80_FR_22677 80 FR 22600 - Self-Regulatory Organizations; BATS Exchange, Inc.; Order Granting Approval of a Proposed Rule Change To Amend Rules 11.9, 11.12, and 11.13 of BATS Exchange, Inc.

80 FR 22600 - Self-Regulatory Organizations; BATS Exchange, Inc.; Order Granting Approval of a Proposed Rule Change To Amend Rules 11.9, 11.12, and 11.13 of BATS Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

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

Page Range22600-22602
FR Document2015-09267

Federal Register, Volume 80 Issue 77 (Wednesday, April 22, 2015)
[Federal Register Volume 80, Number 77 (Wednesday, April 22, 2015)]
[Notices]
[Pages 22600-22602]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-09267]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74738; File No. SR-BATS-2015-09]


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

April 16, 2015.

I. Introduction

    On January 30, 2015, BATS Exchange, Inc. (``BATS'' 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. 74247 (February 11, 
2015), 80 FR 8720 (``Notice''). See also Securities Exchange Act 
Release No. 74247A (February 26, 2015), 80 FR 11695 (March 4, 2015) 
(correcting file number in Notice heading to be ``SR-BATS-2015-
09'').
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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

[[Page 22601]]

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.
---------------------------------------------------------------------------

    \6\ See Rule 11.9(c)(6).
    \7\ As defined in Rule 1.5(e).
---------------------------------------------------------------------------

    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 8721-23, 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 8721.
    \10\ See proposed Rule 11.9(b)(6).
    \11\ See proposed Rule 11.9(c)(6).
    \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).
---------------------------------------------------------------------------

    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 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\
---------------------------------------------------------------------------

    \15\ See Notice, supra note 3 at 8723. See also proposed Rule 
11.12(a).
    \16\ See Notice, supra note 3 at 8723. See also proposed Rule 
11.12(a)(2).
    \17\ See Notice, supra note 3 at 8723. See also proposed Rule 
11.12(a)(2)(C).
    \18\ See Notice, supra note 3 at 8723.
    \19\ See Notice, supra note 3 at 8723. 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 8723.
    \20\ See Notice, supra note 3 at 8723. 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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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 8723-24. See also proposed Rule 
11.13(a).
    \22\ See Notice, supra note 3 at 8724. See also proposed Rule 
11.13.
    \23\ See Notice, supra note 3 at 8724. See also proposed Rules 
11.13(a)(4)(C) and (D).
---------------------------------------------------------------------------

    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

[[Page 22602]]

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\
---------------------------------------------------------------------------

    \24\ See Notice, supra note 3 at 8725. See also proposed Rule 
11.13(b)(4)(A).
    \25\ See Notice, supra note 3 at 8725-26. See also proposed Rule 
11.13(b)(4)(C).
    \26\ See Notice, supra note 3 at 8725. 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 8721-26.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \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)
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \29\ See Notice, supra note 3 at 8726.
---------------------------------------------------------------------------

    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-BATS-2015-09) 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. 2015-09267 Filed 4-21-15; 8:45 am]
BILLING CODE 8011-01-P



                                                    22600                        Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices

                                                    C. Self-Regulatory Organization’s                       it appears to the Commission that such                  All submissions should refer to File
                                                    Statement on Comments on the                            action is: (i) Necessary or appropriate in            Number SR–MIAX–2015–29 and should
                                                    Proposed Rule Change Received From                      the public interest; (ii) for the protection          be submitted on or before May 13, 2015.
                                                    Members, Participants, or Others                        of investors; or (iii) otherwise in                     For the Commission, by the Division of
                                                      Written comments were neither                         furtherance of the purposes of the Act.               Trading and Markets, pursuant to delegated
                                                    solicited nor received.                                 If the Commission takes such action, the              authority.24
                                                                                                            Commission shall institute proceedings                Brent J. Fields,
                                                    III. Date of Effectiveness of the                       to determine whether the proposed rule                Secretary.
                                                    Proposed Rule Change and Timing for                     should be approved or disapproved.
                                                    Commission Action                                                                                             [FR Doc. 2015–09263 Filed 4–21–15; 8:45 am]
                                                                                                            IV. Solicitation of Comments                          BILLING CODE 8011–01–P
                                                       Because the foregoing rule does not:
                                                    (i) Significantly affect the protection of                Interested persons are invited to
                                                    investors or the public interest; (ii)                  submit written data, views, and                       SECURITIES AND EXCHANGE
                                                    impose any significant burden on                        arguments concerning the foregoing,                   COMMISSION
                                                    competition; and (iii) become operative                 including whether the proposed rule
                                                    for 30 days from the date on which it                   change is consistent with the Act.                    [Release No. 34–74738; File No. SR–BATS–
                                                    was filed, or such shorter time as the                  Comments may be submitted by any of                   2015–09]
                                                    Commission may designate if consistent                  the following methods:
                                                                                                                                                                  Self-Regulatory Organizations; BATS
                                                    with the protection of investors and the
                                                                                                            Electronic Comments                                   Exchange, Inc.; Order Granting
                                                    public interest, provided that the self-
                                                                                                              • Use the Commission’s Internet                     Approval of a Proposed Rule Change
                                                    regulatory organization has given the
                                                                                                            comment form (http://www.sec.gov/                     To Amend Rules 11.9, 11.12, and 11.13
                                                    Commission written notice of its intent
                                                                                                            rules/sro.shtml); or                                  of BATS Exchange, Inc.
                                                    to file the proposed rule change at least
                                                    five business days prior to the date of                   • Send an email to rule-comments@                   April 16, 2015.
                                                    filing of the proposed rule change or                   sec.gov. Please include File Number SR–
                                                    such shorter time as designated by the                  MIAX–2015–29 on the subject line.                     I. Introduction
                                                    Commission,18 the proposed rule                                                                                  On January 30, 2015, BATS Exchange,
                                                    change has become effective pursuant to                 Paper Comments
                                                                                                                                                                  Inc. (‘‘BATS’’ or the ‘‘Exchange’’) filed
                                                    Section 19(b)(3)(A) of the Act 19 and                      • Send paper comments in triplicate                with the Securities and Exchange
                                                    Rule 19b–4(f)(6) thereunder.20                          to Brent J. Fields, Secretary, Securities             Commission (‘‘Commission’’), pursuant
                                                       A proposed rule change filed under                   and Exchange Commission, 100 F Street                 to Section 19(b)(1) of the Securities
                                                    Rule 19b–4(f)(6) 21 normally does not                   NE., Washington, DC 20549–1090.                       Exchange Act of 1934 (‘‘Act’’ or
                                                    become operative prior to 30 days after                 All submissions should refer to File                  ‘‘Exchange Act’’) 1 and Rule 19b–4
                                                    the date of the filing. However, pursuant               Number SR–MIAX–2015–29. This file                     thereunder,2 a proposed rule change to
                                                    to Rule 19b–4(f)(6)(iii),22 the                         number should be included on the                      amend Exchange Rules 11.9, 11.12, and
                                                    Commission may designate a shorter                                                                            11.13. The proposed rule change was
                                                                                                            subject line if email is used. To help the
                                                    time if such action is consistent with the                                                                    published for comment in the Federal
                                                                                                            Commission process and review your
                                                    protection of investors and the public                                                                        Register on February 18, 2015.3 The
                                                                                                            comments more efficiently, please use
                                                    interest. The Exchange has requested                                                                          Commission received no comments on
                                                                                                            only one method. The Commission will
                                                    that the Commission waive the 30-day                                                                          the proposal. This order grants approval
                                                                                                            post all comments on the Commission’s
                                                    operative delay to allow the Exchange to                                                                      of the proposed rule change.
                                                                                                            Internet Web site (http://www.sec.gov/
                                                    respond to current demand for the
                                                                                                            rules/sro.shtml). Copies of the                       II. Description of the Proposed Rule
                                                    expeditious sharing of risk settings
                                                                                                            submission, all subsequent                            Change
                                                    between Clearing Members and
                                                                                                            amendments, all written statements
                                                    Members on whose behalf they clear                                                                              The Exchange conducted a
                                                    Exchange Transactions. The proposal                     with respect to the proposed rule
                                                                                                            change that are filed with the                        comprehensive review of its system
                                                    does not raise any novel or unique                                                                            functionality.4 The proposal adds
                                                    issues, and is substantially similar to                 Commission, and all written
                                                                                                            communications relating to the                        additional clarity and specificity
                                                    rules that are currently operative on                                                                         regarding the current functionality of
                                                    other options exchanges. Therefore, the                 proposed rule change between the
                                                                                                            Commission and any person, other than                 the Exchange’s System,5 including the
                                                    Commission believes that waiving the
                                                    30-day operative delay is consistent                    those that may be withheld from the                     24 17  CFR 200.30–3(a)(12).
                                                    with the protection of investors and the                public in accordance with the                           1 15  U.S.C. 78s(b)(1).
                                                    public interest and designates the                      provisions of 5 U.S.C. 552, will be                      2 17 CFR 240.19b–4.

