Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BATS Rule 11.17, Entitled “Clearly Erroneous Executions”, 51917-51921 [E9-24247]
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Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices
19(b)(3)(A) of the Act 11 and Rule 19b–
4(f)(6) thereunder.12
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 13 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6) 14
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange requests
that the Commission waive the 30-day
operative delay so that it may
implement the new rule on October 5,
2009, the same date as the other equities
exchanges. The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest
because it will allow the Exchange to
begin applying the new rule on the same
date as the other equities exchanges.15
Application of the new rule on this date
should help foster transparency and
consistency among those exchanges that
adopt clearly erroneous execution rules
substantially similar to those previously
approved by the Commission.16 For
these reasons, the Commission
designates that the proposed rule
change become operative on October 5,
2009.
At any time within 60 days of the
filing of the 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:
11 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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 Exchange has satisfied this
requirement.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6).
15 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposal’s impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
16 See Securities Exchange Act Release No. 60706
(September 22, 2009) 74 FR 49416 (September 28,
2009) (NYSEArca–2009–36).
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12 17
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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
Number SR–CBOE–2009–071 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
51917
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60759; File No. SR–BATS–
2009–030]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend BATS Rule
11.17, Entitled ‘‘Clearly Erroneous
Executions’’
October 1, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
All submissions should refer to File
September 28, 2009, BATS Exchange,
Number SR–CBOE–2009–071. This file
Inc. (‘‘Exchange’’ or ‘‘BATS’’) filed with
number should be included on the
the Securities and Exchange
subject line if e-mail is used. To help the Commission (‘‘Commission’’) the
Commission process and review your
proposed rule change as described in
comments more efficiently, please use
Items I and II below, which Items have
only one method. The Commission will been prepared by the Exchange. BATS
post all comments on the Commission’s has designated the proposed rule change
as constituting a rule change under Rule
Internet Web site (https://www.sec.gov/
19b–4(f)(6) under the Act,3 which
rules/sro.shtml). Copies of the
renders the proposal effective upon
submission, all subsequent
filing with the Commission. The
amendments, all written statements
Commission is publishing this notice to
with respect to the proposed rule
solicit comments on the proposed rule
change that are filed with the
change from interested persons.
Commission, and all written
communications relating to the
I. Self-Regulatory Organization’s
proposed rule change between the
Statement of the Terms of Substance of
Commission and any person, other than the Proposed Rule Change
those that may be withheld from the
The Exchange is proposing to amend
public in accordance with the
BATS Rule 11.17, entitled ‘‘Clearly
provisions of 5 U.S.C. 552, will be
Erroneous Executions,’’ to modify the
available for inspection and copying in
Exchange’s rule regarding clearly
the Commission’s Public Reference
erroneous executions.
Room, 100 F Street, NE., Washington,
The text of the proposed rule change
DC 20549, on official business days
is available at the Exchange’s Web site
between the hours of 10 a.m. and 3 p.m. at https://www.batstrading.com, at the
Copies of such filing also will be
principal office of the Exchange, and at
available for inspection and copying at
the Commission’s Public Reference
the principal office of the Exchange. All Room.
comments received will be posted
II. Self-Regulatory Organization’s
without change; the Commission does
Statement of the Purpose of, and
not edit personal identifying
Statutory Basis for, the Proposed Rule
information from submissions. You
Change
should submit only information that
In its filing with the Commission, the
you wish to make publicly available. All
Exchange included statements
submissions should refer to File
concerning the purpose of and basis for
Number SR–CBOE–2009–071 and
the proposed rule change and discussed
should be submitted on or before
any comments it received on the
October 29, 2009.
proposed rule change. The text of these
For the Commission, by the Division of
statements may be examined at the
Trading and Markets, pursuant to delegated
places specified in Item IV below. The
authority.17
Exchange has prepared summaries, set
Florence E. Harmon,
forth in Sections A, B, and C below, of
the most significant parts of such
Deputy Secretary.
statements.
[FR Doc. E9–24248 Filed 10–7–09; 8:45 am]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
2 17
17 17
PO 00000
CFR 200.30–3(a)(12).
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Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
BATS Rule 11.17 in order to modify the
Exchange’s rule regarding clearly
erroneous executions. The proposed
changes are part of a market-wide effort
designed to provide transparency and
finality with respect to clearly erroneous
executions. This effort seeks to achieve
consistent results for participants across
U.S. equities exchanges while
maintaining a fair and orderly market,
protecting investors and protecting the
public interest. The proposed changes
are more fully discussed below.
Definition
The Exchange will maintain the
meaning of the definition of a clearly
erroneous execution, but proposes to
add clarifying language with respect to
cancelled trades. The proposed change
identifies that a transaction made in
clearly erroneous error and agreed to be
canceled by both parties or determined
by the Exchange to be clearly erroneous
will be removed ‘‘from the Consolidated
Tape.’’ 4 A trade will only be removed
from the Consolidated Tape when the
determination is deemed final and any
applicable appeals have been exhausted.
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Member Initiated Review Requests
The Exchange proposes to amend
BATS Rule 11.17 to update the
procedures for requesting a review of a
clearly erroneous transaction. The
Exchange currently requires requests for
review of a clearly erroneous execution
to be made both by electronic mail
(‘‘e-mail’’) and telephone. The proposed
amended rule would require that
requests for review be made by e-mail
or ‘‘other electronic means specified
from time to time by the Exchange.’’
