[Federal Register Volume 75, Number 37 (Thursday, February 25, 2010)]
[Notices]
[Pages 8769-8770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-3822]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61545; File No. SR-BATS-2009-032]
Self-Regulatory Organizations; BATS Exchange, Inc.; Order
Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto,
To Amend BATS Fee Schedule To Impose Fees for Physical Ports Used To
Connect to BATS Exchange
February 19, 2010.
On December 18, 2009, BATS Exchange, Inc. (``BATS'' or
``Exchange'') 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 amend the fee schedule applicable to Members\3\
and non-members of the Exchange to begin charging for certain physical
ports used to connect to the Exchange's systems. The proposed rule
change was published for comment in the Federal Register on January 8,
2010.\4\ The Commission received no comments regarding the proposal. On
February 9, 2010, the Exchange filed Amendment No. 1 to the proposed
rule change.\5\ This order grants approval of the proposed rule change,
as modified by Amendment No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange. See BATS Rule 1.5(n).
\4\ Securities Exchange Act Release No. 61260 (December 30,
2009), 75 FR 1109 (``Notice'').
\5\ In Amendment No. 1, the Exchange replaced the bracketed
``[September 1, 2009]'' with ``[February 1, 2010]'' in the proposed
rule text to reflect the fact that the current fee schedule is dated
February 1, 2010. Because the change in Amendment No. 1 is technical
in nature, it is not subject to notice and comment.
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BATS proposes to begin charging a monthly fee for certain physical
ports\6\ used to connect to the Exchange's system for order entry and
receipt of data from the Exchange.\7\ BATS states that under its
current policy all physical ports are provided free of charge but
Members and non-members are only permitted to establish up to four such
physical port pairs.\8\ Under the proposal, BATS will continue to
provide four pairs of physical ports without charge to any Member or
non-member that has been approved to connect to the Exchange. In
addition, the Exchange will permit Members and non-members to establish
additional physical ports at a charge of $2,000 for each additional
single physical port provided by the Exchange to any Member or non-
member in any data center. The proposal applies to all Exchange
constituents with physical connections, including Members that obtain
ports for direct access to the Exchange, non-member service bureaus
that act as a conduit for orders entered by Exchange Members that are
their customers, Sponsored Participants, and market data recipients.
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\6\ The Exchange states that a physical port is used by a Member
or non-member to literally plug into the Exchange at the data
centers where the Exchange's servers are located (i.e., either a
cross-connection or a private line Ethernet connection to the
Exchange's network within the data center).
\7\ The Commission notes that BATS will implement the proposed
physical port fees commencing on the first day of the month
immediately following Commission approval of this proposed rule
change (or on the date of approval, if on the first business day of
a month). See Notice, supra note 4.
\8\ A ``pair'' of ports refers to one port at the site of the
Exchange's primary data center (including the expansion space
located adjacent to such data center) and one port at the site of
the Exchange's secondary data center.
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The Exchange states that very few Members or non-members require
four physical ports for their operations related to the Exchange or
would utilize more than four physical ports, and thus, the Exchange
believes that the proposal should not affect many of the Exchange's
constituents. However, the Exchange believes that Members and non-
members that wish to pay for additional physical ports outside of those
provided for free should have the ability to do so.
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\9\ Specifically, the Commission finds that the proposal is
consistent with Section 6(b)(4) of the Act,\10\ which requires the
equitable allocation of reasonable dues, fees, and other charges among
Exchange Members and other persons using the Exchange's facilities, and
Section 6(b)(5) of the Act,\11\ which requires, among other things,
that the rules of a national securities exchange be 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 not be designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The Commission also finds that the
proposed rule change is consistent with Section 6(b)(8) of the Act,\12\
which requires that the rules of an exchange not impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Act. Finally, the Commission finds that the proposed rule change
is consistent with Rule 603(a) of Regulation NMS,\13\ which requires an
exclusive processor that distributes information with respect to
quotations for or transactions in an NMS stock to do so on terms that
are fair and reasonable and not unreasonably discriminatory.
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\9\ In approving this proposed rule change the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(8).
\13\ 17 CFR 242.603(a).
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The Commission believes that the proposed physical port fees are
equitably allocated among Members and
[[Page 8770]]
non-members and do not unfairly or unreasonably discriminate between
customers, issuers, brokers, or dealers because the proposed physical
port fees do not distinguish among the type of participant but rather
are the same for all Members and non-members. The Commission also
believes that BATS was subject to significant competitive pressure to
act equitably, fairly, and reasonably in setting the physical port
fees, in light of the highly competitive nature of the market for
execution and routing services.\14\
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\14\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\15\ that the proposed rule change (SR-BATS-2009-032), as modified
by Amendment No. 1 thereto, be, and it hereby is, approved.
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\15\ 15 U.S.C. 78s(b)(2).
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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3822 Filed 2-24-10; 8:45 am]
BILLING CODE 8011-01-P