Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing of Proposed Rule Change by BATS Y-Exchange, Inc. To Amend BYX Rule 2.12, Entitled “BATS Trading, Inc. as Inbound Router”, 15152-15153 [2012-6293]

Download as PDF 15152 Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–66572; File No. SR–BYX– 2012–006] Self-Regulatory Organizations; BATS Y–Exchange, Inc.; Notice of Filing of Proposed Rule Change by BATS Y– Exchange, Inc. To Amend BYX Rule 2.12, Entitled ‘‘BATS Trading, Inc. as Inbound Router’’ March 12, 2012. 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 March 8, 2012, BATS Y–Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. 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 amend Rule 2.12, to make permanent the existing pilot program that permits the Exchange to receive inbound routes of equities orders through BATS Trading, Inc. (‘‘BATS Trading’’), the Exchange’s routing broker-dealer, from BATS Exchange, Inc. (‘‘BZX’’). 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. srobinson on DSK4SPTVN1PROD with NOTICES 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. 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Mar<15>2010 19:41 Mar 13, 2012 Jkt 226001 A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, BATS Trading is the approved outbound order routing facility of BZX.3 The Exchange has been authorized to receive inbound routes of equities orders by BATS Trading from BZX.4 The Exchange’s authority to receive inbound routes of equities orders by BATS Trading from BZX is currently subject to a pilot period of twelve months, ending April 15, 2012. The Exchange hereby seeks permanent approval to permit the Exchange to accept inbound orders that BATS Trading routes in its capacity as a facility of BZX. This is reflected in the proposed amendment to BYX Rule 2.12(b). Under the pilot, the Exchange is committed to the following obligations and conditions: • The Exchange shall enter into a plan pursuant to Rule 17d–2 under the Exchange Act with a non-affiliated selfregulatory organization (‘‘SRO’’) to relieve the Exchange of regulatory responsibilities for BATS Trading with respect to rules that are common rules between the Exchange and the nonaffiliated SRO, and enter into a regulatory contract (‘‘Regulatory Contract’’) with a non-affiliated SRO to perform regulatory responsibilities for BATS Trading for unique Exchange rules. • The Regulatory Contract shall require the Exchange to provide the non-affiliated SRO with information, in an easily accessible manner, regarding all exception reports, alerts, complaints, trading errors, cancellations, investigations, and enforcement matters (collectively ‘‘Exceptions’’) in which BATS Trading is identified as a participant that has potentially violated Exchange or SEC Rules, and shall require that the non-affiliated SRO provide a report, at least quarterly, to the Exchange quantifying all Exceptions in which BATS Trading is identified as a participant that has potentially violated Exchange or SEC Rules. • The Exchange, on behalf of BATS Global Markets, Inc., shall establish and maintain procedures and internal 3 See Securities Exchange Act Release No. 58375 (August 21, 2008), 73 FR 49498 (August 21, 2008) (Order Approving Application of BATS Exchange, Inc. for Registration as a National Securities Exchange). 4 See Securities Exchange Act Release No. 62716 (August 13, 2010), 75 FR 51295 (August 19, 2010) (Order Approving Application of BATS Y– Exchange, Inc. for Registration as a National Securities Exchange). PO 00000 Frm 00131 Fmt 4703 Sfmt 4703 controls reasonably designed to ensure that BATS Trading does not develop or implement changes to its system on the basis of non-public information regarding planned changes to Exchange systems, obtained as a result of its affiliation with the Exchange, until such information is available generally to similarly situated member organizations of the Exchange in connection with the provision of inbound order routing to the Exchange. • The Exchange may furnish to BATS Trading the same information on the same terms that the Exchange makes available in the normal course of business to any other member organization. The Exchange is in compliance with the above-listed obligations and conditions. In meeting them, the Exchange has set up mechanisms that protect the independence of the Exchange’s regulatory responsibility with respect to BATS Trading, as well as demonstrate that BATS Trading cannot use any information that it may have because of its affiliation with the Exchange to its advantage. Since the Exchange has met all the above-listed obligations and conditions, it now seeks permanent approval of the Exchange and BATS Trading’s inbound routing relationship. Upon approval of the proposed rule change, the Exchange will continue to comply with the obligations and conditions as set forth in proposed BYX Rule 2.12. 