                                                    proposed rule change as operative upon                  available for Web site viewing and                       3 See Securities Exchange Act Release No. 74247

                                                    filing.23                                               printing in the Commission’s Public                   (February 11, 2015), 80 FR 8720 (‘‘Notice’’). See
                                                                                                            Reference Room, 100 F Street NE.,                     also Securities Exchange Act Release No. 74247A
                                                       At any time within 60 days of the                                                                          (February 26, 2015), 80 FR 11695 (March 4, 2015)
                                                    filing of the proposed rule change, the                 Washington, DC 20549, on official                     (correcting file number in Notice heading to be
                                                    Commission summarily may                                business days between the hours of                    ‘‘SR–BATS–2015–09’’).
                                                    temporarily suspend such rule change if                 10:00 a.m. and 3:00 p.m. Copies of the                   4 On June 5, 2014, Chair Mary Jo White asked all

                                                                                                            filing also will be available for                     national securities exchanges to conduct a
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                      18 The                                                inspection and copying at the principal               comprehensive review of each order type offered to
                                                              Exchange has satisfied this requirement.                                                            members and how it operates in practice. See Mary
                                                      19 15  U.S.C. 78s(b)(3)(A).                           office of the Exchange. All comments                  Jo White, Chair, Commission, Speech at the Sandler
                                                      20 17 CFR 240.19b–4(f)(6).                            received will be posted without change;               O’Neill & Partners, L.P. Global Exchange and
                                                      21 Id.
                                                                                                            the Commission does not edit personal                 Brokerage Conference, (June 5, 2014) (available at
                                                      22 17 CFR 240.19b–4(f)(6)(iii).
                                                                                                            identifying information from                          http://www.sec.gov/News/Speech/Detail/Speech/
                                                      23 For purposes only of waiving the 30-day                                                                  1370542004312#.VD2HW610w6Y).
                                                    operative delay, the Commission has considered the
                                                                                                            submissions. You should submit only                      5 Exchange Rule 1.5(aa) defines ‘‘System’’ as ‘‘the

                                                    proposed rule’s impact on efficiency, competition,      information that you wish to make                     electronic communications and trading facility
                                                    and capital formation. See 15 U.S.C. 78c(f).            available publicly.                                   designated by the Board through which securities



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                                                                                 Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices                                                       22601

