80 FR 60210 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Restructure and Amend Rule 11.17, Clearly Erroneous Executions

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 192 (October 5, 2015)

Page Range		60210-60213
FR Document		2015-25177

Federal Register, Volume 80 Issue 192 (Monday, October 5, 2015)

[Federal Register Volume 80, Number 192 (Monday, October 5, 2015)]
[Notices]
[Pages 60210-60213]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-25177]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76015; File No. SR-BATS-2015-76]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Restructure and Amend Rule 11.17, Clearly Erroneous Executions

September 29, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 21, 2015, BATS Exchange, Inc. (the ``Exchange'' or
``BATS'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange filed a proposal to restructure and amend Rule 11.17,
Clearly Erroneous Executions, in order to conform to the rules of EDGA
Exchange, Inc. (``EDGA'') and EDGX Exchange, Inc. (``EDGX'').\3\
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\3\ See EDGA and EDGX Rule 11.15.
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The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, and at

[[Page 60211]]

the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
In early 2014, the Exchange and its affiliate, BATS Y-Exchange,
Inc. (``BYX''), received approval to effect a merger (the ``Merger'')
of the Exchange's parent company, BATS Global Markets, Inc., with
Direct Edge Holdings LLC, the indirect parent of EDGX and EDGA
(together with BZX, BYX and EDGX, the ``BGM Affiliated Exchanges'').\4\
In the context of the Merger, the BGM Affiliated Exchanges are working
to align their rules, retaining only intended differences between the
BGM Affiliated Exchanges. Thus, the Exchange proposes to restructure
and amend Rule 11.17, Clearly Erroneous Executions, in order to conform
to the corresponding rules of EDGA and EDGX and provide a consistent
rule set across each of the BGM Affiliated Exchanges.\5\
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\4\ See Securities Exchange Act Release No. 71375 (January 23,
2014), 79 FR 4771 (January 29, 2014) (SR-BATS-2013-059; SR-BYX-2013-
039).
\5\ The Exchange notes that BYX intends to file an identical
proposal with the Commission to restructure and amend its Rule
11.17, Clearly Erroneous Executions, to conform to EDGA and EDGX
Rules 11.15.
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Background
On September 10, 2010, the Commission approved, on a pilot basis,
changes to BATS Rule 11.17 to provide for uniform treatment: (1) Of
clearly erroneous \6\ execution reviews in multi-stock events involving
twenty or more securities; and (2) in the event transactions occur that
result in the issuance of an individual stock trading pause by the
primary listing market and subsequent transactions that occur before
the trading pause is in effect on the Exchange.\7\ The Exchange also
adopted additional changes to Rule 11.17 that reduced the ability of
the Exchange to deviate from the objective standards set forth in Rule
11.17,\8\ and in 2013, adopted a provision designed to address the
operation of the Plan to Address Extraordinary Market Volatility
Pursuant to Rule 608 of Regulation NMS under the Act (the ``Limit Up-
Limit Down Plan'' or the ``Plan'').\9\ In 2014, the Exchange adopted
two additional provisions providing that: (i) A series of transactions
in a particular security on one or more trading days may be viewed as
one event if all such transactions were effected based on the same
fundamentally incorrect or grossly misinterpreted issuance information
resulting in a severe valuation error for all such transactions (the
``Multi-Day Event''); and (ii) in the event of any disruption or
malfunction in the operation of the electronic communications and
trading facilities of an Exchange, another SRO, or responsible single
plan processor in connection with the transmittal or receipt of a
trading halt, an Officer, acting on his or her own motion, shall
nullify any transaction that occurs after a trading halt has been
declared by the primary listing market for a security and before such
trading halt has officially ended according to the primary listing
market.\10\
