[Federal Register Volume 76, Number 49 (Monday, March 14, 2011)]
[Notices]
[Pages 13681-13683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5774]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64055; File No. SR-BYX-2011-005]
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.
March 8, 2011.
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 February 28, 2011, 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\ 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 March 1,
2011. 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.
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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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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 Exchange proposes to modify its fee schedule applicable to use
of the Exchange effective March 1, 2011, in order to: (i) Amend the
liquidity fees for adding liquidity, including increased fees to add
non-displayed liquidity and adoption of a fee to add displayed
liquidity unless a Member has an average daily volume of 10 million
shares or more added per day in a given month; (ii) reduce certain
standard routing fees; and (iii) expand the Exchange's Discounted
Destination Specific Routing program to include a rebate for
Destination Specific Orders \6\ routed to EDGA Exchange.
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\6\ As defined in BYX Rule 11.9(c)(12).
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(i) Amending the Liquidity Fees for Adding Liquidity
The Exchange has not previously provided any rebate or imposed any
charge for adding displayed liquidity to the BYX order book in
securities priced $1.00 and above. The Exchange proposes to introduce a
tiered pricing structure applicable to added displayed liquidity in
securities priced $1.00 and above, under which Members adding a daily
average of 10 million shares or more of liquidity (including displayed
and non-displayed liquidity) during a month will continue to be able to
add displayed liquidity without charge, while Members adding a daily
average of less than 10 million shares of liquidity during a month will
be charged $0.0002 per share. Thus, while the fee change will result in
a small fee increase for Members providing low volumes of liquidity on
BYX, it will remain unchanged for Members providing higher volumes of
liquidity.
The Exchange also proposes to increase its fee to add non-displayed
liquidity to the BYX order book in securities priced $1.00 and above
from a charge of $0.0005 per share to a charge of $0.0010 per share. As
defined on the BYX fee schedule, the reference to ``non-displayed
liquidity'' for purposes of the fee schedule includes liquidity
resulting from all forms of Pegged Orders,\7\ Mid-Point Peg Orders,\8\
and Non-Displayed Orders,\9\ but does not include liquidity resulting
from Reserve Orders \10\ or Discretionary Orders.\11\
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\7\ As defined in BYX Rule 11.9(c)(8).
\8\ As defined in BYX Rule 11.9(c)(9).
\9\ As defined in BYX Rule 11.9(c)(11).
\10\ As defined in BYX Rule 11.9(c)(1).
\11\ As defined in BYX Rule 11.9(c)(10).
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The Exchange does not propose to change its pricing structure for
added liquidity in securities priced below $1.00.
(ii) Reduced Standard Routing Fees
The Exchange proposes to reduce the fee that it charges for certain
of its standard best execution routing strategies. The Exchange
currently offers the Parallel D, Parallel 2D, CYCLE and RECYCLE routing
strategies at a charge of $0.0028 per share for executions that occur
at other trading venues as a result of such strategies in securities
priced $1.00 and above.\12\ The Exchange proposes to reduce the fee for
use of such strategies to a charge of $0.0026 per share to in order to
encourage use
[[Page 13682]]
of these strategies. To be consistent with this change, the Exchange
proposes to charge 0.26%, rather than 0.28%, of the total dollar value
of the executions at other trading venues as a result of Parallel D,
Parallel 2D, CYCLE and RECYCLE in securities priced under $1.00 per
share.
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\12\ The Exchange's routing strategies are described in Rule
11.13(a)(3).
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(iii) Destination Specific Routing to EDGA Exchange
The Exchange currently provides a discounted fee for Destination
Specific Orders routed to certain market centers (NYSE, NYSE Arca and
NASDAQ), which, in each instance is $0.0001 less per share for orders
routed to such market centers by the Exchange than such market centers
currently charge for removing liquidity (referred to by the Exchange as
``One Under'' pricing). Consistent with this program, the Exchange
proposes to adopt pricing for Destination Specific Orders routed to
EDGA Exchange. Specifically, the Exchange proposes to provide a rebate
of $0.00025 per share for BYX + EDGA Destination Specific Orders
executed at EDGA, which is $0.0001 higher per share than the $0.00015
per share rebate provided by EDGA for orders that remove liquidity.
The Exchange imposes a charge of $0.0030 per share for Destination
Specific Orders sent to and executed by any market center for which it
does not have any separately identified pricing. Based on the change
described above, the Exchange proposes to add EDGA to the list of
market centers to which this charge does not apply.
Consistent with the changes described above, the Exchange proposes
to change the title of its Discounted Destination Specific Routing
section to refer to the program as ``One Under/Better,'' rather than
``One Under,'' and to add reference to EDGA.
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.\13\
Specifically, 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 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 its fees
and credits are competitive with those charged by other venues.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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While the establishment of tiered pricing for adding displayed
liquidity to the Exchange's order book will result in a small increase
in fees for some Members, this fee still remains lower than other
markets that impose a fee to add liquidity, such as EDGA Exchange and
NASDAQ OMX BX. Similarly, while the Exchange's proposal to increase the
fee to add non-displayed liquidity to the Exchange will result in an
increase in fees for Members that add non-displayed liquidity, this fee
is lower than the fee to add liquidity (whether displayed or non-
displayed) to NASDAQ OMX BX. As it relates to its differentiation
between displayed and non-displayed liquidity, the Exchange believes
that a fee structure that provides greater incentives to add displayed
liquidity than incentives to add non-displayed liquidity is fair and
reasonable. In addition, to the extent the proposed changes will result
in increased fees charged to Members, the Exchange believes that any
additional revenue it receives will allow the Exchange to devote
additional capital to its operations and to continue to offer
competitive pricing, which, in turn, will benefit Members of the
Exchange.
The reduction of the routing fee for several of the BYX standard
routing options and the adoption of new pricing for a Destination
Specific Order that offers improvement of the execution rebate offered
by another market center are changes intended to attract order flow to
BYX by offering competitive rates to Exchange Members for strategies
that first check the BYX order book before routing to away venues.
Accordingly, the Exchange's proposal will result in reduced fees that
will benefit Members due to the obvious economic savings those Members
will receive and the potential of increased available liquidity at the
Exchange.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change imposes
any burden on 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
Pursuant to Section 19(b)(3)(A)(ii) of the Act \15\ and Rule 19b-
4(f)(2) thereunder,\16\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge applicable to its
members, which renders the proposed rule change effective upon filing.
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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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.
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 e-mail to [email protected]. Please include
File Number SR-BYX-2011-005 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-2011-005. This file
number should be included on the subject line if e-mail 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 website (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
[[Page 13683]]
available for Web site viewing and printing in the Commission's Public
Reference Room on official business days between the hours of 10 a.m.
and 3 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-2011-005, and should be
submitted on or before April 4, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-5774 Filed 3-11-11; 8:45 am]
BILLING CODE 8011-01-P