Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by BATS Exchange, Inc. to Modify the Minor Rule Violation Plan for BATS Options, 73153-73155 [2010-29895]
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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Notices
does not raise any new regulatory
issues.18
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
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
available publicly. All submissions
should refer to File Number SR–Phlx–
2010–156 and should be submitted on
or before December 20, 2010.
IV. Solicitation of Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Elizabeth M. Murphy,
Secretary.
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–Phlx–2010–156 on the
subject line.
mstockstill on DSKH9S0YB1PROD 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–2010–156. 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.,
18 For
the purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78(c)(f).
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[FR Doc. 2010–29907 Filed 11–26–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–63359; File No. SR–BATS–
2010–033]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change by BATS Exchange, Inc.
to Modify the Minor Rule Violation Plan
for BATS Options
November 22, 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 November
18, 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 is proposing to amend
BATS Rule 25.3, entitled ‘‘Penalty for
19 17
CFR 200.30–3(a)(12).
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)(iii).
1 15
PO 00000
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Fmt 4703
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73153
Minor Rule Violations’’, to expand the
list of violations eligible for disposition
under the Exchange’s Minor Rule
Violation Plan (‘‘MRVP’’) as it relates to
the equity options platform operated by
the Exchange (‘‘BATS Options’’).
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, on the
Commission’s Web site at https://
www.sec.gov 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 purpose of the proposed rule
change is to amend Rule 25.3, entitled
‘‘Penalty for Minor Rule Violations’’, to
expand the list of violations eligible for
disposition under the Exchange’s Minor
Rule Violation Plan (‘‘MRVP’’) as it
relates to options in order to improve
the consistency of the Exchange’s MRVP
with other options exchanges. All
options exchanges have entered into a
plan pursuant to Rule 17d–2 of the Act
(the ‘‘Plan’’) under which the exchanges
have agreed to allocate regulatory
responsibility for certain rules common
to all options exchanges, which Plan is
administered by a committee known as
the Options Surveillance Group (the
‘‘OSG’’). Adding the proposed rules to
the MRVP makes the Exchange’s MRVP
more consistent with the minor rule
violation plans of other self-regulatory
organizations, including with respect to
rules that are classified as common rules
pursuant to the Plan (the ‘‘OSG 17d–2’’).
The Exchange believes that its MRVP
with respect to violations of rules that
are common rules pursuant to the OSG
17d–2 should be consistent with the
other options exchanges that are parties
to the OSG 17d–2.
Consistent with the goal of improved
consistency between the Exchange’s
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73154
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Notices
MRVP and the MRVPs of other options
exchanges, the proposed additions
include Rules 18.9, 18.10, 23.1(a)
through (k), 23.1(l), and 24.4, each of
which is described below.
• Rule 18.9 provides that no Options
Member may directly or indirectly
exceed exercise limits established by the
Chicago Board Options Exchange, BATS
Options, or another exchange, as the
limits apply to options trading on BATS
Options.
• Rule 18.10 provides the
requirements for accurately reporting
position and account information to the
Exchange.
• Rule 23.1(a) through (k) relates to
expiring exercise declarations and the
timely submission of ‘‘Advice Cancel’’ or
exercise instruction relating to the
exercise or non-exercise of non-cashsettled equity options.
• Rule 23.1(l) relates to the failure to
submit an Exercise Advice; the
submission of an advice and no
subsequent exercise; the submission of
an Exercise Advice after the designated
cut-off time; the submission of an
Exercise Advice for an amount different
than the amount exercised; and the
time-stamping of an advice or exercise
instruction memorandum prior to
purchasing contracts.
• Lastly, Rule 24.4 covers requests by
the Exchange for submission of trade
data.
The proposed changes would allow
the Exchange to impose a fine of at least
$500 per violation of the above-listed
rules, with a maximum fine amount of
$5,000. By promptly imposing a
meaningful financial penalty for such
violations, the MRVP focuses on
correcting conduct before it gives rise to
more serious enforcement action. The
MRVP provides a reasonable means of
addressing rule violations that do not
necessarily rise to the level of requiring
formal disciplinary proceedings, while
also providing a greater flexibility in
handling certain violations. Adopting a
provision that would allow the
Exchange to sanction violators under
the MRVP by no means minimizes the
importance of compliance with these
rules. The Exchange believes that the
violation of any of its rules is a serious
matter. The addition of a sanction under
the MRVP simply serves to add an
additional method for disciplining
violators of the additional rules. The
Exchange will continue to conduct
surveillance with due diligence and
make its determination, on a case by
case basis, whether a violation of these
additional rules should be subject to
formal disciplinary proceedings.
