13678 Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 

7 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3This proposal refers to ‘‘PHLX XL’’ as the 

Exchange’s automated options trading system. In 

May 2009 the Exchange enhanced the system and 

adopted corresponding rules referring to the system 

as ‘‘Phlx XL II.’’ See Securities Exchange Act Release 

No. 59995 (May 28, 2009), 74 FR 26750 (June 3, 

2009) (SR–Phlx–2009–32). The Exchange intends to 

submit a separate technical proposed rule change 

that would change all references to the system from 

‘‘Phlx XL II’’ to ‘‘PHLX XL’’ for branding purposes. 

4See Securities Exchange Act Release No. 59995 

(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR– 

Phlx–2009–32). 

5Currently, there is no mechanism for the 

Options Price Reporting Authority (‘‘OPRA’’) to 

identify only one side of a quote as non-firm. The 

Exchange has approached OPRA to attempt to 

develop the capability to identify and implement 

such functionality. The Exchange has asked the 

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, as amended, is consistent with 

the Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–BX–2011–013 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–BX–2011–013. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://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–BX–2011–013, and should 

be submitted on or before April 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5776 Filed 3–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64056; File No. SR–Phlx– 

2011–29] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Extension of a Pilot Program 

Concerning Disseminated Quotations 

March 8, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 2 thereunder, 

notice is hereby given that on February 

24, 2011, NASDAQ OMX PHLX LLC 

(‘‘Phlx’’ 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 amend 

Exchange Rules 1017, Openings in 

Options, and 1082, Firm Quotations, to 

extend, through July 31, 2011, a pilot 

program (the ‘‘pilot’’) under which the 

Exchange’s rules describe the manner in 

which the PHLX XL® automated options 

trading system 3 disseminates quotations 

when (i) there is an opening imbalance 

in a particular series, and (ii) there is a 

Quote Exhaust (as described below) or 

a Market Exhaust (as described below) 

quote condition present in a particular 

series. 

The current pilot is scheduled to 

expire March 31, 2011. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nasdaqtrader.com/ 

micro.aspx?id=PHLXRulefilings, 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 aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to extend the pilot through 

July 31, 2011. 

Background 

In June, 2009, the Exchange added 

several significant enhancements to its 

automated options trading platform 

(now known as PHLX XL), and adopted 

rules to reflect those enhancements.4 As 

part of the system enhancements, the 

Exchange proposed to disseminate a 

‘‘non-firm’’ quote condition on a bid or 

offer whose size is exhausted in certain 

situations. The non-exhausted side of 

the Exchange’s disseminated quotation 

would remain firm up to its 

disseminated size. At the time the 

Exchange proposed the ‘‘one-sided nonfirm’’ quote condition, the Options Price 

Reporting Authority (‘‘OPRA’’) was only 

capable of disseminating option 

quotations for which both sides of the 

quotation are marked ‘‘non-firm.’’ OPRA 

does not disseminate a ‘‘non-firm’’ 

condition for one side of a quotation 

while the other side of the quotation 

remains firm.5

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Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 13679 

Commission to revise this footnote by deleting the 

prior sentence and replace it with the following: ‘‘In 

November, 2010, OPRA filed for immediate 

effectiveness to enable its systems to support such 

functionality. See Securities Exchange Act Release 

No. 63400 (November 30, 2010), 75 FR 76058 

(December 7, 2010)(SR–OPRA–2010–04).’’ See email from Richard S. Rudolph, Associate General 

Counsel, NASDAQ OMX PHLX, to David Liu, 

Senior Special Counsel, Commission, dated March 

8, 2011. 

6See supra n.4. 

7See Securities Exchange Act Release No. 63350 

(November 19, 2010), 75 FR 73150 (November 29, 

2010) (SR–Phlx–2010–156). 

8See Securities Exchange Act Release No. 63024 

(September 30, 2010), 75 FR 61799 (October 6, 

2010) (SR–Phlx–2010–134). 

