80 FR 22567 - Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Order Granting Approval of a Proposed Rule Change To Amend Rules 11.9, 11.12, and 11.13 of BATS Y-Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 77 (April 22, 2015)

Page Range		22567-22568
FR Document		2015-09268
Federal Register, Volume 80 Issue 77 (Wednesday, April 22, 2015)
[Federal Register Volume 80, Number 77 (Wednesday, April 22, 2015)]
[Notices]
[Pages 22567-22568]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-09268]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74739; File No. SR-BYX-2015-07]


Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Order 
Granting Approval of a Proposed Rule Change To Amend Rules 11.9, 11.12, 
and 11.13 of BATS Y-Exchange, Inc.

April 16, 2015.

I. Introduction

    On January 30, 2015, BATS Y-Exchange, Inc. (``BYX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Exchange Rules 11.9, 
11.12, and 11.13. The proposed rule change was published for comment in 
the Federal Register on February 18, 2015.\3\ The Commission received 
no comments on the proposal. This order grants approval of the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 74250 (February 11, 
2015), 80 FR 8734 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange conducted a comprehensive review of its system 
functionality.\4\ The proposal adds additional clarity and specificity 
regarding the current functionality of the Exchange's System,\5\ 
including the operation of its order types and order instructions. The 
Exchange proposes no substantive modifications to the System.
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    \4\ On June 5, 2014, Chair Mary Jo White asked all national 
securities exchanges to conduct a comprehensive review of each order 
type offered to members and how it operates in practice. See Mary Jo 
White, Chair, Commission, Speech at the Sandler O'Neill & Partners, 
L.P. Global Exchange and Brokerage Conference, (June 5, 2014) 
(available at http://www.sec.gov/News/Speech/Detail/Speech/1370542004312#.VD2HW610w6Y).
    \5\ Exchange Rule 1.5(aa) defines ``System'' as ``the electronic 
communications and trading facility designated by the Board through 
which securities orders of Users are consolidated for ranking, 
execution and, when applicable, routing away.''
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    The changes include: (i) Making clear that orders with a Time-in-
Force (``TIF'') of Immediate-or-Cancel (``IOC'') can be routed away 
from the Exchange; (ii) specifying the methodology used by the Exchange 
to determine whether BATS Post Only Orders \6\ will remove liquidity 
from the BATS Book; \7\ (iii) adding additional detail to and re-
structuring the description of Pegged Orders; (iv) adding additional 
detail to the description of Mid-Point Peg Orders; (v) adding 
additional detail to the description of Discretionary Orders; (vi) 
amending Rule 11.12, Priority of Orders, and Rule 11.13, Order 
Execution, to provide additional specificity and enhance the structure 
of Exchange rules describing the process for ranking, executing and 
routing orders; (vii) adding additional detail to the description of 
orders subject to Re-Route functionality; and (viii) making a series of 
conforming changes to Rules 11.9, 11.12 and 11.13 to update cross-
references.
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    \6\ See Rule 11.9(c)(6).
    \7\ As defined in Rule 1.5(e).
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    Rule 11.9. The Exchange proposes revisions to Rule 11.9 to provide 
greater detail as to the existing functionality of certain order types 
and modifiers.\8\ Among other things, the Exchange proposes to make 
clear that orders with an IOC TIF are routable but do not post to the 
Exchange's book,\9\ whereas orders with a Fill-or-Kill (``FOK'') TIF 
