Self-Regulatory Organizations; BATS Exchange Inc.; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, Modifying Rule 21.7 of BATS Exchange, Inc., 68492-68494 [2014-27065]
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68492
Federal Register / Vol. 79, No. 221 / Monday, November 17, 2014 / Notices
Week of December 8, 2014—Tentative
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Week of December 15, 2014—Tentative
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[FR Doc. 2014–27289 Filed 11–13–14; 4:15 pm]
BILLING CODE 7590–01–P
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OVERSEAS PRIVATE INVESTMENT
CORPORATION
OPIC funding, and to collect
information for financial underwriting
analysis.
Submission for OMB Review;
Comments Request
Dated: November 7, 2014.
Nichole Cadiente,
Administrative Counsel, Department of Legal
Affairs.
Overseas Private Investment
Corporation (OPIC).
ACTION: Notice and request for
comments.
AGENCY:
Under the provisions of the
Paperwork Reduction Act (44 U.S.C.
Chapter 35), agencies are required to
publish a Notice in the Federal Register
notifying the public that the agency has
prepared an information collection for
OMB review and approval and has
requested public review and comment
on the submission. Comments are being
solicited on the need for the
information; the accuracy of the
Agency’s burden estimate; the quality,
practical utility, and clarity of the
information to be collected; and ways to
minimize reporting the burden,
including automated collected
techniques and uses of other forms of
technology.
[FR Doc. 2014–26931 Filed 11–14–14; 8:45 am]
BILLING CODE M
SUMMARY:
Comments must be received
within 60 calendar-days of publication
of this Notice.
ADDRESSES: Copies of the subject form
may be obtained from the Agency
Submitting Officer.
FOR FURTHER INFORMATION CONTACT:
OPIC Agency Submitting Officer: Essie
Bryant, Record Manager, Overseas
Private Investment Corporation, 1100
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SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on Wednesday, November 19, 2014 at
10:00 a.m., in the Auditorium, Room L–
002.
The subject matter of the Open
Meeting will be:
• The Commission will consider
whether to adopt Regulation Systems
Compliance and Integrity (Regulation
SCI) under the Securities Exchange Act
of 1934 (‘‘Exchange Act’’) and
conforming amendments to Regulation
ATS under the Exchange Act.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted, or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
Dated: November 12, 2014.
Brent J. Fields,
Secretary.
[FR Doc. 2014–27240 Filed 11–13–14; 11:15 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73571; File No. SR–BATS–
2014–040]
Self-Regulatory Organizations; BATS
Exchange Inc.; Order Approving a
Proposed Rule Change, as Modified by
Amendment No. 1, Modifying Rule 21.7
of BATS Exchange, Inc.
November 10, 2014.
I. Introduction
On September 12, 2014, BATS
Exchange, Inc., (‘‘BATS’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’), pursuant to Section
E:\FR\FM\17NON1.SGM
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Federal Register / Vol. 79, No. 221 / Monday, November 17, 2014 / Notices
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change
amending BATS Rule 21.7. The
proposed rule change was published for
comment in the Federal Register on
September 30, 2014.3 On October 10,
2014, the Exchange filed Amendment
No. 1 to the proposed rule change.4 The
Commission received no comments on
the proposal. This order approves the
proposed rule change, as modified by
Amendment No. 1.
II. Description of the Proposal
BATS proposes to amend BATS Rule
21.7 (‘‘Market Opening Procedures’’) to
modify the process by which the
Exchange’s equity options trading
platform (‘‘BATS Options’’) opens
trading at the beginning of the day and
after trading halts. Specifically, the
BATS proposal would modify the
Opening Process 5 set forth in BATS
Rule 21.7 as follows: (1) Orders in the
Opening Process will be executed based
on time priority instead of price-time
priority; (2) certain orders that are not
executed during the Opening Process
will be treated as if they had been
entered by a User 6 rather than canceled;
and (3) add certain clarifying language
to BATS Rule 21.7 in order to make the
Opening Process more clear.7 The
Exchange is not proposing to amend the
process by which orders are entered or
the Opening Price is determined or
validated.
Currently, after establishing an
Opening Price that is also a Valid Price,8
orders and quotes in the Exchange’s
System 9 that are priced equal to or more
aggressively than the Opening Price will
be matched based on price-time priority
and in accordance with BATS Rule 21.8.
