Federal Register / Vol. 76, No. 158 / Tuesday, August 16, 2011 / Notices 50773 

Agency name Organization name Position title Authorization number Effective 

date 

DEPARTMENT OF ENERGY Office of Nuclear Energy, 

Science and Technology.

Special Assistant ..................... DE110084 ............................... 5/11/2011 

Office of General Counsel ...... Senior Counsel ........................ DE110085 ............................... 5/19/2011 

Office of Assistant Secretary 

for Policy and International 

Affairs.

Special Assistant ..................... DE110093 ............................... 5/24/2011 

ENVIRONMENTAL PROTECTION AGENCY.Office of the Administrator ...... Policy Analyst .......................... EP110022 ................................ 5/2/2011 

EXPORT-IMPORT BANK ....... Office of the General Counsel Senior Vice President and 

General Counsel.

EB110009 ................................ 5/27/2011 

FEDERAL ENERGY REGULATORY COMMISSION.Office of the Chairman ............ Confidential Assistant .............. DR110005 ............................... 5/19/2011 

DEPARTMENT OF HEALTH 

AND HUMAN SERVICES.

Office of the Assistant Secretary for Planning and Evaluation.Director of Delivery System 

Reform.

DH110075 ............................... 5/13/2011 

DEPARTMENT OF HOMELAND SECURITY.Office of the Chief of Staff ...... Confidential Assistant .............. DM110138 ............................... 5/4/2011 

Office of the Assistant Secretary for Policy.Special Assistant ..................... DM110151 ............................... 5/4/2011 

Office of the Chief of Staff ...... Special Assistant ..................... DM110141 ............................... 5/4/2011 

Office of the Secretary ............ Special Assistant ..................... DM110139 ............................... 5/6/2011 

Office of the Assistant Secretary for Public Affairs.Public Affairs and Strategic 

Communications Assistant.

DM110163 ............................... 5/12/2011 

Office of Assistant Secretary 

for Legislative Affairs.

Legislative Affairs Specialist ... DM110160 ............................... 5/13/2011 

Office of the Chief of Staff ...... Special Assistant ..................... DM110169 ............................... 5/13/2011 

Office of Assistant Secretary 

for Legislative Affairs.

Legislative Affairs Specialist ... DM110173 ............................... 5/18/2011 

U.S. Immigration and Customs 

Enforcement.

Special Assistant ..................... DM110170 ............................... 5/19/2011 

Office of the Assistant Secretary for Public Affairs.Advisor for Strategic Planning 

and Coordination.

DM110175 ............................... 5/20/2011 

Office of the Assistant Secretary for Public Affairs.Director of Special Projects .... DM110174 ............................... 5/27/2011 

DEPARTMENT OF HOUSING 

AND URBAN DEVELOPMENT.

Office of the General Counsel Special Assistant ..................... DU110021 ............................... 5/6/2011 

DEPARTMENT OF THE INTERIOR.Secretary’s Immediate Office .. Special Assistant ..................... DI110050 ................................. 5/11/2011 

DEPARTMENT OF JUSTICE Office of Intergovernmental 

and Public Liaison.

Associate Director ................... DJ110077 ................................ 5/23/2011 

DEPARTMENT OF LABOR .... Office of the Solicitor ............... Senior Counselor .................... DL110031 ................................ 5/9/2011 

Office of Congressional and 

Intergovernmental Affairs.

Senior Legislative Officer ........ DL110030 ................................ 5/13/2011 

Office of Public Affairs ............ Special Assistant ..................... DL110034 ................................ 5/19/2011 

SECURITIES AND EXCHANGE COMMISSION.Division of Investment Management.Confidential Assistant .............. SE110004 ................................ 5/17/2011 

SMALL BUSINESS ADMINISTRATION.Office of Field Operations ....... Regional Administrator, Region VII, Kansas City, Missouri.SB110013 ................................ 5/17/2011 

SOCIAL SECURITY ADMINISTRATION.Office of the Commissioner .... Senior Advisor ......................... SZ110035 ................................ 5/12/2011 

DEPARTMENT OF STATE ..... Bureau of Public Affairs .......... Senior Advisor ......................... DS110077 ............................... 5/18/2011 

DEPARTMENT OF TRANSPORTATION.Administrator ........................... Director of Communications .... DT110028 ................................ 5/13/2011 

DEPARTMENT OF THE 

TREASURY.

Secretary of the Treasury ....... Special Assistant ..................... DY110079 ............................... 5/31/2011 

Authority: 5 U.S.C. 3301 and 3302; E.O. 

10577, 3 CFR 1954–1958 Comp., p. 218. 