are not routable.\10\ The Exchange also proposes to clarify the 
Exchange's methodology for determining whether BATS Post Only orders 
will remove liquidity from the Exchange's order book upon entry.\11\ In 
addition, the Exchange proposes to reformat the rule describing the 
Primary Pegged and Market Pegged orders,\12\ and to make clear that 
Mid-Point Peg Orders are not eligible to execute when the NBBO is 
crossed but Users may elect whether such orders will be eligible to 
execute when the NBBO is locked.\13\ Further, the Exchange proposes to 
add additional detail to the rule describing Discretionary Orders so 
that it specifies: (i) That Discretionary Orders may be fully non-
displayed, with a non-displayed ranked price (and discretionary price); 
(ii) how resting Discretionary Orders interact with incoming contra-
side orders, including how the order type, TIF and price of the 
incoming order affects whether the resting Discretionary Order removes 
liquidity against the incoming order or the incoming order removes 
liquidity against the resting Discretionary Order; and (iii) that 
Discretionary Orders are routed away from the Exchange at their full 
discretionary price.\14\
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    \8\ For additional detail regarding the specific proposed 
revisions for each order type and modifier, see Notice, supra note 3 
at 8734-36, and proposed Rule 11.9.
    \9\ See proposed Rule 11.9(b)(1). In connection with this 
proposed change the Exchange also proposes to specify that the 
cancellation of an unfilled balance of an order is one possible 
outcome after an order has been routed away. See proposed Rule 
11.13(b)(2). This is what would occur with the unfilled balance of a 
routed IOC order. See Notice, supra note 3 at 8734.
    \10\ See proposed Rule 11.9(b)(6).
    \11\ See proposed Rule 11.9(c)(6). Due to the Exchange's 
inverted fee structure, incoming BATS Post Only Orders always 
execute upon entry (and hence remove liquidity) when marketable 
against resting contra-side liquidity because it is always 
economically advantageous for them to do so. The Exchange 
nevertheless maintains this order type so that the post-only 
functionality remains available in the event the Exchange's fee 
structure changes, and proposes the clarifying changes reflected in 
proposed Rule 11.9(c)(6) so as to reflect the actual functionality 
of the System, which still performs the economic best interest 
specified in the rule despite the outcome being pre-determined by 
the Exchange's fee structure. See Notice, supra note 3 at 8735.
    \12\ See proposed Rule 11.9(c)(8).
    \13\ See proposed Rule 11.9(c)(9).
    \14\ See proposed Rule 11.9(c)(10). In addition, the Exchange 
proposes to update cross references to rules that would be re-
numbered as a result of the proposal. See proposed Rules 11.9(c), 
11.9(d) and 11.9(g).
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    Rule 11.12. The Exchange proposes several modifications to Rule 
11.12 that are intended to clarify existing functionality relating to 
order priority. Some of these modifications would revise the structure 
of Rule 11.12 or add cross references to other rules.\15\ In addition, 
the Exchange proposes to revise Rule 11.12(a)(2) to refer to ranking, 
rather than executing, equally-priced trading interest because, 
according to the Exchange, the rule is intended to describe the manner 
in which resting orders are ranked and maintained.\16\ The Exchange 
also proposes to revise the reference to Pegged Orders in the priority 
hierarchy set forth in Rule 11.12(a)(2) to make clear that the 
reference is specifically to non-displayed Pegged Orders.\17\ The 
Exchange notes that the purpose of this revision is to distinguish non-
displayed Pegged Orders from Primary Pegged

