81 FR 44073 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Remove Interpretation and Policy .01 From Rule 11.13, Order Execution and Routing

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 129 (July 6, 2016)

Page Range		44073-44075
FR Document		2016-15917
Federal Register, Volume 81 Issue 129 (Wednesday, July 6, 2016)
[Federal Register Volume 81, Number 129 (Wednesday, July 6, 2016)]
[Notices]
[Pages 44073-44075]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-15917]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78194; File No. SR-BatsBYX-2016-16]


Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Remove 
Interpretation and Policy .01 From Rule 11.13, Order Execution and 
Routing

June 29, 2016.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on June 23, 2016, Bats BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ which renders it effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 remove Interpretation & Policy .01 
from Exchange Rule 11.13, as further described below.
    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 the Commission's Public Reference Room.

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

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

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

1. Purpose
Introduction
    In 2011, the Exchange identified an inefficiency in its handling of 
certain non-displayed orders resting on the Exchange at a price equal 
to the Exchange's best displayed orders on the opposite side of the 
market (``Locking Price'') (the non-displayed orders at the Locking 
Price, ``Non-Displayed Orders''). Similarly, the Exchange identified an 
inefficiency in its handling of certain displayed orders that were 
ranked at the Locking Price and displayed at a permissible price one 
minimum price variation away from the Locking Price (such orders 
``Resting Order Subject to NMS Price Sliding''). In order to avoid an 
apparent issue under its then-existing priority rule, the Exchange was 
rejecting incoming orders that were otherwise marketable against the 
Non-Displayed Orders or the Resting Orders Subject to NMS Price 
Sliding. In order to optimize available liquidity for incoming orders 
and to provide price improvement for market participants, the Exchange 
proposed in May of 2011 to execute a resting Non-Displayed Order or 
Resting Order Subject to NMS Price Sliding at one-half minimum price 
variation less than the Locking Price in the case of a bid and one-half 
minimum price variation more than the Locking Price in the case of an 
offer.\5\
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    \5\ See Securities Exchange Act Release No. 64476 (May 12, 
2011), 76 FR 28826 (May 18, 2011) (SR-BYX-2011-009) (``2011 
Proposal''). The reference to the most ``aggressive'' price, as used 
in that filing, means for bids the highest price the User is willing 
to pay, and for offers the lowest price at which the User is willing 
to sell.
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    To ease concerns that these new order-handling procedures could be 
abused solely for the purpose of obtaining executions at one-half 
minimum price variations--although there was no evidence to suggest 
this might occur--the Exchange included Interpretation and Policy .01 
to Rule 11.13 stating:

    The Exchange will consider it inconsistent with just and 
equitable principles of trade to engage in a pattern or practice of 
using Non-Displayed Orders or orders subject to price sliding solely 
for the purpose of executing such orders at one-half minimum price 
variation from the locking price. Evidence of such behavior may 
include, but is not limited to, a User's pattern of entering orders 
at a price that would lock or be ranked at the price of a displayed 
quotation and cancelling orders when they no longer lock the 
displayed quotation.

The Exchange also stated in the 2011 Proposal that it would conduct 
surveillance to monitor for such potential abuse.\6\
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    \6\ See 2011 Proposal, supra note 5, at 28829.

    The Commission approved the 2011 Proposal,\7\ and the Exchange has 
conducted nearly five years of surveillance as it promised in the 2011 
Proposal. After this lengthy period of surveillance, the Exchange has 
determined that there is no evidence that market participants attempt 
to use the Exchange's order handling procedures in Rule 11.13 solely to 
obtain executions at one-half minimum price variations. Further, the 
Exchange has found no way in which a market participant could abuse 
these order handling procedures. It is the Exchange's position, 
therefore, that Interpretation and Policy .01 and its corollary 
surveillance is now unnecessary. The Exchange proposes to remove the 
unnecessary Interpretation and Policy and to discontinue the corollary 
surveillance.
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    \7\ See Securities Exchange Act Release No. 64753 (June 27, 
2011), 76 FR 38714 (July 1, 2011) (SR-BYX-2011-009) (Order Approving 
a Proposed Rule Change To Amend BYX Rule 11.9, Entitled ``Orders and 
Modifiers'' and BYX Rule 11.13, Entitled ``Order Execution'') 
(``2011 Approval'').
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Background
    Prior to the implementation of the 2011 Proposal, consistent with 
the Exchange's rule regarding priority of orders, Rule 11.12, in order 
to avoid an apparent priority issue under the Exchange's rules Non-
Displayed Orders and Resting Orders Subject to NMS Price Sliding were 
not executed by the Exchange pursuant to Rule 11.13 when such orders 
would be executed at a Locking Price. Specifically, if incoming