In addition to the changes proposed
above, the Exchange proposes to modify
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17:57 Nov 26, 2010
Jkt 223001
its MRVP sanction for a violation of
Exchange position limit rules (Rule
18.7) in order to conform to the
sanctions imposed by a majority of other
options exchanges. The Exchange’s
current MRVP sanction for violations of
position limits differs depending on
whether a violation occurs in an
Options Member’s account or a
customer account, a distinction not
present in the rules of most other
options exchanges. Furthermore, the
Exchange’s current MRVP sanction for
violations of position limits is based on
a per contract amount, whereas most
options exchanges would impose a flat
amount as the fine. Consistent with the
other changes proposed above, the
Exchange believes that conforming
changes are appropriate, especially due
to the fact that position limit rules are
subject to the OSG 17d–2.
Finally, the Exchange also proposes
modifying the headings of the sub-parts
in its existing Rule 25.3 to correct
typographical errors. Specifically, in
each heading the ‘‘Number of
Cumulative Violations Within One
Period’’ and ‘‘Fine Amount’’ language is
currently commingled into one heading.
2. Statutory Basis
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.
6 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00128
Fmt 4703
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 7 and Rule 19b–
4(f)(6)(iii) thereunder.8
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Approval of 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.5
In particular, the proposed change is
consistent with Section 6(b)(5) of the
Act,6 because it would promote just and
equitable principles of trade, remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system, and, in
general, protect investors and the public
interest, by giving the Exchange the
ability to promptly impose a meaningful
financial penalty for such violations
before there is a need for more serious
enforcement action. The Exchange
believes that the proposed rule meets
these requirements in that it promotes
transparency and uniformity across
markets concerning enforcement of
common rules contained in the OSG
17d–2.
5 15
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Sfmt 4703
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposal is
consistent with the Act. Comments may
be submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–BATS–2010–033 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–2010–033. This file number
should be included on the subject line
7 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 Commission notes that the
Exchange satisfied this five-day pre-filing
requirement.
8 17
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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Notices
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 such filing
also will be available for inspection and
copying at the principal office of the
Exchange. All comments received will
be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–BATS–
2010–033 and should be submitted on
or before December 20, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010–29895 Filed 11–26–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Order Granting Approval
of Proposed Rule Change To Amend
Certain Rules Pertaining to Credit
Options
November 19, 2010.
mstockstill on DSKH9S0YB1PROD with NOTICES
I. Introduction
On September 20, 2010, the Chicago
Board Options Exchange, Incorporated
(‘‘CBOE’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
CFR 200.30–3(a)(12).
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17:57 Nov 26, 2010
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II. Description of the Proposal
The Exchange proposes to amend its
rules governing Credit Options 4 to make
three substantive changes. First, CBOE
proposes to permit the Exchange to fix
the exercise settlement value for Credit
Default Options, on a class-by-class
basis, at $1 or $100, or at a value
between those two points. Currently, the
exercise settlement value is fixed at
$100. Since the cash settlement amount
for Credit Default Options is the product
of the exercise settlement value
multiplied by a contract multiplier that
may be fixed by the Exchange on a
class-by-class basis within a range of
1 to 1,000, this change will enable the
Exchange to list a Credit Default Option
contact with a cash settlement amount
that could be arrived at in different
ways.5 Second, the proposal would
permit the Exchange to establish the
minimum price variation (‘‘MPV’’) for all
Credit Options, which is currently
$0.05, on a class-by-class basis, at an
increment no less than $0.01, which
would permit more pricing points, such
as when lower exercise settlement
values are designated. Third, the
proposal would give the Exchange
authority to list Credit Options that
contemplate only a single credit event.
Currently, CBOE rules for Credit
Options enumerate several potential
credit events, the occurrence of any one
of which could allow the Credit Option
1 15
[Release No. 34–63352; File No. SR–CBOE–
2010–046]
9 17
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend its rules relating to Credit
Options. The proposed rule change was
published for comment in the Federal
Register on October 7, 2010.3 The
Commission received no comments on
the proposal. This order approves the
proposed rule change.