[[Page 22568]]

Orders that, if displayed, are ranked with other displayed orders.\18\ 
Further, the Exchange proposes to adopt new Rule 11.12(a)(3), which 
would codify existing match trade prevention rules that optionally 
prevent the execution of orders from the same User.\19\ Lastly, the 
Exchange proposes to renumber current Rules 11.12(a)(3) and (a)(4) as 
Rules 11.12(a)(4) and (a)(5), respectively, and to revise them to 
clarify that time priority in particular can be retained or lost in 
certain circumstances, as opposed to both price and time priority.\20\
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    \15\ See Notice, supra note 3 at 8736-37. See also proposed Rule 
11.12(a).
    \16\ See Notice, supra note 3 at 8737. See also proposed Rule 
11.12(a)(2).
    \17\ See Notice, supra note 3 at 8737. See also proposed Rule 
11.12(a)(2)(C).
    \18\ See Notice, supra note 3 at 8737.
    \19\ See Notice, supra note 3 at 8737. See also proposed Rule 
11.12(a)(3). The Exchange notes that proposed Rule 11.12(a)(3) is 
based on EDGX Rule 11.9(a)(3). See Notice, supra note 3 at 8737.
    \20\ See Notice, supra note 3 at 8737. See also proposed Rules 
11.12(a)(4) and (a)(5). In addition, the Exchange proposes to 
renumber current Rules 11.12(a)(5) and (a)(6) as Rules 11.12(a)(6) 
and (a)(7), respectively.
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    Rule 11.13. The Exchange proposes several revisions to Rule 11.13, 
which currently governs the execution and routing logic on the 
Exchange. The Exchange proposes to restructure and reformat the rule in 
certain ways, including by more clearly delineating between execution 
(to be contained in new paragraph (a)) \21\ and routing (to be 
contained in new paragraph (b)), adding sub-headings and descriptive 
titles, adding a cross reference to the Exchange's rules related to the 
Limit Up-Limit Down Plan, and revising existing cross references in the 
rule.\22\ In addition, the Exchange proposes to add Rules 
11.13(a)(4)(C) and (D), which would replace and amend existing text set 
forth in Rule 11.13(a)(1) and are intended to provide further clarity 
regarding how incoming orders are handled in certain situations when 
there is undisplayed locking interest on the Exchange.\23\
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    \21\ The Exchange proposes to move language contained within 
Rule 11.13 to the beginning of new paragraph (a) such that the 
language is more generally applicable to the rules governing 
execution. Specifically, the Exchange proposes to relocate language 
stating that any order falling within the parameters of the 
paragraph shall be referred to as ``executable'' and that an order 
will be cancelled back to the User if, based on market conditions, 
User instructions, applicable Exchange Rules and/or the Act and the 
rules and regulations thereunder, such order is not executable, 
cannot be routed to another Trading Center pursuant to Rule 11.13(b) 
(as proposed to be re-numbered) or cannot be posted to the BATS 
Book. See Notice, supra note 3 at 8737. See also proposed Rule 
11.13(a).
    \22\ See Notice, supra note 3 at 8737. See also proposed Rule 
11.13.
    \23\ See Notice, supra note 3 at 8738. See also proposed Rules 
11.13(a)(4)(C) and (D).
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    The Exchange also proposes revisions to Rule 11.13 as it relates to 
the Exchange's routing process, including its re-route functionality. 
In particular, the Exchange proposes to add language to the rule's 
description of the Aggressive Re-Route instruction (to be renumbered as 
Rule 11.13(b)(4)(A)) that states that any routable non-displayed limit 
order posted to the BATS Book that is crossed by another accessible 
Trading Center will be automatically routed to that Trading Center.\24\ 
The Exchange also proposes to adopt new Rule 11.13(b)(4)(C), which 
would specify when an order with a Super Aggressive Re-Route 
instruction will remove liquidity against an incoming order.\25\ 
Further, the Exchange proposes to revise Rule 11.13(b) (to be 
renumbered as Rule 11.13(b)(5)) to make clear that orders that have 
been routed pursuant to Rule 11.12(a) are not ranked and maintained by 
the BATS Book, and therefore are not available to execute against 
incoming orders pursuant to new Rule 11.13(a).\26\
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    \24\ See Notice, supra note 3 at 8738-40. See also proposed Rule 
11.13(b)(4)(A).
    \25\ See Notice, supra note 3 at 8738-40. See also proposed Rule 
11.13(b)(4)(C).
    \26\ See Notice, supra note 3 at 8738. See also proposed Rule 
11.13(b)(5). For additional detail regarding the Exchange's proposed 
rule changes, including examples of the operation of functionality 
addressed by this rule filing, see Notice, supra note 3 at 8734-40.
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\27\ In particular, the Commission finds that the proposed 
rule change is consistent with the requirements of Section 6(b)(5) of 
the Act,\28\ which requires, among other things, that the Exchange's 
rules be designed to prevent fraudulent and manipulative acts and 
practices, 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 are not designed to permit unfair discrimination 
between customers, issuers, brokers or dealers.
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    \27\ 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).
    \28\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change will provide 
additional clarity and specificity regarding the functionality of the 
System, thus promoting just and equitable principals of trade and 
promoting a fair and open market. In addition, the Exchange believes 
the proposed rule change will contribute to the protection of investors 
and the public interest by making the Exchange's rules easier to 
understand.
    The Exchange states that the proposed rule changes add clarity and 
transparency to the Exchange's rulebook regarding existing Exchange 
functionality.\29\ For example, among other things, the Exchange's 
proposal would amend Rule 11.9 to clarify that IOC orders are routable 
and FOK orders are not routable, specify the methodology used by the 
Exchange to determine whether BATS Post Only Orders will remove 
liquidity from the BATS Book, and add additional detail describing the 
operation of Mid-Point Peg Orders and Discretionary Orders. The 
Exchange also has proposed to amend Rules 11.12 and 11.13 to provide 
additional transparency as to, but not substantively modify, the 
Exchange's process for ranking, executing and routing orders, including 
orders subject to the Exchange's re-route functionality.
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    \29\ See Notice, supra note 3 at 8726.
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    The Commission believes that these proposed changes should provide 
greater specificity, clarity and transparency with respect to certain 
order type and modifier functionality available on the Exchange, as 
well as the Exchange's methodologies for ranking, executing and routing 
orders. Therefore, the proposal should help to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, remove impediments to and perfect the mechanism of a free and 
open market and a national market system, and, in general, protect 
investors and the public interest.