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\6\ The terms of a transaction executed on the Exchange are
``clearly erroneous'' when there is an obvious error in any term,
such as price, number of shares or other unit of trading, or
identification of the security. A transaction made in clearly
erroneous error and cancelled by both parties or determined by the
Exchange to be clearly erroneous will be removed from the
Consolidated Tape. See Exchange Rule 11.17(a).
\7\ Securities Exchange Act Release No. 62886 (Sept. 10, 2010),
75 FR 56613 (Sept. 16, 2010) (SR-BATS-2010-016).
\8\ Id.
\9\ See Securities Exchange Act Release No. 68797 (Jan. 31,
2013), 78 FR 8635 (Feb. 6, 2013) (SR-BATS-2013-008); see also
current BATS Rule 11.17(h).
\10\ See Securities Exchange Act Release No. 72434 (June 19,
2014), 79 FR 36110 (June 25, 2014) (SR-BATS-2014-014).
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Proposed Amendments to Rule 11.17
First, the Exchange proposes to add new subparagraph (h) to Rule
11.17 which would describe the process for nullifying trades in UTP
Securities that are the subject of an initial public offering
(``IPOs''). The provisions of proposed paragraph (h) are substantially
similar to EDGA and EDGX Rules 11.15(h) and differs only to the extent
to conform to existing phrasing and terminology within other provisions
of Rule 11.17.\11\
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\11\ The Exchange notes that EDGA and EDGX are to file rule
changes with the Commission to proposes a series of ministerial
changes to their Rules 11.15, Clearly Erroneous Executions, to
conform with other provisions of BZX and BYX Rule 11.17 to ensure
each of the BGM Affiliated Exchange have identical rule text with
regard to the review and handling of clearly erroneous executions.
This filing would include changes to EDGA and EDGX Rules 11.15(h) to
mirror Exchange Rule 11.17(h) as proposed herein.
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Pursuant to Rule 12f-2 of the Securities Exchange Act of 1934,\12\
the Exchange may extend unlisted trading privileges to a security that
is the subject of an IPO when at least one transaction in the subject
security has been effected on the national securities exchange or
association upon which the security is listed and the transaction has
been reported pursuant to an effective transaction reporting plan.
Under proposed paragraph (h), a clearly erroneous error may be deemed
to have occurred in the opening transaction of the subject security if
the execution price of the opening transaction on the Exchange is the
lesser of $1.00 or 10% away from the opening price on the listing
exchange or association. In such circumstances, the Officer of the
Exchange or other senior level employee designee shall declare the
opening transaction null and void or shall decline to take action in
connection with the completed trade(s). Clearly erroneous executions of
subsequent transactions of the subject security will be reviewed in the
same manner as the procedure set forth in Exchange Rule 11.17(e)(1).
Absent extraordinary circumstances, any such action of the Officer of
the Exchange or other senior level employee designee pursuant to
proposed subparagraph (h) shall be taken in a timely fashion, generally
within thirty (30) minutes of the detection of the erroneous
transaction. When extraordinary circumstances exist, any such action of
the Officer of the Exchange or other senior level employee designee
must be taken by no later than the start of Regular Trading Hours on
the trading day following the date of execution(s) under review. Each
party involved in the transaction shall be notified as soon as
practicable by the Exchange, and the party aggrieved by the action may
appeal such action in accordance with the provisions of Exchange Rule
11.17(e)(2). As stated above, proposed paragraph (h) is substantially
similar to EDGA and EDGX Rules 11.15(h) and differs only to the extent
to conform to existing phrasing and terminology within other provisions
of Rule 11.17.
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\12\ 17 CFR 240.12f-2.
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The Exchange also proposes the following ministerial amendments to
Rule 11.17 as a result of proposing new paragraph (h). First, the
Exchange proposes to renumber current paragraph

[[Page 60212]]

