Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.12 To Remove References to “Direct Edge ECN LLC” and “DE Route”, 66-69 [2014-30694]
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66
Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices
BATS Trading as the Exchange’s routing
broker-dealer upon migration of the
Exchange to the BATS technology
platform, thereby enabling BATS
Trading to act as the routing brokerdealer for each of the BGM Affiliated
Exchanges in a timely manner and
simplifying the technology integration
for Members of the Exchange that are
also participants on EDGA, BZX and
BYX. In this regard, the Exchange notes
that, since completion of the Merger,
both Members and the BGM Affiliated
Exchanges have made numerous
systems changes in preparation for the
technology migration occurring on
January 12, 2015, the Exchange has
issued frequent updates to Members
informing them of the BGM Affiliated
Exchange technology migration as well
as its anticipated time line so that
Members may make the requisite system
changes, and the Exchange has
conducted multiple testing
opportunities for Members to ensure
that both Members’ and the Exchange’s
systems will operate in accordance with
the proposed rule change on January 12,
2015. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission hereby
waives the operative delay and
designates the proposed rule change
operative upon filing.15
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
under Section 19(b)(2)(B) of the Act 16 to
determine whether the proposed rule
change should be approved or
disapproved.
asabaliauskas on DSK5VPTVN1PROD 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:
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–
EDGX–2014–35 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–EDGX–2014–35. 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 at 100 F Street NE.,
Washington, DC 20549–1090 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–EDGX–
2014–35, and should be submitted on or
January 23, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Brent J. Fields,
Secretary.
[FR Doc. 2014–30699 Filed 12–31–14; 8:45 am]
BILLING CODE 8011–01–P
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).
16 15 U.S.C. 78s(b)(2)(B).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73935; File No. SR–BATS–
2014–073]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rule 2.12 To
Remove References to ‘‘Direct Edge
ECN LLC’’ and ‘‘DE Route’’
December 24, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
22, 2014, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange filed a proposed rule
change to amend Rule 2.12 to remove
references to ‘‘Direct Edge ECN LLC’’
and ‘‘DE Route.’’ The Exchange does not
propose to amend the requirements of
this rule.
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.
15 For
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1 15
17 17
PO 00000
CFR 200.30–3(a)(12).
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2 17
E:\FR\FM\02JAN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
02JAN1
Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices
asabaliauskas on DSK5VPTVN1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Earlier this year, the Exchange and its
affiliate BATS Y-Exchange, Inc. (‘‘BYX’’)
received approval to affect a merger (the
‘‘Merger’’) of the Exchange’s parent
company, BATS Global Markets, Inc.,
with Direct Edge Holdings LLC, the
indirect parent of EDGX Exchange, Inc.
(‘‘EDGX’’) and EDGA Exchange, Inc.
(‘‘EDGA,’’ and together with BZX, BYX
and EDGX, the ‘‘BGM Affiliated
Exchanges’’).3 As a result, the Exchange
amended Rule 2.12 to reflect that DE
Route, the affiliated EDGA and EDGX
routing broker-dealer, would also act as
the inbound router for routing orders
from EDGA and EDGX to the Exchange.
In the context of the Merger, the BGM
Affiliated Exchanges are working to
migrate EDGX and EDGA onto the BATS
technology platform, and align certain
system functionality, retaining only
intended differences between the BGM
Affiliated Exchanges. As a result of
these efforts, the Exchange proposes to
amend to amend [sic] Rule 2.12 to
remove references to ‘‘Direct Edge ECN
LLC’’ and ‘‘DE Route’’ to reflect that
BATS Trading, Inc. will be the
Exchange’s sole routing broker-dealer as
of January 12, 2015. Thereafter, BATS
Trading will serve as the sole inbound
routing broker-dealer for the Exchange.
The Exchange does not propose to
amend the requirements of the rule.
DE Route and BATS Trading provide
Members of the Exchange, EDGA, EDGX
and BYX with optional routing services
to other market centers. Thus, in certain
circumstances, DE Route and BATS
Trading provides inbound routing from
EDGA, EDGX, or BYX to the Exchange.
