Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BATS Rule 11.13, Entitled “Order Execution”, 25793-25795 [E9-12446]
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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices
mstockstill on PROD1PC66 with NOTICES
III. Discussion and Commission’s
Findings
After careful review of the proposed
rule change, 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
association.6 In particular, the
Commission finds that the proposed
rule change is consistent with the
provisions of Section 15A(b)(4) of the
Act,7 which requires that FINRA rules
be designed to assure a fair
representation of FINRA’s members in
the selection of its directors and the
administration of its affairs.
The FINRA By-Laws provide that the
FINRA Board currently must consist of
the Chief Executive Officer of FINRA,
the Chief Executive Officer of NYSE
Regulation, eleven Public Governors
and ten Industry Governors, including a
Floor Member Governor, an
Independent Dealer/Insurance Affiliate
Governor, an Investment Company
Affiliate Governor, three Small Firm
Governors, one Mid-Size Firm
Governor, and three Large-Firm
Governors.8 The Small Firm Governors,
Mid-Size Firm Governor, and LargeFirm Governors are elected by members
of FINRA according to their
classification as a Small Firm, Mid-Size
Firm or Large Firm.9
The proposed rule change would
provide that the FINRA Regulation
Board continue to consist of between 5
and 15 members,10 and that FINRA
Regulation Board members be elected
by, and drawn exclusively from, the
FINRA Board. Additionally, the
proposed rule change would require
that the FINRA Regulation Board, like
the FINRA Board, have a greater number
of Public Directors than Industry
Directors.11 In addition, to ensure fair
representation on the FINRA Regulation
Board, the proposed rule change also
would require that at least two, and not
less than 20%, of the Directors of the
FINRA Regulation Board be Small, MidSize, or Large Firm Governors.12 The
Commission notes that it previously
6 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition and capital formation. See
15 U.S.C. 78c(f).
7 15 U.S.C. 78o–3(b)(4).
8 See FINRA By-Laws, Article VII, Section 4 and
XXII, Section 2(a).
9 See FINRA By-Laws, Article I(z), Article I(dd),
Article I(xx) (defining Small Firm Governor, MidSize Firm Governor, and Large-Firm Governor), and
Article VII, Section 4(a).
10 See proposed FINRA Regulation By-Laws,
Article IV, Section 4.2 (Number of Directors).
11 See proposed FINRA Regulation By-Laws,
Article IV, Section 4.3(a) (Qualifications).
12 See id.
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found the composition of the FINRA
Board to be consistent with the fair
representation requirement of Section
15A(b)(4) of the Act.13 The Commission
further notes that it has previously
found a requirement that at least 20% of
directors represent the exchange’s
members to be consistent with the fair
representation requirement applicable
to national securities exchanges under
Section 6(b)(3) of the Act.14
Accordingly, the Commission believes
that the requirement that the FINRA
Regulation Board be composed of at
least two, and not less than 20%, of
FINRA Regulation’s Directors be Small
Firm, Mid-Size Firm or Large-Firm
Governors is consistent with Section
15A(b)(4) of the Act.
The Commission also finds that the
proposed rule change is consistent with
the provisions of Section 15A(b)(6) of
the Act,15 which requires, among other
things, that FINRA rules must be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest. The
Commission believes that the proposed
changes to the FINRA Regulation ByLaws should allow the FINRA
Regulation Board to operate in a more
effective and efficient manner by,
among other things, having a similar
composition and a complementary
governance structure to the FINRA
Board.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,16 that the
proposed rule change (SR–FINRA–
2009–020) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–12444 Filed 5–28–09; 8:45 am]
Consolidation Approval Order, supra note
4.
14 See, e.g., Securities Exchange Act Release No.
58324 (August 7, 2008), 73 FR 46936, 46941
(August 12, 2008) (SR–BSE–2008–02, SR–BSE–
2008–23, SR–BSE–2008–25, SR–BSECC–2008–01).
15 15 U.S.C. 78o–3(b)(6).
16 15 U.S.C. 78s(b)(2).
17 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59967; File No. SR–BATS–
2009–015]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend BATS Rule
11.13, Entitled ‘‘Order Execution’’
May 21, 2009.
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 May 19,
2009, BATS Exchange, Inc. (‘‘BATS’’ or
the ‘‘Exchange’’) 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 ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to amend
BATS Rule 11.13, entitled ‘‘Order
Execution,’’ to provide Users 5 of the
Exchange with another option with
respect to the Exchange’s method of
processing the unfilled balance of a
limit order that returns to the Exchange
and is posted to the BATS Book after
being routed away to one or more away
Trading Centers 6 for execution.
The text of the proposed rule change
is available at the Exchange’s Web site
at https://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
BILLING CODE 8010–01–P
13 See
25793
Sfmt 4703
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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 As defined in BATS Rule 1.5(bb).