IV. Conclusion

    IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the 
Act,\30\ that the proposed rule change (SR-BYX-2015-07) be, and it 
hereby is, approved.
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    \30\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
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    \31\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-09268 Filed 4-21-15; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices 22567

attendance, the general public should regarding the current functionality of In addition, the Exchange proposes to
email nwbcouncil@nwbc.gov with the Exchange’s System,5 including the reformat the rule describing the Primary
subject line—‘‘RSVP for Austin.’’ operation of its order types and order Pegged and Market Pegged orders,12 and
Participants will receive confirmation instructions. The Exchange proposes no to make clear that Mid-Point Peg Orders
information with the logistical details substantive modifications to the System. are not eligible to execute when the
closer to the date of the meeting. The changes include: (i) Making clear NBBO is crossed but Users may elect
Anyone wishing to make a presentation that orders with a Time-in-Force (‘‘TIF’’) whether such orders will be eligible to
to the NWBC at this meeting must either of Immediate-or-Cancel (‘‘IOC’’) can be execute when the NBBO is locked.13
email their interest to chair@nwbc.gov routed away from the Exchange; (ii) Further, the Exchange proposes to add
or call the main office number at 202– specifying the methodology used by the additional detail to the rule describing
205–3850. For more information, please Exchange to determine whether BATS Discretionary Orders so that it specifies:
visit the National Women’s Business Post Only Orders 6 will remove liquidity (i) That Discretionary Orders may be
Council Web site at www.nwbc.gov. from the BATS Book; 7 (iii) adding fully non-displayed, with a non-
additional detail to and re-structuring displayed ranked price (and
Miguel J. L’Heureux,
the description of Pegged Orders; (iv) discretionary price); (ii) how resting
SBA Committee Management Officer. adding additional detail to the Discretionary Orders interact with
[FR Doc. 2015–09293 Filed 4–21–15; 8:45 am] description of Mid-Point Peg Orders; (v) incoming contra-side orders, including
BILLING CODE P adding additional detail to the how the order type, TIF and price of the
description of Discretionary Orders; (vi) incoming order affects whether the
amending Rule 11.12, Priority of Orders, resting Discretionary Order removes
SECURITIES AND EXCHANGE and Rule 11.13, Order Execution, to liquidity against the incoming order or
COMMISSION provide additional specificity and the incoming order removes liquidity
[Release No. 34–74739; File No. SR–BYX– enhance the structure of Exchange rules against the resting Discretionary Order;
2015–07] describing the process for ranking, and (iii) that Discretionary Orders are
executing and routing orders; (vii) routed away from the Exchange at their
Self-Regulatory Organizations; BATS adding additional detail to the full discretionary price.14
Y-Exchange, Inc.; Order Granting description of orders subject to Re-Route Rule 11.12. The Exchange proposes
Approval of a Proposed Rule Change functionality; and (viii) making a series several modifications to Rule 11.12 that
To Amend Rules 11.9, 11.12, and 11.13 of conforming changes to Rules 11.9, are intended to clarify existing
of BATS Y-Exchange, Inc. 11.12 and 11.13 to update cross- functionality relating to order priority.
references. Some of these modifications would
April 16, 2015. Rule 11.9. The Exchange proposes revise the structure of Rule 11.12 or add
I. Introduction revisions to Rule 11.9 to provide greater cross references to other rules.15 In
detail as to the existing functionality of addition, the Exchange proposes to
On January 30, 2015, BATS Y- certain order types and modifiers.8 revise Rule 11.12(a)(2) to refer to
Exchange, Inc. (‘‘BYX’’ or the Among other things, the Exchange ranking, rather than executing, equally-
‘‘Exchange’’) filed with the Securities proposes to make clear that orders with priced trading interest because,
and Exchange Commission an IOC TIF are routable but do not post according to the Exchange, the rule is
(‘‘Commission’’), pursuant to Section to the Exchange’s book,9 whereas orders intended to describe the manner in
19(b)(1) of the Securities Exchange Act with a Fill-or-Kill (‘‘FOK’’) TIF are not which resting orders are ranked and
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and routable.10 The Exchange also proposes maintained.16 The Exchange also
Rule 19b–4 thereunder,2 a proposed rule to clarify the Exchange’s methodology proposes to revise the reference to
change to amend Exchange Rules 11.9, for determining whether BATS Post Pegged Orders in the priority hierarchy
11.12, and 11.13. The proposed rule Only orders will remove liquidity from set forth in Rule 11.12(a)(2) to make
change was published for comment in the Exchange’s order book upon entry.11 clear that the reference is specifically to
the Federal Register on February 18, non-displayed Pegged Orders.17 The
2015.3 The Commission received no 5 Exchange Rule 1.5(aa) defines ‘‘System’’ as ‘‘the
Exchange notes that the purpose of this
comments on the proposal. This order electronic communications and trading facility revision is to distinguish non-displayed
grants approval of the proposed rule designated by the Board through which securities
Pegged Orders from Primary Pegged
change. orders of Users are consolidated for ranking,
execution and, when applicable, routing away.’’
II. Description of the Proposed Rule 6 See Rule 11.9(c)(6). that the post-only functionality remains available in
7 As defined in Rule 1.5(e). the event the Exchange’s fee structure changes, and
Change proposes the clarifying changes reflected in
8 For additional detail regarding the specific
The Exchange conducted a proposed revisions for each order type and proposed Rule 11.9(c)(6) so as to reflect the actual
functionality of the System, which still performs
comprehensive review of its system modifier, see Notice, supra note 3 at 8734–36, and
the economic best interest specified in the rule
functionality.4 The proposal adds proposed Rule 11.9.
9 See proposed Rule 11.9(b)(1). In connection despite the outcome being pre-determined by the
additional clarity and specificity with this proposed change the Exchange also
Exchange’s fee structure. See Notice, supra note 3
at 8735.
proposes to specify that the cancellation of an 12 See proposed Rule 11.9(c)(8).
1 15 U.S.C. 78s(b)(1). unfilled balance of an order is one possible outcome
2 17 13 See proposed Rule 11.9(c)(9).
CFR 240.19b–4. after an order has been routed away. See proposed
14 See proposed Rule 11.9(c)(10). In addition, the
3 See Securities Exchange Act Release No. 74250 Rule 11.13(b)(2). This is what would occur with the
asabaliauskas on DSK5VPTVN1PROD with NOTICES