Exchange Rule 2.12 governs this
inbound routing of orders by DE Route
and BATS Trading to the Exchange in
DE Route’s and BATS Trading’s
capacity as a facility of the Exchange.
The Exchange proposes to amend Rule
2.12 to remove all references to DE
Route as BATS Trading will be the sole
inbound routing service for the
Exchange upon migration of EDGA and
EDGX onto the BATS technology
platform. The Exchange does not
propose to amend the requirements of
this rule. Therefore, the conditions and
limitations set forth in Exchange Rule
2.12(a) will continue to require that:
• The Exchange enter into (a) a plan
pursuant to Rule 17d–2 under the Act
3 See Securities Exchange Act Release No. 71375
(January 23, 2014), 79 FR 4771 (January 29, 2014)
(SR–BATS–2013–059; SR–BYX–2013–039).
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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 (b) a regulatory services contract
(‘‘Regulatory Contract’’) with a nonaffiliated SRO to perform regulatory
responsibilities for BATS Trading for
unique Exchange rules.
• The Regulatory Contract 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 Commission rules, and
requires 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 Commission rules.
• The Exchange, on behalf of holding
company indirectly owning the
Exchange, establish and maintain
procedures and internal controls
reasonably designed to ensure that
BATS Trading does not develop or
implement changes to its system based
on non-public information obtained as a
result of its affiliation with the
Exchange, until such information is
available generally to similarly situated
Members of the Exchange.
• The Exchange furnish to BATS
Trading only the same information and
on the same terms as the Exchange
makes available in the normal course of
business to other users.4
In addition, provided the conditions
in Exchange Rule 2.12 are complied
with, and provided further that BATS
Trading operates as an outbound router
on behalf of BYX on the same terms and
conditions as it does for the Exchange,
and in accordance with the rules of
BYX, BATS Trading may provide
inbound routing services to the
Exchange from BYX. BATS Trading
provides members of the BGM Affiliated
Exchanges (including BYX) with
optional routing services to other market
centers, which may include routing
from a BGM Affiliated Exchange to the
Exchange. Therefore, the Exchange
proposes to remove reference to BYX as
BATS Trading will be required under
Exchange Rule 2.12 to operate as an
outbound router on behalf of each BATS
Exchange on the same terms and
conditions as it does for the Exchange,
and in accordance with the rules of each
BATS Exchange, BATS Trading may
provide inbound routing services to the
Exchange from each BATS Exchange.
The Exchange believes that Rule 2.12
will continue to adequately manage the
potential for conflicts of interest that
could arise from BATS Trading routing
orders to the Exchange.
Implementation Date
The Exchange intends to implement
the proposed rule change on or about
January 12, 2015, which is the
anticipated date upon which the
migration of the EDGA and EDGX to the
BATS technology platform will be
complete and BATS Trading, Inc. will
act as the BGM Affiliated Exchange’s
sole routing broker-dealer.
2. Statutory Basis
The Exchange believes that the
proposed rule changes are consistent
with Section 6(b) of the Act 5 and further
the objectives of Section 6(b)(5) of the
Act 6 because they are designed 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, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and, in general, to protect investors and
the public interest. The proposed rule
change also is designed to support the
principles of Section 11A(a)(1) 7 of the
Act in that it seeks to assure fair
competition among brokers and dealers
and among exchange markets. The
Exchange does not propose to amend
the requirements of the rule and the
proposed rule change is intended only
to reflect that BATS Trading will be the
Exchange’s sole routing broker-dealer
upon migration of the EDGA and EDGX
to the BATS technology platform. A
consistent technology offering through
the use of a single routing broker-dealer
by each of the BGM Affiliated Exchange
will, in turn, simplify the technology
implementation, changes and
maintenance by users of the Exchange
that are also participants on BYX,
EDGA, and EDGX. As such, the
proposed rule change would foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities and would
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).
U.S.C. 78f(b)(5).
7 15 U.S.C. 78k–1(a)(1).
6 15
4 See
PO 00000
Exchange Rule 2.12(a)(2).