Requiring requests for review to be
made via e-mail creates a standard
format that can easily be logged and
tracked. Due to the evolution of
electronic systems, however, it is
possible that the Exchange will develop
a more efficient means of electronic
submission, and thus, has proposed
language with a broader scope. The
Exchange will publish the e-mail
address or other electronic means to be
4 For purposes of this Rule, ‘‘removed from the
Consolidate Tape’’ means that a subsequent
message will be sent to the Consolidated Tape
indicating that a previously executed trade has been
cancelled.
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used for all clearly erroneous filings in
a circular distributed to Members.5
In order to be consistent with the
clearly erroneous execution rules of
other exchanges, the language of the
proposed rule slightly differs from the
current rule with respect to the
information that must be included with
a request for review. The only
substantive difference between the
current rule and proposed rule in this
regard, however, is that the Exchange
will no longer request that a Member
indicate a requested resolution of the
matter (i.e., break or adjust) and will
require a Member to include the factual
basis for the request.
The proposed rule also requires the
Exchange to notify the counterparty to
a trade upon receipt of a timely filed
request for review that satisfies the
numerical guidelines set forth within
the Rule (the ‘‘Numerical Guidelines’’).
This proposed language eliminates the
requirement that counterparties be
notified of every request for a ruling and
instead requires notice only when a
request is filed in a timely manner and
satisfies the Numerical Guidelines. This
change alleviates the burden on the
Exchange of notifying the counterparty
when a request for review does not
merit a ruling.
The Exchange proposes to amend
BATS Rule 11.17 to allow an Officer of
the Exchange or such other employee
designee (‘‘Officer’’) of the Exchange to
request additional information from
each party to a transaction under
review. Parties to the review will have
30 minutes from the time of the request
to provide additional supporting
information.
Routed Executions
The Exchange proposes to give other
market centers an additional thirty (30)
minutes from the receipt of their
participant’s timely filing to request a
ruling, but no longer than sixty (60)
minutes from the time of the execution
under review. This provision accounts
for those executions initially directed to
an away market center and subsequently
routed by that away market center to the
Exchange. For example, assume an
order is initially routed by a participant
to Market Center A and subsequently
routed to BATS where the order is
executed at a price outside of the
Numerical Guidelines. This provision
generally requires Market Center A to
file with the Exchange within 30
minutes from the time it receives its
participant’s timely filed request for
5 BATS Rule 1.5(n) defines a Member as ‘‘any
registered broker or dealer that has been admitted
to membership in the Exchange.’’
PO 00000
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review. This provision caps the filing
deadline for an away market center at 60
minutes from the time of the execution
under review.
Threshold Factors
Currently, the Exchange’s Clearly
Erroneous Execution rule does not
identify specific numeric guidelines for
determining what constitutes a clearly
erroneous transaction. The current rule
simply provides that an Exchange
Official ‘‘shall review the transaction
under dispute and determine whether it
is clearly erroneous, with a view toward
maintaining a fair and orderly market
and the protection of investors and the
public interest.’’ 6 The Exchange
proposes adding certain numerical
thresholds to the Rule that explicitly
state what constitutes a clearly
erroneous execution.
Numerical Guidelines
The proposed numerical guidelines
state that a transaction executed during
Regular Trading Hours 7 or the PreOpening 8 and After Hours Trading
Sessions 9 may be found to be clearly
erroneous only if the price of the
transaction to buy is greater, or less in
the case of a sale, than the reference
price by an amount that equals or
exceeds the numerical guidelines for a
particular transaction category. The
execution time of the transaction under
review determines whether the
guidance threshold is Regular Trading
Hours or Pre-Opening or After Hours
Trading Sessions (which occur before
and after the Regular Trading Hours).
The Reference Price shall be equal to the
Consolidated Last Sale immediately
prior to the execution under review,
unless unusual circumstances are
present. The proposed guidelines for
sales greater than $0.00 up to and
including $25.00 are 10% for Regular
Trading Hours and 20% for the PreOpening and After Hours Trading
Sessions. The proposed guidelines for
sales greater than $25.00 up to and
including $50.00 are 5% for Regular
Trading Hours and 10% for the PreOpening and After Hours Trading
Sessions. The proposed guidelines for
sales greater than $50.00 are 3% for
Regular Trading Hours and 6% for the
Pre-Opening and After Hours Trading
Sessions. A filing involving five or more
6 BATS
Rule 11.17(b).
Trading Hours last from 9:30 a.m. until
4:00 p.m. (Eastern Time). BATS Rule 1.5(w).
8 The Pre-Opening Session begins at 8:00 a.m. and
concludes 9:30 a.m. (Eastern Time). BATS Rule
1.5(r).
9 The After Hours Trading Session begins at 4:00
p.m. and concludes at 5:00 p.m. (Eastern Time).
BATS Rule 1.5(c).
7 Regular
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securities by the same Member will be
aggregated into a single filing called a
‘‘Multi-Stock Event.’’ In the case of a
Multi-Stock Event, the proposed
guidelines are 10% for Regular Trading
Hours and 10% for the Pre-Opening and
After Hours Trading Sessions. In the
case of Leveraged ETF/ETN securities,
the above guidelines are to be
multiplied by the leverage multiplier of
the security. Executions that do not
meet or exceed the Numerical
Regular trading hours numerical guidelines
(subject transaction’s % difference from the
reference price):
Reference price
Guidelines will not be eligible for
review under this section. The following
chart summarizes the proposed
Numerical Guidelines.