(February 11, 2015), 80 FR 8734 (‘‘Notice’’). unfilled balance of a routed IOC order. See Notice, Exchange proposes to update cross references to
4 On June 5, 2014, Chair Mary Jo White asked all supra note 3 at 8734. rules that would be re-numbered as a result of the
national securities exchanges to conduct a 10 See proposed Rule 11.9(b)(6). proposal. See proposed Rules 11.9(c), 11.9(d) and
comprehensive review of each order type offered to 11 See proposed Rule 11.9(c)(6). Due to the 11.9(g).
15 See Notice, supra note 3 at 8736–37. See also
members and how it operates in practice. See Mary Exchange’s inverted fee structure, incoming BATS
Jo White, Chair, Commission, Speech at the Sandler Post Only Orders always execute upon entry (and proposed Rule 11.12(a).
16 See Notice, supra note 3 at 8737. See also
O’Neill & Partners, L.P. Global Exchange and hence remove liquidity) when marketable against
Brokerage Conference, (June 5, 2014) (available at resting contra-side liquidity because it is always proposed Rule 11.12(a)(2).
http://www.sec.gov/News/Speech/Detail/Speech/ economically advantageous for them to do so. The 17 See Notice, supra note 3 at 8737. See also

1370542004312#.VD2HW610w6Y). Exchange nevertheless maintains this order type so proposed Rule 11.12(a)(2)(C).

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22568 Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices

Orders that, if displayed, are ranked the Exchange proposes to add language addition, the Exchange believes the
with other displayed orders.18 Further, to the rule’s description of the proposed rule change will contribute to
the Exchange proposes to adopt new Aggressive Re-Route instruction (to be the protection of investors and the
Rule 11.12(a)(3), which would codify renumbered as Rule 11.13(b)(4)(A)) that public interest by making the
existing match trade prevention rules states that any routable non-displayed Exchange’s rules easier to understand.
that optionally prevent the execution of limit order posted to the BATS Book
The Exchange states that the proposed
orders from the same User.19 Lastly, the that is crossed by another accessible
Exchange proposes to renumber current Trading Center will be automatically rule changes add clarity and
Rules 11.12(a)(3) and (a)(4) as Rules routed to that Trading Center.24 The transparency to the Exchange’s rulebook
11.12(a)(4) and (a)(5), respectively, and Exchange also proposes to adopt new regarding existing Exchange
to revise them to clarify that time Rule 11.13(b)(4)(C), which would functionality.29 For example, among
priority in particular can be retained or specify when an order with a Super other things, the Exchange’s proposal
lost in certain circumstances, as Aggressive Re-Route instruction will would amend Rule 11.9 to clarify that
opposed to both price and time remove liquidity against an incoming IOC orders are routable and FOK orders
priority.20 order.25 Further, the Exchange proposes are not routable, specify the
Rule 11.13. The Exchange proposes to revise Rule 11.13(b) (to be methodology used by the Exchange to
several revisions to Rule 11.13, which renumbered as Rule 11.13(b)(5)) to make determine whether BATS Post Only
currently governs the execution and clear that orders that have been routed Orders will remove liquidity from the
routing logic on the Exchange. The pursuant to Rule 11.12(a) are not ranked BATS Book, and add additional detail
Exchange proposes to restructure and and maintained by the BATS Book, and describing the operation of Mid-Point
reformat the rule in certain ways, therefore are not available to execute Peg Orders and Discretionary Orders.
including by more clearly delineating against incoming orders pursuant to The Exchange also has proposed to
between execution (to be contained in new Rule 11.13(a).26 amend Rules 11.12 and 11.13 to provide
new paragraph (a)) 21 and routing (to be
III. Discussion and Commission additional transparency as to, but not