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Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange reiterates that the proposed
rule change is being proposed in the
context of the technology integration of
the BGM Affiliated Exchanges. Thus,
the Exchange believes this proposed
rule change is necessary to permit fair
competition among national securities
exchanges. In addition, the Exchange
believes the proposed rule change will
benefit Exchange participants in that it
is one of several changes necessary to
achieve a consistent technology offering
by the BGM Affiliated Exchanges.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule
filing as non-controversial under
Section 19(b)(3)(A) of the Act 8 and
paragraph (f)(6) of Rule 19b–4
thereunder.9 Because the 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 prior to 30 days from the date
on which it was filed, or such shorter
time as the Commission may designate
if consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act and Rule 19b–4(f)(6)
thereunder.10
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 11 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 12
permits the Commission to designate a
shorter time if such action is consistent
asabaliauskas on DSK5VPTVN1PROD with NOTICES
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4.
10 17 CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the 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.
11 17 CFR 240.19b–4(f)(6).
12 17 CFR 240.19b–4(f)(6)(iii).
9 17
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with the protection of investors and the
public interest. The Exchange has asked
the Commission to waive the 30-day
operative delay in order to permit the
Exchange to implement the proposed
rule change on January 12, 2015, which
is the anticipated date upon which the
migration of EDGA and EDGX to the
BATS technology platform will be
complete and BATS Trading will serve
as the Exchange’s sole routing brokerdealer. The Exchange states that waiver
of the operative delay is consistent with
the protection of investors and the
public interest because it will allow
BATS Trading to act as the BGM
Affiliated Exchanges’ sole routing
broker-dealer upon migration of EDGX
and EDGA to the BATS technology
platform, thereby simplifying the
technology integration for Members of
the Exchange that are also participants
on EDGX, EDGA, and BYX. In this
regard, the Exchange notes that, since
completion of the Merger, both
Members and the BGM Affiliated
Exchanges have made numerous
systems changes in preparation for the
technology migration occurring on
January 12, 2015, the Exchange has
issued frequent updates to Members
informing them of the BGM Affiliated
Exchange technology migration as well
as its anticipated time line so that
Members may make the requisite system
changes, and the Exchange has
conducted multiple testing
opportunities for Members to ensure
that both Members’ and the Exchange’s
systems will operate in accordance with
the proposed rule change on January 12,
2015. The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Therefore, the Commission hereby
waives the operative delay and
designates the proposed rule change
operative upon filing.13
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
under Section 19(b)(2)(B) of the Act 14 to
determine whether the proposed rule
13 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).
14 15 U.S.C. 78s(b)(2)(B).
PO 00000
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change 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 rule-comments@
sec.gov. Please include File Number SR–
BATS–2014–073 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BATS–2014–073. 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 at 100 F Street NE.,
Washington, DC 20549–1090 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BATS–
2014–073, and should be submitted on
or before January 23, 2015.
E:\FR\FM\02JAN1.SGM
02JAN1
Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Brent J. Fields,
Secretary.
[FR Doc. 2014–30694 Filed 12–31–14; 8:45 am]
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73943; File No. SR–
NASDAQ–2014–123]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Rules
4751(h) and 4754(b) Relating to the
Closing Process
December 24, 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 December
16, 2014, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘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 make
changes to Rules 4751(h) and 4754(b)
relating to the closing process.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.cchwallstreet.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
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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
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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1. Purpose
The Exchange is proposing to adopt
changes related to the close of Regular
Market Session 3 on NASDAQ, which
are designed to bring consistency and
stability to the processing of securities
in the NASDAQ Closing Cross.4 Each
trading day, NASDAQ accepts orders
designated to participate in the Closing
Cross.5 The Closing Cross is the process
by which NASDAQ determines the
price at which orders will be executed
at market close. Beginning at 3:50 p.m.