Pre-opening and after hours trading session
numerical guidelines
(subject transaction’s % difference from the
reference price):
Greater than $0.00 up to and including $25.00
Greater than $25.00 up to and including
$50.00.
Greater than $50.00 ..........................................
Multi-Stock Event—Filings involving five or
more securities by the same Member will be
aggregated into a single filing.
Leveraged ETF/ETN securities .........................
10% ..................................................................
5% ....................................................................
20%.
10%.
3% ....................................................................
10% ..................................................................
6%.
10%.
Establishing Numerical Guidelines
within the Rule brings regulatory
transparency and consistency in the
application of the rules of the Exchange.
These Numerical Guidelines represent
the general consensus approach and
were developed based on the collective
experiences of a market-wide group.
The Exchange believes that the
Thresholds established are fair and
appropriate and apply evenly to all
participants.
Trade #1—1,000 shares @ $10.00 (9,000
remaining)
Trade #2—1,000 shares @ $10.20 (8,000
remaining)
Trade #3—1,000 shares @ $10.40 (7,000
remaining)
Trade #4—1,000 shares @ $10.60 (6,000
remaining)
Trade #5—1,000 shares @ $10.80 (5,000
remaining)
Trade #6—1,000 shares @ $11.00 (4,000
remaining)
Trade #7—1,000 shares @ $11.20 (3,000
remaining)
Trade #8—1,000 shares @ $11.40 (2,000
remaining)
Trade #9—1,000 shares @ $11.60 (1,000
remaining)
Trade #10—1,000 shares @ $11.80 (complete)
Unusual Circumstances
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51919
The Exchange further proposes that in
Unusual Circumstances the Exchange
may, in its discretion and with a view
toward maintaining a fair and orderly
market and the protection of investors
and the public interest, use a Reference
Price other than the consolidated last
sale. Unusual Circumstances may
include periods of extreme market
volatility, sustained illiquidity, or
widespread system issues. Other
Reference Prices that the Exchange may
use would include the consolidated
inside price, the consolidated opening
price, the consolidated prior close, or
the consolidated last sale prior to a
series of executions.
The following example explains the
use of a Reference Price equal to the
consolidated last sale prior to a series of
executions.
ABC has a consolidated last sale of
$10.00. During Regular Trading Hours
Customer A enters a market order to buy
10,000 shares, although it had intended
a market order for 1,000 shares. The size
of the order is such that the order
sweeps the BATS Book, which reflects
1,000 shares of liquidity offered at each
of following prices. Executions occur,
moving through the depth of Book, as
follows:
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Regular Trading Hours Numerical Guidelines Regular Trading Hours Numerical Guidelines
multiplied by the leverage multiplier (i.e., 2×).
multiplied by the leverage multiplier (i.e.,
2×).
Thus, to be eligible for review, a
transaction must be at a price that is at
least 10% higher than the consolidated
last sale prior to the series of executions.
Customer A could request a ruling for
trades #6 through #10, priced at $11.00
and above, but trades #1 through #5
would not be eligible for review.
Under the proposed rule the Exchange
may also use a higher numerical
guideline if, after market participants
have been alerted to erroneous activity,
the price of the security returns toward
its prior trading range but continues to
trade beyond the price it would have
normally been broken.
Joint Market Rulings
In the interest of achieving
consistency across markets, the
Exchange proposes that, in events that
involve other markets, the Exchange
would have the ability to use a different
Reference Price and/or Numerical
Guideline. In these instances the
Reference Price would be determined
based on a consensus among the
Exchanges where the transactions
occurred. Furthermore, when a ruling is
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made across markets, the Exchange may
determine that the ruling is not eligible
for appeal because immediate finality is
necessary to maintain a fair and orderly
market and to protect investors and the
public interest.
Additional Factors
The proposed amendments to BATS
Rule 11.17 also enumerate some
additional factors that an Officer may
consider when determining whether an
execution is clearly erroneous. These
factors include, but are not limited to,
system malfunctions or disruptions,
volume and volatility for the security,
derivative securities products that
correspond to greater than 100% in the
direction of a tracking index, news
released for the security, whether
trading in the security was recently
halted/resumed, whether the security is
an initial public offering, whether the
security was subject to a stock-split,
reorganization, or other corporate
action, overall market conditions, PreOpening or After Hours Trading Session
executions, validity of the consolidated
tapes trades and quotes, consideration
of primary market indications, and
executions inconsistent with the trading
pattern in the stock. Each additional
factor shall be considered with a view
toward maintaining a fair and orderly
market, the protection of investors and
the public interest.
Numerical Guidelines Applicable to
Volatile Market Openings
The proposed Rule would give the
Exchange the ability to expand the
Numerical Guidelines applicable to
transactions occurring between 9:30
a.m. and 10 a.m. based on the
disseminated value of the S&P 500
Futures at 9:15 a.m. When the S&P
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Futures are up or down from 3% up to
but not including 5% at 9:15 a.m., the
Numerical Guidelines are doubled.
When the S&P Futures are up or down
5% or greater at 9:15 a.m., the
Numerical Guidelines are tripled. The
Exchange believes that the S&P 500
Futures contract is an appropriate and
reliable barometer of market activity
prior to the market opening due to its
broad based market coverage and deep
liquidity. Using the S&P 500 Futures
disseminated value at 9:15 a.m. as the
barometer of market activity, the
Exchange is providing a transparent
means of offering adjusted guidelines in
times of volatile market activity.