contained in new paragraph (b)), adding
Findings substantively modify, the Exchange’s
sub-headings and descriptive titles,
adding a cross reference to the process for ranking, executing and
After careful review, the Commission
Exchange’s rules related to the Limit finds that the proposed rule change is routing orders, including orders subject
Up-Limit Down Plan, and revising consistent with the requirements of the to the Exchange’s re-route functionality.
existing cross references in the rule.22 In Act and the rules and regulations The Commission believes that these
addition, the Exchange proposes to add thereunder applicable to a national proposed changes should provide
Rules 11.13(a)(4)(C) and (D), which securities exchange.27 In particular, the greater specificity, clarity and
would replace and amend existing text Commission finds that the proposed transparency with respect to certain
set forth in Rule 11.13(a)(1) and are rule change is consistent with the order type and modifier functionality
intended to provide further clarity requirements of Section 6(b)(5) of the available on the Exchange, as well as the
regarding how incoming orders are Act,28 which requires, among other Exchange’s methodologies for ranking,
handled in certain situations when there things, that the Exchange’s rules be executing and routing orders. Therefore,
is undisplayed locking interest on the designed to prevent fraudulent and the proposal should help to prevent
Exchange.23 manipulative acts and practices, to fraudulent and manipulative acts and
The Exchange also proposes revisions promote just and equitable principles of practices, promote just and equitable
to Rule 11.13 as it relates to the trade, to remove impediments to and principles of trade, remove
Exchange’s routing process, including perfect the mechanism of a free and
its re-route functionality. In particular, impediments to and perfect the
open market and a national market mechanism of a free and open market
system, and, in general, to protect
18 See Notice, supra note 3 at 8737. and a national market system, and, in
investors and the public interest; and
19 See Notice, supra note 3 at 8737. See also general, protect investors and the public
are not designed to permit unfair
proposed Rule 11.12(a)(3). The Exchange notes that
discrimination between customers, interest.
proposed Rule 11.12(a)(3) is based on EDGX Rule
11.9(a)(3). See Notice, supra note 3 at 8737. issuers, brokers or dealers. IV. Conclusion
20 See Notice, supra note 3 at 8737. See also The Exchange believes that the
proposed Rules 11.12(a)(4) and (a)(5). In addition, proposed rule change will provide IT IS THEREFORE ORDERED,
the Exchange proposes to renumber current Rules pursuant to Section 19(b)(2) of the
11.12(a)(5) and (a)(6) as Rules 11.12(a)(6) and (a)(7),
additional clarity and specificity
respectively. regarding the functionality of the Act,30 that the proposed rule change
21 The Exchange proposes to move language System, thus promoting just and (SR–BYX–2015–07) be, and it hereby is,
contained within Rule 11.13 to the beginning of equitable principals of trade and approved.
new paragraph (a) such that the language is more promoting a fair and open market. In
generally applicable to the rules governing For the Commission, by the Division of
execution. Specifically, the Exchange proposes to Trading and Markets, pursuant to delegated
24 See Notice, supra note 3 at 8738–40. See also
relocate language stating that any order falling authority.31
within the parameters of the paragraph shall be proposed Rule 11.13(b)(4)(A).
referred to as ‘‘executable’’ and that an order will 25 See Notice, supra note 3 at 8738–40. See also Brent J. Fields,
be cancelled back to the User if, based on market proposed Rule 11.13(b)(4)(C). Secretary.
conditions, User instructions, applicable Exchange 26 See Notice, supra note 3 at 8738. See also
asabaliauskas on DSK5VPTVN1PROD with NOTICES