[[Page 44074]]

orders were allowed to execute against the resting Non-Displayed Order 
or the Resting Order Subject to NMS Price Sliding at the Locking Price, 
such orders would have received a perceived priority advantage over a 
resting, displayed contra-side order at the Locking Price; accordingly, 
such executions at the Locking Price were disallowed. As noted above, 
however, the Exchange proposed functionality to optimize available 
liquidity for incoming orders and to provide price improvement for 
market participants, which was subsequently approved and implemented by 
the Exchange.\8\ Below is an example that illustrates how the Exchange 
has handled such orders following the implementation of functionality 
described in the 2011 Proposal.
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    \8\ See id.
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    Assume the Exchange has a posted and displayed bid to buy 100 
shares of a security priced at $10.10 per share, a resting Non-
Displayed Order bid to buy 100 shares of a security priced at $10.11 
per share, and a posted and displayed offer to sell 100 shares also at 
$10.11 per share. Assume the NBBO is also $10.10 by $10.11. The 
Exchange's order book (``BYX Book'') in this situation can be depicted 
as follows, with ``ND'' identifying the Non-Displayed Order:

------------------------------------------------------------------------
                                          Bid                  Offer
------------------------------------------------------------------------
Bats:                             $10.10 (ND)          X   $10.10
                                  $10.10
------------------------------------------------------------------------

    If an incoming offer to sell 100 shares at $10.10 is entered into 
the BYX Book, the resting Non-Displayed Order at the locking price will 
be executed at $10.105 per share, thus providing the resting Non-
Displayed bid a half-penny of price improvement from its limit price of 
$10.11 and the incoming offer a half-penny of price improvement from 
its limit price of $10.10. The result would be the same for an incoming 
market order to sell or any other incoming limit order offer priced at 
$10.10 or below, which would execute against the Non-Displayed bid at a 
price of $10.105 per share. An offer at the full price of the resting 
and displayed $10.11 offer would not execute against the resting Non-
Displayed bid, but would instead either cancel or post to the BYX Book 
behind the original $10.11 offer in priority. As described above, the 
Exchange has adopted similar functionality with respect to Resting 
Orders Subject to NMS Price Sliding.
Interpretation and Policy .01 to Rule 11.13
    In proposing the 2011 Proposal, there was concern from Commission 
staff that market participants may attempt to abuse the rule solely to 
obtain executions at one-half minimum price variations. To assuage the 
concern, the Exchange included Interpretation and Policy .01 to Rule 
11.13 to state explicitly that the Exchange will consider it 
inconsistent with just and equitable principles of trade to engage in a 
pattern or practice of using Non-Displayed Orders or Resting Orders 
Subject to NMS Price Sliding solely for the purpose of executing such 
orders at one-half minimum price variations from the locking price. The 
Exchange further explained that evidence of such behavior may include, 
but is not limited to, a User's pattern of entering orders at a price 
that would lock or be ranked at the price of a displayed quotation and 
cancelling orders when they no longer lock the displayed quotation. The 
Exchange stated in the 2011 Proposal it would ``conduct surveillance to 
ensure that Users are not intentionally seeking to create an internally 
locked Book for the purpose of obtaining an execution at one-half 
minimum price variation.'' \9\ The Exchange notes that when proposed 
the Exchange believed the functionality was a solution to a specific 
situation that was a natural consequence of the Exchange's order 
handling procedures, particularly due to offering Users the ability to 
enter orders that instruct the Exchange not to remove liquidity (i.e., 
``Post Only Orders'') and to enter orders with non-displayed 
prices.\10\ The Exchange still believes this to be the case and thus, 
as further described below, seeks to eliminate surveillance focused on 
orders and System functionality that are simply behaving as the 
Exchange intends them to behave.
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    \9\ See 2011 Proposal, supra note 5 at 28829.
    \10\ See id.
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    In approving the rule change, the Staff noted the proposed 
Interpretation and Policy .01:

    The Exchange also proposes adding Interpretation and Policy .01 
to BATS Rule 11.13 to state that the Exchange will consider it 
inconsistent with just and equitable principles of trade to engage 
in a pattern or practice of using Non-Displayed Orders or orders 
subject to price sliding solely for the purpose of executing such 
orders at one-half minimum price variation from the locking price. 
Evidence of such behavior may include, but is not limited to, a 
User's pattern of entering orders at a price that would lock or be 
ranked at the price of a displayed quotation and cancelling orders 
when they no longer lock the displayed quotation. The Exchange has 
also stated that it will conduct surveillance to ensure that users 
are not intentionally seeking to create an internally locked book 
for the purpose of obtaining an execution at a one-half minimum 
price variation.\11\
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    \11\ See 2011 Approval, supra note 7 at 38714.

The Commission stated in its approval order that it ``believes that any 
potential abuses are mitigated by the Exchange's addition of 
Interpretation and Policy .01 to BATS Rule 11.13 and its commitment to 
monitor relevant trading on its market.'' \12\
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    \12\ See 2011 Approval, supra note 7 at 38715.
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Proposal To Remove Interpretation and Policy .01 to Rule 11.13
    The Exchange designed and implemented a surveillance program to 
monitor for abuse of the order handling procedures implemented by the 
2011 Proposal and has conducted the surveillance for nearly five years. 
The Exchange has found over this period no evidence to suggest that 
market participants intentionally seek to create an internally locked 
book solely for the purpose of obtaining an execution at one-half 
minimum price variation. The evidence has shown that half-penny 
executions appear to be the natural result of order interactions on the 
Exchange. Further, since the change, market participants have received 
price improvement on both sides of a trade when that trade would have 
otherwise been prevented from occurring under the Exchange's prior 
functionality. The Exchange, therefore, no longer believes 
Interpretation and Policy .01 is necessary or appropriate.
    The purpose of Interpretation and Policy .01 and the associated 
surveillance was to ensure that market participants would not find a 
way to abuse the new order handling procedures by engaging in a pattern 
or practice of entering non-displayed locking orders solely for the 
purpose of obtaining an execution at one-half minimum price variation. 
Since the Exchange has determined there is no evidence that such abuse 
has occurred the Exchange believes that Interpretation and Policy and 
corollary surveillance have served their purpose and are no longer 
necessary. The Exchange believes that its regulatory program would be 
better served by the removal of Interpretation and Policy .01 so that 
the Exchange staff may retire the surveillance and focus its regulatory 
efforts on activity that it has identified as having an impact on the 
safety and quality of its market.
    Finally, Bats EDGX Exchange Inc. (``EDGX'') and Bats EDGA Exchange 
Inc. (``EDGA'') have substantively identical

[[Page 44075]]

order handling functionality, but neither have the Interpretation and 
Policy this proposal seeks to remove. The Exchange, therefore, believes 
that the Interpretation and Policy is unnecessary and the Exchange 
proposes to remove it from Rule 11.13. Although the Exchange is 
proposing to remove Interpretation and Policy .01 from Rule 11.13, the 
Exchange notes that all trading activity on the Exchange, including 
orders entered and handled and executions resulting from the order 
handling procedures implemented by the 2011 Proposal, is subject to the 
Exchange's overall surveillance program, which monitors for potential 
violations of the federal securities laws and the regulations 
thereunder as well as Exchange Rules.
2. Statutory Basis
    The rule change proposed in this submission 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 prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to, and perfect 
the mechanism of, a free and open market and a national market system. 
The proposed change to remove Interpretation and Policy .01 from Rule 
11.13 will permit the Exchange to focus its regulatory efforts on 
conduct that more likely violates principles of just and equitable 
trade rather than dedicating regulatory staff and efforts on a topic 
which the Exchange has found no evidence of its existence. Since 2011, 
the Exchange has dedicated resources to operate regulatory surveillance 
and investigate potential abuse of the Exchange's functionality and has 
found that there is no evidence of abuse of the relevant order handling 
procedures solely for the purpose of obtaining one-half minimum price 
variations. The Exchange believes the proposal will promote just and 
equitable principles of trade and will help prevent fraudulent and 
manipulative acts by focusing regulatory efforts on activity that the 
Exchange has identified as having an impact on the safety and quality 
of its market rather than the hypothetical concern that Interpretation 
and Policy .01 was implemented to monitor.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change simply removes an interpretation and policy that the 
Exchange does not believe is necessary, as described above, and should 
have no effect on competition.

