Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Exchange Rule 14.3, Entitled “General Procedures and Prerequisites for Initial and Continued Listing on the Exchange”, 16110-16112 [2012-6495]

Download as PDF 16110 Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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 after the date of the filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 13 and Rule 19b– 4(f)(6) 14 thereunder. 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. 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 rulecomments@sec.gov. Please include File Number SR–Phlx–2012–32 on the subject line. emcdonald on DSK29S0YB1PROD 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–2012–32. This file 13 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 14 17 VerDate Mar<15>2010 13:40 Mar 16, 2012 Jkt 226001 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 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 offices 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–2012–32, and should be submitted on or before April 9, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–6498 Filed 3–16–12; 8:45 am] BILLING CODE 8011–01–P (‘‘Commission’’) the proposed rule change as described in Items I and II 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 is filing with the Commission a proposal to amend Rule 14.3, entitled ‘‘General Procedures and Prerequisites for Initial and Continued Listing on the Exchange’’ to include additional requirements for the listing of securities that are issued by the Exchange or any of its affiliates. 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. SECURITIES AND EXCHANGE COMMISSION A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change [Release No. 34–66580; File No. SR–BATS– 2012–012] 1. Purpose Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify Exchange Rule 14.3, Entitled ‘‘General Procedures and Prerequisites for Initial and Continued Listing on the Exchange’’ March 13, 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 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 The Exchange is proposing a rule change to adopt a new Rule 14.3(e) that would impose additional reporting requirements on the Exchange should the Exchange or an affiliate of the Exchange list a security on the Exchange (collectively, the ‘‘BATS Affiliates’’). In the event that a BATS Affiliate seeks to list a security on the Exchange (the ‘‘Affiliate Security’’), the proposed rule change would require that prior to the initial listing of the Affiliate Security on the Exchange, Exchange personnel determine that such security satisfies the Exchange’s rules for listing, and such finding must be approved by the Regulatory Oversight Committee of the Exchange’s Board of Directors. The proposed rule change would also require the Exchange to prepare a E:\FR\FM\19MRN1.SGM 19MRN1 emcdonald on DSK29S0YB1PROD with NOTICES Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Notices quarterly report for the Regulatory Oversight Committee of the Exchange’s Board of Directors detailing: (1) The Exchange’s monitoring of the Affiliate Security’s compliance with the Exchange’s listing standards, including the Affiliate Security’s compliance with the Exchange’s minimum share price requirement and the Affiliate Security’s compliance with each of the quantitative continued listing requirements; and (2) the Exchange’s monitoring of the trading of the Affiliate Security, including summaries of all related surveillance alerts, complaints, regulatory referrals, trades cancelled or adjusted pursuant to Rule 11.17, investigations, examinations, formal and informal disciplinary actions, exception reports and trading data used to ensure the Affiliate Security’s compliance with the Exchange’s listing and trading rules. The Exchange would be required to promptly furnish a copy of this quarterly report to the Commission. To the extent the Exchange uses Exchange staff to conduct surveillance of trading activity on the Exchange, which it does today, the Exchange would be required to engage an independent third party once a year to review and prepare a report regarding surveillance of the Affiliate Security and promptly forward to the Regulatory Oversight Committee of the Exchange’s Board of Directors and the Commission a copy of the report prepared by the independent third party. In connection with the engagement of this third party, the Exchange would look for appropriate subject-matter expertise and would consider engaging appropriately qualified entities such as independent accounting firms, law firms, consulting firms or other self-regulatory organizations. The Exchange would also be required to commission an annual review and report by an independent accounting firm of the compliance of the Affiliate Security with the Exchange’s listing requirements. The Exchange would be required to promptly furnish a copy of this annual report to the Regulatory Oversight Committee of the Exchange’s Board of Directors and the Commission. In the event that the Exchange determines that the BATS Affiliate is not in compliance with any of the Exchange’s listing standards, the rule would require the Exchange to notify the issuer of such non-compliance promptly and request a plan of compliance. The Exchange would be required to file a report with the Commission within five business days of providing such notice to the issuer of its non-compliance. The required report would identify the date of the non- VerDate Mar<15>2010 13:40 Mar 16, 2012 Jkt 226001 compliance, type of non-compliance, and any other material information conveyed to the issuer in the notice of non-compliance. Within five business days of receipt of a plan of compliance from the issuer, the Exchange would be again required to notify the Commission of such receipt, whether the plan of compliance was accepted by the Exchange or what other action was taken with respect to the plan and the time period provided to regain compliance with the Exchange’s listing standards, if any. The Exchange is proposing to exclude from the definition of Rule 14.3(e)— solely for purposes of this rule— securities that meet the definition of ‘‘Portfolio Depository Receipts’’ and ‘‘Index Fund Shares’’ under Rules 14.11(b)(1)(A) and 14.11(c)(1)(A), respectively. These securities, commonly referred to as ‘‘exchange traded funds’’ or ‘‘ETFs,’’ are issued by investment companies registered under the Investment Company Act of 1940 and are based on an index or portfolio of securities. An ETF is designed to provide investment results that correspond generally to the price and yield performance of the underlying index or portfolio of securities. The Exchange believes that such securities do not present the same concerns as other securities, even if issued by a BATS Affiliate. ETFs, which do not represent investments in an individual company, are already exempt from a number of listing standards including corporate governance rules standards, such as the requirement to have a board