73150 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Notices 

21 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). 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–NYSEArca–2010–103 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–NYSEArca–2010–103. 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, 100 F Street, NE., 

Washington, DC 20549–1090 on official 

business days between 10 a.m. and 3 

p.m. Copies of the filing will also be 

available for inspection and copying at 

the Exchange’s principal office. 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–NYSEArca–2010–103 and 

should be submitted on or before 

December 20, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–29906 Filed 11–26–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63350; File No. SR–Phlx– 

2010–156] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX, Inc.; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Extension of a Pilot Program 

Concerning Disseminated Quotations 

November 19, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’)1, and Rule 19b–42 thereunder, 

notice is hereby given that on November 

10, 2010, NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Exchange Rules 1017, Openings in 

Options, and 1082, Firm Quotations, to 

extend, through March 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 November 30, 2010. 

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 

March 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 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Notices 73151 

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. 

6See supra note 4. 

7See Securities Exchange Act Release No. 63024 

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

2010) (SR–Phlx–2010–134). 

8Where 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). 

9See Exchange Rule 1082(a)(ii)(B)(3). 

the Exchange’s disseminated quotation 

would remain firm up to its 

disseminated size. Currently, however, 

the Options Price Reporting Authority 

(‘‘OPRA’’) only disseminates option 

quotations for which both sides of the 

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

currently does not disseminate a ‘‘nonfirm’’ condition for one side of a 

quotation while the other side of the 

quotation remains firm.5

Accordingly, the Exchange proposed, 

for a pilot period scheduled to expire 

November 30, 2009, and later extended 

through September 30, 2010,6 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.7

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 

require 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 set a 

target date for its completion of the 

changes by the end of January, 2011. 

The Exchange is proposing to extend the 

current pilot through March 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 beyond the 

end of January target date. 

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.8

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 

November 30, 2010. The Exchange 

proposes to extend the pilot through 

March 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.9

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 contracs, 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 

November 30, 2010. The Exchange 

proposes to extend the pilot through 

March 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 March 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 

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73152 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Notices 

10See Exchange Rule 1082(a)(ii)(B)(4)(b). 

11 15 U.S.C. 78f(b). 

12 15 U.S.C. 78f(b)(5). 

13See 17 CFR 242.602(a)(3)(i) and (ii). 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). 

16 17 CFR 240.19b–4(f)(6). 

17 17 CFR 240.19b–4(f)(6). 

order in the series is received. In such 

a circumstance, the PHLX XL system 

initiates a ‘‘Market Exhaust Auction’’ for 

the initiating order.10

In this situation, the PHLX XL system 

will first determine if the initiating 

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 March 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 

March 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 11 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 12

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.13 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. 

II. Date of Effectiveness of the Proposed 

Rule Change and Timing for 

Commission Action 

Pursuant to Section 19(b)(3)(A) of the 

Act 14 and Rule 19b–4(f)(6) 15

thereunder, the Exchange has 

designated this proposal as one that 

effects a change that: (i) Does not 

significantly affect the protection of 

investors or the public interest; (ii) does 

not impose any significant burden on 

competition; and (iii) by its terms, does 

not become operative for 30 days after 

the date of the filing, or such shorter 

time as the Commission may designate 

if consistent with the protection of 

investors and the public interest. The 

Exchange believes that the current pilot 

is ‘‘non-controversial’’ and therefore 

appropriate for filing pursuant to Rule 

19b–4(f)(6). 

Rule 19b–4(f)(6) requires a selfregulatory 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. Furthermore, a 

proposed rule change filed pursuant to 

Rule 19b–4(f)(6) under the Act 16

normally does not become operative for 

30 days after the date of its filing. 

However, Rule 19b–4(f)(6) 17 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 requested that the 

Commission waive the 30-day operative 

delay. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. The 

Commission notes the instant proposed 

rule change does not involve any 

substantive change to the Exchange’s 

rules. Rather, the proposed rule change 

only seeks to extend the current pilot to 

allow time for OPRA to make 

technological changes that would enable 

OPRA to support a one-sided non-firm 

quote condition and allow the Exchange 

time to make corresponding changes to 

its systems. Thus, the Commission 

believes that the proposed rule change 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Notices 73153 

18For the 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. 78(c)(f). 

19 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). 

4 17 CFR 240.19b–4(f)(6)(iii). 

does not raise any new regulatory 

issues.18

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–2010–156 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–2010–156. 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, 100 F Street, NE., 

Washington, DC. 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2010–156 and should be submitted on 

or before December 20, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–29907 Filed 11–26–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63359; File No. SR–BATS– 

2010–033] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change by BATS Exchange, Inc. 

to Modify the Minor Rule Violation Plan 

for BATS Options 

November 22, 2010. 

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 November 

18, 2010, 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 Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it 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 Exchange is proposing to amend 

BATS Rule 25.3, entitled ‘‘Penalty for 

Minor Rule Violations’’, to expand the 

list of violations eligible for disposition 

under the Exchange’s Minor Rule 

Violation Plan (‘‘MRVP’’) as it relates to 

the equity options platform operated by 

the Exchange (‘‘BATS Options’’). 

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, on the 

Commission’s Web site at http:// 

www.sec.gov 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 purpose of the proposed rule 

change is to amend Rule 25.3, entitled 

‘‘Penalty for Minor Rule Violations’’, to 

expand the list of violations eligible for 

disposition under the Exchange’s Minor 

Rule Violation Plan (‘‘MRVP’’) as it 

relates to options in order to improve 

the consistency of the Exchange’s MRVP 

with other options exchanges. All 

options exchanges have entered into a 

plan pursuant to Rule 17d–2 of the Act 

(the ‘‘Plan’’) under which the exchanges 

have agreed to allocate regulatory 

responsibility for certain rules common 

to all options exchanges, which Plan is 

administered by a committee known as 

the Options Surveillance Group (the 

‘‘OSG’’). Adding the proposed rules to 

the MRVP makes the Exchange’s MRVP 

more consistent with the minor rule 

violation plans of other self-regulatory 

organizations, including with respect to 

rules that are classified as common rules 

pursuant to the Plan (the ‘‘OSG 17d–2’’). 

The Exchange believes that its MRVP 

with respect to violations of rules that 

are common rules pursuant to the OSG 

17d–2 should be consistent with the 

other options exchanges that are parties 

to the OSG 17d–2. 

Consistent with the goal of improved 

consistency between the Exchange’s 

mstockstill on DSKH9S0YB1PROD with NOTICES