(h) as (i), current paragraph (i) as (j), and current paragraph (j) as
(k). In addition, the Exchange proposes to update the references to
these paragraph in the introductory section of Rule 11.17 to reflect
these changes and the addition of proposed paragraph (h).
Lastly, the Exchange proposes the following changes to further
conform Rule 11.17 to EDGA and EDGX Rules 11.15:
Amend paragraph (e)(1) to clarify that a determination
made pursuant to this paragraph shall be made generally within thirty
(30) minutes of receipt of the complaint, but in no case later than the
start of Regular Trading Hours on the following trading day, rather
than simply stating the following day. This proposed change would make
paragraph (e)(1) identical to EDGA and EDGX Rule 11.15(e)(1).
Amend paragraph (e)(2)(A) to define CRO as the
``Exchange's Chief Regulatory Officer''. This proposed change would
make paragraph (e)(2)(A) identical to EDGA and EDGX Rule
11.15(e)(2)(A).
Amend paragraph (e)(2)(F) to replace the term ``Officer'' with
``Official'' in order to use consistent terminology throughout Rule
11.17.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange, and,
in particular, with the requirements of Section 6(b) of the Act.\13\
Specifically, the proposed change is consistent with Section 6(b)(5) of
the Act,\14\ because it is designed to promote just and equitable
principles of trade, to remove impediments to, and perfect the
mechanism of, a free and open market and a national market system, and,
in general, to protect investors and the public interest. As mentioned
above, the proposed rule changes, combined with the planned filing for
the BYX, EDGA, and EDGX, would allow the BGM Affiliated Exchanges to
provide a consistent set of rules as it relates to clearly erroneous
executions. Consistent rules, in turn, will simplify the regulatory
requirements for Members of the Exchange that are also participants on
EDGA, EDGX and/or BYX. The proposed rule change would provide greater
harmonization between rules of similar purpose on the BGM Affiliated
Exchanges, resulting in greater uniformity and less burdensome and more
efficient regulatory compliance and understanding of Exchange Rules. As
such, the proposed rule change would foster cooperation and
coordination with persons engaged in facilitating transactions in
securities and would remove impediments to and perfect the mechanism of
a free and open market and a national market system. Similarly, the
Exchange also believes that, by harmonizing the rules across each BGM
Affiliated Exchange, the proposal will enhance the Exchange's ability
to fairly and efficiently regulate its Members, meaning that the
proposed rule change is equitable and will promote fairness in the
market place.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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Finally, the Exchange believes that the non-substantive,
ministerial changes discussed above will contribute to the protection
of investors and the public interest by helping to avoid confusion with
respect to Exchange Rules.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the act. To the contrary, allowing the
Exchange to implement substantively identical rules across each of the
BGM Affiliated Exchanges regarding clearly erroneous executions does
not present any competitive issues, but rather is designed to provide
greater harmonization among Exchange, BYX, EDGX, and EDGA rules of
similar purpose. The proposed rule change should, therefore, result in
less burdensome and more efficient regulatory compliance and
understanding of Exchange Rules for common members of the BGM
Affiliated Exchanges and an enhanced ability of the BGM Affiliated
Exchanges to fairly and efficiently regulate Members.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

The Exchange has neither solicited nor received written comments on
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

The Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) of the Act \15\ and paragraph (f)(6) of Rule
19b-4 thereunder.\16\ The proposed rule change effects a change that
(A) does not significantly affect the protection of investors or the
public interest; (B) does not impose any significant burden on
competition; and (C) by its terms, does not become operative for 30
days after the date of the filing, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest; provided that the self-regulatory organization
has given the Commission written notice of its intent to file the
proposed rule change, along with a brief description and text of the
proposed rule change, at least five business days prior to the date of
filing of the proposed rule change, or such shorter time as designated
by the Commission.
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\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4.
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily temporarily suspend such rule
change if it appears to the Commission that such action is: (1)
Necessary or appropriate in the public interest; (2) for the protection
of investors; or (3) otherwise in furtherance of the purposes of the
Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BATS-2015-76 on the subject line.

