Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BATS Rule 11.9, Entitled “Orders and Modifiers”, 28670-28672 [2010-12226]
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28670
Federal Register / Vol. 75, No. 98 / Friday, May 21, 2010 / Notices
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–Phlx–2010–71 on the
subject line.
emcdonald on DSK2BSOYB1PROD with NOTICES
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–Phlx-2010–71. 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 Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–Phlx2010–71 and should be submitted on or
before June 11, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–12227 Filed 5–20–10; 8:45 am]
BILLING CODE 8010–01–P
11 17
16:40 May 20, 2010
the most significant parts of such
statements.
[Release No. 34–62102; File No. SR–BATS–
2010–011]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend BATS Rule
11.9, Entitled ‘‘Orders and Modifiers’’
May 13, 2010.
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 4,
2010, BATS Exchange, Inc. (the
‘‘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. 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 proposes to make a
modification to the existing technology
that it provides to a User that wishes to
avoid trading against orders from that
same User (currently referred to as
‘‘Member Match Trade Prevention’’ or
‘‘MMTP’’).
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
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).
2 17
CFR 200.30–3(a)(12).
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1. Purpose
The Exchange proposes to make a
minor change to its Member Match
Trade Prevention, or MMTP,
functionality, described in BATS Rules
11.9(f) and 21.1(g) and to rename the
functionality as Match Trade Prevention
(‘‘MTP’’).
MMTP modifiers are designed to
prevent two orders with the same
Unique Identifier (as defined below)
from executing against each other. The
Exchange currently offers four MMTP
modifiers that can be set at the market
participant identifier (‘‘MPID’’), the
Exchange Member identifier or the
Exchange Sponsored Participant
identifier level (any such identifier, a
‘‘Unique Identifier’’).5 BATS is
proposing a change to the MMTP
Decrement and Cancel identifier
(‘‘MDC’’); none of the other MMTP
identifiers are affected by this proposal,
other than to change the references
throughout the rule text to MTP.
Under the existing rules, an incoming
order marked with the MDC modifier
will not execute against opposite side
resting interest marked with any MMTP
modifier originating from the same
Unique Identifier. If both orders are
equivalent in size, both orders will be
cancelled back to the originating User.
If the orders are not equivalent in size,
the equivalent size will be cancelled
back to the originating User and the
larger order will be decremented by the
size of the smaller order, with the
balance remaining on the BATS Book;
provided, however, that if the resting
order is marked with any MMTP
modifier other than MDC, and the
incoming order is smaller in size than
the resting order, then both orders will
be cancelled back to the originating User
(the ‘‘MDC Exception’’). Thus, as shown
in the example below, rather than
decrementing either order, pursuant to
the MDC Exception both orders are
cancelled in their entirety when the
resting order contains an MMTP
modifier other than MDC and is larger
than the incoming order.
Current MDC Exception—Example:
An order to buy 500 shares @ $22.00 is
5 Any Exchange Member that has an MPID issued
by FINRA is identified in the Exchange’s internal
systems by that MPID. Each Exchange Member that
does not already have an MPID and each Sponsored
Participant is issued an identifier that is specific to
the Exchange and allows the Exchange to determine
the User for each order and trade.
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emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 98 / Friday, May 21, 2010 / Notices
marked with any MMTP modifier other
than MDC and becomes a resting order
in the BATS Book. Subsequently, an
order to sell 400 shares @ $22.00 is
entered with the same Unique Identifier
and marked with the MDC modifier.
Current MDC Exception—Result: The
resting buy order for 500 shares at
$22.00 marked with a MMTP modifier
other than MDC is cancelled back to the
originating User. The incoming sell
order for 400 shares @ $22.00 marked
with the MDC modifier is cancelled
back to the originating User.
The Exchange proposes to allow Users
to opt-out of the default behavior of the
MDC Exception to allow an incoming
MDC order to result in a decremented
order even when it is smaller than the
resting order and the resting order
contains an MMTP modifier other than
MDC.
Proposed Opt-Out of MDC—Example:
An order to buy 500 shares @ $22.00 is
marked with any MMTP modifier and
becomes a resting order in the BATS
Book. Subsequently, an order to sell 400
shares @ $22.00 is entered with the
same Unique Identifier and marked with
the MDC modifier.
Proposed Opt-Out of MDC—Result:
400 of the 500 shares on the resting buy
order at $22.00 marked with any MMTP
modifier are cancelled back to the
originating User. The outstanding 100
shares remain on the BATS Book. The
incoming sell order for 400 shares @
$22.00 marked with the MDC modifier
is cancelled back to the originating User.