of directors comprised of a majority of independent directors and to have a code of conduct applicable to all employees and directors. The Exchange does not believe that the additional reporting requirements in the proposed rule change would provide any value in this context because ETFs would not constitute an investment in a BATS Affiliate. Further, these issuers are already subject to a comprehensive scheme of regulation pursuant to the Investment Company Act of 1940. The listing of securities of a BATS Affiliate could potentially create a conflict of interest between the Exchange’s self regulatory responsibility to vigorously oversee the listing and trading of the stock on its market, and its own commercial or economic interests. Such ‘‘self-listing’’ may raise questions as to the Exchange’s ability to independently and effectively enforce its rules against an affiliate or the operator/owner of its facility. In addition, such listing has the potential to exacerbate possible conflicts that may arise when the Exchange oversees PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 16111 competitors that may also be listed on the Exchange. The Exchange believes that the proposed rule change, by requiring heightened reporting by the Exchange to the Commission with respect to the Exchange’s oversight of the listing and trading on the Exchange of the securities of any BATS Affiliate, will help protect against any concern that the Exchange will not effectively enforce its rules with respect to the listing and trading of these securities. In addition, the requirement that an independent accounting firm review such issuer’s compliance with the Exchange’s listing standards adds a degree of independent oversight to the Exchange’s regulation of the listing of these securities, which should help mitigate against any potential or actual conflicts of interest. The Exchange also believes that the additional requirements contained in the proposed rule change would provide additional assurance that any Affiliate Securities listed on the Exchange by a BATS Affiliate comply with the Exchange’s listing standards on an on-going basis. Finally, the Exchange believes that the proposed rule change would eliminate any perception of a potential conflict of interest if a BATS Affiliate seeks to list a security on the Exchange. 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.3 Specifically, the proposed change is consistent with Section 6(b)(5) of the Act,4 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, the Exchange believes that the proposed rule change, by requiring heightened reporting by the Exchange to the Commission with respect to oversight of the listing and trading on the Exchange of Affiliate Securities, will help protect against concerns that the Exchange will not effectively enforce its rules with respect to the listing and trading of these securities. In addition, the requirement that an independent accounting firm review such issuer’s compliance with 3 15 4 15 E:\FR\FM\19MRN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(5). 19MRN1 16112 Federal Register / Vol. 77, No. 53 / Monday, March 19, 2012 / Notices the Exchange’s listing standards adds a degree of independent oversight to the Exchange’s regulation of the listing of these securities, which may mitigate any potential or actual conflicts of interest. Further, the additional requirements contained in the proposed rule change would help to provide additional assurance that any Affiliate Securities listed on the Exchange by a BATS Affiliate comply with the Exchange’s listing standards both upon the initial listing of the BATS Affiliate and on an on-going basis. The Exchange believes that the proposed rule change would eliminate any perception of a potential conflict of interest if a BATS Affiliate seeks to list a security on the Exchange. 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. consistent with the protection of investors and the public interest because such waiver would allow the Exchange to implement protections against potential conflicts of interest that may arise from listing an Affiliate security on the Exchange without undue delay. The Commission notes that the proposed rule change is based on and similar to New York Stock Exchange Rule 497.8 Therefore, the Commission designates the proposal operative upon filing.9 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 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. 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: III. Date of Effectiveness of the Proposed Rule Changes and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not 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 5 and Rule 19b– 4(f)(6) thereunder.6 The Exchange has requested that the Commission waive the 30-day operative delay. The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest because it would permit the Exchange to immediately implement the proposed rule change in the event an Affiliate seeks to list on the Exchange.7 The Commission believes that waiver of the operative delay is Electronic Comments emcdonald on DSK29S0YB1PROD with NOTICES 5 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s 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. 7 See SR–BATS–2012–012, Item 7. • 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–BATS–2012–012 on the subject line. Paper Comments 13:40 Mar 16, 2012 Jkt 226001 8 See id. See also Securities Exchange Act Release Nos. 53382 (February 27, 2006), 71 FR 11251 (March 6, 2006) (SR–NYSE–77) and 55293 (February 14, 2007), 72 FR 8033 (February 22, 2007) (SR–NYSE–2006–120). 9 For 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). PO 00000 Frm 00119 Fmt 4703 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–6495 Filed 3–16–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [File No. 500–1] • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–BATS–2012–012. 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 6 17 VerDate Mar<15>2010 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–BATS– 2012–012 and should be submitted on or before April 9, 2012. Sfmt 4703 Eugene Science, Inc., Order of Suspension of Trading March 15, 2012. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Eugene Science, Inc. because it has not filed any periodic reports since the period ended June 30, 2008. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the abovelisted company is suspended for the period from 9:30 a.m. EDT on March 15, 2012, through 11:59 p.m. EDT on March 28, 2012. 10 17 E:\FR\FM\19MRN1.SGM CFR 200.30–3(a)(12). 19MRN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 77, Number 53 (Monday, March 19, 2012)]
[Notices]
[Pages 16110-16112]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6495]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66580; File No. SR-BATS-2012-012]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify
Exchange Rule 14.3, Entitled ``General Procedures and Prerequisites for
Initial and Continued Listing on the Exchange''