Under the current process, all orders
and quotes or portions thereof that are
matched pursuant to the Opening
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 73203
(September 24, 2014), 79 FR 58845 (‘‘Notice’’).
4 In Amendment No. 1, the Exchange further
clarified the process by which the Exchange’s
equity options trading platform opens trading at the
beginning of the day and after trading halts.
Amendment No. 1 has been placed in the public
comment file for SR–BATS–2014–040 at https://
www.sec.gov/comments/sr-bats-2014-040/
bats2014040-1.pdf (See letter from Anders Franzon,
VP, Associate General Counsel, BATS, to Secretary,
Commission, dated October 16, 2014) and is also
available on the Exchange’s Web site.
5 See BATS Rule 21.7(a) (defining ‘‘Opening
Process’’).
6 See BATS Rule 16.1(a)(63) (defining ‘‘User’’).
7 The Exchange also proposes to add titles to
BATS Rule 21.7(a)(1), (2), (3), and (4).
8 See BATS Rule 21.7(a)(2) (defining ‘‘Valid
Price’’).
9 See BATS Rule 1.5(aa) (defining ‘‘System’’).
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Process will be executed at the Opening
Price. Further, under the current rule,
orders that meet the following criteria
which are not executed during the
Opening Process are cancelled: (i) Limit
orders that are priced equal to or more
aggressively than the Opening Price;
and (ii) market orders.10 Where the
Exchange currently opens trading in a
series pursuant to BATS Rule
21.7(a)(1)(D) (where there is no NBBO
Midpoint, no Print, and no Previous
Close at a Valid Price) (a ‘‘Contingent
Open’’) and there is at least one price
level at which at least one contract of a
limit order could be executed, the
System similarly cancels all orders that
are priced equal to or more aggressively
than the midpoint of the most
aggressively priced bid and the most
aggressively priced offer.11 The
Exchange states that under its current
Opening Process, limit orders and
quotes that are not executed during the
Opening Process or cancelled become
eligible for trading on BATS Options
immediately following the completion
of the Opening Process.12
The Exchange proposes to amend its
rules in order to match orders for
execution in the Opening Process based
on time priority rather than price-time
priority and in accordance with BATS
Rule 21.9. The Exchange believes that
handling orders in time priority makes
more sense than price-time priority for
the Opening Process because, according
to the Exchange, the price of an order
is not particularly important to the
Opening Process, so long as the order is
priced at or more aggressively than the
Opening Price, which can only be one
of three prices: The midpoint of the
NBBO; the last regular way print
disseminated to the OPRA Plan 13 after
9:30 a.m.; or the last regular way
transaction from the previous trading
day as disseminated pursuant to
OPRA.14 According to the Exchange,
because the Opening Price is always
based on a price-taking process rather
than a price-forming process, there is no
reason to reward a more aggressive
order with priority in the Opening
Process.15 Therefore, the Exchange
proposes that all orders and quotes that
are priced equal to or more aggressively
10 See
Notice, supra note 3, at 58845.
id.
12 See id. The Exchange also notes that, under its
current Opening Process, where there are no orders
in a series that are matched at the Opening Price,
the System will open the series for trading. See id.
at 58845–58846.
13 See BATS Rule 27.1(15) (defining ‘‘OPRA
Plan’’).
14 See Notice, supra note 3, at 58846. See also
BATS Rule 27.1(14) (defining ‘‘OPRA’’).
15 See Notice, supra note 3, at 58846.
11 See
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68493
than the Opening Price will be matched
based only on time priority and will be
matched until there is no remaining
volume or there is an imbalance of
orders that are not executed in whole or
in part, at which point all matched
orders and quotes will be executed at
the Opening Price.16
The Exchange also proposes to handle
all orders that are not executed in the
Opening Process in time priority.