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Outlier Transactions
The proposed amendments to BATS
Rule 11.17 provide that an Officer may
consider requests for review received
after 30 minutes, but not longer than 60
minutes after the execution in question
in the case of an Outlier Transaction. An
Outlier Transaction is a transaction
where the execution price of the
security is greater than three times the
current Numerical Guidelines. In
addition, if the execution price of the
security breaches the 52-week high or
low, then the Exchange may consider
Additional Factors to determine if the
transaction qualifies for review or if the
Exchange shall decline to act.
Review Procedures
Initial Determination: The Exchange
proposes removing language that
currently allows an Officer to modify
one or more of the terms of a transaction
under review. Under the proposed rule,
the Officer of the Exchange will only
have the authority to break the trades or
rule to let the trades stand. This change
attempts to remove the subjectivity from
the rule that is necessitated by an
adjustment. The Exchange also proposes
adding language stating that a
determination shall be made generally
within 30 minutes of receipt of the
complaint, but in no case later than the
start of Regular Trading Hours on the
following trading day. Rulings made
outside of 30 minutes by an Officer will
not fail for lack of timeliness. The
guideline simply provides participants
an appropriate expectation that a ruling
will generally be made within 30
minutes, and in no case later than the
start of Regular Trading Hours on the
following trading day.
Appeals: The Exchange proposes to
amend the appeals procedure for trades
that are deemed to be clearly erroneous.
First, the Exchange will no longer
accept appeal requests via facsimile.
Similar to the proposed language for an
initial request for a ruling, all appeal
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requests must be made via e-mail or
other electronic means specified by the
Exchange.
The current rule provides that the
Exchange shall review and render a
decision upon an appeal within a
timeframe prescribed by the Exchange.
The proposed rule offers more definite
guidelines to ensure the expedient
resolution of appeals. It requires the
Exchange to review appeals as soon as
practicable, but generally on the same
day as the executions under review.
Appeals received between 3 Eastern
Time and the close of trading of the
After Hours Trading Session should be
made as soon as practicable, but in no
case later than the trading day following
the date of the execution under review.
Appeals will not fail for lack of
timeliness. This revised provision
provides participants a reasonable
expectation of when a ruling on appeal
will generally be made.
Further, the proposed rule declares
that any determination made by an
Officer or by the CEE Panel shall be
rendered without prejudice as to the
right of the parties to the transaction to
submit their dispute to arbitration. This
provision simply clarifies the fact that
nothing in the proposed rule limits or
impedes the rights of the parties to
arbitrate their dispute.
System Disruption and Malfunctions
Within the System Disruptions and
Malfunctions section of current BATS
Rule 11.17, after an Officer determines
that a trade was clearly erroneous he
may declare the transaction null and
void or modify the trade to attempt to
achieve an equitable rectification of the
error. The proposed Rule eliminates the
Exchange’s ability to modify a clearly
erroneous execution. The Exchange
must either uphold or nullify the
execution based upon the findings of
the Officer reviewing the execution. The
proposed Rule provides that, in the
event of a disruption or a malfunction,
an Officer of the Corporation or other
senior level employee designee will rely
on the proposed Numerical Guidelines
in determining whether an execution is
clearly erroneous. However, the Officer
or senior level employee may also use
a lower Numerical Guideline if
necessary to maintain a fair and orderly
market, protect investors, and protect
the public interest. The proposed rule
also adds that actions taken under these
circumstances must be taken within 30
minutes of detection of the erroneous
transaction in the ordinary case, and by
no later than the start of Regular Trading
Hours on the day following the date of
the execution under review when
extraordinary circumstances exist.
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Officers Acting on Their Own Motion
The Exchange proposes to add a
section to the Rule that will grant an
Officer of the Exchange or other senior
level employee designee the ability to
act on his or her own motion to review
potentially erroneous executions. Under
the current rule, an Officer of the
Exchange or other senior level employee
designee has the ability to act upon his
or her own motion only in the event of
a system disruption or malfunction. The
proposed rule would allow an Officer of
the Corporation or other senior level
employee designee to review executions
and rely on the Numerical Guidelines,
under any circumstance. In
extraordinary circumstances an Officer
or senior level employee designee may
apply a lower Numerical Guideline if it
is determined that such action is
necessary to maintain a fair and orderly
market or protect investors and the
public interest. In some instances the
Exchange may detect a single execution
that breaches the Numerical Guidelines
but is not the subject of a ruling request.
This provision gives the Exchange the
ability to review such executions.
Additionally, in practice, clearly
erroneous executions commonly involve
multiple parties and multiple
executions. In such instances, all
affected parties may not request a
ruling. The Exchange proposes this
provision to permit an Officer of the
Exchange or other senior level employee
designee to rule on a group of
transactions related to the same
occurrence or event as a whole, without
a formal request for a ruling from every
affected party.
As noted above, the proposed rule is
the result of a market-wide effort to
harmonize the clearly erroneous rules of
U.S. equities exchanges so that market
participants receive more uniform
rulings regarding their executions on
different exchanges. To best achieve
such harmonization, the Exchange
believes that the rules those national
securities exchanges that are amending
their rules should be amended as of the
same date, and such implementation is
currently planned for October 5, 2009.