Paper Comments

Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2015-76. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the

[[Page 60213]]

Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-BATS-2015-76, and should be
submitted on or before October 26, 2015.
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\17\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-25177 Filed 10-2-15; 8:45 am]
BILLING CODE 8011-01-P

60210 Federal Register / Vol. 80, No. 192 / Monday, October 5, 2015 / Notices

is not necessary or appropriate in At any time within 60 days of the inspection and copying at the principal
furtherance of the purposes of the Act. filing of such proposed rule change, the offices of the Exchange. All comments
The market for proprietary data Commission summarily may received will be posted without change;
products is currently competitive and temporarily suspend such rule change if the Commission does not edit personal
inherently contestable because there is it appears to the Commission that such identifying information from
fierce competition for the inputs action is necessary or appropriate in the submissions. You should submit only
necessary to the creation of proprietary public interest, for the protection of information that you wish to make
data. Numerous exchanges compete investors, or otherwise in furtherance of available publicly. All submissions
with each other for listings, trades, and the purposes of the Act. If the should refer to File Number SR–
market data itself, providing virtually Commission takes such action, the NYSEARCA–2015–83, and should be
limitless opportunities for entrepreneurs Commission shall institute proceedings submitted on or before October 26,
who wish to produce and distribute under Section 19(b)(2)(B) 17 of the Act to 2015.
their own market data. This proprietary determine whether the proposed rule For the Commission, by the Division of
data is produced by each individual change should be approved or Trading and Markets, pursuant to delegated
exchange, as well as other entities (such disapproved. authority.18
as internalizing broker-dealers and IV. Solicitation of Comments Robert W. Errett,
various forms of alternative trading Deputy Secretary.
systems, including dark pools and Interested persons are invited to
submit written data, views, and [FR Doc. 2015–25185 Filed 10–2–15; 8:45 am]
electronic communication networks), in
a vigorously competitive market. It is arguments concerning the foregoing, BILLING CODE 8011–01–P

common for market participants to including whether the proposed rule
further and exploit this competition by change is consistent with the Act.
Comments may be submitted by any of SECURITIES AND EXCHANGE
sending their order flow and transaction COMMISSION
reports to multiple markets, rather than the following methods:
providing them all to a single market. Electronic Comments [Release No. 34–76015; File No. SR–BATS–
2015–76]
C. Self-Regulatory Organization’s • Use the Commission’s Internet
Statement on Comments on the comment form (http://www.sec.gov/ Self-Regulatory Organizations; BATS
Proposed Rule Change Received From rules/sro.shtml); or Exchange, Inc.; Notice of Filing and
Members, Participants, or Others • Send an email to rule-comments@
Immediate Effectiveness of a Proposed
sec.gov. Please include File Number SR–
No written comments were solicited Rule Change To Restructure and
NYSEARCA–2015–83 on the subject
or received with respect to the proposed Amend Rule 11.17, Clearly Erroneous
line.
rule change. Executions
Paper Comments
III. Date of Effectiveness of the September 29, 2015.
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the
Proposed Rule Change and Timing for
to Brent J. Fields, Secretary, Securities Securities Exchange Act of 1934 (the
Commission Action
and Exchange Commission, 100 F Street ‘‘Act’’),1 and Rule 19b–4 thereunder,2
The Exchange has filed the proposed NE., Washington, DC 20549–1090. notice is hereby given that on
rule change pursuant to Section All submissions should refer to File September 21, 2015, BATS Exchange,
19(b)(3)(A)(iii) of the Act 13 and Rule Number SR–NYSEARCA–2015–83. This Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed
19b–4(f)(6) thereunder.14 Because the file number should be included on the with the Securities and Exchange
proposed rule change does not: (i) subject line if email is used. To help the Commission (‘‘Commission’’) the
Significantly affect the protection of Commission process and review your proposed rule change as described in
investors or the public interest; (ii) comments more efficiently, please use Items I, II, and III below, which items
impose any significant burden on only one method. The Commission will have been prepared by the Exchange.
competition; and (iii) become operative post all comments on the Commission’s The Commission is publishing this
prior to 30 days from the date on which Internet Web site (http://www.sec.gov/ notice to solicit comments on the
it was filed, or such shorter time as the rules/sro.shtml). Copies of the proposed rule change from interested
Commission may designate, if submission, all subsequent persons.
consistent with the protection of amendments, all written statements
investors and the public interest, the with respect to the proposed rule I. Self-Regulatory Organization’s
proposed rule change has become change that are filed with the Statement of the Terms of Substance of
effective pursuant to Section 19(b)(3)(A) Commission, and all written the Proposed Rule Change
of the Act and Rule 19b–4(f)(6)(iii) communications relating to the The Exchange filed a proposal to
thereunder. proposed rule change between the restructure and amend Rule 11.17,
A proposed rule change filed under Commission and any person, other than Clearly Erroneous Executions, in order
Rule 19b–4(f)(6) 15 normally does not those that may be withheld from the to conform to the rules of EDGA
become operative prior to 30 days after public in accordance with the Exchange, Inc. (‘‘EDGA’’) and EDGX
the date of the filing. However, pursuant provisions of 5 U.S.C. 552, will be Exchange, Inc. (‘‘EDGX’’).3
to Rule 19b4(f)(6)(iii),16 the Commission available for Web site viewing and The text of the proposed rule change
mstockstill on DSK4VPTVN1PROD with NOTICES