Specifically, the Exchange proposes to
handle such orders in time sequence,
beginning with the order with the oldest
time stamp and may, in whole or in
part, place such orders on the BATS
Options Book,17 cancel the orders,
execute the orders, or route the orders
in accordance with BATS Rule 21.9.18
According to the Exchange, all orders
that were eligible for execution in the
Opening Process that were not executed
will be processed ahead of any orders
received after the conclusion of the
Opening Process.19 If an order is placed
on the BATS Options Book, it will then
be subject to the standard price-time
priority and subject to BATS Rule
21.8.20 According to the Exchange, the
proposed functionality will apply to all
orders, including both those orders that
are not executed under proposed BATS
Rule 21.7(a)(3) and orders in a series
that is opening subject to a Contingent
Open.21 The Exchange states that
although it currently cancels any orders
that are not executed in the Opening
Process that are priced more
aggressively than the Opening Price, the
Exchange now proposes to simply enter
these orders onto the BATS Options
Book as described above in order to
minimize the number of orders that are
cancelled and must be reentered by
Users.22 The Exchange notes that all
order protections, including TradeThrough 23 protection and a BATS
Market Order 24 collar, will apply to
orders entered pursuant to proposed
BATS Rules 21.7(a)(3) and 21.7(a)(4).
The Exchange also proposes to
eliminate the current functionality that
cancels orders that are not executed
during the Opening Process that fit the
following criteria: (i) Limit orders that
are priced equal to or more aggressively
than the Opening Price; and (ii) market
16 See
id.
BATS Rule 16.1(a)(9) (defining ‘‘BATS
Options Book’’).
18 See Notice, supra note 3, at 58846.
19 See Amendment No. 1 at 3.
20 See Notice, supra note 3, at 58846.
21 See id.
22 See id.
23 See BATS Rule 27.1(22) (defining ‘‘TradeThrough’’).
24 See BATS Rule 21.1(d)(5) (defining ‘‘BATS
Market Order’’).
17 See
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68494
Federal Register / Vol. 79, No. 221 / Monday, November 17, 2014 / Notices
orders.25 Further, the Exchange
proposes to eliminate the current
functionality for a series subject to a
Contingent Open where, if there is at
least one price level at which at least
one contract of a limit order can be
executed, the System will cancel all
orders that are priced equal to or more
aggressively than the midpoint of the
most aggressively priced bid and the
most aggressively priced offer.26
According to BATS, for many Users,
cancelling orders that were entered for
participation in the Opening Process
negates the advantages of allowing
orders to be entered prior to the
beginning of regular way trading and the
Opening Process.27
Finally, the Exchange proposes
certain clarifying changes to its Opening
Process rules. For example, the
Exchange proposes to add language to
Rule 21.7(a)(3) stating that the Opening
Process will be performed after the
establishment of an Opening Price that
is a Valid Price 28 and that matches will
occur until there is no remaining
volume or there is an imbalance of
orders.29 The Exchange believes that
both of these concepts are implicit in
the rule.30
III. Discussion and Commission
Findings
After careful review, 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.31 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,32 which requires,
among other things, that the rules of a
national securities exchange be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
25 See
Notice, supra note 3, at 58846.
id. The Exchange notes that although not
cancelling these orders might result in executions
at a price that is not the same as the Opening Price
that occurs as the orders are handled in time
sequence (either on BATS Options or upon routing
to another options exchange), these executions
would be part of regular way trading and are
distinct from the opening execution that occurs as
a result of the Opening Process. See id.
27 See id.
28 See BATS Rule 21.7(a)(2) (defining ‘‘Valid
Price’’).
29 See Notice, supra note 3, at 58846.
30 See id.
31 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
32 15 U.S.C. 78f(b)(5).
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system, and, in general, to protect
investors and the public interest.
The proposed rule change is designed
to modify the Exchange’s Opening
Process for options listed on the
Exchange to ensure that BATS Options
opens trading in options contracts in a
fair and orderly manner. As noted
above, the Exchange believes that
handling orders in time priority (as
opposed to price-time priority) will
create a more orderly opening and
makes more sense because the price of
the order is not particularly important to
the Opening Process, provided the order
is priced at or more aggressively than
the Opening Price. Under such
circumstances, the Exchange believes
that there is no reason to reward a more
aggressive order with priority in the
Opening Process. In addition, the
Exchange also believes that entering
orders in time sequence based on the
time of receipt instead of canceling
certain orders will create a more orderly
opening because Users will be able to
enter orders and quotes prior to the
opening of trading and be assured that
such orders will either participate in the
Opening Process or be handled as if
they were entered immediately
following the Opening Process. The
Exchange believes that these changes
will provide market makers and Users
greater control and flexibility with
respect to entering orders and quotes
because they will no longer have to
reenter orders that may have been
canceled because they were not
executed in the opening process.