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
10 15
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U.S.C. 78f(b).
08OCN1
Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices
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. The
proposed rule change provides
transparency and finality for
participants and creates consistent
results across U.S. equities exchanges
with respect to clearly erroneous
executions. This proposed change
further promotes the maintenance of a
fair and orderly market, the protection
of investors and the protection of the
public interest.
B. Self-Regulatory Organization’s
Statement on 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 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 12 and Rule 19b–
4(f)(6) thereunder.13
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 14 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6) 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 requests
that the Commission waive the 30-day
operative delay so that it may
implement the new rule on October 5,
2009, the same date as the other equities
exchanges. The Commission believes
11 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A).
13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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 Exchange has satisfied this
requirement.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6).
mstockstill on DSKH9S0YB1PROD with NOTICES
12 15
VerDate Nov<24>2008
18:31 Oct 07, 2009
Jkt 220001
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest
because it will allow the Exchange to
begin applying the new rule on the same
date as the other equities exchanges.16
Application of the new rule on this date
should help foster transparency and
consistency among those exchanges that
adopt clearly erroneous execution rules
substantially similar to those previously
approved by the Commission.17 For
these reasons, the Commission
designates that the proposed rule
change become operative on October 5,
2009.
At any time within 60 days of the
filing of the 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
Number SR–BATS–2009–030 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BATS–2009–030. 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
16 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposal’s impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
17 See Securities Exchange Act Release No. 60706
(September 22, 2009) 74 FR 49416 (September 28,
2009) (NYSEArca–2009–36).
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
51921
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 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 publicly available. All
submissions should refer to File
Number SR–BATS–2009–030 and
should be submitted on or before
October 29, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–24247 Filed 10–7–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60782; File No. SR–
NYSEAmex–2009–69]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NYSE
Amex LLC Amending NYSE Amex
Equities Rule 128 Governing Clearly
Erroneous Executions for NYSE Amex
Equities
October 2, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
2, 2009, NYSE Amex LLC (‘‘Exchange’’
or ‘‘NYSE Amex’’) 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. NYSE Amex has
designated the proposed rule change as
constituting a rule change under Rule
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\08OCN1.SGM
08OCN1
]]>Agencies
[Federal Register Volume 74, Number 194 (Thursday, October 8, 2009)]
[Notices]
[Pages 51917-51921]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-24247]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60759; File No. SR-BATS-2009-030]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
BATS Rule 11.17, Entitled ``Clearly Erroneous Executions''
October 1, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 28, 2009, BATS Exchange, Inc. (``Exchange'' or ``BATS'')
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. BATS has designated the proposed
rule change as constituting a rule change under Rule 19b-4(f)(6) under
the Act,\3\ which renders the proposal 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\ 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 11.17, entitled
``Clearly Erroneous Executions,'' to modify the Exchange's rule
regarding clearly erroneous executions.
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 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.
[[Page 51918]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend BATS Rule 11.17 in order to modify
the Exchange's rule regarding clearly erroneous executions. The
proposed changes are part of a market-wide effort designed to provide
transparency and finality with respect to clearly erroneous executions.
This effort seeks to achieve consistent results for participants across
U.S. equities exchanges while maintaining a fair and orderly market,
protecting investors and protecting the public interest. The proposed
changes are more fully discussed below.
Definition
The Exchange will maintain the meaning of the definition of a
clearly erroneous execution, but proposes to add clarifying language
with respect to cancelled trades. The proposed change identifies that a
transaction made in clearly erroneous error and agreed to be canceled
by both parties or determined by the Exchange to be clearly erroneous
will be removed ``from the Consolidated Tape.'' \4\ A trade will only
be removed from the Consolidated Tape when the determination is deemed
final and any applicable appeals have been exhausted.
---------------------------------------------------------------------------
\4\ For purposes of this Rule, ``removed from the Consolidate
Tape'' means that a subsequent message will be sent to the
Consolidated Tape indicating that a previously executed trade has
been cancelled.
---------------------------------------------------------------------------
Member Initiated Review Requests
The Exchange proposes to amend BATS Rule 11.17 to update the
procedures for requesting a review of a clearly erroneous transaction.
The Exchange currently requires requests for review of a clearly
erroneous execution to be made both by electronic mail (``e-mail'') and
telephone. The proposed amended rule would require that requests for
review be made by e-mail or ``other electronic means specified from
time to time by the Exchange.'' Requiring requests for review to be
made via e-mail creates a standard format that can easily be logged and
tracked. Due to the evolution of electronic systems, however, it is
possible that the Exchange will develop a more efficient means of
electronic submission, and thus, has proposed language with a broader
scope. The Exchange will publish the e-mail address or other electronic
means to be used for all clearly erroneous filings in a circular
distributed to Members.\5\
---------------------------------------------------------------------------
\5\ BATS Rule 1.5(n) defines a Member as ``any registered broker
or dealer that has been admitted to membership in the Exchange.''
---------------------------------------------------------------------------
In order to be consistent with the clearly erroneous execution
rules of other exchanges, the language of the proposed rule slightly
differs from the current rule with respect to the information that must
be included with a request for review. The only substantive difference
between the current rule and proposed rule in this regard, however, is
that the Exchange will no longer request that a Member indicate a
requested resolution of the matter (i.e., break or adjust) and will
require a Member to include the factual basis for the request.