                                                    operation of its order types and order                  Further, the Exchange proposes to add                  opposed to both price and time
                                                    instructions. The Exchange proposes no                  additional detail to the rule describing               priority.20
                                                    substantive modifications to the System.                Discretionary Orders so that it specifies:                Rule 11.13. The Exchange proposes
                                                       The changes include: (i) Making clear                (i) That Discretionary Orders may be                   several revisions to Rule 11.13, which
                                                    that orders with a Time-in-Force (‘‘TIF’’)              fully non-displayed, with a non-                       currently governs the execution and
                                                    of Immediate-or-Cancel (‘‘IOC’’) can be                 displayed ranked price (and                            routing logic on the Exchange. The
                                                    routed away from the Exchange; (ii)                     discretionary price); (ii) how resting                 Exchange proposes to restructure and
                                                    specifying the methodology used by the                  Discretionary Orders interact with                     reformat the rule in certain ways,
                                                    Exchange to determine whether BATS                      incoming contra-side orders, including
                                                                                                                                                                   including by more clearly delineating
                                                    Post Only Orders 6 will remove liquidity                how the order type, TIF and price of the
                                                    from the BATS Book; 7 (iii) adding                                                                             between execution (to be contained in
                                                                                                            incoming order affects whether the
                                                    additional detail to and re-structuring                                                                        new paragraph (a)) 21 and routing (to be
                                                                                                            resting Discretionary Order removes
                                                    the description of Pegged Orders; (iv)                                                                         contained in new paragraph (b)), adding
                                                                                                            liquidity against the incoming order or
                                                    adding additional detail to the                         the incoming order removes liquidity                   sub-headings and descriptive titles,
                                                    description of Mid-Point Peg Orders; (v)                against the resting Discretionary Order;               adding a cross reference to the
                                                    adding additional detail to the                         and (iii) that Discretionary Orders are                Exchange’s rules related to the Limit
                                                    description of Discretionary Orders; (vi)               routed away from the Exchange at their                 Up-Limit Down Plan, and revising
                                                    amending Rule 11.12, Priority of Orders,                full discretionary price.14                            existing cross references in the rule.22 In
                                                    and Rule 11.13, Order Execution, to                        Rule 11.12. The Exchange proposes                   addition, the Exchange proposes to add
                                                    provide additional specificity and                      several modifications to Rule 11.12 that               Rules 11.13(a)(4)(C) and (D), which
                                                    enhance the structure of Exchange rules                 are intended to clarify existing                       would replace and amend existing text
                                                    describing the process for ranking,                     functionality relating to order priority.              set forth in Rule 11.13(a)(1) and are
                                                    executing and routing orders; (vii)                     Some of these modifications would                      intended to provide further clarity
                                                    adding additional detail to the                         revise the structure of Rule 11.12 or add              regarding how incoming orders are
                                                    description of orders subject to Re-Route               cross references to other rules.15 In                  handled in certain situations when there
                                                    functionality; and (viii) making a series               addition, the Exchange proposes to                     is undisplayed locking interest on the
                                                    of conforming changes to Rules 11.9,                    revise Rule 11.12(a)(2) to refer to                    Exchange.23
                                                    11.12 and 11.13 to update cross-                        ranking, rather than executing, equally-                  The Exchange also proposes revisions
                                                    references.                                             priced trading interest because,                       to Rule 11.13 as it relates to the
                                                       Rule 11.9. The Exchange proposes                     according to the Exchange, the rule is                 Exchange’s routing process, including
                                                    revisions to Rule 11.9 to provide greater               intended to describe the manner in                     its re-route functionality. In particular,
                                                    detail as to the existing functionality of              which resting orders are ranked and                    the Exchange proposes to add language
                                                    certain order types and modifiers.8                     maintained.16 The Exchange also                        to the rule’s description of the
                                                    Among other things, the Exchange                        proposes to revise the reference to                    Aggressive Re-Route instruction (to be
                                                    proposes to make clear that orders with                 Pegged Orders in the priority hierarchy                renumbered as Rule 11.13(b)(4)(A)) that
                                                    an IOC TIF are routable but do not post                 set forth in Rule 11.12(a)(2) to make                  states that any routable non-displayed
                                                    to the Exchange’s book,9 whereas orders                 clear that the reference is specifically to            limit order posted to the BATS Book
                                                    with a Fill-or-Kill (‘‘FOK’’) TIF are not               non-displayed Pegged Orders.17 The                     that is crossed by another accessible