6 As defined in BATS Rule 2.11.
2 17
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25794
Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices
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
mstockstill on PROD1PC66 with NOTICES
1. Purpose
The purpose of the proposed rule
change is to provide Users of the
Exchange with another option with
respect to the Exchange’s method of
processing the unfilled balance of a
limit order that returns to the Exchange
and is posted to the BATS Book after
being routed away to one or more away
Trading Centers for execution.
Specifically, the Exchange will allow
Users to designate an order as eligible
for re-routing after being posted to the
BATS Book if another Trading Center
has locked or crossed the posted order.
The Exchange currently allows Users
to submit various types of limit orders
to the Exchange that are processed
pursuant to Rules 11.13(a)(1) and
11.13(a)(2)(B), as set forth below. Rule
11.13(a)(1) describes the process by
which an incoming order would execute
against the BATS Book.7 To the extent
an order has not been executed in its
entirety against the BATS Book, Rule
11.13(a)(2)(B) then describes the process
of routing marketable limit orders 8 to
one or more Trading Centers, including
a description of how the Exchange treats
any unfilled balance that returns to the
Exchange following the first attempt to
fill the order through the routing
process. If not filled through routing,
and based on the order instructions, the
unfilled balance of the order may be
posted to the BATS Book. The Exchange
is proposing to permit Users to
designate the order as eligible to be
routed away from the Exchange, after
being posted, to the extent another
Trading Center locks or crosses the
posted order. The Exchange believes
that the proposed change to Rule 11.13
will give additional flexibility with
respect to the treatment of their orders
and may result in such orders being
executed more quickly. The proposed
option to route a posted order to a
locking or crossing market is offered by
7 As
defined in BATS Rule 1.5(d).
orders are also routed away, pursuant to
Rule 11.13(a)(2)(A), however the Exchange is not
proposing any changes to the treatment of routed
market orders at this time.
8 Market
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17:24 May 28, 2009
Jkt 217001
at least one of the Exchange’s
competitors.9
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.10 Specifically, the proposed change
is consistent with Section 6(b)(5) of the
Act,11 because it would 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, by allowing Users to instruct
the Exchange to route a posted order
away from the Exchange to the extent
another market has locked or crossed
such order. This functionality will allow
the Exchange to seek to execute the
resting order if market conditions have
changed since such order was originally
posted.
B. Self-Regulatory Organization’s
Statement of Burden on Competition
The Exchange does not believe that
the proposed rule change imposes any
burden 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 foregoing rule change
does not: (1) Significantly affect the
protection of investors or the public
interest; (2) impose any significant
burden on competition; and (3) become
operative for 30 days after the date of
this filing, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule
19b 4(f)(6) thereunder.13
A proposed rule change filed under
Rule 19b–4(f)(6) normally may not
become operative prior to 30 days after
the date of filing.14 However, Rule
9 See,
e.g., NASDAQ Rule 4758(a)(1)(A)(ii).
U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
12 15 U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) requires that a self-regulatory
organization submit to the Commission written
10 15
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19b 4(f)(6)(iii)15 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay. The Commission notes
that BATS’ proposal is substantially
similar to the rules of another national
securities exchanges and does not raise
any new substantive issues.16 BATS
expects to have operational and
technological changes in place to
support the proposed rule change on
May 22, 2009.17 In addition, BATS
states that the proposed functionality is
completely optional, and will not
require any programming changes by
Users of the Exchange unless they
choose to use the new functionality.
Based on the foregoing, the Commission
believes that waiving the 30-day
operative delay is consistent with the
protection of investors and the public
interest and hereby designates the
proposal operative upon filing.18
At any time within 60 days of the
filing of such proposed rule change the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form(https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–BATS–2009–015 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
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. The Commission deems this
requirement to have been satisfied.
15 Id.
16 See supra note 9.
17 See SR–BATS–2009–015, Item 7.
18 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
E:\FR\FM\29MYN1.SGM
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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Notices
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File No.
SR–BATS–2009–015. This file number
should be included on the subject line
if e-mail 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 (https://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 inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of BATS. 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–BATS–2009–015 and should be
submitted on or before June 19, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–12446 Filed 5–28–09; 8:45 am]
BILLING CODE 8010–01–P
of Securities Dealers, Inc. (‘‘NASD’’))
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
a proposed rule change pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder.2 Notice of the
proposal was published for comment in
the Federal Register on April 20, 2009.3
The Commission received no comments
on the proposed rule change. This order
approves the proposed rule change.