The proposed rule also requires the Exchange to notify the
counterparty to a trade upon receipt of a timely filed request for
review that satisfies the numerical guidelines set forth within the
Rule (the ``Numerical Guidelines''). This proposed language eliminates
the requirement that counterparties be notified of every request for a
ruling and instead requires notice only when a request is filed in a
timely manner and satisfies the Numerical Guidelines. This change
alleviates the burden on the Exchange of notifying the counterparty
when a request for review does not merit a ruling.
The Exchange proposes to amend BATS Rule 11.17 to allow an Officer
of the Exchange or such other employee designee (``Officer'') of the
Exchange to request additional information from each party to a
transaction under review. Parties to the review will have 30 minutes
from the time of the request to provide additional supporting
information.
Routed Executions
The Exchange proposes to give other market centers an additional
thirty (30) minutes from the receipt of their participant's timely
filing to request a ruling, but no longer than sixty (60) minutes from
the time of the execution under review. This provision accounts for
those executions initially directed to an away market center and
subsequently routed by that away market center to the Exchange. For
example, assume an order is initially routed by a participant to Market
Center A and subsequently routed to BATS where the order is executed at
a price outside of the Numerical Guidelines. This provision generally
requires Market Center A to file with the Exchange within 30 minutes
from the time it receives its participant's timely filed request for
review. This provision caps the filing deadline for an away market
center at 60 minutes from the time of the execution under review.
Threshold Factors
Currently, the Exchange's Clearly Erroneous Execution rule does not
identify specific numeric guidelines for determining what constitutes a
clearly erroneous transaction. The current rule simply provides that an
Exchange Official ``shall review the transaction under dispute and
determine whether it is clearly erroneous, with a view toward
maintaining a fair and orderly market and the protection of investors
and the public interest.'' \6\ The Exchange proposes adding certain
numerical thresholds to the Rule that explicitly state what constitutes
a clearly erroneous execution.
---------------------------------------------------------------------------
\6\ BATS Rule 11.17(b).
---------------------------------------------------------------------------
Numerical Guidelines
The proposed numerical guidelines state that a transaction executed
during Regular Trading Hours \7\ or the Pre-Opening \8\ and After Hours
Trading Sessions \9\ may be found to be clearly erroneous only if the
price of the transaction to buy is greater, or less in the case of a
sale, than the reference price by an amount that equals or exceeds the
numerical guidelines for a particular transaction category. The
execution time of the transaction under review determines whether the
guidance threshold is Regular Trading Hours or Pre-Opening or After
Hours Trading Sessions (which occur before and after the Regular
Trading Hours). The Reference Price shall be equal to the Consolidated
Last Sale immediately prior to the execution under review, unless
unusual circumstances are present. The proposed guidelines for sales
greater than $0.00 up to and including $25.00 are 10% for Regular
Trading Hours and 20% for the Pre-Opening and After Hours Trading
Sessions. The proposed guidelines for sales greater than $25.00 up to
and including $50.00 are 5% for Regular Trading Hours and 10% for the
Pre-Opening and After Hours Trading Sessions. The proposed guidelines
for sales greater than $50.00 are 3% for Regular Trading Hours and 6%
for the Pre-Opening and After Hours Trading Sessions. A filing
involving five or more
[[Page 51919]]
securities by the same Member will be aggregated into a single filing
called a ``Multi-Stock Event.'' In the case of a Multi-Stock Event, the
proposed guidelines are 10% for Regular Trading Hours and 10% for the
Pre-Opening and After Hours Trading Sessions. In the case of Leveraged
ETF/ETN securities, the above guidelines are to be multiplied by the
leverage multiplier of the security. Executions that do not meet or
exceed the Numerical Guidelines will not be eligible for review under
this section. The following chart summarizes the proposed Numerical
Guidelines.
---------------------------------------------------------------------------
\7\ Regular Trading Hours last from 9:30 a.m. until 4:00 p.m.
(Eastern Time). BATS Rule 1.5(w).
\8\ The Pre-Opening Session begins at 8:00 a.m. and concludes
9:30 a.m. (Eastern Time). BATS Rule 1.5(r).
\9\ The After Hours Trading Session begins at 4:00 p.m. and
concludes at 5:00 p.m. (Eastern Time). BATS Rule 1.5(c).
------------------------------------------------------------------------
Pre-opening and
Regular trading after hours
hours numerical trading session
guidelines numerical
(subject guidelines
Reference price transaction's % (subject
difference from transaction's %
the reference difference from
price): the reference
price):
------------------------------------------------------------------------
Greater than $0.00 up to and 10%............... 20%.
including $25.00.
Greater than $25.00 up to and 5%................ 10%.
including $50.00.
Greater than $50.00............. 3%................ 6%.
Multi-Stock Event--Filings 10%............... 10%.
involving five or more
securities by the same Member
will be aggregated into a
single filing.
Leveraged ETF/ETN securities.... Regular Trading Regular Trading
Hours Numerical Hours Numerical
Guidelines Guidelines
multiplied by the multiplied by the
leverage leverage
multiplier (i.e., multiplier (i.e.,
2x). 2x).
------------------------------------------------------------------------
Establishing Numerical Guidelines within the Rule brings regulatory
transparency and consistency in the application of the rules of the
Exchange. These Numerical Guidelines represent the general consensus
approach and were developed based on the collective experiences of a
market-wide group. The Exchange believes that the Thresholds
established are fair and appropriate and apply evenly to all
participants.