                                                    routable.10 The Exchange also proposes                  Exchange notes that the purpose of this                Trading Center will be automatically
                                                    to clarify the Exchange’s methodology                   revision is to distinguish non-displayed               routed to that Trading Center.24 The
                                                    for determining whether BATS Post                       Pegged Orders from Primary Pegged                      Exchange also proposes to adopt new
                                                    Only orders will remove liquidity from                  Orders that, if displayed, are ranked                  Rule 11.13(b)(4)(C), which would
                                                    the Exchange’s order book upon entry.11                 with other displayed orders.18 Further,                specify when an order with a Super
                                                    In addition, the Exchange proposes to                   the Exchange proposes to adopt new                     Aggressive Re-Route instruction will
                                                    reformat the rule describing the Primary                Rule 11.12(a)(3), which would codify                   remove liquidity against an incoming
                                                    Pegged and Market Pegged orders,12 and                  existing match trade prevention rules
                                                    to make clear that Mid-Point Peg Orders                 that optionally prevent the execution of                 20 See Notice, supra note 3 at 8723. See also
                                                    are not eligible to execute when the                    orders from the same User.19 Lastly, the               proposed Rules 11.12(a)(4) and (a)(5). In addition,
                                                    NBBO is crossed but Users may elect                     Exchange proposes to renumber current                  the Exchange proposes to renumber current Rules
                                                    whether such orders will be eligible to                 Rules 11.12(a)(3) and (a)(4) as Rules                  11.12(a)(5) and (a)(6) as Rules 11.12(a)(6) and (a)(7),
                                                    execute when the NBBO is locked.13                                                                             respectively.
                                                                                                            11.12(a)(4) and (a)(5), respectively, and                21 The Exchange proposes to move language
                                                                                                            to revise them to clarify that time                    contained within Rule 11.13 to the beginning of
                                                    orders of Users are consolidated for ranking,
                                                    execution and, when applicable, routing away.’’         priority in particular can be retained or              new paragraph (a) such that the language is more
                                                       6 See Rule 11.9(c)(6).                               lost in certain circumstances, as                      generally applicable to the rules governing
                                                                                                                                                                   execution. Specifically, the Exchange proposes to
                                                       7 As defined in Rule 1.5(e).
                                                                                                                                                                   relocate language stating that any order falling
                                                       8 For additional detail regarding the specific         14 See proposed Rule 11.9(c)(10). In addition, the
                                                                                                                                                                   within the parameters of the paragraph shall be
                                                    proposed revisions for each order type and              Exchange proposes to update cross references to        referred to as ‘‘executable’’ and that an order will
                                                    modifier, see Notice, supra note 3 at 8721–23, and      rules that would be re-numbered as a result of the     be cancelled back to the User if, based on market
                                                    proposed Rule 11.9.                                     proposal. See proposed Rules 11.9(c), 11.9(d) and      conditions, User instructions, applicable Exchange
                                                       9 See proposed Rule 11.9(b)(1). In connection        11.9(g).                                               Rules and/or the Act and the rules and regulations
                                                    with this proposed change the Exchange also               15 See Notice, supra note 3 at 8723. See also
                                                                                                                                                                   thereunder, such order is not executable, cannot be
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                                                    proposes to specify that the cancellation of an         proposed Rule 11.12(a).                                routed to another Trading Center pursuant to Rule
                                                    unfilled balance of an order is one possible outcome      16 See Notice, supra note 3 at 8723. See also        11.13(b) (as proposed to be re-numbered), or cannot
                                                    after an order has been routed away. See proposed       proposed Rule 11.12(a)(2).                             be posted to the BATS Book. See Notice, supra note
                                                    Rule 11.13(b)(2). This is what would occur with the       17 See Notice, supra note 3 at 8723. See also        3 at 8723–24. See also proposed Rule 11.13(a).
                                                    unfilled balance of a routed IOC order. See Notice,     proposed Rule 11.12(a)(2)(C).                            22 See Notice, supra note 3 at 8724. See also
                                                    supra note 3 at 8721.                                     18 See Notice, supra note 3 at 8723.                 proposed Rule 11.13.
                                                       10 See proposed Rule 11.9(b)(6).                                                                              23 See Notice, supra note 3 at 8724. See also
                                                                                                              19 See Notice, supra note 3 at 8723. See also
                                                       11 See proposed Rule 11.9(c)(6).
                                                                                                            proposed Rule 11.12(a)(3). The Exchange notes that     proposed Rules 11.13(a)(4)(C) and (D).
                                                       12 See proposed Rule 11.9(c)(8).
                                                                                                            proposed Rule 11.12(a)(3) is based on EDGX Rule          24 See Notice, supra note 3 at 8725. See also
                                                       13 See proposed Rule 11.9(c)(9).                     11.9(a)(3). See Notice, supra note 3 at 8723.          proposed Rule 11.13(b)(4)(A).