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 63026
(October 1, 2010), 75 FR 62167 (‘‘Notice’’).
4 Credit Options include Credit Default Options
and Credit Default Basket Options. Credit Default
Options are cash-settled binary options that are
automatically exercised upon the occurrence of
specified credit events or expire worthless. See
CBOE Rule 29.1(b); Securities Exchange Act Release
No. 55871 (June 6, 2007), 72 FR 32372 (June 12,
2007) (SR–CBOE–2006–84) (order approving
CBOE’s proposed rules to list and trade Credit
Default Options). Credit Default Basket Options are
cash-settled binary options based on a basket of at
least two reference entities. See CBOE Rule 29.1(h);
Securities Exchange Act Release No. 56275 (August
17, 2007), 72 FR 47097 (August 22, 2007) (SR–
CBOE–2007–26) (order approving CBOE’s proposed
rules to list and trade Credit Default Basket
Options).
5 The Exchange has represented that it will not
list more than one Credit Default Option contract
with a cash settlement amount arrived at in
different ways. See Notice at note 8 and
accompanying text.
2 17
PO 00000
Frm 00129
Fmt 4703
Sfmt 4703
73155
to be exercised. For example, a failureto-pay default will always be a
designated credit event for each class,
and the Exchange may, on a class-byclass basis, specify other events of
default or a restructuring.6 The
Exchange proposes to amend its rules to
permit it to list Credit Options
designating a single credit event, such
as a failure-to-pay default, another event
of default, or a restructuring. The
Exchange also proposes to make a
technical, non-substantive change to
one of its rules governing Credit
Options, Rule 29.3.
III. Discussion and Commission’s
Findings
After careful consideration, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.7 In
particular, the Commission finds that
the proposed rule change is consistent
with the requirements of Section 6(b)(5)
of the Act,8 which requires, among other
things, that the Exchange’s rules be
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
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities; to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system; and, in
general, to protect investors and the
public interest.
The Commission believes that the
proposal to authorize the Exchange to
list Credit Options that contemplate
only a single credit event is consistent
with the Act. In addition, the
Commission believes that the proposal
to allow the Exchange flexibility to fix
the exercise settlement value for Credit
Default Options within a range of $1 to
$100 is consistent with the Act. With
this change, the Exchange could list a
contract with a cash settlement value of
$10,000 with a multiplier of 1,000 and
an exercise settlement amount of $10, or
with a multiplier of 100 and an exercise
settlement amount of $100. There could
be concerns if the Exchange were to
seek to list Credit Default Options
having the same cash settlement value
but with different combinations of
multiplier and cash settlement amount.
6 See
CBOE Rules 29.2 and 29.2A.
approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
8 15 U.S.C. 78f(b)(5).
7 In
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]]>Agencies
[Federal Register Volume 75, Number 228 (Monday, November 29, 2010)]
[Notices]
[Pages 73153-73155]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-29895]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63359; File No. SR-BATS-2010-033]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change by BATS
Exchange, Inc. to Modify the Minor Rule Violation Plan for BATS Options
November 22, 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 November 18, 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)(iii).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to amend BATS Rule 25.3, entitled
``Penalty for Minor Rule Violations'', to expand the list of violations
eligible for disposition under the Exchange's Minor Rule Violation Plan
(``MRVP'') as it relates to the equity options platform operated by the
Exchange (``BATS Options'').
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, on the Commission's Web site at https://www.sec.gov 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 purpose of the proposed rule change is to amend Rule 25.3,
entitled ``Penalty for Minor Rule Violations'', to expand the list of
violations eligible for disposition under the Exchange's Minor Rule
Violation Plan (``MRVP'') as it relates to options in order to improve
the consistency of the Exchange's MRVP with other options exchanges.
All options exchanges have entered into a plan pursuant to Rule 17d-2
of the Act (the ``Plan'') under which the exchanges have agreed to
allocate regulatory responsibility for certain rules common to all
options exchanges, which Plan is administered by a committee known as
the Options Surveillance Group (the ``OSG''). Adding the proposed rules
to the MRVP makes the Exchange's MRVP more consistent with the minor
rule violation plans of other self-regulatory organizations, including
with respect to rules that are classified as common rules pursuant to
the Plan (the ``OSG 17d-2''). The Exchange believes that its MRVP with
respect to violations of rules that are common rules pursuant to the
OSG 17d-2 should be consistent with the other options exchanges that
are parties to the OSG 17d-2.