Although the Exchange intentionally
created the MDC Exception based on
conversations with its Users regarding
the best way to implement the MDC
modifier, other Users have requested
that the Exchange allow them to have
the incoming order control the result in
all situations, and thus, have requested
to be able to opt-out of the MDC
Exception. The Exchange notes that
NYSE Arca Equities (‘‘NYSE Arca’’) has
implemented its version of match trade
prevention without the MDC Exception,
and thus, allowing Users to opt-out of
the exception is consistent with NYSE
Arca’s STP Decrement and Cancel
option.6 The Exchange will allow a User
to opt-out of the MDC Exception by
changing the settings of its order entry
ports. The Exchange may also permit
Users to opt-out of the MDC Exception
on an order-by-order basis through use
of a specific tag attached to each order.
Additional Discussion
In addition to the modification to the
MDC modifier described above, the
Exchange proposes to change the
references throughout its rules from
‘‘Member Match Trade Prevention’’ to
‘‘Match Trade Prevention’’ and from
‘‘MMTP’’ to ‘‘MTP’’.
The Exchange believes that its Match
Trade Prevention functionality allows
certain firms to better internalize their
agency order flow, which in turn may
decrease costs to customers of such
firms. The Exchange notes that MTP
modifiers do not alleviate, or otherwise
exempt, broker-dealers from their best
execution obligations. As such, brokerdealers using MTP modifiers are
obligated to internally cross agency
orders at the same price, or a better
price than they would have received
had the orders been executed on the
Exchange. Additionally, MTP modifiers
assist market participants in complying
with certain rules and regulations of the
Employee Retirement Income Security
Act (‘‘ERISA’’) that preclude and/or limit
managing broker-dealers of such
accounts from trading as principal with
orders generated for those accounts.
Finally, the Exchange notes that offering
the MTP modifiers may streamline
certain regulatory functions by reducing
false positive results that may occur on
Exchange generated wash trading
surveillance reports when orders are
executed under the same Unique
Identifier. For these reasons, the
Exchange believes the MTP modifiers
offer users enhanced order processing
functionality that may prevent
potentially undesirable executions
without negatively impacting brokerdealer best execution obligations.
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.7
Specifically, the proposed change is
consistent with Section 6(b)(5) of the
Act,8 because it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and to remove impediments to, and
perfect the mechanism of, a free and
open market and a national market
system. Specifically, Match Trade
Prevention functionality allows firms to
better manage order flow and prevent
undesirable executions against
themselves, and the proposed change
described herein enhances the choices
7 15
6 See
NYSE Arca Rule 7.31(qq)(3).
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16:40 May 20, 2010
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00130
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28671
available to such firms in how they do
so.
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 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 9 and Rule 19b–
4(f)(6) thereunder.10
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.11 However, Rule 19b–
4(f)(6)(iii)12 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 so that the Exchange may
immediately offer Exchange Users
another choice with respect to MTP
modifiers. The Commission notes that
the proposal is consistent with the rules
of another national securities
exchange.13 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.14
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
11 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 Exchange has satisfied this
requirement.
12 Id.
13 See supra note 6.
14 For the purposes only of waiving the 30-day
operative delay, the Commission has considered the
10 17
Continued
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28672
Federal Register / Vol. 75, No. 98 / Friday, May 21, 2010 / Notices
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:
emcdonald on DSK2BSOYB1PROD with NOTICES
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–2010–011 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 No.
SR–BATS–2010–011. 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,15 all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
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–2010–011 and should be
submitted on or before June 11, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–12226 Filed 5–20–10; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice: 7020]
Bureau of International Security and
Nonproliferation; Determination Under
the Foreign Assistance Act and the
Department of State, Foreign
Operations, and Related Programs
Appropriations Acts
AGENCY:
ACTION:
Department of State.
Notice.
SUMMARY: A decision has been made to
remove the restrictions imposed on the
Tula Instrument Design Bureau (KBP)
and rescind Federal Register Notice
3039, from April 29, 1999.
DATES:
Effective Date: May 21, 2010.
FOR FURTHER INFORMATION CONTACT:
Brian Bachman, Office of Conventional
Arms Threat Reduction, Bureau of
International Security and
Nonproliferation, Department of State
(202–647–3937).
A decision
was made on May 12, 2010, that it is in
the foreign policy or national security
interests of the United States to remove
the restrictions imposed on the Tula
Instrument Design Bureau (KBP) on
April 29, 1999 under Federal Register
notice 3039.
SUPPLEMENTARY INFORMATION:
DEPARTMENT OF STATE
[Public Notice: 7022]
Bureau of International Security and
Nonproliferation; Lifting of
Nonproliferation Measures Against
Two Russian Entities
Department of State.
Notice.
AGENCY:
ACTION:
SUMMARY: A determination has been
made, pursuant to Section 6 of
Executive Order 12938 of November 14,
1994, as amended, to remove
nonproliferation measures on two
Russian entities.