2. Statutory Basis The Exchange believes that its proposal 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 proposal 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. Specifically, the proposed rule change will allow the Exchange to continue receiving inbound routes of equities orders from BATS Trading acting in its capacity as a facility of BZX, in a manner consistent with prior approvals and established protections. The Exchange believes that meeting the commitments established during the pilot program demonstrates that the Exchange has mechanisms that protect the independence of the Exchange’s 5 15 6 15 E:\FR\FM\14MRN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 14MRN1 Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Notices regulatory responsibility with respect to BATS Trading, as well as demonstrates that BATS Trading cannot use any information that it may have because of its affiliation with the Exchange to its advantage. 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 Changes and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (a) by order approve or disapprove such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be disapproved. 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 publicly available. All submissions should refer to File Number SR–BYX– 2012–006 and should be submitted on or before April 4, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–6293 Filed 3–12–12; 4:15 pm] Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–BYX–2012–006 on the subject line. srobinson on DSK4SPTVN1PROD with NOTICES 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: Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing of Proposed Rule Change by BATS Exchange, Inc. to Amend BATS Rule 2.12, Entitled ‘‘BATS Trading, Inc. as Inbound Router’’ 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–BYX–2012–006. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will VerDate Mar<15>2010 19:41 Mar 13, 2012 Jkt 226001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–66571; File No. SR–BATS– 2012–013] March 12, 2012. 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 March 8, 2012, BATS Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BATS’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The 7 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 15153 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 amend Rule 2.12, to make permanent the existing pilot program that permits the Exchange to receive inbound routes of equities orders through BATS Trading, Inc. (‘‘BATS Trading’’), the Exchange’s routing broker-dealer, from BATS Y– Exchange, Inc. (‘‘BYX’’). 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 Currently, BATS Trading is the approved outbound order routing facility of BYX.3 The Exchange has been authorized to receive inbound routes of equities orders by BATS Trading from BYX.4 The Exchange’s authority to receive inbound routes of equities orders by BATS Trading from BYX is currently subject to a pilot period of twelve months, ending April 15, 2012. 3 See Securities Exchange Act Release No. 62716 (August 13, 2010), 75 FR 51295 (August 19, 2010) (Order Approving Application of BATS Y– Exchange, Inc. for Registration as a National Securities Exchange). 4 See Securities Exchange Act Release Nos. 62901 (September 13, 2010), 75 FR 57097 (September 17, 2010) (SR–BATS–2010–024) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Adopt BATS Rule 2.12, Entitled ‘‘BATS Trading, Inc. as Inbound Router’’ and To Make Related Changes); 65516 (October 7, 2011), 76 FR 63977 (October 14, 2011) (SR–BATS–2011–040) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Extend the Pilot Period of the Inbound Router, as Described in Rule 2.12). E:\FR\FM\14MRN1.SGM 14MRN1