Unusual Circumstances
The Exchange further proposes that in Unusual Circumstances the
Exchange may, in its discretion and with a view toward maintaining a
fair and orderly market and the protection of investors and the public
interest, use a Reference Price other than the consolidated last sale.
Unusual Circumstances may include periods of extreme market volatility,
sustained illiquidity, or widespread system issues. Other Reference
Prices that the Exchange may use would include the consolidated inside
price, the consolidated opening price, the consolidated prior close, or
the consolidated last sale prior to a series of executions.
The following example explains the use of a Reference Price equal
to the consolidated last sale prior to a series of executions.
ABC has a consolidated last sale of $10.00. During Regular Trading
Hours Customer A enters a market order to buy 10,000 shares, although
it had intended a market order for 1,000 shares. The size of the order
is such that the order sweeps the BATS Book, which reflects 1,000
shares of liquidity offered at each of following prices. Executions
occur, moving through the depth of Book, as follows:
Trade 1--1,000 shares @ $10.00 (9,000 remaining)
Trade 2--1,000 shares @ $10.20 (8,000 remaining)
Trade 3--1,000 shares @ $10.40 (7,000 remaining)
Trade 4--1,000 shares @ $10.60 (6,000 remaining)
Trade 5--1,000 shares @ $10.80 (5,000 remaining)
Trade 6--1,000 shares @ $11.00 (4,000 remaining)
Trade 7--1,000 shares @ $11.20 (3,000 remaining)
Trade 8--1,000 shares @ $11.40 (2,000 remaining)
Trade 9--1,000 shares @ $11.60 (1,000 remaining)
Trade 10--1,000 shares @ $11.80 (complete)
Thus, to be eligible for review, a transaction must be at a price
that is at least 10% higher than the consolidated last sale prior to
the series of executions. Customer A could request a ruling for trades
6 through 10, priced at $11.00 and above, but trades
1 through 5 would not be eligible for review.
Under the proposed rule the Exchange may also use a higher
numerical guideline if, after market participants have been alerted to
erroneous activity, the price of the security returns toward its prior
trading range but continues to trade beyond the price it would have
normally been broken.
Joint Market Rulings
In the interest of achieving consistency across markets, the
Exchange proposes that, in events that involve other markets, the
Exchange would have the ability to use a different Reference Price and/
or Numerical Guideline. In these instances the Reference Price would be
determined based on a consensus among the Exchanges where the
transactions occurred. Furthermore, when a ruling is made across
markets, the Exchange may determine that the ruling is not eligible for
appeal because immediate finality is necessary to maintain a fair and
orderly market and to protect investors and the public interest.
Additional Factors
The proposed amendments to BATS Rule 11.17 also enumerate some
additional factors that an Officer may consider when determining
whether an execution is clearly erroneous. These factors include, but
are not limited to, system malfunctions or disruptions, volume and
volatility for the security, derivative securities products that
correspond to greater than 100% in the direction of a tracking index,
news released for the security, whether trading in the security was
recently halted/resumed, whether the security is an initial public
offering, whether the security was subject to a stock-split,
reorganization, or other corporate action, overall market conditions,
Pre-Opening or After Hours Trading Session executions, validity of the
consolidated tapes trades and quotes, consideration of primary market
indications, and executions inconsistent with the trading pattern in
the stock. Each additional factor shall be considered with a view
toward maintaining a fair and orderly market, the protection of
investors and the public interest.
Numerical Guidelines Applicable to Volatile Market Openings
The proposed Rule would give the Exchange the ability to expand the
Numerical Guidelines applicable to transactions occurring between 9:30
a.m. and 10 a.m. based on the disseminated value of the S&P 500 Futures
at 9:15 a.m. When the S&P
[[Page 51920]]
Futures are up or down from 3% up to but not including 5% at 9:15 a.m.,
the Numerical Guidelines are doubled. When the S&P Futures are up or
down 5% or greater at 9:15 a.m., the Numerical Guidelines are tripled.
The Exchange believes that the S&P 500 Futures contract is an
appropriate and reliable barometer of market activity prior to the
market opening due to its broad based market coverage and deep
liquidity. Using the S&P 500 Futures disseminated value at 9:15 a.m. as
the barometer of market activity, the Exchange is providing a
transparent means of offering adjusted guidelines in times of volatile
market activity.
Outlier Transactions
The proposed amendments to BATS Rule 11.17 provide that an Officer
may consider requests for review received after 30 minutes, but not
longer than 60 minutes after the execution in question in the case of
an Outlier Transaction. An Outlier Transaction is a transaction where
the execution price of the security is greater than three times the
current Numerical Guidelines. In addition, if the execution price of
the security breaches the 52-week high or low, then the Exchange may
consider Additional Factors to determine if the transaction qualifies
for review or if the Exchange shall decline to act.
Review Procedures
Initial Determination: The Exchange proposes removing language that
currently allows an Officer to modify one or more of the terms of a
transaction under review. Under the proposed rule, the Officer of the
Exchange will only have the authority to break the trades or rule to
let the trades stand. This change attempts to remove the subjectivity
from the rule that is necessitated by an adjustment. The Exchange also
proposes adding language stating that a determination shall be made
generally within 30 minutes of receipt of the complaint, but in no case
later than the start of Regular Trading Hours on the following trading
day. Rulings made outside of 30 minutes by an Officer will not fail for
lack of timeliness. The guideline simply provides participants an
appropriate expectation that a ruling will generally be made within 30
minutes, and in no case later than the start of Regular Trading Hours
on the following trading day.