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

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to section 
19(b)(3)(A) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change 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 [email protected]. Please include 
File No. SR-BatsBYX-2016-16 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-BatsBYX-2016-16. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BatsBYX-2016-16, and should be 
submitted on or before July 27, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-15917 Filed 7-5-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 129 / Wednesday, July 6, 2016 / Notices 44073

filing also will be available for The text of the proposed rule change To ease concerns that these new
inspection and copying at the principal is available at the Exchange’s Web site order-handling procedures could be
office of FINRA. All comments received at www.batstrading.com, at the abused solely for the purpose of
will be posted without change; the principal office of the Exchange, and at obtaining executions at one-half
Commission does not edit personal the Commission’s Public Reference minimum price variations—although
identifying information from Room. there was no evidence to suggest this
submissions. You should submit only might occur—the Exchange included
II. Self-Regulatory Organization’s
information that you wish to make Interpretation and Policy .01 to Rule
Statement of the Purpose of, and
available publicly. All submissions 11.13 stating:
Statutory Basis for, the Proposed Rule
should refer to File Number SR–FINRA– Change The Exchange will consider it inconsistent
2016–023, and should be submitted on with just and equitable principles of trade to
or before July 27, 2016. In its filing with the Commission, the engage in a pattern or practice of using Non-
Exchange included statements Displayed Orders or orders subject to price
For the Commission, by the Division of concerning the purpose of and basis for sliding solely for the purpose of executing
Trading and Markets, pursuant to delegated
the proposed rule change and discussed such orders at one-half minimum price
authority.38 variation from the locking price. Evidence of
any comments it received on the
Robert W. Errett, such behavior may include, but is not limited
proposed rule change. The text of these
Deputy Secretary. to, a User’s pattern of entering orders at a
statements may be examined at the
[FR Doc. 2016–15918 Filed 7–5–16; 8:45 am] price that would lock or be ranked at the
places specified in Item IV below. The price of a displayed quotation and cancelling
BILLING CODE 8011–01–P Exchange has prepared summaries, set orders when they no longer lock the
forth in sections A, B, and C below, of displayed quotation.
the most significant parts of such
SECURITIES AND EXCHANGE The Exchange also stated in the 2011
statements.
COMMISSION Proposal that it would conduct
A. Self-Regulatory Organization’s surveillance to monitor for such
[Release No. 34–78194; File No. SR– Statement of the Purpose of, and the potential abuse.6
BatsBYX–2016–16] Statutory Basis for, the Proposed Rule The Commission approved the 2011
Change Proposal,7 and the Exchange has
Self-Regulatory Organizations; Bats conducted nearly five years of
BYX Exchange, Inc.; Notice of Filing 1. Purpose
surveillance as it promised in the 2011
and Immediate Effectiveness of a Introduction Proposal. After this lengthy period of
Proposed Rule Change To Remove In 2011, the Exchange identified an surveillance, the Exchange has
Interpretation and Policy .01 From Rule inefficiency in its handling of certain determined that there is no evidence
11.13, Order Execution and Routing non-displayed orders resting on the that market participants attempt to use
June 29, 2016. Exchange at a price equal to the the Exchange’s order handling
Exchange’s best displayed orders on the procedures in Rule 11.13 solely to
Pursuant to section 19(b)(1) of the
opposite side of the market (‘‘Locking obtain executions at one-half minimum
Securities Exchange Act of 1934 (the
Price’’) (the non-displayed orders at the price variations. Further, the Exchange
‘‘Act’’),1 and Rule 19b–4 thereunder,2
Locking Price, ‘‘Non-Displayed has found no way in which a market
notice is hereby given that on June 23, participant could abuse these order
2016, Bats BYX Exchange, Inc. (the Orders’’). Similarly, the Exchange
identified an inefficiency in its handling handling procedures. It is the
‘‘Exchange’’ or ‘‘BYX’’) filed with the Exchange’s position, therefore, that
of certain displayed orders that were
Securities and Exchange Commission Interpretation and Policy .01 and its
ranked at the Locking Price and
(‘‘Commission’’) the proposed rule corollary surveillance is now
displayed at a permissible price one
change as described in Items I and II unnecessary. The Exchange proposes to
minimum price variation away from the
below, which Items have been prepared remove the unnecessary Interpretation
Locking Price (such orders ‘‘Resting
by the Exchange. The Exchange has and Policy and to discontinue the
Order Subject to NMS Price Sliding’’).
designated this proposal as a ‘‘non- corollary surveillance.
In order to avoid an apparent issue
controversial’’ proposed rule change
under its then-existing priority rule, the Background
pursuant to section 19(b)(3)(A) of the
Exchange was rejecting incoming orders
Act 3 and Rule 19b–4(f)(6) thereunder,4 Prior to the implementation of the
that were otherwise marketable against
which renders it effective upon filing 2011 Proposal, consistent with the
the Non-Displayed Orders or the Resting
with the Commission. The Commission Exchange’s rule regarding priority of
Orders Subject to NMS Price Sliding. In
is publishing this notice to solicit orders, Rule 11.12, in order to avoid an
order to optimize available liquidity for
comments on the proposed rule change apparent priority issue under the
incoming orders and to provide price
from interested persons. Exchange’s rules Non-Displayed Orders
improvement for market participants,
I. Self-Regulatory Organization’s the Exchange proposed in May of 2011 and Resting Orders Subject to NMS
Statement of the Terms of Substance of to execute a resting Non-Displayed Price Sliding were not executed by the
the Proposed Rule Change Order or Resting Order Subject to NMS Exchange pursuant to Rule 11.13 when
Price Sliding at one-half minimum price such orders would be executed at a
The Exchange filed a proposal to Locking Price. Specifically, if incoming
remove Interpretation & Policy .01 from variation less than the Locking Price in
Exchange Rule 11.13, as further the case of a bid and one-half minimum
to pay, and for offers the lowest price at which the
ehiers on DSK5VPTVN1PROD with NOTICES