I. Description of the Proposed Rule
Change
As part of the process of developing
a new consolidated rulebook
(‘‘Consolidated FINRA Rulebook’’),4
FINRA proposed to adopt NASD IM–
2830–1 (‘‘Breakpoint’’ Sales),
renumbered as FINRA Rule 2342, into
the Consolidated FINRA Rulebook with
the minor changes discussed below.
NASD IM–2830–1 prohibits sales of
mutual fund shares in amounts below a
‘‘breakpoint’’ if such sales are made ‘‘so
as to share in the higher sales charges.’’
In the context of mutual fund sales, a
‘‘breakpoint’’ is that point at which the
sales charge is reduced for quantity
purchases of fund shares.
The application of the standard in
NASD IM–2830–1 depends on the facts
and circumstances of particular
transactions to determine whether a
member executed a transaction for the
purpose of earning a higher sales charge.
In 1998, NASD IM–2830–1 was
amended to address the use of modern
portfolio investment strategies that
utilize many different mutual funds
with varying investment objectives.5
The amendments specify more precisely
those facts and circumstances that
FINRA will consider when examining
whether trades that miss breakpoints,
but are made pursuant to bona fide asset
allocation programs, may have violated
NASD IM–2830–1. In making such
1 15
[Release No. 34–59961; File No. SR–FINRA–
2009–018]
mstockstill on PROD1PC66 with NOTICES
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Granting
Approval of Proposed Rule Change To
Adopt IM–2830–1 (‘‘Breakpoint’’ Sales)
in the Consolidated FINRA Rulebook
May 21, 2009.
On March 26, 2009, Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (f/k/a National Association
19 17
CFR 200.30–3(a)(12).
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17:24 May 28, 2009
Jkt 217001
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Exchange Act Rel. No. 59754 (Apr. 13,
2009), 74 FR 18007 (Apr. 20, 2009).
4 The current FINRA rulebook consists of (1)
FINRA Rules; (2) NASD Rules; and (3) rules
incorporated from NYSE (‘‘Incorporated NYSE
Rules’’) (together, the NASD Rules and Incorporated
NYSE Rules are referred to as the ‘‘Transitional
Rulebook’’). While the NASD Rules generally apply
to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that
are also members of the NYSE (‘‘Dual Members’’).
The FINRA Rules apply to all FINRA members,
unless such rules have a more limited application
by their terms. For more information about the
rulebook consolidation process, see FINRA
Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
5 See Securities Exchange Act Release No. 40659
(Nov. 10, 1998), 63 FR 64136 (Nov. 18, 1998) (Order
Approving Proposed Rule Change Relating to
Mutual Fund Breakpoint Sales).
2 17
SECURITIES AND EXCHANGE
COMMISSION
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25795
determinations, the rule provides that
FINRA will consider, among other
things, whether a member has retained
records that demonstrate that the trade
was executed in accordance with a bona
fide asset allocation program that the
member offers to its customers which is
designed to meet their diversification
needs and investment goals, and under
which the member discloses to its
customers that they may not qualify for
breakpoint reductions that are otherwise
available.
Breakpoint issues have been of
concern to the regulatory community.
On December 23, 2002, FINRA issued
Special Notice to Members 02–85,
which reminded firms of their
obligation to apply correctly breakpoint
discounts to front-end sales load mutual
fund transactions.6 In 2003, the staffs of
FINRA, the SEC, and the NYSE
conducted examinations of brokerdealers to assess their ability to deliver
breakpoint discounts and memorialized
the findings of those examinations in a
joint report.7 Concurrently, FINRA staff
and industry members formed a joint
task force to consider issues regarding
breakpoints. The joint task force issued
a report in July 2003 containing
recommendations for the industry to
facilitate the accurate delivery of
breakpoint discounts.8
FINRA proposed to adopt NASD IM–
2830–1 as FINRA Rule 2342, stating it
believes this rule continues to be an
important tool in regulating members’
sales of mutual fund shares to ensure
that they are not sold in dollar amounts
just below breakpoints so as to share in
higher sales charges. FINRA proposed to
eliminate references to ‘‘just and
equitable principles of trade’’ and make
other minor changes to the text to reflect
that it would be a stand-alone rule,
rather than Interpretive Material, and to
eliminate certain redundant text that is
inconsistent with a rules-based format.
FINRA stated that it will announce
the implementation date of the
proposed rule change in a Regulatory
Notice to be published no later than 90
days following Commission approval.
6 NASD Special Notice to Members 02–85, NASD
Requires Immediate Member Firm Action Regarding
Mutual Fund Purchases and Breakpoint Schedules
(December 2002).
7 See Joint SEC/NASD/NYSE Report of
Examinations of Broker/Dealers Regarding
Discounts on Front-End Sales Charges on Mutual
Funds (March 2003), available at https://
www.finra.org/Industry/Issues/Breakpoints/
P006438.