U.S. Office of Personnel Management. 

John Berry, 

Director. 

[FR Doc. 2011–20806 Filed 8–15–11; 8:45 am] 

BILLING CODE 6325–39–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29751; 812–13883] 

Pax World Funds Series Trust I and 

Pax World Management LLC; Notice of 

Application 

August 10, 2011. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from section 15(a) of the Act and rule 

18f–2 under the Act, as well as from 

certain disclosure requirements. 

Summary of Application: Applicants 

request an order that would permit them 

to enter into and materially amend 

subadvisory agreements without 

shareholder approval and would grant 


emcdonald on DSK2BSOYB1PROD with NOTICES
50774 Federal Register / Vol. 76, No. 158 / Tuesday, August 16, 2011 / Notices 

1Applicants also request relief with respect to 

any other existing or future registered open-end 

management investment company or series thereof 

that: (a) Is advised by the Adviser or any entity 

controlling, controlled by, or under common 

control with the Adviser (collectively, the 

‘‘Adviser’’) or its successors; (b) uses the multimanager structure (‘‘Multi-Manager Structure’’) 

described in the application; and (c) complies with 

the terms and conditions of this application 

(together with any Funds that currently use the 

Multi-Manager Structure, each a ‘‘Subadvised 

Fund’’ and collectively, the ‘‘Subadvised Funds’’). 

The only existing registered open-end management 

investment companies that currently intend to rely 

on the requested order are named as applicants. For 

purposes of the requested order, ‘‘successor’’ is 

limited to an entity or entities that result from a 

reorganization into another jurisdiction or a change 

in the type of business organization. If the name of 

any Subadvised Fund contains the name of a SubAdviser (as defined below), the name of the Adviser 

will precede the name of the Sub-Adviser. 

2The Adviser has entered into Sub-Advisory 

Agreements with Impax Asset Management Ltd., 

Access Capital Strategies LLC, a division of 

Voyageur Asset Management Inc., Ariel 

Investments, LLC, ClearBridge Advisors, LLC, 

Community Capital Management, Inc., Miller 

Howard Investments Inc., Mennonite Mutual Aid 

Association, Neuberger Berman Management, LLC, 

Portfolio 21 Investments, Inc. and Parnassus 

Investments. 

3As described more fully in the application, the 

Adviser utilizes the services of Morningstar 

Associates, LLC (‘‘Morningstar Associates’’) under a 

subsidiary agreement for recommending to the 

Adviser and the Board various Sub-Advisers. The 

responsibility for the evaluation, selection, and 

recommendation of Sub-Advisers to manage the 

assets (or portion thereof) of a Subadvised Fund, as 

well as the monitoring and review of the SubAdviser ultimately rests with the Adviser. 

Applicants acknowledge that the requested relief 

will not extend to any such subadvisory agreement 

with Morningstar Associates. 

relief from certain disclosure 

requirements. 

Applicants: Pax World Funds Series 

Trust I (‘‘Mutual Funds Trust’’) and Pax 

World Management LLC (the ‘‘Adviser’’) 

(collectively, ‘‘Applicants’’). 

Filing Dates: The application was 

filed on March 22, 2011, and amended 

on August 1, 2011. Applicants have 

agreed to file an amendment during the 

notice period, the substance of which is 

reflected in this notice. 

Hearing or Notification of Hearing: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on September 6, 2011 and 

should be accompanied by proof of 

service on the applicants, in the form of 

an affidavit or, for lawyers, a certificate 

of service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549– 

1090. Applicants: c\o Stuart E. Fross, 

K&L Gates LLP, One Lincoln Street, 

Boston, MA 02111, and Joseph F. Keefe, 

Pax World Management LLC, 30 

Penhallow Street, Suite 400, 

Portsmouth, New Hampshire 03801. 

FOR FURTHER INFORMATION CONTACT: 

Emerson S. Davis, Senior Counsel, at 

(202) 551–6868, or Daniele Marchesani, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. Mutual Funds Trust, a 

Massachusetts business trust, is 

registered under the Act as open-end 

management investment companies and 

currently offers eleven series (each a 

‘‘Series’’ and Mutual Funds Trust, 

Series or future Series, a ‘‘Fund’’ and 

collectively the ‘‘Funds’’), each of which 

has its own distinct investment 

objectives, policies and restrictions.1

The Adviser is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’) and serves as the 

investment adviser to the Mutual Funds 

Trust pursuant to separate investment 

advisory agreements (each an 

‘‘Investment Advisory Agreement’’ and 

collectively, the ‘‘Investment Advisory 

Agreements’’) with each Fund. Each 

Investment Advisory Agreement has 

been or will be approved by the Mutual 

Funds Trust’s board of trustees (the 

‘‘Board’’), including a majority of the 

trustees who are not ‘‘interested 

persons,’’ as defined in section 2(a)(19) 

of the Act, of the Trust or the Adviser 

(‘‘Independent Trustees’’) and by the 

shareholders of the relevant Fund in the 

manner required by sections 15(a) and 

15(c) of the Act and rule 18f–2 under 

the Act. 