Eastern Time, NASDAQ disseminates an
Order Imbalance Indicator 6 every five
seconds until market close, which
allows market participants to see the
nature of interest in a security and make
investment decisions accordingly. The
NASDAQ closing process is initiated at
4:00 p.m. Eastern Time.7 During the
brief period between the initiation of the
closing process and the conclusion of
the last Closing Cross,8 the continuous
order book is open to accept orders and
cancellations in a security until the
Closing Cross for that security is
complete. These orders can affect the
ultimate closing price of the security.
Although accepting orders and
cancellations through the completion of
a security’s Closing Cross allows the
greatest interest to participate in the
Closing Cross, the Exchange has
observed that in cases where there is
aberrant volatility in a security due to
an error,9 accepting such order activity
may also significantly alter the closing
price. In normal trading, NASDAQ has
observed that allowing order entry and
cancellation in a security up to the
completion of a security’s Closing Cross
provides little additional price
3 As
defined by Rule 4120(b)(4)(D).
Rule 4754.
5 See Rule 4754(a)(1) for a description of quotes
and orders eligible for participation in the Closing
Cross.
6 The Order Imbalance Indicator provides
information about orders eligible to participate in
the Closing Cross and the price at which those
orders would execute at the time of dissemination.
7 Once the closing process is initiated, the System
will execute crosses in each individual security
traded on NASDAQ one by one. The order in which
each security is processed is random and differs day
by day.
8 This brief period is normally well under one
second.
9 For example, a member firm that enters an order
that is erroneous in price and/or size may cause
significant order imbalances, which may cause the
closing price of the security to be significantly
different from what is anticipated.
4 See
PO 00000
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69
discovery to offset the greater risk in
allowing such order activity.
Accordingly, NASDAQ is proposing to
close the order book for participation in
the Closing Cross once the closing
process is initiated at 4:00 p.m. Eastern
Time (the ‘‘Lockdown Period’’). As a
consequence of closing the order book,
orders entered for participation in the
continuous market after the Lockdown
Period has begun, but prior to
completion of the Closing Cross, will
not be accepted by the System.
Under the proposed process, at 4:00
p.m. Eastern Time, when the closing
process is initiated, the Lockdown
Period is triggered at which point the
order book will no longer accept new
orders for execution, and will cease to
process order cancellation requests for
resting orders. New orders received for
participation in the Closing Cross after
initiation of the Lockdown Period will
be cancelled back to the member firm,
and cancellations of resting orders will
be processed after the Closing Cross is
complete.10 NASDAQ notes that the
processing and calculation of the
Closing Cross will remain unchanged.11
Moreover, in proposing the Lockdown
Period, NASDAQ is not altering how
orders are processed prior to the Closing
Cross, and after it is completed. Rather,
NASDAQ is merely providing a precise
time at which orders will not participate
in the Closing Cross, in lieu of the
uncertain, albeit brief, time under the
current process. In addition to
amending Rule 4754(b) to reflect the
changes discussed above, NASDAQ is
making a clarifying change to the rule
text to make it clear that the Closing
Cross begins at 4:00:00 p.m.. [sic]
In a related change, the Exchange is
also proposing to harmonize the
processing of Market Hours Day
(‘‘MDAY’’) orders 12 in the Closing
Cross. MDAY is a time-in-force
characteristic of orders, which allows
the order to be executed during the
Regular Market Session. Under
NASDAQ rules, MDAY-designated
orders are available from 4:00 a.m. to
4:00 p.m. Eastern Time.13 Currently, an
order designated as MDAY entered after
completion of the Closing Cross in a
particular security may be rejected,
cancelled, or modified to an order with
a time-in-force of Immediate or Cancel,
10 A member firm that sends a cancellation
request during the Lockdown Period will receive an
execution message for that order if it is executed in
the Closing Cross.
11 The closing process will still be initiated at
4:00 p.m. Eastern Time, and the order in which
securities enter into their individual Closing
Crosses will continue to be random.
12 See Rule 4751(h)(6).
13 Id.
E:\FR\FM\02JAN1.SGM
02JAN1
]]>Agencies
[Federal Register Volume 80, Number 1 (Friday, January 2, 2015)]
[Notices]
[Pages 66-69]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30694]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73935; File No. SR-BATS-2014-073]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 2.12 To Remove References to ``Direct Edge ECN LLC'' and ``DE
Route''
December 24, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 22, 2014, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange filed a proposed rule change to amend Rule 2.12 to
remove references to ``Direct Edge ECN LLC'' and ``DE Route.'' The
Exchange does not propose to amend the requirements of this rule.