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                                                    22602                        Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices

                                                    order.25 Further, the Exchange proposes                 determine whether BATS Post Only                      ADDRESSES:   The hearing will be at The
                                                    to revise Rule 11.13(b) (to be                          Orders will remove liquidity from the                 Historic Davenport Hotel, 10 South Post
                                                    renumbered as Rule 11.13(b)(5)) to make                 BATS Book, and add additional detail                  Street, Elizabethan Room, Spokane, WA
                                                    clear that orders that have been routed                 describing the operation of Mid-Point                 99201.
                                                    pursuant to Rule 11.12(a) are not ranked                Peg Orders and Discretionary Orders.                  SUPPLEMENTARY INFORMATION: Pursuant
                                                    and maintained by the BATS Book, and                    The Exchange also has proposed to                     to the Small Business Regulatory
                                                    therefore are not available to execute                  amend Rules 11.12 and 11.13 to provide                Enforcement Fairness Act (Pub. L. 104–
                                                    against incoming orders pursuant to                     additional transparency as to, but not                121), Sec. 222, SBA announces the
                                                    new Rule 11.13(a).26                                    substantively modify, the Exchange’s                  hearing for Small Business Owners,
                                                    III. Discussion and Commission                          process for ranking, executing and                    Business Organizations, Trade
                                                    Findings                                                routing orders, including orders subject              Associations, Chambers of Commerce
                                                                                                            to the Exchange’s re-route functionality.             and related organizations serving small
                                                       After careful review, the Commission                    The Commission believes that these                 business concerns to report experiences
                                                    finds that the proposed rule change is                  proposed changes should provide                       regarding unfair or excessive Federal
                                                    consistent with the requirements of the                 greater specificity, clarity and                      regulatory enforcement issues affecting
                                                    Act and the rules and regulations                       transparency with respect to certain                  their members.
                                                    thereunder applicable to a national                     order type and modifier functionality
                                                    securities exchange.27 In particular, the                                                                     FOR FURTHER INFORMATION CONTACT: The
                                                                                                            available on the Exchange, as well as the             hearing is open to the public; however,
                                                    Commission finds that the proposed                      Exchange’s methodologies for ranking,
                                                    rule change is consistent with the                                                                            advance notice of attendance is
                                                                                                            executing and routing orders. Therefore,              requested. Anyone wishing to attend
                                                    requirements of Section 6(b)(5) of the                  the proposal should help to prevent
                                                    Act,28 which requires, among other                                                                            and/or make a presentation at the
                                                                                                            fraudulent and manipulative acts and                  Spokane, WA hearing must contact José
                                                    things, that the Exchange’s rules be                    practices, promote just and equitable
                                                    designed to prevent fraudulent and                                                                            Méndez by May 1, 2015 in writing, or
                                                                                                            principles of trade, remove                           by fax or email in order to be placed on
                                                    manipulative acts and practices, to                     impediments to and perfect the
                                                    promote just and equitable principles of                                                                      the agenda. For further information,
                                                                                                            mechanism of a free and open market                   please contact José Méndez, Case
                                                    trade, to remove impediments to and                     and a national market system, and, in
                                                    perfect the mechanism of a free and                                                                           Management Specialist, Office of the
                                                                                                            general, protect investors and the public             National Ombudsman, 409 3rd Street
                                                    open market and a national market                       interest.
                                                    system, and, in general, to protect                                                                           SW., Suite 7125, Washington, DC 20416,
                                                    investors and the public interest; and                  IV. Conclusion                                        by phone (202) 205–6178 and fax (202)
                                                    are not designed to permit unfair                                                                             481–5719. Additionally, if you need
                                                                                                              It is therefore ordered, pursuant to
                                                    discrimination between customers,                                                                             accommodations because of a disability,
                                                                                                            Section 19(b)(2) of the Act,30 that the
                                                    issuers, brokers or dealers.                                                                                  translation services, or require
                                                                                                            proposed rule change (SR–BATS–2015–