may designate a shorter time if such printing in the Commission’s Public is available at the Exchange’s Web site
action is consistent with the protection Reference Room, 100 F Street NE., at www.batstrading.com, at the
of investors and the public interest. Washington, DC 20549 on official principal office of the Exchange, and at
business days between the hours of
13 15 U.S.C. 78s(b)(3)(A)(iii). 10:00 a.m. and 3:00 p.m. Copies of such 18 17 CFR 200.30–3(a)(12).
14 17 CFR 240.19b–4(f)(6). filing also will be available for 1 15 U.S.C. 78s(b)(1).
15 17 CFR 240.19b–4(f)(6). 2 17 CFR 240.19b–4.
16 17 CFR 240.19b–4(f)(6)(iii). 17 15 U.S.C. 78s(b)(2)(B). 3 See EDGA and EDGX Rule 11.15.

VerDate Sep<11>2014 18:34 Oct 02, 2015 Jkt 238001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 E:\FR\FM\05OCN1.SGM 05OCN1

Federal Register / Vol. 80, No. 192 / Monday, October 5, 2015 / Notices 60211

the Commission’s Public Reference transactions occur that result in the Pursuant to Rule 12f–2 of the
Room. issuance of an individual stock trading Securities Exchange Act of 1934,12 the
pause by the primary listing market and Exchange may extend unlisted trading
II. Self-Regulatory Organization’s
subsequent transactions that occur privileges to a security that is the
Statement of the Purpose of, and
before the trading pause is in effect on subject of an IPO when at least one
Statutory Basis for, the Proposed Rule
the Exchange.7 The Exchange also transaction in the subject security has
Change
adopted additional changes to Rule been effected on the national securities
In its filing with the Commission, the 11.17 that reduced the ability of the exchange or association upon which the
Exchange included statements Exchange to deviate from the objective security is listed and the transaction has
concerning the purpose of and basis for standards set forth in Rule 11.17,8 and been reported pursuant to an effective
the proposed rule change and discussed in 2013, adopted a provision designed transaction reporting plan. Under
any comments it received on the to address the operation of the Plan to proposed paragraph (h), a clearly
proposed rule change. The text of these Address Extraordinary Market Volatility erroneous error may be deemed to have
statements may be examined at the Pursuant to Rule 608 of Regulation NMS occurred in the opening transaction of
places specified in Item IV below. The under the Act (the ‘‘Limit Up-Limit the subject security if the execution
Exchange has prepared summaries, set Down Plan’’ or the ‘‘Plan’’).9 In 2014, price of the opening transaction on the
forth in Sections A, B, and C below, of the Exchange adopted two additional Exchange is the lesser of $1.00 or 10%
the most significant parts of such provisions providing that: (i) A series of away from the opening price on the
statements. transactions in a particular security on listing exchange or association. In such
A. Self-Regulatory Organization’s one or more trading days may be viewed circumstances, the Officer of the
Statement of the Purpose of, and as one event if all such transactions Exchange or other senior level employee
Statutory Basis for, the Proposed Rule were effected based on the same designee shall declare the opening
Change fundamentally incorrect or grossly transaction null and void or shall
misinterpreted issuance information decline to take action in connection
1. Purpose resulting in a severe valuation error for with the completed trade(s). Clearly
In early 2014, the Exchange and its all such transactions (the ‘‘Multi-Day erroneous executions of subsequent
affiliate, BATS Y-Exchange, Inc. Event’’); and (ii) in the event of any transactions of the subject security will
