[Federal Register Volume 81, Number 25 (Monday, February 8, 2016)]
[Notices]
[Pages 6558-6560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02333]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77033; File No. SR-BATS-2016-12]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend
the Pilot Period for the Exchange's Supplemental Competitive Liquidity
Provider Program
February 2, 2016.
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 January 28, 2016, BATS Exchange, Inc. (``Exchange'' or
``BATS'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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 proposal to extend the pilot period for the
Exchange's Supplemental Competitive Liquidity Provider Program (the
``Program''), which is currently set to expire on January 28, 2016, for
three months, to expire on April 28, 2016. The Exchange has designated
this proposal as non-controversial and provided the Commission with the
notice required by Rule 19b-4(f)(6)(iii) under the Act.\3\
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\3\ 17 CFR 240.19b-4(f)(6)(iii).
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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 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
Background
On August 30, 2011, the Exchange received approval of rules
applicable to the qualification, listing and delisting of securities of
issuers on the Exchange.\4\ More recently, the Exchange received
approval to operate a pilot program that is designed to incentivize
certain Market Makers \5\ registered with the Exchange as ETP CLPs, as
defined in Interpretation and Policy .03 to Rule 11.8, to enhance
liquidity on the Exchange in certain ETPs \6\ listed on the Exchange
and thereby qualify to receive part of a daily rebate as part of the
Program under Interpretation and Policy .03 to Rule 11.8.\7\
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\4\ See Securities Exchange Act Release No. 65225 (August 30,
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
\5\ As defined in BATS Rules, the term ``Market Maker'' means a
Member that acts a as a market maker pursuant to Chapter XI of BATS
Rules.
\6\ ETP is defined in Interpretation and Policy .03(b)(4) to
Rule 11.8.
\7\ See Securities Exchange Act Release No. 72692 (July 28,
2014), 79 FR 44908 (August 1, 2014) (SR-BATS-2014-022) (``CLP
Approval Order'').
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The Program was approved by the Commission on a pilot basis running
one-year from the date of implementation.\8\ The Commission approved
the Program on July 28, 2014.\9\ The Exchange implemented the Program
on July 28, 2014 and the pilot period for the Program was originally
scheduled to end on July 28, 2015 until it was extended to end on
October 28, 2015 \10\
[[Page 6559]]
and later extended to January 28, 2016.\11\
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\8\ See id at 44909.
\9\ Id.
\10\ See Securities Exchange Act Release No. 75518 (July 24,
2015), 80 FR 45566 (July 30, 2015 (SR-BATS-2015-55).
\11\ See Securities Exchange Act Release No. 76293 (October 28,
2015), 80 FR 67808 (November 3, 2015 (SR-BATS-2015-96).
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Proposal To Extend the Operation of the Program
The Exchange established the Program in order to enhance liquidity
on the Exchange in certain ETPs listed on the Exchange (and thereby
enhance the Exchange's ability to compete as a listing venue) by
providing a mechanism by which ETP CLPs compete for part of a daily
quoting incentive on the basis of providing the most aggressive quotes
with the greatest amount of size. Such competition has the ability to
reduce spreads, facilitate the price discovery process, and reduce
costs for investors trading in such securities, thereby promoting
capital formation and helping the Exchange to compete as a listing
venue. The Exchange believes that extending the pilot is appropriate
because the Exchange is also planning to submit a proposal to make the
Program permanent. As part of this proposal, the Exchange is also
preparing a report analyzing the Program. As such, the Exchange
believes that it is appropriate to extend the current operation of the
Program for three months in order to provide enough time for the
Program to continue operating while such proposal is under
consideration by the Commission. Through this filing, the Exchange
seeks to extend the current pilot period of the Program until April 28,
2016.
2. Statutory Basis
The Exchange believes that its proposal 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(b) of the Act.\12\ In particular,
the Exchange believes the proposed change furthers the objectives of
Section 6(b)(5) of the Act,\13\ in that it is 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, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system. The Exchange believes that
extending the pilot period for the Program is consistent with these
principles because the Program is reasonably designed to enhance quote
competition, improve liquidity in securities listed on the Exchange,
support the quality of price discovery, promote market transparency,
and increase competition for listings and trade executions, while
reducing spreads and transaction costs in such securities. Maintaining
and increasing liquidity in Exchange-listed securities will help raise
investors' confidence in the fairness of the market and their
transactions. The extension of the pilot period will allow Exchange
[sic] to continue to operate the Program while its proposal to make the
Program permanent is under consideration by the Commission.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change
extends an established pilot program for 6 [sic] months, thus allowing
the Program to enhance competition in both the listings market and in
competition for market makers. The Program will continue to promote
competition in the listings market by providing issuers with a vehicle
for paying the Exchange additional fees in exchange for incentivizing
tighter spreads and deeper liquidity in listed securities and allow the
Exchange to continue to compete with similar programs at Nasdaq Stock
Market LLC \14\ and NYSE Arca Equities, Inc.\15\
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\14\ See Securities Exchange Act Release No. 69195 (March 20,
2013), 78 FR 18393 (March 26, 2013) (SR-NASDAQ-2012-137).
\15\ See Securities Exchange Act Release No. 69335 (April 5,
2013), 78 FR 35340 (June 12, 2013) (SR-NYSEARCA-2013-34).
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The Exchange also believes that extending the pilot program for an
additional 6 [sic] months will allow the Program to continue to enhance
competition among market participants by creating incentives for market
makers to compete to make better quality markets. By continuing to
require that market makers both meet the quoting requirements and also
compete for the daily financial incentives, the quality of quotes on
the Exchange will continue to improve. This, in turn, will attract more
liquidity to the Exchange and further improve the quality of trading in
exchange-listed securities participating in the Program, which will
also act to bolster the Exchange's listing business.
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6) thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative before 30 days from the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\18\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the 30-day operative
delay. The Commission believes that waiving the 30-day operative delay
is consistent with the protection of investors and the public interest.
Waiver of the operative delay will allow the Exchange to extend the
Program prior to its expiration on January 28, 2016, which will ensure
that the Program continues to operate uninterrupted while the Exchange
and the Commission continue to analyze data regarding the Program.
Therefore, the Commission hereby waives the 30-day operative delay and
designates the proposed rule change to be operative upon filing with
the Commission.\19\
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\19\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may
[[Page 6560]]
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. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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 No. SR-BATS-2016-12 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 No. SR-BATS-2016-12. 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 will also 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 No. SR-BATS-2016-12 and should be
submitted on or before February 29, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
Robert W. Errett,
Deputy Secretary.
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\20\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-02333 Filed 2-5-16; 8:45 am]
BILLING CODE 8011-01-P