8 See Report of the Joint NASD/Industry Task
Force on Breakpoints (July 2003), available at
https://www.finra.org/Industry/Issues/Breakpoints/
P006422.
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]]>Agencies
[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Notices]
[Pages 25793-25795]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12446]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59967; File No. SR-BATS-2009-015]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
BATS Rule 11.13, Entitled ``Order Execution''
May 21, 2009.
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 May 19, 2009, BATS Exchange, Inc. (``BATS'' or the
``Exchange'') 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)(iii) 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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend BATS Rule 11.13, entitled
``Order Execution,'' to provide Users \5\ of the Exchange with another
option with respect to the Exchange's method of processing the unfilled
balance of a limit order that returns to the Exchange and is posted to
the BATS Book after being routed away to one or more away Trading
Centers \6\ for execution.
---------------------------------------------------------------------------
\5\ As defined in BATS Rule 1.5(bb).
\6\ As defined in BATS Rule 2.11.
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
Web site at https://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
[[Page 25794]]
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
The purpose of the proposed rule change is to provide Users of the
Exchange with another option with respect to the Exchange's method of
processing the unfilled balance of a limit order that returns to the
Exchange and is posted to the BATS Book after being routed away to one
or more away Trading Centers for execution. Specifically, the Exchange
will allow Users to designate an order as eligible for re-routing after
being posted to the BATS Book if another Trading Center has locked or
crossed the posted order.
The Exchange currently allows Users to submit various types of
limit orders to the Exchange that are processed pursuant to Rules
11.13(a)(1) and 11.13(a)(2)(B), as set forth below. Rule 11.13(a)(1)
describes the process by which an incoming order would execute against
the BATS Book.\7\ To the extent an order has not been executed in its
entirety against the BATS Book, Rule 11.13(a)(2)(B) then describes the
process of routing marketable limit orders \8\ to one or more Trading
Centers, including a description of how the Exchange treats any
unfilled balance that returns to the Exchange following the first
attempt to fill the order through the routing process. If not filled
through routing, and based on the order instructions, the unfilled
balance of the order may be posted to the BATS Book. The Exchange is
proposing to permit Users to designate the order as eligible to be
routed away from the Exchange, after being posted, to the extent
another Trading Center locks or crosses the posted order. The Exchange
believes that the proposed change to Rule 11.13 will give additional
flexibility with respect to the treatment of their orders and may
result in such orders being executed more quickly. The proposed option
to route a posted order to a locking or crossing market is offered by
at least one of the Exchange's competitors.\9\
---------------------------------------------------------------------------
\7\ As defined in BATS Rule 1.5(d).
\8\ Market orders are also routed away, pursuant to Rule
11.13(a)(2)(A), however the Exchange is not proposing any changes to
the treatment of routed market orders at this time.
\9\ See, e.g., NASDAQ Rule 4758(a)(1)(A)(ii).
---------------------------------------------------------------------------
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.\10\ Specifically, the
proposed change is consistent with Section 6(b)(5) of the Act,\11\
because it would 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, by allowing Users to instruct the Exchange to
route a posted order away from the Exchange to the extent another
market has locked or crossed such order. This functionality will allow
the Exchange to seek to execute the resting order if market conditions
have changed since such order was originally posted.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement of Burden on Competition
The Exchange does not believe that the proposed rule change imposes
any burden 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 foregoing rule change does not: (1) Significantly
affect the protection of investors or the public interest; (2) impose
any significant burden on competition; and (3) become operative for 30
days after the date of this filing, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act \12\ and Rule 19b 4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.\14\
However, Rule 19b 4(f)(6)(iii)\15\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has requested that the
Commission waive the 30-day operative delay. The Commission notes that
BATS' proposal is substantially similar to the rules of another
national securities exchanges and does not raise any new substantive
issues.\16\ BATS expects to have operational and technological changes
in place to support the proposed rule change on May 22, 2009.\17\ In
addition, BATS states that the proposed functionality is completely
optional, and will not require any programming changes by Users of the
Exchange unless they choose to use the new functionality. Based on the
foregoing, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest and hereby designates the proposal operative upon filing.\18\
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\14\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
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. The Commission deems this requirement to have been
satisfied.
\15\ Id.
\16\ See supra note 9.
\17\ See SR-BATS-2009-015, Item 7.
\18\ For the purposes only of waiving the 30-day operative
delay, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors or otherwise in
furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form(https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-BATS-2009-015 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 25795]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090.
All submissions should refer to File No. SR-BATS-2009-015. This file
number should be included on the subject line if e-mail 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 (https://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 inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of BATS. 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-BATS-2009-015 and should be
submitted on or before June 19, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12446 Filed 5-28-09; 8:45 am]
BILLING CODE 8010-01-P