9Where there is an imbalance at the price at 

which the maximum number of contracts can trade 

that is also at or within the lowest quote bid and 

highest quote offer, the PHLX XL system will 

calculate an OQR for a particular series, outside of 

which the PHLX XL system will not execute. See 

Exchange Rule 1017(l)(iii) and (iv). 10See Exchange Rule 1082(a)(ii)(B)(3). 11See Exchange Rule 1082(a)(ii)(B)(4)(b). 

Accordingly, the Exchange proposed, 

for a pilot period scheduled to expire 

November 30, 2009, and later extended 

through September 30, 2010,6 and then 

through March 31, 2011,7 to disseminate 

quotations in such a circumstance with 

(i) a bid price of $0.00, with a size of 

one contract if the remaining size is a 

seller, or (ii) an offer price of $200,000, 

with a size of one contract if the 

remaining size is a buyer. 

The Exchange subsequently modified 

the manner in which the PHLX XL 

system disseminates quotes when one 

side of the quote is exhausted but the 

opposite side still has marketable size at 

the disseminated price, as described in 

detail below.8

On October 7, 2010, the U.S. options 

exchanges, as participants in the OPRA 

Plan, voted to make technological 

changes that would enable OPRA to 

support a one-sided non-firm quote 

condition. These technological changes 

provide the opportunity for OPRA and 

the participants to design, test, and 

deploy modifications to their systems, 

and to establish connectivity with 

quotation vendors, that will support the 

one-sided non-firm quote condition. 

The Exchange is proposing to extend the 

current pilot through July 31, 2011, in 

order to account for the time required to 

complete the changes, and to account 

for the possibility that issues could arise 

that might delay the process. 

Opening Imbalance 

An opening ‘‘imbalance’’ occurs when 

all opening marketable size cannot be 

completely executed at or within an 

established Opening Quote Range 

(‘‘OQR’’) for the affected series.9

Currently, pursuant to Exchange Rule 

1017(l)(v)(C)(7), any unexecuted 

contracts from the opening imbalance 

not traded or routed are displayed in the 

Exchange quote at the opening price for 

a period not to exceed ten seconds, and 

subsequently, cancelled back to the 

entering participant if they remain 

unexecuted and priced through the 

opening price, unless the member that 

submitted the original order has 

instructed the Exchange in writing to reenter the remaining size, in which case 

the remaining size will be automatically 

submitted as a new order. During this 

display time period, the PHLX XL 

system disseminates, if the imbalance is 

a buy imbalance, an offer of $0.00, with 

a size of zero contracts or, if the 

imbalance is a sell imbalance, a bid of 

$0.00, with a size of zero contracts, on 

the opposite side of the market from 

remaining unexecuted contracts. 

The purpose of this provision is to 

indicate that the Exchange has 

exhausted all marketable interest, at or 

within the OQR, on one side of the 

market during the opening process yet 

has remaining unexecuted contracts on 

the opposite side of the market that are 

firm at the disseminated price and size. 

Rule 1017(l)(v)(C)(7) is subject to the 

pilot, which is scheduled to expire 

March 31, 2011. The Exchange proposes 

to extend the pilot through July 31, 

2011. 

Quote Exhaust 

Quote Exhaust occurs when the 

market at a particular price level on the 

Exchange includes a quote, and such 

market is exhausted by an inbound 

contra-side quote or order (‘‘initiating 

quote or order’’), and following such 

exhaustion, contracts remain to be 

executed from the initiating quote or 

order.10

Rather than immediately executing at 

the next available price, the PHLX XL 

system employs a timer (a ‘‘Quote 

Exhaust Timer’’), not to exceed one 

second, in order to allow market 

participants to refresh their quotes. 