described below. price variation more than the Locking User is willing to sell.
Price in the case of an offer.5 6 See 2011 Proposal, supra note 5, at 28829.
7 See Securities Exchange Act Release No. 64753
38 17 CFR 200.30–3(a)(12). 5 See Securities Exchange Act Release No. 64476 (June 27, 2011), 76 FR 38714 (July 1, 2011) (SR–
1 15 U.S.C. 78s(b)(1). (May 12, 2011), 76 FR 28826 (May 18, 2011) (SR– BYX–2011–009) (Order Approving a Proposed Rule
2 17 CFR 240.19b–4.
BYX–2011–009) (‘‘2011 Proposal’’). The reference to Change To Amend BYX Rule 11.9, Entitled ‘‘Orders
3 15 U.S.C. 78s(b)(3)(A).
the most ‘‘aggressive’’ price, as used in that filing, and Modifiers’’ and BYX Rule 11.13, Entitled
4 17 CFR 240.19b–4(f)(6). means for bids the highest price the User is willing ‘‘Order Execution’’) (‘‘2011 Approval’’).

VerDate Sep<11>2014 15:04 Jul 05, 2016 Jkt 238001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 E:\FR\FM\06JYN1.SGM 06JYN1
Federal Register / Vol. 81, No. 129 / Wednesday, July 6, 2016 / Notices 44075