2. Under the terms of the Investment 

Advisory Agreements, the Adviser, 

subject to the oversight of the Board, 

furnishes a continuous investment 

program for each Fund. The Adviser 

periodically reviews investment policies 

and strategies of each Fund and based 

on the need of a particular Fund may 

recommend changes to the investment 

policies and strategies of the Fund for 

consideration by its Board. For its 

services to each Fund, the Adviser 

receives an investment advisory fee 

from that Fund as specified in the 

applicable Investment Advisory 

Agreement based on the average daily 

net asset value of that Fund. The terms 

of the Investment Advisory Agreements 

also permit the Adviser, subject to the 

approval of the relevant Board, 

including a majority of the Independent 

Trustees, and the shareholders of the 

applicable Subadvised Funds (if 

required by applicable law), to delegate 

portfolio management responsibilities of 

all or a portion of the assets of the 

Subadvised Fund to one or more 

subadvisers (‘‘Sub-Advisers’’). The 

Adviser has entered into subadvisory 

agreements (‘‘Sub-Advisory 

Agreements’’) with various SubAdvisers to provide investment advisory 

services to various Subadvised Funds.2

Each Sub-Adviser is, and each future 

Sub-Adviser will be, an investment 

adviser as defined in section 2(a)(20) of 

the Act as well as registered with the 

Commission as an ‘‘investment adviser’’ 

under the Advisers Act. The Adviser 

evaluates, allocates assets to and 

oversees the Sub-Advisers, and makes 

recommendations about their hiring, 

termination and replacement to the 

Board, at all times subject to the 

authority of the Board.3 The Adviser 

will compensate each Sub-Adviser out 

of the fee paid to the Adviser under the 

relevant Investment Advisory 

Agreement, or the Subadvised Fund will 

be responsible for paying subadvisory 

fees directly to the Sub-Adviser. 

3. Applicants request an order to 

permit the Adviser, subject to Board 

approval, to select certain Sub-Advisers 

to manage all or a portion of the assets 

of a Subadvised Fund pursuant to a 

Sub-Advisory Agreement and materially 

amend Sub-Advisory Agreements 

without obtaining shareholder approval. 

The requested relief will not extend to 

any Sub-Adviser that is an affiliated 

person, as defined in section 2(a)(3) of 

the Act, of a Subadvised Fund or the 

Adviser, other than by reason of serving 

as a Sub-Adviser a Subadvised Funds 

(‘‘Affiliated Sub-Adviser’’). 

4. Applicants also request an order 

exempting the Subadvised Funds from 

certain disclosure provisions described 

below that may require the Applicants 

to disclose fees paid by the Adviser or 

a Subadvised Fund to each Sub-Adviser. 

Applicants seek an order to permit each 

Subadvised Fund to disclose (as a dollar 

amount and a percentage of each 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 158 / Tuesday, August 16, 2011 / Notices 50775 

Subadvised Fund’s net assets) only: (a) 

The aggregate fees paid to the Adviser 

and any Affiliated Sub-Advisers; and (b) 

the aggregate fees paid to Sub-Advisers 

other than Affiliated Sub-Advisers 

(collectively, the ‘‘Aggregate Fee 

Disclosure’’). A Subadvised Fund that 

employs an Affiliated Sub-Adviser will 

provide separate disclosure of any fees 

paid to the Affiliated Sub-Adviser. 

Applicants’ Legal Analysis 

1. Section 15(a) of the Act provides, 

in relevant part, that it is unlawful for 

any person to act as an investment 

adviser to a registered investment 

company except pursuant to a written 

contract that has been approved by the 

vote of a majority of the company’s 

outstanding voting securities. Rule 18f– 

2 under the Act provides that each 

series or class of stock in a series 

investment company affected by a 

matter must approve that matter if the 

Act requires shareholder approval. 

2. Form N–1A is the registration 

statement used by open-end investment 

companies. Item 19(a)(3) of Form N–1A 

requires disclosure of the method and 

amount of the investment adviser’s 

compensation. 

3. Rule 20a–1 under the Act requires 

proxies solicited with respect to an 

investment company to comply with 

Schedule 14A under the Securities 

Exchange Act of 1934 (‘‘1934 Act’’). 

Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) 

and 22(c)(9) of Schedule 14A, taken 

together, require a proxy statement for a 

shareholder meeting at which the 

advisory contract will be voted upon to 

include the ‘‘rate of compensation of the 

investment adviser,’’ the ‘‘aggregate 

amount of the investment adviser’s 

fees,’’ a description of the ‘‘terms of the 

contract to be acted upon,’’ and, if a 

change in the advisory fee is proposed, 

the existing and proposed fees and the 

difference between the two fees. 

4. Regulation S–X sets forth the 

requirements for financial statements 

required to be included as part of a 

registered investment company’s 

registration statement and shareholder 

reports filed with the Commission. 

Sections 6–07(2)(a), (b) and (c) of 

Regulation S–X require a registered 

investment company to include in its 

financial statement information about 

the investment advisory fees. 

5. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security, or transaction or any 

class or classes of persons, securities, or 

transactions from any provisions of the 

Act, or from any rule thereunder, if such 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. Applicants 

state that the requested relief meets this 

standard for the reasons discussed 

below. 

6. Applicants assert that the 

shareholders expect the Adviser, subject 

to the review and approval of the Board, 

to select the Sub-Advisers who are best 

suited to achieve the Subadvised Fund’s 

investment objective. Applicants assert 

that, from the perspective of the 

shareholder, the role of the Sub-Adviser 

is substantially equivalent to the role of 

the individual portfolio managers 

employed by an investment adviser to a 

traditional investment company. 

Applicants state that requiring 

shareholder approval of each SubAdvisory Agreement would impose 

unnecessary delays and expenses on the 

Subadvised Funds, and enable the 

Subadvised Fund to act more quickly 

when the Board and the Adviser believe 

that a change would benefit a 

Subadvised Fund and its shareholders. 

Applicants note that the Investment 

Advisory Agreements and any SubAdvisory Agreement with an Affiliated 

Sub-Adviser (if any) will continue to be 

subject to the shareholder approval 

requirements of section 15(a) of the Act 

and rule 18f–2 under the Act. 

7. Applicants assert that the requested 

disclosure relief would benefit 

shareholders of the Subadvised Funds 

because it would improve the Adviser’s 

ability to negotiate the fees paid to SubAdvisers. Applicants state that the 

Adviser may be able to negotiate rates 

that are below a Sub-Adviser’s ‘‘posted’’ 

amounts, if the Adviser is not required 

to disclose the Sub-Advisers’ fees to the 

public. Applicants submit that the 

requested relief will encourage SubAdvisers to negotiate lower subadvisory 

fees with the Adviser if the lower fees 

are not required to be made public. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Before a Subadvised Fund may rely 

on the order requested herein, the 

operation of the Subadvised Fund in the 

manner described in this application 

will be approved by a majority of the 

Subadvised Fund’s outstanding voting 

securities as defined in the Act or, in the 

case of a Subadvised Fund whose public 

shareholders purchase shares on the 

basis of a prospectus containing the 

disclosure contemplated by condition 2 

below, by the initial shareholder before 

such Subadvised Fund’s shares are 

offered to the public. 

2. The prospectus for each 

Subadvised Fund will disclose the 

existence, substance, and effect of any 

order granted pursuant to the 

application. In addition, each 

Subadvised Fund will hold itself out to 

the public as employing a MultiManager Structure. The prospectus will 

prominently disclose that the Adviser 

has the ultimate responsibility, subject 

to oversight by the Board, to oversee the 

Sub-Advisers and recommend their 

hiring, termination, and replacement. 

3. Within ninety days of the hiring of 

a new Sub-Adviser, shareholders of the 

relevant Subadvised Fund will be 

furnished all information about the new 

Sub-Adviser that would be included in 

a proxy statement, except as modified to 

permit Aggregate Fee Disclosure. This 

information will include Aggregate Fee 

Disclosure and any change in disclosure 

caused by the addition of a new SubAdviser. To meet this obligation, each 

Subadvised Fund will provide its 

shareholders, within 90 days of the 

hiring of a new Sub-Adviser, an 

information statement meeting the 

requirements of Regulation 14C, 

Schedule 14C and Item 22 of Schedule 

14A under the 1934 Act, except as 

modified by the order to permit 

Aggregate Fee Disclosure. 

4. The Adviser will not enter into a 

Sub-Advisory Agreement with any 

Affiliated Sub-Adviser without that 

agreement, including the compensation 

to be paid thereunder, being approved 

by the shareholders of the applicable 

Subadvised Fund. 