During the Quote Exhaust Timer, PHLX 

XL currently disseminates the 

‘‘Reference Price’’ (the most recent 

execution price) for the remaining size, 

provided that such price does not lock 

an away market, in which case, the 

Exchange currently disseminates a bid 

and offer that is one Minimum Price 

Variation (‘‘MPV’’) from the away market 

price. During the Quote Exhaust Timer, 

the Exchange disseminates: (i) A bid 

price of $0.00, with a size of zero 

contracts if the remaining size is a 

seller, or (ii) an offer price of $0.00, with 

a size of zero contracts if the remaining 

size is a buyer. 

Currently, Exchange Rules 

1082(a)(ii)(B)(3)(g)(iv)(A)(3), 

1082(a)(ii)(B)(3)(g)(iv)(A)(4), 

1082(a)(ii)(B)(3)(g)(iv)(B)(2), and 

1082(a)(ii)(B)(3)(g)(iv)(C) describe 

various scenarios under which the 

PHLX XL system trades, routes, or posts 

unexecuted contracts after determining 

the ‘‘Best Price’’ following a Quote 

Exhaust. These rules permit an up to 10- 

second time period during which 

participants may revise their quotes 

prior to the PHLX XL system taking 

action. In all of these scenarios, during 

the up to 10-second time period, the 

PHLX XL system currently disseminates 

an offer of $0.00, with a size of zero 

contracts if the remaining size is a buyer 

or, if the remaining size is a seller, a bid 

of $0.00, with a size of zero contracts, 

on the opposite side of the market from 

remaining unexecuted contracts. 

Exchange Rules 

1082(a)(ii)(B)(3)(g)(iv)(A)(3), 

1082(a)(ii)(B)(3)(g)(iv)(A)(4), 

1082(a)(ii)(B)(3)(g)(iv)(B)(2), and 

1082(a)(ii)(B)(3)(g)(iv)(C) are subject to 

the pilot, which is scheduled to expire 

March 31, 2011. The Exchange proposes 

to extend the pilot through July 31, 

2011. 

Current Rule 1082(a)(ii)(B)(3)(g)(vi) 

describes what the PHLX XL system 

does if, after trading at the PHLX and/ 

or routing, there are unexecuted 

contracts from the initiating order that 

are still marketable. In this situation, 

remaining contracts are posted for a 

period of time not to exceed 10 seconds 

and then cancelled after such period of 

time has elapsed, unless the member 

that submitted the original order has 

instructed the Exchange in writing to reenter the remaining size, in which case 

the remaining size will be automatically 

submitted as a new order. During the up 

to 10-second time period, the Exchange 

will disseminate, on the opposite side of 

the market from remaining unexecuted 

contracts: (i) a bid price of $0.00, with 

a size of zero contracts if the remaining 

size is a seller, or (ii) an offer price of 

$0.00, with a size of zero contracts if the 

remaining size is a buyer. 

Rule 1082(a)(ii)(B)(3)(g)(vi) is subject 

to the pilot. The Exchange proposes to 

extend the pilot through July 31, 2011. 

Market Exhaust 

Market Exhaust occurs when there are 

no PHLX XL participant quotations in 

the Exchange’s disseminated market for 

a particular series and an initiating 

order in the series is received. In such 

a circumstance, the PHLX XL system 

initiates a ‘‘Market Exhaust Auction’’ for 

the initiating order.11

In this situation, the PHLX XL system 

will first determine if the initiating 

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13680 Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 

12 15 U.S.C. 78f(b). 

13 15 U.S.C. 78f(b)(5). 

14See 17 CFR 242.602(a)(3)(i) and (ii). 

15 15 U.S.C. 78s(b)(3)(A). 