DATES: Effective Date: May 21, 2010.
FOR FURTHER INFORMATION CONTACT:
Pamela K. Durham, Office of Missile
Threat Reduction, Bureau of
International Security and
Nonproliferation, Department of State
(202–647–4930).
SUPPLEMENTARY INFORMATION: Pursuant
to the authorities vested in the President
by the Constitution and the laws of the
United States of America, including the
International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.)
(‘‘IEEPA’’), the National Emergencies Act
(50 U.S.C. 1601 et seq.), the Arms
Export Control Act (22 U.S.C. 2751 et
seq.), and section 301 of title 3, United
States Code, and Section 6 of Executive
Order 12938 of November 14, 1994, as
amended, a determination was made on
May 12, 2010, that it is in the foreign
policy or national security interests of
the United States to remove the
restrictions imposed pursuant to
Sections 4(b), 4(c), and 4(d) of the
Executive Order on the following
Russian entities, their sub-units and
successors:
1. D. Mendeleyev University of
Chemical Technology of Russia
2. Moscow Aviation Institute
These restrictions were imposed on
January 8, 1999 (see 64 FR 2935).
Dated: May 17, 2010.
C.S. Eliot Kang,
Acting Assistant Secretary of State for
International Security and Nonproliferation,
Department of State.
VerDate Mar<15>2010
16:40 May 20, 2010
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[FR Doc. 2010–12322 Filed 5–20–10; 8:45 am]
[Public Notice 7019]
BILLING CODE 4710–27–P
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
15 The text of the proposed rule change is
available on the Commission’s Web site at https://
www.sec.gov/rules/sro.shtml.
Dated: May 17, 2010.
C.S. Eliot Kang,
Acting Assistant Secretary of State for
International Security and Nonproliferation,
Department of State.
U.S. National Commission for UNESCO
Notice of Teleconference Meeting
16 17
PO 00000
CFR 200.30–3(a)(12).
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BILLING CODE 4710–27–P
DEPARTMENT OF STATE
The U.S. National Commission for
UNESCO will hold a conference call on
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]]>Agencies
[Federal Register Volume 75, Number 98 (Friday, May 21, 2010)]
[Notices]
[Pages 28670-28672]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-12226]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62102; File No. SR-BATS-2010-011]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
BATS Rule 11.9, Entitled ``Orders and Modifiers''
May 13, 2010.
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 4, 2010, BATS Exchange, Inc. (the ``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. 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 proposes to make a modification to the existing
technology that it provides to a User that wishes to avoid trading
against orders from that same User (currently referred to as ``Member
Match Trade Prevention'' or ``MMTP'').
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to make a minor change to its Member Match
Trade Prevention, or MMTP, functionality, described in BATS Rules
11.9(f) and 21.1(g) and to rename the functionality as Match Trade
Prevention (``MTP'').
MMTP modifiers are designed to prevent two orders with the same
Unique Identifier (as defined below) from executing against each other.
The Exchange currently offers four MMTP modifiers that can be set at
the market participant identifier (``MPID''), the Exchange Member
identifier or the Exchange Sponsored Participant identifier level (any
such identifier, a ``Unique Identifier'').\5\ BATS is proposing a
change to the MMTP Decrement and Cancel identifier (``MDC''); none of
the other MMTP identifiers are affected by this proposal, other than to
change the references throughout the rule text to MTP.
---------------------------------------------------------------------------
\5\ Any Exchange Member that has an MPID issued by FINRA is
identified in the Exchange's internal systems by that MPID. Each
Exchange Member that does not already have an MPID and each
Sponsored Participant is issued an identifier that is specific to
the Exchange and allows the Exchange to determine the User for each
order and trade.
---------------------------------------------------------------------------
Under the existing rules, an incoming order marked with the MDC
modifier will not execute against opposite side resting interest marked
with any MMTP modifier originating from the same Unique Identifier. If
both orders are equivalent in size, both orders will be cancelled back
to the originating User. If the orders are not equivalent in size, the
equivalent size will be cancelled back to the originating User and the
larger order will be decremented by the size of the smaller order, with
the balance remaining on the BATS Book; provided, however, that if the
resting order is marked with any MMTP modifier other than MDC, and the
incoming order is smaller in size than the resting order, then both
orders will be cancelled back to the originating User (the ``MDC
Exception''). Thus, as shown in the example below, rather than
decrementing either order, pursuant to the MDC Exception both orders
are cancelled in their entirety when the resting order contains an MMTP
modifier other than MDC and is larger than the incoming order.