March 13, 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 and II 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 is filing with the Commission a proposal to amend Rule
14.3, entitled ``General Procedures and Prerequisites for Initial and
Continued Listing on the Exchange'' to include additional requirements
for the listing of securities that are issued by the Exchange or any of
its affiliates.
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 is proposing a rule change to adopt a new Rule 14.3(e)
that would impose additional reporting requirements on the Exchange
should the Exchange or an affiliate of the Exchange list a security on
the Exchange (collectively, the ``BATS Affiliates''). In the event that
a BATS Affiliate seeks to list a security on the Exchange (the
``Affiliate Security''), the proposed rule change would require that
prior to the initial listing of the Affiliate Security on the Exchange,
Exchange personnel determine that such security satisfies the
Exchange's rules for listing, and such finding must be approved by the
Regulatory Oversight Committee of the Exchange's Board of Directors.
The proposed rule change would also require the Exchange to prepare a

[[Page 16111]]

quarterly report for the Regulatory Oversight Committee of the
Exchange's Board of Directors detailing: (1) The Exchange's monitoring
of the Affiliate Security's compliance with the Exchange's listing
standards, including the Affiliate Security's compliance with the
Exchange's minimum share price requirement and the Affiliate Security's
compliance with each of the quantitative continued listing
requirements; and (2) the Exchange's monitoring of the trading of the
Affiliate Security, including summaries of all related surveillance
alerts, complaints, regulatory referrals, trades cancelled or adjusted
pursuant to Rule 11.17, investigations, examinations, formal and
informal disciplinary actions, exception reports and trading data used
to ensure the Affiliate Security's compliance with the Exchange's
listing and trading rules. The Exchange would be required to promptly
furnish a copy of this quarterly report to the Commission.
To the extent the Exchange uses Exchange staff to conduct
surveillance of trading activity on the Exchange, which it does today,
the Exchange would be required to engage an independent third party
once a year to review and prepare a report regarding surveillance of
the Affiliate Security and promptly forward to the Regulatory Oversight
Committee of the Exchange's Board of Directors and the Commission a
copy of the report prepared by the independent third party. In
connection with the engagement of this third party, the Exchange would
look for appropriate subject-matter expertise and would consider
engaging appropriately qualified entities such as independent
accounting firms, law firms, consulting firms or other self-regulatory
organizations. The Exchange would also be required to commission an
annual review and report by an independent accounting firm of the
compliance of the Affiliate Security with the Exchange's listing
requirements. The Exchange would be required to promptly furnish a copy
of this annual report to the Regulatory Oversight Committee of the
Exchange's Board of Directors and the Commission.
In the event that the Exchange determines that the BATS Affiliate
is not in compliance with any of the Exchange's listing standards, the
rule would require the Exchange to notify the issuer of such non-
compliance promptly and request a plan of compliance. The Exchange
would be required to file a report with the Commission within five
business days of providing such notice to the issuer of its non-
compliance. The required report would identify the date of the non-
compliance, type of non-compliance, and any other material information
conveyed to the issuer in the notice of non-compliance. Within five
business days of receipt of a plan of compliance from the issuer, the
Exchange would be again required to notify the Commission of such
receipt, whether the plan of compliance was accepted by the Exchange or
what other action was taken with respect to the plan and the time
period provided to regain compliance with the Exchange's listing
standards, if any.
The Exchange is proposing to exclude from the definition of Rule
14.3(e)--solely for purposes of this rule--securities that meet the
definition of ``Portfolio Depository Receipts'' and ``Index Fund
Shares'' under Rules 14.11(b)(1)(A) and 14.11(c)(1)(A), respectively.
These securities, commonly referred to as ``exchange traded funds'' or
``ETFs,'' are issued by investment companies registered under the
Investment Company Act of 1940 and are based on an index or portfolio
of securities. An ETF is designed to provide investment results that
correspond generally to the price and yield performance of the
underlying index or portfolio of securities. The Exchange believes that
such securities do not present the same concerns as other securities,
even if issued by a BATS Affiliate. ETFs, which do not represent
investments in an individual company, are already exempt from a number
of listing standards including corporate governance rules standards,
such as the requirement to have a board of directors comprised of a
majority of independent directors and to have a code of conduct
applicable to all employees and directors. The Exchange does not
believe that the additional reporting requirements in the proposed rule
change would provide any value in this context because ETFs would not
constitute an investment in a BATS Affiliate. Further, these issuers
are already subject to a comprehensive scheme of regulation pursuant to
the Investment Company Act of 1940.
The listing of securities of a BATS Affiliate could potentially
create a conflict of interest between the Exchange's self regulatory
responsibility to vigorously oversee the listing and trading of the
stock on its market, and its own commercial or economic interests. Such
``self-listing'' may raise questions as to the Exchange's ability to
independently and effectively enforce its rules against an affiliate or
the operator/owner of its facility. In addition, such listing has the
potential to exacerbate possible conflicts that may arise when the
Exchange oversees competitors that may also be listed on the Exchange.
The Exchange believes that the proposed rule change, by requiring
heightened reporting by the Exchange to the Commission with respect to
the Exchange's oversight of the listing and trading on the Exchange of
the securities of any BATS Affiliate, will help protect against any
concern that the Exchange will not effectively enforce its rules with
respect to the listing and trading of these securities. In addition,
the requirement that an independent accounting firm review such
issuer's compliance with the Exchange's listing standards adds a degree
of independent oversight to the Exchange's regulation of the listing of
these securities, which should help mitigate against any potential or
actual conflicts of interest. The Exchange also believes that the
additional requirements contained in the proposed rule change would
provide additional assurance that any Affiliate Securities listed on
the Exchange by a BATS Affiliate comply with the Exchange's listing
standards on an on-going basis. Finally, the Exchange believes that the
proposed rule change would eliminate any perception of a potential
conflict of interest if a BATS Affiliate seeks to list a security on
the Exchange.
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.\3\ Specifically, the
proposed change is consistent with Section 6(b)(5) of the Act,\4\
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, the Exchange believes that the proposed rule change, by
requiring heightened reporting by the Exchange to the Commission with
respect to oversight of the listing and trading on the Exchange of
Affiliate Securities, will help protect against concerns that the
Exchange will not effectively enforce its rules with respect to the
listing and trading of these securities. In addition, the requirement
that an independent accounting firm review such issuer's compliance
with