16 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

the proposed rule change at least five business days 

prior to the date of filing of the proposed rule 

change, or such shorter time as designated by the 

Commission. The Exchange has satisfied this 

requirement. 

order, or a portion thereof, can be 

executed on the PHLX. Thereafter, if 

there are unexecuted contracts 

remaining in the initiating order the 

PHLX XL system will initiate a Market 

Exhaust Timer. During the Market 

Exhaust Timer, the Exchange 

disseminates any unexecuted size of the 

initiating order at the ‘‘Reference Price,’’ 

which is the execution price of a portion 

of the initiating order, or one MPV from 

a better-priced away market price if the 

Reference Price would lock the away 

market. The PHLX XL system currently 

disseminates, on the opposite side of the 

market from the remaining unexecuted 

contracts: (i) A bid price of $0.00, with 

a size of zero contracts if the remaining 

size is a seller, or (ii) an offer price of 

$0.00, with a size of zero contracts if the 

remaining size is a buyer. This 

provision is subject to the pilot. The 

Exchange proposes to extend the pilot 

through July 31, 2011. 

Provisional Auction 

Exchange Rule 

1082(a)(ii)(B)(4)(d)(iv)(E) describes what 

PHLX XL does after it has explored all 

alternatives and there still remain 

unexecuted contracts. During the 

‘‘Provisional Auction,’’ any unexecuted 

contracts from the initiating order are 

displayed in the Exchange quote for the 

remaining size for a brief period not to 

exceed ten seconds and subsequently 

cancelled back to the entering 

participant if they remain unexecuted, 

unless the member that submitted the 

original order has instructed the 

Exchange in writing to re-enter the 

remaining size, in which case the 

remaining size will be automatically 

submitted as a new order. During the 

brief period, the PHLX XL system 

currently disseminates, on the opposite 

side of the market from remaining 

unexecuted contracts: (i) A bid price of 

$0.00, with a size of zero contracts if the 

remaining size is a seller, or (ii) an offer 

price of $0.00, with a size of zero 

contracts if the remaining size is a 

buyer. 

Rule 1082(a)(ii)(B)(4)(d)(iv)(E) is 

subject to the pilot. The Exchange 

proposes to extend the pilot through 

July 31, 2011. 

The Exchange believes that the pilot 

benefits customers and the marketplace 

as a whole by enabling PHLX to 

effectively reflect the market interest the 

Exchange has that is firm and 

executable, while at the same time 

indicating the other side of the 

Exchange market is not firm and 

therefore not executable. This allows the 

Exchange to protect orders on its book 

and attempt to attract interest to execute 

against such order. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act 12 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 13

in particular, in that it is 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, and, in general to protect 

investors and the public interest. 

The Exchange further believes that the 

proposal is consistent with the SEC 

Quote Rule’s provisions regarding nonfirm quotations.14 Specifically, Rule 

602(a)(3)(i) provides that if, at any time 

a national securities exchange is open 

for trading, the exchange determines, 

pursuant to rules approved by the 

Commission, that the level of trading 

activities or the existence of unusual 

market conditions is such that the 

exchange is incapable of collecting, 

processing, and making available to 

vendors the data for a subject security 

required to be made available in a 

manner that accurately reflects the 

current state of the market on such 

exchange, such exchange shall 

immediately notify all specified persons 

of that determination and, upon such 

notification, the exchange is relieved of 

its obligations under paragraphs (a)(1) 

and (2) of Rule 602 relating to collecting 

and disseminating quotations, subject to 

certain other provisions of Rule 

602(a)(3). 

By disseminating a bid of $0.00 for a 

size of zero contracts, or an offer of 

$0.00 for a size of zero contracts in 

certain situations delineated above in 

the Exchange’s rules, the Exchange 

believes that it is adequately 

communicating that it is non-firm on 

that side of the market in compliance 

with the Quote Rule. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

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 19(b)(3)(A) 

of the Act 15 and Rule 19b–4(f)(6) 16

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2011–29 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–Phlx–2011–29. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Notices 13681 

17 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5A Member is any registered broker or dealer that 

has been admitted to membership in the Exchange. 

6As defined in BYX Rule 11.9(c)(12). 

7As defined in BYX Rule 11.9(c)(8). 

8As defined in BYX Rule 11.9(c)(9). 