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.
[[Page 67]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Earlier this year, the Exchange and its affiliate BATS Y-Exchange,
Inc. (``BYX'') received approval to affect a merger (the ``Merger'') of
the Exchange's parent company, BATS Global Markets, Inc., with Direct
Edge Holdings LLC, the indirect parent of EDGX Exchange, Inc.
(``EDGX'') and EDGA Exchange, Inc. (``EDGA,'' and together with BZX,
BYX and EDGX, the ``BGM Affiliated Exchanges'').\3\ As a result, the
Exchange amended Rule 2.12 to reflect that DE Route, the affiliated
EDGA and EDGX routing broker-dealer, would also act as the inbound
router for routing orders from EDGA and EDGX to the Exchange. In the
context of the Merger, the BGM Affiliated Exchanges are working to
migrate EDGX and EDGA onto the BATS technology platform, and align
certain system functionality, retaining only intended differences
between the BGM Affiliated Exchanges. As a result of these efforts, the
Exchange proposes to amend to amend [sic] Rule 2.12 to remove
references to ``Direct Edge ECN LLC'' and ``DE Route'' to reflect that
BATS Trading, Inc. will be the Exchange's sole routing broker-dealer as
of January 12, 2015. Thereafter, BATS Trading will serve as the sole
inbound routing broker-dealer for the Exchange. The Exchange does not
propose to amend the requirements of the rule.
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\3\ See Securities Exchange Act Release No. 71375 (January 23,
2014), 79 FR 4771 (January 29, 2014) (SR-BATS-2013-059; SR-BYX-2013-
039).
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DE Route and BATS Trading provide Members of the Exchange, EDGA,
EDGX and BYX with optional routing services to other market centers.
Thus, in certain circumstances, DE Route and BATS Trading provides
inbound routing from EDGA, EDGX, or BYX to the Exchange. Exchange Rule
2.12 governs this inbound routing of orders by DE Route and BATS
Trading to the Exchange in DE Route's and BATS Trading's capacity as a
facility of the Exchange. The Exchange proposes to amend Rule 2.12 to
remove all references to DE Route as BATS Trading will be the sole
inbound routing service for the Exchange upon migration of EDGA and
EDGX onto the BATS technology platform. The Exchange does not propose
to amend the requirements of this rule. Therefore, the conditions and
limitations set forth in Exchange Rule 2.12(a) will continue to require
that:
The Exchange enter into (a) a plan pursuant to Rule 17d-2
under the 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 (b) a regulatory services
contract (``Regulatory Contract'') with a non-affiliated SRO to perform
regulatory responsibilities for BATS Trading for unique Exchange rules.
The Regulatory Contract 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 Commission rules,
and requires 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 Commission rules.
The Exchange, on behalf of holding company indirectly
owning the Exchange, establish and maintain procedures and internal
controls reasonably designed to ensure that BATS Trading does not
develop or implement changes to its system based on non-public
information obtained as a result of its affiliation with the Exchange,
until such information is available generally to similarly situated
Members of the Exchange.
The Exchange furnish to BATS Trading only the same
information and on the same terms as the Exchange makes available in
the normal course of business to other users.\4\
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\4\ See Exchange Rule 2.12(a)(2).
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In addition, provided the conditions in Exchange Rule 2.12 are
complied with, and provided further that BATS Trading operates as an
outbound router on behalf of BYX on the same terms and conditions as it
does for the Exchange, and in accordance with the rules of BYX, BATS
Trading may provide inbound routing services to the Exchange from BYX.