[[Page 16112]]

the Exchange's listing standards adds a degree of independent oversight
to the Exchange's regulation of the listing of these securities, which
may mitigate any potential or actual conflicts of interest. Further,
the additional requirements contained in the proposed rule change would
help to provide additional assurance that any Affiliate Securities
listed on the Exchange by a BATS Affiliate comply with the Exchange's
listing standards both upon the initial listing of the BATS Affiliate
and on an on-going basis. The Exchange believes that the proposed rule
change would eliminate any perception of a potential conflict of
interest if a BATS Affiliate seeks to list a security on the Exchange.
---------------------------------------------------------------------------

\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change imposes
any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

The Exchange has neither solicited nor received written comments on
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Changes and Timing for
Commission Action

Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest, does not
impose any significant burden on competition, and, by its terms, does
not 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 \5\ and Rule 19b-
4(f)(6) thereunder.\6\
---------------------------------------------------------------------------

\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's 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.
---------------------------------------------------------------------------

The Exchange has requested that the Commission waive the 30-day
operative delay. The Exchange believes that the proposed rule change is
consistent with the protection of investors and the public interest
because it would permit the Exchange to immediately implement the
proposed rule change in the event an Affiliate seeks to list on the
Exchange.\7\ The Commission believes that waiver of the operative delay
is consistent with the protection of investors and the public interest
because such waiver would allow the Exchange to implement protections
against potential conflicts of interest that may arise from listing an
Affiliate security on the Exchange without undue delay. The Commission
notes that the proposed rule change is based on and similar to New York
Stock Exchange Rule 497.\8\ Therefore, the Commission designates the
proposal operative upon filing.\9\
---------------------------------------------------------------------------

\7\ See SR-BATS-2012-012, Item 7.
\8\ See id. See also Securities Exchange Act Release Nos. 53382
(February 27, 2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-77) and
55293 (February 14, 2007), 72 FR 8033 (February 22, 2007) (SR-NYSE-
2006-120).
\9\ For purposes only of waiving the 30-day operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of 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 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-BATS-2012-012 on the subject line.

Paper Comments

Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BATS-2012-012. 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-BATS-2012-012 and should be
submitted on or before April 9, 2012.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6495 Filed 3-16-12; 8:45 am]
BILLING CODE 8011-01-P

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