(‘‘BYX’’), received approval to effect a disruption or malfunction in the be reviewed in the same manner as the
merger (the ‘‘Merger’’) of the Exchange’s operation of the electronic procedure set forth in Exchange Rule
parent company, BATS Global Markets, communications and trading facilities of 11.17(e)(1). Absent extraordinary
Inc., with Direct Edge Holdings LLC, the an Exchange, another SRO, or circumstances, any such action of the
indirect parent of EDGX and EDGA responsible single plan processor in Officer of the Exchange or other senior
(together with BZX, BYX and EDGX, the connection with the transmittal or level employee designee pursuant to
‘‘BGM Affiliated Exchanges’’).4 In the receipt of a trading halt, an Officer, proposed subparagraph (h) shall be
context of the Merger, the BGM acting on his or her own motion, shall taken in a timely fashion, generally
Affiliated Exchanges are working to nullify any transaction that occurs after within thirty (30) minutes of the
align their rules, retaining only intended a trading halt has been declared by the detection of the erroneous transaction.
differences between the BGM Affiliated primary listing market for a security and When extraordinary circumstances
Exchanges. Thus, the Exchange before such trading halt has officially exist, any such action of the Officer of
proposes to restructure and amend Rule ended according to the primary listing the Exchange or other senior level
11.17, Clearly Erroneous Executions, in market.10 employee designee must be taken by no
order to conform to the corresponding later than the start of Regular Trading
rules of EDGA and EDGX and provide Proposed Amendments to Rule 11.17 Hours on the trading day following the
a consistent rule set across each of the First, the Exchange proposes to add date of execution(s) under review. Each
BGM Affiliated Exchanges.5 new subparagraph (h) to Rule 11.17 party involved in the transaction shall
which would describe the process for be notified as soon as practicable by the
Background Exchange, and the party aggrieved by
nullifying trades in UTP Securities that
On September 10, 2010, the are the subject of an initial public the action may appeal such action in
Commission approved, on a pilot basis, offering (‘‘IPOs’’). The provisions of accordance with the provisions of
changes to BATS Rule 11.17 to provide proposed paragraph (h) are substantially Exchange Rule 11.17(e)(2). As stated
for uniform treatment: (1) Of clearly similar to EDGA and EDGX Rules above, proposed paragraph (h) is
erroneous 6 execution reviews in multi- 11.15(h) and differs only to the extent to substantially similar to EDGA and
stock events involving twenty or more conform to existing phrasing and EDGX Rules 11.15(h) and differs only to
securities; and (2) in the event terminology within other provisions of the extent to conform to existing
Rule 11.17.11 phrasing and terminology within other
4 See Securities Exchange Act Release No. 71375
provisions of Rule 11.17.
(January 23, 2014), 79 FR 4771 (January 29, 2014)
(SR–BATS–2013–059; SR–BYX–2013–039).
7 Securities Exchange Act Release No. 62886 The Exchange also proposes the
5 The Exchange notes that BYX intends to file an
(Sept. 10, 2010), 75 FR 56613 (Sept. 16, 2010) (SR– following ministerial amendments to
BATS–2010–016).
identical proposal with the Commission to 8 Id.
Rule 11.17 as a result of proposing new
restructure and amend its Rule 11.17, Clearly
9 See Securities Exchange Act Release No. 68797
paragraph (h). First, the Exchange
Erroneous Executions, to conform to EDGA and
EDGX Rules 11.15. (Jan. 31, 2013), 78 FR 8635 (Feb. 6, 2013) (SR– proposes to renumber current paragraph
mstockstill on DSK4VPTVN1PROD with NOTICES

