9\ In the
context of the Merger, the BGM Affiliated Exchanges are working to
align certain system and regulatory functionality, retaining only
intended differences between the BGM Affiliated Exchanges. This
includes migrating the BGM Affiliated Exchanges, which are currently
located in different data centers, into a single data center. As part
of the data center migration and the integration of the BGM Affiliated
Exchanges, the Exchange is proposing to increase the fees charged from
$400 per month to $500 per month for all categories of logical ports,
including sets of Multicast PITCH Spin Server Ports for the A feed and
the C feed, individual GRP Ports for the A feed and the C feed, and all
other logical ports. The Exchange notes that EDGA and EDGX currently
charge $500 per month for most logical ports.\10\ The Exchange
communicated to Members and non-Members regarding these changes via a
trading notice issued on October 7, 2014.\11\
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\9\ See Securities Exchange Act Release No. 71375 (January 23,
2014), 79 FR 4771 (January 29, 2014) (SR-BATS-2013-059; SR-BYX-2013-
039).
\10\ The Exchange notes that BZX intends to file a proposal very
similar to this proposal that will align its logical port fees
across each of the BGM Affiliated Exchanges. The Exchange also notes
that EDGA and EDGX also intend to file a proposal to charge $500 per
month for all types of logical ports as well as to change the
descriptions used for logical port fees to mirror the descriptions
used by the Exchange and BZX.
\11\ See BATS Global Markets Access Fee Changes for 2015,
available at http://cdn.batstrading.com/resources/fee_schedule/2015/BATS-Global-Markets-Access-Services-Fee-Changes-for-2015.pdf (issued
October 7, 2014).
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In addition to increasing the port fees charged by the Exchange,
the Exchange proposes to add the words ``Multicast PITCH'' before GRP
Ports to mirror the description of fees for Multicast PITCH Spin Server
Ports. As noted above, the separate fees for Spin Server Ports and GRP
Ports both relate to the Exchange's Multicast PITCH data feed.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\12\ in general, and
furthers the objectives of Section 6(b)(4),\13\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its Members and other persons using its
facilities. The Exchange also 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. The Exchange believes that the proposed rates
are equitable and non-discriminatory in that they apply uniformly to
all Members.
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\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposed rule change is consistent
with Section 6(b)(4) of the Act,\14\ 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 its proposed
changes, combined with the planned filings for EDGA, EDGX and BZX,\15\
would allow the BGM Affiliated Exchanges to provide consistent logical
port offerings across each of the BGM Affiliated Exchanges. Consistent
offerings, in turn, will simplify the connectivity requirements for
Members of the Exchange that are also participants on EDGA, BZX and/or
BYX [sic]. The proposed rule change would result in greater uniformity
and less burdensome and more efficient understanding of Exchange
connectivity requirements.
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\14\ 15 U.S.C. 78f(b)(4).
\15\ See supra note 10.
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The Exchange believes that the increase of fees for logical ports
represents an equitable allocation of reasonable dues, fees and other
charges. 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
[[Page 20522]]
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. Lastly, the Exchange believe [sic] its proposed fees
are reasonable because the Nasdaq Stock Market LLC (``Nasdaq'') and the
NYSE Arca, Inc. (``NYSE Arca'') charge comparable rates for logical
ports to access such markets.\16\ As noted above, EDGA and EDGX also
charge the same rate for access to most logical ports.
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\16\ See Nasdaq Rule 7015 (providing no FIX or non-Trading FIX
ports free of charge) and the NYSE Arca fee schedule available at
https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf (dated February 26, 2015). The
Exchange recognizes that some participants may be charged the lower
rate of $200 per month to the extent such participants maintain a
low number of ports with NYSE Arca. The Exchange nonetheless
believes that its proposed fees are comparable despite the fact that
it does not proposed [sic] a lower fee for such participants.
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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. 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
access and receive data from the Exchange. 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.
Lastly, the Exchange also believes that the proposed amendments to
its fee schedule are non-discriminatory because they will apply
uniformly to all Members. All Members that voluntarily select various
service options will be charged the same amount for the same services.
All Members have the option to select any connectivity option, and
there is no differentiation among Members with regard to the fees
charged for the services offered by the Exchange.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe its proposed amendments to its fee
schedule would impose any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act. The Exchange
does not believe that the proposed change to logical port fees
represents a significant departure from previous pricing offered by the
Exchange or pricing offered by the Exchange's competitors.
Additionally, Members may opt to disfavor the Exchange's pricing if
they believe that alternatives offer them better value. Accordingly,
the Exchange does not believe that the proposed change will impair the
ability of Members or competing venues to maintain their competitive
standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
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 \17\ and paragraph (f) of Rule 19b-4
thereunder.\18\ 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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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f).
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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-2015-21 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BYX-2015-21. 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 offices 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-2015-21,
and should be submitted on or before May 7, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-08697 Filed 4-15-15; 8:45 am]
BILLING CODE 8011-01-P