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Notice

Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Bats BYX Exchange, Inc.

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Start Preamble June 15, 2017.

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 June 9, 2017, Bats BYX 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.

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).

The text of the proposed rule change is available at the Exchange's Web site at www.bats.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 the Statutory Basis for, the Proposed Rule Change

1. Purpose

The Exchange proposes to amend its fee schedule applicable to its equities trading platform (“BYX Equities”) to: (i) Modify the rates associated with fee codes AA, BJ and RA; and (ii) increase the scope of executions subject to fee code IX. The Exchange notes that Bats EDGA Exchange, Inc. (“EDGA”) implemented certain pricing changes effective June 1, 2017, including modification of various fees and rebates to add and remove liquidity with a displayed or IOC order to a flat fee of $0.0003 per share to add or remove liquidity with a displayed or IOC order.[6] The proposed changes to AA, BJ, and RA are proposed in light of these changes.

Fee Code AA

The Exchange proposes to modify the rate associated with orders yielding fee code AA, which results from an order routed to EDGA using ALLB routing strategy,[7] from a $0.0002 per share rebate to a fee of $0.0003 per share for securities priced at or above $1.00. The Exchange does not propose to modify the rate for orders yielding fee code AA for securities priced below $1.00, which are currently not charged a fee nor provided a rebate.

Fee Code BJ

The Exchange proposes to modify the rate associated with orders yielding fee code BJ, which result from an order routed to EDGA using the Destination Specific (“DIRC”),[8] TRIM or TRIM2 routing strategies,[9] from a rebate of $0.0002 per share to a fee of $0.0003 per share for all securities (i.e., those priced at or above $1.00 and those priced below $1.00).

Fee Code RA

The Exchange proposes to decrease the fee associated with orders yielding fee code RA, which results from an order routed to EDGA which adds liquidity, from a fee of $0.0005 per share to a fee of $0.0003 per share for securities priced at or above $1.00. The Exchange does not propose to modify the rate for orders yielding fee code RA for securities priced below $1.00, which are currently not charged a fee nor provided a rebate.

Fee Code IX

The Exchange proposes to modify the routing strategies applicable to fee code IX to include the TRIM or TRIM2 routing strategies. Fee code IX is currently appended to all orders that are routed to the Investors Exchange, Inc. (“IEX”) using the Destination Specific routing strategy (also referred to as “DIRC”).[10] The Exchange does not Start Printed Page 28368propose to modify the rate of $0.0010 per share currently charged orders appended with IX. The Exchange notes that it has not previously included IEX on the routing tables for TRIM and TRIM2 but began to do so effective June 1, 2017, and thus, that the proposed change is necessary to account for executions at IEX through such routing strategies.

Implementation Date

The Exchange proposes to implement the above changes to its fee schedule immediately.[11]

2. Statutory Basis

The Exchange believes that the proposed rule changes are 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 or incentives to be insufficient. The proposed rule changes reflect a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange. Furthermore, the Exchange notes that routing through the Exchange's affiliate, Bats Trading, is voluntary.

Fee Codes AA, BJ, and RA

As noted above, EDGA implemented certain pricing changes effective June 1, 2017, including modification of various fees and rebates to and remove liquidity with a displayed or IOC order to a flat fee of $0.0003 per share to add or remove liquidity with a displayed or IOC order.[14] The changes to fee codes AA, BJ, and RA are proposed in light of these changes and reflect a pass-through of the pricing provided by EDGA. As the pricing in securities priced at or above $1.00 reflects the same pricing a Member would receive for participation on EDGA directly and the pricing in securities priced below $1.00 is based on the current pricing model applied by the Exchange, the Exchange believes the proposed fees are reasonable and equitably allocated. The Exchange further believes the proposed fees are non-discriminatory because they apply uniformly to all Members.

Fee Code IX

The Exchange believes that its proposal to include TRIM and TRIM2 routing strategies for orders routed to IEX that yield fee code IX is equitable and reasonable because routing through Bats Trading is voluntary and Members may utilize other avenues to route orders to IEX, such as connecting to IEX directly. Lastly, the Exchange also believes that the proposed alternative routing strategies are non-discriminatory because the availability applies uniformly to all Members.

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 not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that any of the proposed changes to the Exchange's routing pricing burden competition, as they are based on the pricing on other venues. 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 structures to be unreasonable or excessive. The Exchange does not believe the proposed amendments would burden intramarket competition as they would be available to all Members uniformly.

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 unsolicited 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 [15] and paragraph (f) of Rule 19b-4 thereunder.[16] 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

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-BatsBYX-2017-15. 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 the filing also will 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-BatsBYX-2017-15, and should be submitted on or before July 12, 2017.

Start Signature
Start Printed Page 28369

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.[17]

Eduardo A. Aleman,

Assistant Secretary.

End Signature End Preamble

Footnotes

3.  15 U.S.C. 78s(b)(3)(A)(ii).

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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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6.  See Press Release, Bats Announces Fee Overhaul of EDGA Equities Exchange (May 30, 2017), available at http://ir.cboe.com/​press-releases/​2017/​05-30-2017.aspx.

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7.  ALLB is a routing option under which the order checks the System for available shares and is then sent to the Bats BZX Exchange, Inc. (“BZX”), EDGA, and Bats EDGX Exchange, Inc. (“EDGX” collectively with the Exchange, BZX, and EDGA, the “BGM Affiliated Exchanges”). See the Exchange's routing strategies available at http://cdn.batstrading.com/​resources/​features/​bats_​exchange_​routing-strategies.pdf. See also Exchange Rule 11.13(b)(3).

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8.  See the Exchange's routing strategies available at http://cdn.batstrading.com/​resources/​features/​bats_​exchange_​routing-strategies.pdf. See also Exchange Rule 11.13(b)(3).

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9.  The TRIM and TRIM2 routing strategies focus on seeking execution of orders while minimizing execution costs by routing only to certain low cost execution venues on the Exchange's System routing table. Id.

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10.  See the Exchange's routing strategies available at http://cdn.batstrading.com/​resources/​features/​bats_exchange_routing-strategies.pdf. See also Rule 11.13(b)(3).

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11.  The Exchange initially submitted the proposed fee change on June 1, 2017. (SR-BatsBYX-2017-14). On June 9, 2017, the Exchange withdrew SR-BatsBYX-2017-14 and submitted this filing.

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14.  See supra, note 6.

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[FR Doc. 2017-12889 Filed 6-20-17; 8:45 am]

BILLING CODE 8011-01-P