Agencies

[Federal Register Volume 77, Number 50 (Wednesday, March 14, 2012)]
[Notices]
[Pages 15152-15153]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6293]



[[Page 15152]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66572; File No. SR-BYX-2012-006]


 Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of 
Filing of Proposed Rule Change by BATS Y-Exchange, Inc. To Amend BYX 
Rule 2.12, Entitled ``BATS Trading, Inc. as Inbound Router''

March 12, 2012.
    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 March 8, 2012, BATS Y-Exchange, Inc. (the ``Exchange'' or ``BYX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. 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.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 2.12, to make permanent the 
existing pilot program that permits the Exchange to receive inbound 
routes of equities orders through BATS Trading, Inc. (``BATS 
Trading''), the Exchange's routing broker-dealer, from BATS Exchange, 
Inc. (``BZX'').
    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
    Currently, BATS Trading is the approved outbound order routing 
facility of BZX.\3\ The Exchange has been authorized to receive inbound 
routes of equities orders by BATS Trading from BZX.\4\ The Exchange's 
authority to receive inbound routes of equities orders by BATS Trading 
from BZX is currently subject to a pilot period of twelve months, 
ending April 15, 2012. The Exchange hereby seeks permanent approval to 
permit the Exchange to accept inbound orders that BATS Trading routes 
in its capacity as a facility of BZX. This is reflected in the proposed 
amendment to BYX Rule 2.12(b).
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 58375 (August 21, 
2008), 73 FR 49498 (August 21, 2008) (Order Approving Application of 
BATS Exchange, Inc. for Registration as a National Securities 
Exchange).
    \4\ See Securities Exchange Act Release No. 62716 (August 13, 
2010), 75 FR 51295 (August 19, 2010) (Order Approving Application of 
BATS Y-Exchange, Inc. for Registration as a National Securities 
Exchange).
---------------------------------------------------------------------------

    Under the pilot, the Exchange is committed to the following 
obligations and conditions:
     The Exchange shall enter into a plan pursuant to Rule 17d-
2 under the Exchange Act with a non-affiliated self-regulatory 
organization (``SRO'') to relieve the Exchange of regulatory 
responsibilities for BATS Trading with respect to rules that are common 
rules between the Exchange and the non-affiliated SRO, and enter into a 
regulatory contract (``Regulatory Contract'') with a non-affiliated SRO 
to perform regulatory responsibilities for BATS Trading for unique 
Exchange rules.
     The Regulatory Contract shall require the Exchange to 
provide the non-affiliated SRO with information, in an easily 
accessible manner, regarding all exception reports, alerts, complaints, 
trading errors, cancellations, investigations, and enforcement matters 
(collectively ``Exceptions'') in which BATS Trading is identified as a 
participant that has potentially violated Exchange or SEC Rules, and 
shall require that the non-affiliated SRO provide a report, at least 
quarterly, to the Exchange quantifying all Exceptions in which BATS 
Trading is identified as a participant that has potentially violated 
Exchange or SEC Rules.
     The Exchange, on behalf of BATS Global Markets, Inc., 
shall establish and maintain procedures and internal controls 
reasonably designed to ensure that BATS Trading does not develop or 
implement changes to its system on the basis of non-public information 
regarding planned changes to Exchange systems, obtained as a result of 
its affiliation with the Exchange, until such information is available 
generally to similarly situated member organizations of the Exchange in 
connection with the provision of inbound order routing to the Exchange.
     The Exchange may furnish to BATS Trading the same 
information on the same terms that the Exchange makes available in the 
normal course of business to any other member organization.
    The Exchange is in compliance with the above-listed obligations and 
conditions. In meeting them, the Exchange has set up mechanisms that 
protect the independence of the Exchange's regulatory responsibility 
with respect to BATS Trading, as well as demonstrate that BATS Trading 
cannot use any information that it may have because of its affiliation 
with the Exchange to its advantage. Since the Exchange has met all the 
above-listed obligations and conditions, it now seeks permanent 
approval of the Exchange and BATS Trading's inbound routing 
relationship. Upon approval of the proposed rule change, the Exchange 
will continue to comply with the obligations and conditions as set 
forth in proposed BYX Rule 2.12.
2. Statutory Basis
    The Exchange believes that its proposal 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 
proposal 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the proposed rule change will allow the Exchange to 
continue receiving inbound routes of equities orders from BATS Trading 
acting in its capacity as a facility of BZX, in a manner consistent 
with prior approvals and established protections. The Exchange believes 
that meeting the commitments established during the pilot program 
demonstrates that the Exchange has mechanisms that protect the 
independence of the Exchange's

[[Page 15153]]

regulatory responsibility with respect to BATS Trading, as well as 
demonstrates that BATS Trading cannot use any information that it may 
have because of its affiliation with the Exchange to its advantage.

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 Changes and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will: (a) by order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BYX-2012-006 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-BYX-2012-006. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (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 publicly available. All 
submissions should refer to File Number SR-BYX-2012-006 and should be 
submitted on or before April 4, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6293 Filed 3-12-12; 4:15 pm]
BILLING CODE 8011-01-P
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