order handling functionality, but neither concern that Interpretation and Policy Electronic Comments
have the Interpretation and Policy this .01 was implemented to monitor.
proposal seeks to remove. The • Use the Commission’s Internet
B. Self-Regulatory Organization’s comment form (http://www.sec.gov/
Exchange, therefore, believes that the
Statement on Burden on Competition rules/sro.shtml); or
Interpretation and Policy is unnecessary
and the Exchange proposes to remove it The Exchange does not believe that • Send an email to rule-comments@
from Rule 11.13. Although the Exchange the proposed rule changes will result in sec.gov. Please include File No. SR–
is proposing to remove Interpretation any burden on competition that is not BatsBYX–2016–16 on the subject line.
and Policy .01 from Rule 11.13, the necessary or appropriate in furtherance
Exchange notes that all trading activity of the purposes of the Act. The Paper Comments
on the Exchange, including orders proposed rule change simply removes
an interpretation and policy that the • Send paper comments in triplicate
entered and handled and executions
Exchange does not believe is necessary, to Secretary, Securities and Exchange
resulting from the order handling
procedures implemented by the 2011 as described above, and should have no Commission, 100 F Street NE.,
Proposal, is subject to the Exchange’s effect on competition. Washington, DC 20549–1090.
overall surveillance program, which C. Self-Regulatory Organization’s All submissions should refer to File No.
monitors for potential violations of the Statement on Comments on the SR–BatsBYX–2016–16. This file number
federal securities laws and the Proposed Rule Change Received From should be included on the subject line
regulations thereunder as well as Members, Participants, or Others if email is used. To help the
Exchange Rules. Commission process and review your
The Exchange has neither solicited
2. Statutory Basis nor received written comments on the comments more efficiently, please use
proposed rule change. only one method. The Commission will
The rule change proposed in this post all comments on the Commission’s
submission is consistent with the III. Date of Effectiveness of the
Proposed Rule Change and Timing for Internet Web site (http://www.sec.gov/
requirements of the Act and the rules rules/sro.shtml). Copies of the
and regulations thereunder that are Commission Action
submission, all subsequent
applicable to a national securities Because the proposed rule change amendments, all written statements
exchange, and, in particular, with the does not (i) significantly affect the with respect to the proposed rule
requirements of section 6(b) of the protection of investors or the public
change that are filed with the
Act.13 Specifically, the proposed change interest; (ii) impose any significant
Commission, and all written
is consistent with section 6(b)(5) of the burden on competition; and (iii) become
operative for 30 days from the date on communications relating to the
Act,14 because it is designed to prevent
fraudulent and manipulative acts and which it was filed, or such shorter time proposed rule change between the
practices, to promote just and equitable as the Commission may designate, it has Commission and any person, other than
principles of trade, to foster cooperation become effective pursuant to section those that may be withheld from the
and coordination with persons engaged 19(b)(3)(A) of the Act 15 and Rule 19b– public in accordance with the
in facilitating transactions in securities, 4(f)(6) thereunder.16 provisions of 5 U.S.C. 552, will be
and to remove impediments to, and At any time within 60 days of the available for Web site viewing and
perfect the mechanism of, a free and filing of the proposed rule change, the printing in the Commission’s Public
open market and a national market Commission summarily may Reference Room, 100 F Street NE.,
system. The proposed change to remove temporarily suspend such rule change if Washington, DC 20549, on official
Interpretation and Policy .01 from Rule it appears to the Commission that such business days between the hours of
11.13 will permit the Exchange to focus action is necessary or appropriate in the 10:00 a.m. and 3:00 p.m. Copies of the
its regulatory efforts on conduct that public interest, for the protection of filing also will be available for
more likely violates principles of just investors, or otherwise in furtherance of inspection and copying at the principal
and equitable trade rather than the purposes of the Act. If the office of the Exchange. All comments
dedicating regulatory staff and efforts on Commission takes such action, the received will be posted without change;
a topic which the Exchange has found Commission shall institute proceedings the Commission does not edit personal
no evidence of its existence. Since 2011, to determine whether the proposed rule
identifying information from
the Exchange has dedicated resources to change should be approved or
submissions. You should submit only
operate regulatory surveillance and disapproved.
information that you wish to make
investigate potential abuse of the IV. Solicitation of Comments available publicly. All submissions
Exchange’s functionality and has found should refer to File No. SR–BatsBYX–
that there is no evidence of abuse of the Interested persons are invited to
submit written data, views, and 2016–16, and should be submitted on or
relevant order handling procedures
arguments concerning the foregoing, before July 27, 2016.
solely for the purpose of obtaining one-
half minimum price variations. The including whether the proposed rule For the Commission, by the Division of
Exchange believes the proposal will change is consistent with the Act. Trading and Markets, pursuant to delegated
promote just and equitable principles of Comments may be submitted by any of authority.17
trade and will help prevent fraudulent the following methods: Robert W. Errett,
and manipulative acts by focusing 15 15 Deputy Secretary.
U.S.C. 78s(b)(3)(A).
ehiers on DSK5VPTVN1PROD with NOTICES

regulatory efforts on activity that the 16 17
CFR 240.19b–4(f)(6). As required under Rule [FR Doc. 2016–15917 Filed 7–5–16; 8:45 am]
Exchange has identified as having an 19b–4(f)(6)(iii), the Exchange provided the BILLING CODE 8011–01–P
impact on the safety and quality of its Commission with written notice of its intent to file
market rather than the hypothetical the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
13 15 U.S.C. 78f(b). of filing of the proposed rule change, or such
14 15 U.S.C. 78f(b)(5). shorter time as designated by the Commission. 17 17 CFR 200.30–3(a)(12).

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Document Created: 2016-07-06 07:56:20
Document Modified: 2016-07-06 07:56:20
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		81 FR 44073