Consistent with the goal of improved consistency between the
Exchange's
[[Page 73154]]
MRVP and the MRVPs of other options exchanges, the proposed additions
include Rules 18.9, 18.10, 23.1(a) through (k), 23.1(l), and 24.4, each
of which is described below.
Rule 18.9 provides that no Options Member may directly or
indirectly exceed exercise limits established by the Chicago Board
Options Exchange, BATS Options, or another exchange, as the limits
apply to options trading on BATS Options.
Rule 18.10 provides the requirements for accurately
reporting position and account information to the Exchange.
Rule 23.1(a) through (k) relates to expiring exercise
declarations and the timely submission of ``Advice Cancel'' or exercise
instruction relating to the exercise or non-exercise of non-cash-
settled equity options.
Rule 23.1(l) relates to the failure to submit an Exercise
Advice; the submission of an advice and no subsequent exercise; the
submission of an Exercise Advice after the designated cut-off time; the
submission of an Exercise Advice for an amount different than the
amount exercised; and the time-stamping of an advice or exercise
instruction memorandum prior to purchasing contracts.
Lastly, Rule 24.4 covers requests by the Exchange for
submission of trade data.
The proposed changes would allow the Exchange to impose a fine of
at least $500 per violation of the above-listed rules, with a maximum
fine amount of $5,000. By promptly imposing a meaningful financial
penalty for such violations, the MRVP focuses on correcting conduct
before it gives rise to more serious enforcement action. The MRVP
provides a reasonable means of addressing rule violations that do not
necessarily rise to the level of requiring formal disciplinary
proceedings, while also providing a greater flexibility in handling
certain violations. Adopting a provision that would allow the Exchange
to sanction violators under the MRVP by no means minimizes the
importance of compliance with these rules. The Exchange believes that
the violation of any of its rules is a serious matter. The addition of
a sanction under the MRVP simply serves to add an additional method for
disciplining violators of the additional rules. The Exchange will
continue to conduct surveillance with due diligence and make its
determination, on a case by case basis, whether a violation of these
additional rules should be subject to formal disciplinary proceedings.
In addition to the changes proposed above, the Exchange proposes to
modify its MRVP sanction for a violation of Exchange position limit
rules (Rule 18.7) in order to conform to the sanctions imposed by a
majority of other options exchanges. The Exchange's current MRVP
sanction for violations of position limits differs depending on whether
a violation occurs in an Options Member's account or a customer
account, a distinction not present in the rules of most other options
exchanges. Furthermore, the Exchange's current MRVP sanction for
violations of position limits is based on a per contract amount,
whereas most options exchanges would impose a flat amount as the fine.
Consistent with the other changes proposed above, the Exchange believes
that conforming changes are appropriate, especially due to the fact
that position limit rules are subject to the OSG 17d-2.
Finally, the Exchange also proposes modifying the headings of the
sub-parts in its existing Rule 25.3 to correct typographical errors.
Specifically, in each heading the ``Number of Cumulative Violations
Within One Period'' and ``Fine Amount'' language is currently
commingled into one heading.
2. Statutory Basis
Approval of 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.\5\ In particular, the proposed change is consistent with
Section 6(b)(5) of the Act,\6\ because it would promote just and
equitable principles of trade, remove impediments to, and perfect the
mechanism of, a free and open market and a national market system, and,
in general, protect investors and the public interest, by giving the
Exchange the ability to promptly impose a meaningful financial penalty
for such violations before there is a need for more serious enforcement
action. The Exchange believes that the proposed rule meets these
requirements in that it promotes transparency and uniformity across
markets concerning enforcement of common rules contained in the OSG
17d-2.
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\5\ 15 U.S.C. 78f(b).
\6\ 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 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 \7\ and Rule 19b-
4(f)(6)(iii) thereunder.\8\
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 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 Commission notes that the Exchange satisfied this five-day pre-
filing requirement.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposal 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-2010-033 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-2010-033. This file
number should be included on the subject line
[[Page 73155]]
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 such
filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File No. SR-BATS-2010-033 and should be submitted on or before December
20, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-29895 Filed 11-26-10; 8:45 am]
BILLING CODE 8011-01-P