The Commission believes that the
proposed rule change is designed to
facilitate the opening of options trading
on BATS Options in a fair and orderly
manner. Further, the Commission
believes that the proposal could benefit
investors by providing Users with
certainty that orders that are entered
prior to the Opening Process will not be
cancelled based on market conditions
outside of a User’s control. The
Commission further notes that all order
protections, including Trade-Through
protection and the BATS Market Order
collar, will apply to orders entered
pursuant to proposed BATS Rules
21.7(a)(3) and 21.7(a)(4).33
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,34 that the
proposed rule change (SR–BATS–2014–
040), as modified by Amendment No.1,
is approved.
33 See
34 15
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Notice, supra note 3 at 58846.
U.S.C. 78s(b)(2).
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.35
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–27065 Filed 11–14–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73570; File No. SR–ICEEU–
2014–21]
Self-Regulatory Organizations; ICE
Clear Europe Limited; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Relating to the
Clearance of New Energy Futures
Contracts
November 10, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder 2
notice is hereby given that, on October
28, 2014, ICE Clear Europe Limited
(‘‘ICE Clear Europe’’) 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
primarily by ICE Clear Europe. ICE Clear
Europe filed the proposal pursuant to
Section 19(b)(3)(A) of the Act,3 and Rule
19b–4(f)(4)(ii) 4 thereunder, so that the
proposal was 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 principal purpose of the change
is to modify certain aspects of the ICE
Clear Europe Delivery Procedures in
connection with the launch by the ICE
Endex market of the ICE Endex Belgian
ZTP Natural Gas Futures Contracts (the
‘‘Belgian Natural Gas Contracts’’), which
will be cleared by ICE Clear Europe.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, ICE
Clear Europe included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
35 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)(4)(ii).
1 15
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]]>Agencies
[Federal Register Volume 79, Number 221 (Monday, November 17, 2014)]
[Notices]
[Pages 68492-68494]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27065]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73571; File No. SR-BATS-2014-040]
Self-Regulatory Organizations; BATS Exchange Inc.; Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1,
Modifying Rule 21.7 of BATS Exchange, Inc.
November 10, 2014.
I. Introduction
On September 12, 2014, BATS Exchange, Inc., (``BATS'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission''), pursuant to Section
[[Page 68493]]
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule
19b-4 thereunder,\2\ a proposed rule change amending BATS Rule 21.7.
The proposed rule change was published for comment in the Federal
Register on September 30, 2014.\3\ On October 10, 2014, the Exchange
filed Amendment No. 1 to the proposed rule change.\4\ The Commission
received no comments on the proposal. This order approves the proposed
rule change, as modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 73203 (September 24,
2014), 79 FR 58845 (``Notice'').
\4\ In Amendment No. 1, the Exchange further clarified the
process by which the Exchange's equity options trading platform
opens trading at the beginning of the day and after trading halts.
Amendment No. 1 has been placed in the public comment file for SR-
BATS-2014-040 at https://www.sec.gov/comments/sr-bats-2014-040/bats2014040-1.pdf (See letter from Anders Franzon, VP, Associate
General Counsel, BATS, to Secretary, Commission, dated October 16,
2014) and is also available on the Exchange's Web site.
---------------------------------------------------------------------------
II. Description of the Proposal
BATS proposes to amend BATS Rule 21.7 (``Market Opening
Procedures'') to modify the process by which the Exchange's equity
options trading platform (``BATS Options'') opens trading at the
beginning of the day and after trading halts. Specifically, the BATS
proposal would modify the Opening Process \5\ set forth in BATS Rule
21.7 as follows: (1) Orders in the Opening Process will be executed
based on time priority instead of price-time priority; (2) certain
orders that are not executed during the Opening Process will be treated
as if they had been entered by a User \6\ rather than canceled; and (3)
add certain clarifying language to BATS Rule 21.7 in order to make the
Opening Process more clear.\7\ The Exchange is not proposing to amend
the process by which orders are entered or the Opening Price is
determined or validated.
---------------------------------------------------------------------------
\5\ See BATS Rule 21.7(a) (defining ``Opening Process'').
\6\ See BATS Rule 16.1(a)(63) (defining ``User'').
\7\ The Exchange also proposes to add titles to BATS Rule
21.7(a)(1), (2), (3), and (4).