Current MDC Exception--Example: An order to buy 500 shares @ $22.00
is
[[Page 28671]]
marked with any MMTP modifier other than MDC and becomes a resting
order in the BATS Book. Subsequently, an order to sell 400 shares @
$22.00 is entered with the same Unique Identifier and marked with the
MDC modifier.
Current MDC Exception--Result: The resting buy order for 500 shares
at $22.00 marked with a MMTP modifier other than MDC is cancelled back
to the originating User. The incoming sell order for 400 shares @
$22.00 marked with the MDC modifier is cancelled back to the
originating User.
The Exchange proposes to allow Users to opt-out of the default
behavior of the MDC Exception to allow an incoming MDC order to result
in a decremented order even when it is smaller than the resting order
and the resting order contains an MMTP modifier other than MDC.
Proposed Opt-Out of MDC--Example: An order to buy 500 shares @
$22.00 is marked with any MMTP modifier and becomes a resting order in
the BATS Book. Subsequently, an order to sell 400 shares @ $22.00 is
entered with the same Unique Identifier and marked with the MDC
modifier.
Proposed Opt-Out of MDC--Result: 400 of the 500 shares on the
resting buy order at $22.00 marked with any MMTP modifier are cancelled
back to the originating User. The outstanding 100 shares remain on the
BATS Book. The incoming sell order for 400 shares @ $22.00 marked with
the MDC modifier is cancelled back to the originating User.
Although the Exchange intentionally created the MDC Exception based
on conversations with its Users regarding the best way to implement the
MDC modifier, other Users have requested that the Exchange allow them
to have the incoming order control the result in all situations, and
thus, have requested to be able to opt-out of the MDC Exception. The
Exchange notes that NYSE Arca Equities (``NYSE Arca'') has implemented
its version of match trade prevention without the MDC Exception, and
thus, allowing Users to opt-out of the exception is consistent with
NYSE Arca's STP Decrement and Cancel option.\6\ The Exchange will allow
a User to opt-out of the MDC Exception by changing the settings of its
order entry ports. The Exchange may also permit Users to opt-out of the
MDC Exception on an order-by-order basis through use of a specific tag
attached to each order.
---------------------------------------------------------------------------
\6\ See NYSE Arca Rule 7.31(qq)(3).
---------------------------------------------------------------------------
Additional Discussion
In addition to the modification to the MDC modifier described
above, the Exchange proposes to change the references throughout its
rules from ``Member Match Trade Prevention'' to ``Match Trade
Prevention'' and from ``MMTP'' to ``MTP''.
The Exchange believes that its Match Trade Prevention functionality
allows certain firms to better internalize their agency order flow,
which in turn may decrease costs to customers of such firms. The
Exchange notes that MTP modifiers do not alleviate, or otherwise
exempt, broker-dealers from their best execution obligations. As such,
broker-dealers using MTP modifiers are obligated to internally cross
agency orders at the same price, or a better price than they would have
received had the orders been executed on the Exchange. Additionally,
MTP modifiers assist market participants in complying with certain
rules and regulations of the Employee Retirement Income Security Act
(``ERISA'') that preclude and/or limit managing broker-dealers of such
accounts from trading as principal with orders generated for those
accounts. Finally, the Exchange notes that offering the MTP modifiers
may streamline certain regulatory functions by reducing false positive
results that may occur on Exchange generated wash trading surveillance
reports when orders are executed under the same Unique Identifier. For
these reasons, the Exchange believes the MTP modifiers offer users
enhanced order processing functionality that may prevent potentially
undesirable executions without negatively impacting broker-dealer best
execution obligations.
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.\7\ Specifically, the
proposed change is consistent with Section 6(b)(5) of the Act,\8\
because it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to, and perfect
the mechanism of, a free and open market and a national market system.
Specifically, Match Trade Prevention functionality allows firms to
better manage order flow and prevent undesirable executions against
themselves, and the proposed change described herein enhances the
choices available to such firms in how they do so.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule 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 \9\ and Rule 19b-4(f)(6) thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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.\11\
However, Rule 19b-4(f)(6)(iii)\12\ 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 so that the Exchange may
immediately offer Exchange Users another choice with respect to MTP
modifiers. The Commission notes that the proposal is consistent with
the rules of another national securities exchange.\13\ 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.\14\
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\11\ 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 Exchange has satisfied this requirement.
\12\ Id.
\13\ See supra note 6.
\14\ 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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[[Page 28672]]
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-2010-011 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 No. SR-BATS-2010-011. 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,\15\ all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 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-2010-011 and
should be submitted on or before June 11, 2010.
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\15\ The text of the proposed rule change is available on the
Commission's Web site at https://www.sec.gov/rules/sro.shtml.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-12226 Filed 5-20-10; 8:45 am]
BILLING CODE 8011-01-P