BATS Trading provides members of the BGM Affiliated Exchanges
(including BYX) with optional routing services to other market centers,
which may include routing from a BGM Affiliated Exchange to the
Exchange. Therefore, the Exchange proposes to remove reference to BYX
as BATS Trading will be required under Exchange Rule 2.12 to operate as
an outbound router on behalf of each BATS Exchange on the same terms
and conditions as it does for the Exchange, and in accordance with the
rules of each BATS Exchange, BATS Trading may provide inbound routing
services to the Exchange from each BATS Exchange. The Exchange believes
that Rule 2.12 will continue to adequately manage the potential for
conflicts of interest that could arise from BATS Trading routing orders
to the Exchange.
Implementation Date
The Exchange intends to implement the proposed rule change on or
about January 12, 2015, which is the anticipated date upon which the
migration of the EDGA and EDGX to the BATS technology platform will be
complete and BATS Trading, Inc. will act as the BGM Affiliated
Exchange's sole routing broker-dealer.
2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act \5\ and further the objectives of Section
6(b)(5) of the Act \6\ because they are designed 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, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and, in general, to protect
investors and the public interest. The proposed rule change also is
designed to support the principles of Section 11A(a)(1) \7\ of the Act
in that it seeks to assure fair competition among brokers and dealers
and among exchange markets. The Exchange does not propose to amend the
requirements of the rule and the proposed rule change is intended only
to reflect that BATS Trading will be the Exchange's sole routing
broker-dealer upon migration of the EDGA and EDGX to the BATS
technology platform. A consistent technology offering through the use
of a single routing broker-dealer by each of the BGM Affiliated
Exchange will, in turn, simplify the technology implementation, changes
and maintenance by users of the Exchange that are also participants on
BYX, EDGA, and EDGX. As such, the proposed rule change would foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and would remove impediments to and perfect
the mechanism of a free and open market and a national market system.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
\7\ 15 U.S.C. 78k-1(a)(1).
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[[Page 68]]
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
reiterates that the proposed rule change is being proposed in the
context of the technology integration of the BGM Affiliated Exchanges.
Thus, the Exchange believes this proposed rule change is necessary to
permit fair competition among national securities exchanges. In
addition, the Exchange believes the proposed rule change will benefit
Exchange participants in that it is one of several changes necessary to
achieve a consistent technology offering by the BGM Affiliated
Exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) of the Act \8\ and paragraph (f)(6) of Rule
19b-4 thereunder.\9\ Because the 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 prior to 30 days from the date on which it was filed,
or such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
and Rule 19b-4(f)(6) thereunder.\10\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4.
\10\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \11\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay in order
to permit the Exchange to implement the proposed rule change on January
12, 2015, which is the anticipated date upon which the migration of
EDGA and EDGX to the BATS technology platform will be complete and BATS
Trading will serve as the Exchange's sole routing broker-dealer. The
Exchange states that waiver of the operative delay is consistent with
the protection of investors and the public interest because it will
allow BATS Trading to act as the BGM Affiliated Exchanges' sole routing
broker-dealer upon migration of EDGX and EDGA to the BATS technology
platform, thereby simplifying the technology integration for Members of
the Exchange that are also participants on EDGX, EDGA, and BYX. In this
regard, the Exchange notes that, since completion of the Merger, both
Members and the BGM Affiliated Exchanges have made numerous systems
changes in preparation for the technology migration occurring on
January 12, 2015, the Exchange has issued frequent updates to Members
informing them of the BGM Affiliated Exchange technology migration as
well as its anticipated time line so that Members may make the
requisite system changes, and the Exchange has conducted multiple
testing opportunities for Members to ensure that both Members' and the
Exchange's systems will operate in accordance with the proposed rule
change on January 12, 2015. The Commission believes that waiving the
30-day operative delay is consistent with the protection of investors
and the public interest. Therefore, the Commission hereby waives the
operative delay and designates the proposed rule change operative upon
filing.\13\
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) of the Act \14\ to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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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-2014-073 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BATS-2014-073. 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 at 100 F Street NE.,
Washington, DC 20549-1090 on official business days between the hours
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of the
Exchange. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
BATS-2014-073, and should be submitted on or before January 23, 2015.
[[Page 69]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2014-30694 Filed 12-31-14; 8:45 am]
BILLING CODE 8011-01-P