---------------------------------------------------------------------------
Currently, after establishing an Opening Price that is also a Valid
Price,\8\ orders and quotes in the Exchange's System \9\ that are
priced equal to or more aggressively than the Opening Price will be
matched based on price-time priority and in accordance with BATS Rule
21.8. Under the current process, all orders and quotes or portions
thereof that are matched pursuant to the Opening Process will be
executed at the Opening Price. Further, under the current rule, orders
that meet the following criteria which are not executed during the
Opening Process are cancelled: (i) Limit orders that are priced equal
to or more aggressively than the Opening Price; and (ii) market
orders.\10\ Where the Exchange currently opens trading in a series
pursuant to BATS Rule 21.7(a)(1)(D) (where there is no NBBO Midpoint,
no Print, and no Previous Close at a Valid Price) (a ``Contingent
Open'') and there is at least one price level at which at least one
contract of a limit order could be executed, the System similarly
cancels all orders that are priced equal to or more aggressively than
the midpoint of the most aggressively priced bid and the most
aggressively priced offer.\11\ The Exchange states that under its
current Opening Process, limit orders and quotes that are not executed
during the Opening Process or cancelled become eligible for trading on
BATS Options immediately following the completion of the Opening
Process.\12\
---------------------------------------------------------------------------
\8\ See BATS Rule 21.7(a)(2) (defining ``Valid Price'').
\9\ See BATS Rule 1.5(aa) (defining ``System'').
\10\ See Notice, supra note 3, at 58845.
\11\ See id.
\12\ See id. The Exchange also notes that, under its current
Opening Process, where there are no orders in a series that are
matched at the Opening Price, the System will open the series for
trading. See id. at 58845-58846.
---------------------------------------------------------------------------
The Exchange proposes to amend its rules in order to match orders
for execution in the Opening Process based on time priority rather than
price-time priority and in accordance with BATS Rule 21.9. The Exchange
believes that handling orders in time priority makes more sense than
price-time priority for the Opening Process because, according to the
Exchange, the price of an order is not particularly important to the
Opening Process, so long as the order is priced at or more aggressively
than the Opening Price, which can only be one of three prices: The
midpoint of the NBBO; the last regular way print disseminated to the
OPRA Plan \13\ after 9:30 a.m.; or the last regular way transaction
from the previous trading day as disseminated pursuant to OPRA.\14\
According to the Exchange, because the Opening Price is always based on
a price-taking process rather than a price-forming process, there is no
reason to reward a more aggressive order with priority in the Opening
Process.\15\ Therefore, the Exchange proposes that all orders and
quotes that are priced equal to or more aggressively than the Opening
Price will be matched based only on time priority and will be matched
until there is no remaining volume or there is an imbalance of orders
that are not executed in whole or in part, at which point all matched
orders and quotes will be executed at the Opening Price.\16\
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\13\ See BATS Rule 27.1(15) (defining ``OPRA Plan'').
\14\ See Notice, supra note 3, at 58846. See also BATS Rule
27.1(14) (defining ``OPRA'').
\15\ See Notice, supra note 3, at 58846.
\16\ See id.
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The Exchange also proposes to handle all orders that are not
executed in the Opening Process in time priority. Specifically, the
Exchange proposes to handle such orders in time sequence, beginning
with the order with the oldest time stamp and may, in whole or in part,
place such orders on the BATS Options Book,\17\ cancel the orders,
execute the orders, or route the orders in accordance with BATS Rule
21.9.\18\ According to the Exchange, all orders that were eligible for
execution in the Opening Process that were not executed will be
processed ahead of any orders received after the conclusion of the
Opening Process.\19\ If an order is placed on the BATS Options Book, it
will then be subject to the standard price-time priority and subject to
BATS Rule 21.8.\20\ According to the Exchange, the proposed
functionality will apply to all orders, including both those orders
that are not executed under proposed BATS Rule 21.7(a)(3) and orders in
a series that is opening subject to a Contingent Open.\21\ The Exchange
states that although it currently cancels any orders that are not
executed in the Opening Process that are priced more aggressively than
the Opening Price, the Exchange now proposes to simply enter these
orders onto the BATS Options Book as described above in order to
minimize the number of orders that are cancelled and must be reentered
by Users.\22\ The Exchange notes that all order protections, including
Trade-Through \23\ protection and a BATS Market Order \24\ collar, will
apply to orders entered pursuant to proposed BATS Rules 21.7(a)(3) and
21.7(a)(4).