Rules and/or the Act and the rules and regulations proposed Rule 11.13(b)(5). For additional detail [FR Doc. 2015–09268 Filed 4–21–15; 8:45 am]
thereunder, such order is not executable, cannot be regarding the Exchange’s proposed rule changes, BILLING CODE 8011–01–P
routed to another Trading Center pursuant to Rule including examples of the operation of functionality
11.13(b) (as proposed to be re-numbered) or cannot addressed by this rule filing, see Notice, supra note
be posted to the BATS Book. See Notice, supra note 3 at 8734–40.
3 at 8737. See also proposed Rule 11.13(a). 27 In approving this proposed rule change, the
22 See Notice, supra note 3 at 8737. See also Commission has considered the proposed rule’s
29 See Notice, supra note 3 at 8726.
proposed Rule 11.13. impact on efficiency, competition, and capital
30 15 U.S.C. 78s(b)(2).
23 See Notice, supra note 3 at 8738. See also formation. See 15 U.S.C. 78c(f).
proposed Rules 11.13(a)(4)(C) and (D). 28 15 U.S.C. 78f(b)(5). 31 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 18:00 Apr 21, 2015 Jkt 235001 PO 00000 Frm 00096 Fmt 4703 Sfmt 9990 E:\FR\FM\22APN1.SGM 22APN1
Document Created: 2015-12-16 08:28:09
Document Modified: 2015-12-16 08:28:09
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 22567