                                                       The Exchange believes that the                                                                             additional information, please contact
                                                                                                            09) be, and it hereby is, approved.
                                                    proposed rule change will provide                                                                             José Méndez as well.
                                                    additional clarity and specificity                        For the Commission, by the Division of                 For more information on the Office of
                                                                                                            Trading and Markets, pursuant to delegated            the National Ombudsman, see our Web
                                                    regarding the functionality of the
                                                                                                            authority.31                                          site at www.sba.gov/ombudsman.
                                                    System, thus promoting just and
                                                                                                            Brent J. Fields,
                                                    equitable principals of trade and                                                                               Dated: April 14, 2015.
                                                    promoting a fair and open market. In                    Secretary.
                                                                                                                                                                  Miguel J. L’Heureux,
                                                    addition, the Exchange believes the                     [FR Doc. 2015–09267 Filed 4–21–15; 8:45 am]
                                                                                                                                                                  SBA Committee Management Officer.
                                                    proposed rule change will contribute to                 BILLING CODE 8011–01–P
                                                                                                                                                                  [FR Doc. 2015–09295 Filed 4–21–15; 8:45 am]
                                                    the protection of investors and the
                                                                                                                                                                  BILLING CODE P
                                                    public interest by making the
                                                    Exchange’s rules easier to understand.                  SMALL BUSINESS ADMINISTRATION
                                                       The Exchange states that the proposed
                                                    rule changes add clarity and                            Regulatory Fairness Hearing; U.S.                     SOCIAL SECURITY ADMINISTRATION
                                                    transparency to the Exchange’s rulebook                 Small Business Administration;                        [Docket No: SSA–2015–0020]
                                                    regarding existing Exchange                             Region X—Spokane, Washington
                                                    functionality.29 For example, among                                                                           Agency Information Collection
                                                    other things, the Exchange’s proposal                   AGENCY: U.S. Small Business
                                                                                                                                                                  Activities: Comment Request
                                                    would amend Rule 11.9 to clarify that                   Administration (SBA).
                                                    IOC orders are routable and FOK orders                  ACTION: Notice of open hearing of                        The Social Security Administration
                                                    are not routable, specify the                           Region X Small Business Owners in                     (SSA) publishes a list of information
                                                    methodology used by the Exchange to                     Spokane, WA.                                          collection packages requiring clearance
                                                                                                                                                                  by the Office of Management and
                                                      25 See Notice, supra note 3 at 8725–26. See also      SUMMARY:   The SBA, Office of the                     Budget (OMB) in compliance with
                                                    proposed Rule 11.13(b)(4)(C).                           National Ombudsman is issuing this                    Public Law 104–13, the Paperwork
                                                      26 See Notice, supra note 3 at 8725. See also         notice to announce the location, date                 Reduction Act of 1995, effective October
                                                    proposed Rule 11.13(b)(5). For additional detail        and time of the Spokane, WA                           1, 1995. This notice includes a revision
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                                                    regarding the Exchange’s proposed rule changes,         Regulatory Fairness Hearing. This
                                                    including examples of the operation of functionality                                                          and an extension of OMB-approved
                                                    addressed by this rule filing, see Notice, supra note   hearing is open to the public.                        information collections.
                                                    3 at 8721–26.                                           DATES: The hearing will be held on                       SSA is soliciting comments on the
                                                      27 In approving this proposed rule change, the
                                                                                                            Thursday, May 7, 2015, from 1:00 p.m.                 accuracy of the agency’s burden
                                                    Commission has considered the proposed rule’s
                                                    impact on efficiency, competition, and capital
                                                                                                            to 4:30 p.m. (PDT).                                   estimate; the need for the information;
                                                    formation. See 15 U.S.C. 78c(f).                                                                              its practical utility; ways to enhance its
                                                      28 15 U.S.C. 78f(b)(5)                                  30 15   U.S.C. 78s(b)(2).                           quality, utility, and clarity; and ways to
                                                      29 See Notice, supra note 3 at 8726.                    31 17   CFR 200.30–3(a)(12).                        minimize burden on respondents,


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Document Created: 2015-12-16 08:27:52
Document Modified: 2015-12-16 08:27:52
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 22600 

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