Appeals: The Exchange proposes to amend the appeals procedure for
trades that are deemed to be clearly erroneous. First, the Exchange
will no longer accept appeal requests via facsimile. Similar to the
proposed language for an initial request for a ruling, all appeal
requests must be made via e-mail or other electronic means specified by
the Exchange.
The current rule provides that the Exchange shall review and render
a decision upon an appeal within a timeframe prescribed by the
Exchange. The proposed rule offers more definite guidelines to ensure
the expedient resolution of appeals. It requires the Exchange to review
appeals as soon as practicable, but generally on the same day as the
executions under review. Appeals received between 3 Eastern Time and
the close of trading of the After Hours Trading Session should be made
as soon as practicable, but in no case later than the trading day
following the date of the execution under review. Appeals will not fail
for lack of timeliness. This revised provision provides participants a
reasonable expectation of when a ruling on appeal will generally be
made.
Further, the proposed rule declares that any determination made by
an Officer or by the CEE Panel shall be rendered without prejudice as
to the right of the parties to the transaction to submit their dispute
to arbitration. This provision simply clarifies the fact that nothing
in the proposed rule limits or impedes the rights of the parties to
arbitrate their dispute.
System Disruption and Malfunctions
Within the System Disruptions and Malfunctions section of current
BATS Rule 11.17, after an Officer determines that a trade was clearly
erroneous he may declare the transaction null and void or modify the
trade to attempt to achieve an equitable rectification of the error.
The proposed Rule eliminates the Exchange's ability to modify a clearly
erroneous execution. The Exchange must either uphold or nullify the
execution based upon the findings of the Officer reviewing the
execution. The proposed Rule provides that, in the event of a
disruption or a malfunction, an Officer of the Corporation or other
senior level employee designee will rely on the proposed Numerical
Guidelines in determining whether an execution is clearly erroneous.
However, the Officer or senior level employee may also use a lower
Numerical Guideline if necessary to maintain a fair and orderly market,
protect investors, and protect the public interest. The proposed rule
also adds that actions taken under these circumstances must be taken
within 30 minutes of detection of the erroneous transaction in the
ordinary case, and by no later than the start of Regular Trading Hours
on the day following the date of the execution under review when
extraordinary circumstances exist.
Officers Acting on Their Own Motion
The Exchange proposes to add a section to the Rule that will grant
an Officer of the Exchange or other senior level employee designee the
ability to act on his or her own motion to review potentially erroneous
executions. Under the current rule, an Officer of the Exchange or other
senior level employee designee has the ability to act upon his or her
own motion only in the event of a system disruption or malfunction. The
proposed rule would allow an Officer of the Corporation or other senior
level employee designee to review executions and rely on the Numerical
Guidelines, under any circumstance. In extraordinary circumstances an
Officer or senior level employee designee may apply a lower Numerical
Guideline if it is determined that such action is necessary to maintain
a fair and orderly market or protect investors and the public interest.
In some instances the Exchange may detect a single execution that
breaches the Numerical Guidelines but is not the subject of a ruling
request. This provision gives the Exchange the ability to review such
executions. Additionally, in practice, clearly erroneous executions
commonly involve multiple parties and multiple executions. In such
instances, all affected parties may not request a ruling. The Exchange
proposes this provision to permit an Officer of the Exchange or other
senior level employee designee to rule on a group of transactions
related to the same occurrence or event as a whole, without a formal
request for a ruling from every affected party.
As noted above, the proposed rule is the result of a market-wide
effort to harmonize the clearly erroneous rules of U.S. equities
exchanges so that market participants receive more uniform rulings
regarding their executions on different exchanges. To best achieve such
harmonization, the Exchange believes that the rules those national
securities exchanges that are amending their rules should be amended as
of the same date, and such implementation is currently planned for
October 5, 2009.
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
[[Page 51921]]
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. The proposed rule change
provides transparency and finality for participants and creates
consistent results across U.S. equities exchanges with respect to
clearly erroneous executions. This proposed change further promotes the
maintenance of a fair and orderly market, the protection of investors
and the protection of the public interest.
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on 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 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 \12\ and Rule 19b-
4(f)(6) thereunder.\13\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \14\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6) \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 requests
that the Commission waive the 30-day operative delay so that it may
implement the new rule on October 5, 2009, the same date as the other
equities exchanges. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest because it will allow the Exchange to begin applying
the new rule on the same date as the other equities exchanges.\16\
Application of the new rule on this date should help foster
transparency and consistency among those exchanges that adopt clearly
erroneous execution rules substantially similar to those previously
approved by the Commission.\17\ For these reasons, the Commission
designates that the proposed rule change become operative on October 5,
2009.
---------------------------------------------------------------------------
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposal's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
\17\ See Securities Exchange Act Release No. 60706 (September
22, 2009) 74 FR 49416 (September 28, 2009) (NYSEArca-2009-36).
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At any time within 60 days of the filing of the 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 Number SR-BATS-2009-030 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BATS-2009-030. 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 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 publicly available. All
submissions should refer to File Number SR-BATS-2009-030 and should be
submitted on or before October 29, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-24247 Filed 10-7-09; 8:45 am]
BILLING CODE 8011-01-P