9As defined in BYX Rule 11.9(c)(11). 

10As defined in BYX Rule 11.9(c)(1). 

11As defined in BYX Rule 11.9(c)(10). 

12The Exchange’s routing strategies are described 

in Rule 11.13(a)(3). 

Internet Web site (http://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 the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2011–29 and should be submitted on or 

before April 4, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5775 Filed 3–11–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64055; File No. SR–BYX– 

2011–005] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Fees for Use 

of BATS Y-Exchange, Inc. 

March 8, 2011. 

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 February 

28, 2011, BATS Y-Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Exchange has designated the proposed 

rule change as one establishing or 

changing a member due, fee, or other 

charge imposed by the Exchange under 

Section 19(b)(3)(A)(ii) of the Act 3 and 

Rule 19b–4(f)(2) thereunder,4 which 

renders the proposed rule change 

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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend the 

fee schedule applicable to Members 5 of 

the Exchange pursuant to BYX Rules 

15.1(a) and (c). While changes to the fee 

schedule pursuant to this proposal will 

be effective upon filing, the changes will 

become operative on March 1, 2011. The 

text of the proposed rule change is 

available at the Exchange’s Web site at 

http://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 proposes to modify its 

fee schedule applicable to use of the 

Exchange effective March 1, 2011, in 

order to: (i) Amend the liquidity fees for 

adding liquidity, including increased 

fees to add non-displayed liquidity and 

adoption of a fee to add displayed 

liquidity unless a Member has an 

average daily volume of 10 million 

shares or more added per day in a given 

month; (ii) reduce certain standard 

routing fees; and (iii) expand the 

Exchange’s Discounted Destination 

Specific Routing program to include a 

rebate for Destination Specific Orders 6

routed to EDGA Exchange. 

(i) Amending the Liquidity Fees for 

Adding Liquidity 

The Exchange has not previously 

provided any rebate or imposed any 

charge for adding displayed liquidity to 

the BYX order book in securities priced 

$1.00 and above. The Exchange 

proposes to introduce a tiered pricing 

structure applicable to added displayed 

liquidity in securities priced $1.00 and 

above, under which Members adding a 

daily average of 10 million shares or 

more of liquidity (including displayed 

and non-displayed liquidity) during a 

month will continue to be able to add 

displayed liquidity without charge, 

while Members adding a daily average 

of less than 10 million shares of 

liquidity during a month will be 

charged $0.0002 per share. Thus, while 

the fee change will result in a small fee 

increase for Members providing low 

volumes of liquidity on BYX, it will 

remain unchanged for Members 

providing higher volumes of liquidity. 

The Exchange also proposes to 

increase its fee to add non-displayed 

liquidity to the BYX order book in 

securities priced $1.00 and above from 

a charge of $0.0005 per share to a charge 

of $0.0010 per share. As defined on the 

BYX fee schedule, the reference to ‘‘nondisplayed liquidity’’ for purposes of the 

fee schedule includes liquidity resulting 

from all forms of Pegged Orders,7 MidPoint Peg Orders,8 and Non-Displayed 

Orders,9 but does not include liquidity 

resulting from Reserve Orders 10 or 

Discretionary Orders.11

The Exchange does not propose to 

change its pricing structure for added 

liquidity in securities priced below 

$1.00. 

(ii) Reduced Standard Routing Fees 

The Exchange proposes to reduce the 

fee that it charges for certain of its 

standard best execution routing 

strategies. The Exchange currently offers 

the Parallel D, Parallel 2D, CYCLE and 

RECYCLE routing strategies at a charge 

of $0.0028 per share for executions that 

occur at other trading venues as a result 

of such strategies in securities priced 

$1.00 and above.12 The Exchange 

proposes to reduce the fee for use of 

such strategies to a charge of $0.0026 

per share to in order to encourage use 

mstockstill on DSKH9S0YB1PROD with NOTICES