6 The terms of a transaction executed on the BATS–2013–008); see also current BATS Rule
Exchange are ‘‘clearly erroneous’’ when there is an 11.17(h). conform with other provisions of BZX and BYX
10 See Securities Exchange Act Release No. 72434 Rule 11.17 to ensure each of the BGM Affiliated
obvious error in any term, such as price, number
of shares or other unit of trading, or identification (June 19, 2014), 79 FR 36110 (June 25, 2014) (SR– Exchange have identical rule text with regard to the
of the security. A transaction made in clearly BATS–2014–014). review and handling of clearly erroneous
erroneous error and cancelled by both parties or 11 The Exchange notes that EDGA and EDGX are executions. This filing would include changes to
determined by the Exchange to be clearly erroneous to file rule changes with the Commission to EDGA and EDGX Rules 11.15(h) to mirror Exchange
will be removed from the Consolidated Tape. See proposes a series of ministerial changes to their Rule 11.17(h) as proposed herein.
Exchange Rule 11.17(a). Rules 11.15, Clearly Erroneous Executions, to 12 17 CFR 240.12f–2.

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60212 Federal Register / Vol. 80, No. 192 / Monday, October 5, 2015 / Notices

(h) as (i), current paragraph (i) as (j), and and understanding of Exchange Rules. effects a change that (A) does not
current paragraph (j) as (k). In addition, As such, the proposed rule change significantly affect the protection of
the Exchange proposes to update the would foster cooperation and investors or the public interest; (B) does
references to these paragraph in the coordination with persons engaged in not impose any significant burden on
introductory section of Rule 11.17 to facilitating transactions in securities and competition; and (C) by its terms, does
reflect these changes and the addition of would remove impediments to and not become operative for 30 days after
proposed paragraph (h). perfect the mechanism of a free and the date of the filing, or such shorter
Lastly, the Exchange proposes the open market and a national market time as the Commission may designate
following changes to further conform system. Similarly, the Exchange also if consistent with the protection of
Rule 11.17 to EDGA and EDGX Rules believes that, by harmonizing the rules investors and the public interest;
11.15: across each BGM Affiliated Exchange, provided that the self-regulatory
• Amend paragraph (e)(1) to clarify the proposal will enhance the organization has given the Commission
that a determination made pursuant to Exchange’s ability to fairly and written notice of its intent to file the
this paragraph shall be made generally efficiently regulate its Members, proposed rule change, along with a brief
within thirty (30) minutes of receipt of meaning that the proposed rule change description and text of the proposed
the complaint, but in no case later than is equitable and will promote fairness in rule change, at least five business days
the start of Regular Trading Hours on the market place. prior to the date of filing of the
the following trading day, rather than Finally, the Exchange believes that proposed rule change, or such shorter
simply stating the following day. This the non-substantive, ministerial changes time as designated by the Commission.
proposed change would make paragraph discussed above will contribute to the At any time within 60 days of the
(e)(1) identical to EDGA and EDGX Rule protection of investors and the public filing of the proposed rule change, the
11.15(e)(1). interest by helping to avoid confusion Commission may summarily
• Amend paragraph (e)(2)(A) to with respect to Exchange Rules. temporarily suspend such rule change if
define CRO as the ‘‘Exchange’s Chief it appears to the Commission that such
Regulatory Officer’’. This proposed B. Self-Regulatory Organization’s action is: (1) Necessary or appropriate in
change would make paragraph (e)(2)(A) Statement on Burden on Competition the public interest; (2) for the protection
identical to EDGA and EDGX Rule The Exchange does not believe that of investors; or (3) otherwise in
11.15(e)(2)(A). the proposed rule change will impose furtherance of the purposes of the Act.