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\17\ See BATS Rule 16.1(a)(9) (defining ``BATS Options Book'').
\18\ See Notice, supra note 3, at 58846.
\19\ See Amendment No. 1 at 3.
\20\ See Notice, supra note 3, at 58846.
\21\ See id.
\22\ See id.
\23\ See BATS Rule 27.1(22) (defining ``Trade-Through'').
\24\ See BATS Rule 21.1(d)(5) (defining ``BATS Market Order'').
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The Exchange also proposes to eliminate the current functionality
that cancels orders that are not executed during the Opening Process
that fit the following criteria: (i) Limit orders that are priced equal
to or more aggressively than the Opening Price; and (ii) market
[[Page 68494]]
orders.\25\ Further, the Exchange proposes to eliminate the current
functionality for a series subject to a Contingent Open where, if there
is at least one price level at which at least one contract of a limit
order can be executed, the System will cancel all orders that are
priced equal to or more aggressively than the midpoint of the most
aggressively priced bid and the most aggressively priced offer.\26\
According to BATS, for many Users, cancelling orders that were entered
for participation in the Opening Process negates the advantages of
allowing orders to be entered prior to the beginning of regular way
trading and the Opening Process.\27\
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\25\ See Notice, supra note 3, at 58846.
\26\ See id. The Exchange notes that although not cancelling
these orders might result in executions at a price that is not the
same as the Opening Price that occurs as the orders are handled in
time sequence (either on BATS Options or upon routing to another
options exchange), these executions would be part of regular way
trading and are distinct from the opening execution that occurs as a
result of the Opening Process. See id.
\27\ See id.
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Finally, the Exchange proposes certain clarifying changes to its
Opening Process rules. For example, the Exchange proposes to add
language to Rule 21.7(a)(3) stating that the Opening Process will be
performed after the establishment of an Opening Price that is a Valid
Price \28\ and that matches will occur until there is no remaining
volume or there is an imbalance of orders.\29\ The Exchange believes
that both of these concepts are implicit in the rule.\30\
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\28\ See BATS Rule 21.7(a)(2) (defining ``Valid Price'').
\29\ See Notice, supra note 3, at 58846.
\30\ See id.
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III. Discussion and Commission Findings
After careful review, 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.\31\ In particular, the Commission finds that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\32\ which
requires, among other things, that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, 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.
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\31\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\32\ 15 U.S.C. 78f(b)(5).
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The proposed rule change is designed to modify the Exchange's
Opening Process for options listed on the Exchange to ensure that BATS
Options opens trading in options contracts in a fair and orderly
manner. As noted above, the Exchange believes that handling orders in
time priority (as opposed to price-time priority) will create a more
orderly opening and makes more sense because the price of the order is
not particularly important to the Opening Process, provided the order
is priced at or more aggressively than the Opening Price. Under such
circumstances, the Exchange believes that there is no reason to reward
a more aggressive order with priority in the Opening Process. In
addition, the Exchange also believes that entering orders in time
sequence based on the time of receipt instead of canceling certain
orders will create a more orderly opening because Users will be able to
enter orders and quotes prior to the opening of trading and be assured
that such orders will either participate in the Opening Process or be
handled as if they were entered immediately following the Opening
Process. The Exchange believes that these changes will provide market
makers and Users greater control and flexibility with respect to
entering orders and quotes because they will no longer have to reenter
orders that may have been canceled because they were not executed in
the opening process.
The Commission believes that the proposed rule change is designed
to facilitate the opening of options trading on BATS Options in a fair
and orderly manner. Further, the Commission believes that the proposal
could benefit investors by providing Users with certainty that orders
that are entered prior to the Opening Process will not be cancelled
based on market conditions outside of a User's control. The Commission
further notes that all order protections, including Trade-Through
protection and the BATS Market Order collar, will apply to orders
entered pursuant to proposed BATS Rules 21.7(a)(3) and 21.7(a)(4).\33\
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\33\ See Notice, supra note 3 at 58846.
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\34\ that the proposed rule change (SR-BATS-2014-040), as modified
by Amendment No.1, is approved.
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\34\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27065 Filed 11-14-14; 8:45 am]
BILLING CODE 8011-01-P