Amend paragraph (e)(2)(F) to replace any burden on competition not If the Commission takes such action, the
the term ‘‘Officer’’ with ‘‘Official’’ in necessary or appropriate in furtherance Commission shall institute proceedings
order to use consistent terminology of the purposes of the act. To the to determine whether the proposed rule
throughout Rule 11.17. contrary, allowing the Exchange to should be approved or disapproved.
2. Statutory Basis implement substantively identical rules
IV. Solicitation of Comments
across each of the BGM Affiliated
The Exchange believes that the Exchanges regarding clearly erroneous Interested persons are invited to
proposed rule change is consistent with executions does not present any submit written data, views, and
the requirements of the Act and the competitive issues, but rather is arguments concerning the foregoing,
rules and regulations thereunder that designed to provide greater including whether the proposed rule
are applicable to a national securities harmonization among Exchange, BYX, change is consistent with the Act.
exchange, and, in particular, with the EDGX, and EDGA rules of similar Comments may be submitted by any of
requirements of Section 6(b) of the purpose. The proposed rule change the following methods:
Act.13 Specifically, the proposed change should, therefore, result in less
is consistent with Section 6(b)(5) of the Electronic Comments
burdensome and more efficient
Act,14 because it is designed to promote regulatory compliance and • Use the Commission’s Internet
just and equitable principles of trade, to understanding of Exchange Rules for comment form (http://www.sec.gov/
remove impediments to, and perfect the common members of the BGM Affiliated rules/sro.shtml); or
mechanism of, a free and open market Exchanges and an enhanced ability of • Send an email to rule-comments@
and a national market system, and, in the BGM Affiliated Exchanges to fairly sec.gov. Please include File Number SR–
general, to protect investors and the and efficiently regulate Members. BATS–2015–76 on the subject line.
public interest. As mentioned above, the Paper Comments
proposed rule changes, combined with C. Self-Regulatory Organization’s
the planned filing for the BYX, EDGA, Statement on Comments on the • Send paper comments in triplicate
and EDGX, would allow the BGM Proposed Rule Change Received From to Brent J. Fields, Secretary, Securities
Affiliated Exchanges to provide a Members, Participants, or Others and Exchange Commission, 100 F Street
consistent set of rules as it relates to NE., Washington, DC 20549–1090.
The Exchange has neither solicited
clearly erroneous executions. Consistent nor received written comments on the All submissions should refer to File
rules, in turn, will simplify the proposed rule change. Number SR–BATS–2015–76. This file
regulatory requirements for Members of number should be included on the
the Exchange that are also participants III. Date of Effectiveness of the subject line if email is used. To help the
on EDGA, EDGX and/or BYX. The Proposed Rule Change and Timing for Commission process and review your
proposed rule change would provide Commission Action comments more efficiently, please use
mstockstill on DSK4VPTVN1PROD with NOTICES

greater harmonization between rules of The Exchange has designated this rule only one method. The Commission will
similar purpose on the BGM Affiliated filing as non-controversial under post all comments on the Commission’s
Exchanges, resulting in greater Section 19(b)(3)(A) of the Act 15 and Internet Web site (http://www.sec.gov/
uniformity and less burdensome and paragraph (f)(6) of Rule 19b–4 rules/sro.shtml). Copies of the
more efficient regulatory compliance thereunder.16 The proposed rule change submission, all subsequent
amendments, all written statements
13 15 U.S.C. 78f(b). 15 15 U.S.C. 78s(b)(3)(A). with respect to the proposed rule
14 15 U.S.C. 78f(b)(5). 16 17 CFR 240.19b–4. change that are filed with the

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Document Created: 2015-12-15 08:52:51
Document Modified: 2015-12-15 08:52:51

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 60210