5. At all times, at least a majority of 

the Board will be Independent Trustees, 

and the nomination of new or additional 

Independent Trustees will be placed 

within the discretion of the thenexisting Independent Trustees. 

6. Independent legal counsel, as 

defined in rule 0–1(a)(6) under the Act, 

will be engaged to represent the 

Independent Trustees. The selection of 

such counsel will be within the 

discretion of the then-existing 

Independent Trustees. 

7. Whenever a Sub-Adviser change is 

proposed for a Subadvised Fund with 

an Affiliated Sub-Adviser, the Board, 

including a majority of the Independent 

Trustees, will make a separate finding, 

reflected in the Board minutes, that the 

change is in the best interests of the 

Subadvised Fund and its shareholders, 

and does not involve a conflict of 

interest from which the Adviser or the 

Affiliated Sub-Adviser derives an 

inappropriate advantage. 

8. Whenever a Sub-Adviser is hired or 

terminated, the Adviser will provide the 

Board with information showing the 

expected impact on the profitability of 

the Adviser. 


emcdonald on DSK2BSOYB1PROD with NOTICES
50776 Federal Register / Vol. 76, No. 158 / Tuesday, August 16, 2011 / Notices 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 64235 

(April 7, 2011), 76 FR 20791 (April 13, 2011) (SR– 

BATS–2011–010). 

4Securities Exchange Act Release No. 62886 

(September 10, 2010), 75 FR 56613 (September 16, 

2010) (SR–BATS–2010–016). 

5 Id. 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

9. The Adviser will provide general 

management services to each 

Subadvised Fund, including overall 

supervisory responsibility for the 

general management and investment of 

the Subadvised Fund’s assets and, 

subject to review and approval of the 

Board, will: (a) Set the Subadvised 

Fund’s overall investment strategies; (b) 

evaluate, select and recommend SubAdvisers to manage all or a portion of 

the Subadvised Fund’s assets; (c) 

allocate and, when appropriate, 

reallocate the Subadvised Fund’s assets 

among Sub-Advisers; (d) monitor and 

evaluate the Sub-Advisers’ performance; 

and (e) implement procedures 

reasonably designed to ensure that SubAdvisers comply with the Subadvised 

Fund’s investment objective, policies 

and restrictions. 

10. No trustee or officer of a 

Subadvised Fund or director or officer 

of the Adviser, will own directly or 

indirectly (other than through a pooled 

investment vehicle that is not controlled 

by such person) any interest in a SubAdviser except for (a) ownership of 

interests in the Adviser or any entity 

that controls, is controlled by or is 

under common control with the 

Adviser; or (b) ownership of less than 

1% of the outstanding securities of any 

class of equity or debt of any publicly 

traded company that is either a SubAdviser or an entity that controls, is 

controlled by or is under common 

control with a Sub-Adviser. 

11. Each Subadvised Fund will 

disclose in its registration statement the 

Aggregate Fee Disclosure. 

12. In the event the Commission 

adopts a rule under the Act providing 

substantially similar relief to that in the 

order requested in the application, the 

requested order will expire on the 

effective date of that rule. 

13. The Adviser will provide the 

Board, no less frequently than quarterly, 

with information about the profitability 

of the Adviser on a per Subadvised 

Fund basis. The information will reflect 

the impact on profitability of the hiring 

or termination of any Sub-Adviser 

during the applicable quarter. 

14. For Subadvised Funds that pay 

fees to a Sub-Adviser directly from 

Fund assets, any changes to a SubAdvisory Agreement that would result 

in an increase in the total management 

and advisory fees payable by a 

Subadvised Fund will be required to be 

approved by the shareholders of the 

Subadvised Fund. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–20758 Filed 8–15–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–65079; File No. SR–BATS– 

2011–026] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Extend Pilot Program 

Related to Clearly Erroneous 

Execution Reviews 

August 9, 2011. 

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 August 8, 

2011, 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 Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposal to extend a pilot 

program previously approved by the 

Commission related to Rule 11.17, 

entitled ‘‘Clearly Erroneous 

Executions.’’ 

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to extend 

the effectiveness of the Exchange’s 

current rule applicable to Clearly 

Erroneous Executions, Rule 11.17. The 

rule, explained in further detail below, 

is currently operating as a pilot program 

set to expire on the earlier of August 11, 

2011 or the date on which a limit up/ 

limit down mechanism to address 

extraordinary market volatility, if 

adopted, applies.3 The Exchange 

proposes to extend the pilot program to 

January 31, 2012. 

On September 10, 2010, the 

Commission approved, on a pilot basis, 

changes to BATS Rule 11.17 to provide 

for uniform treatment: (1) Of clearly 

erroneous execution reviews in multistock events involving twenty or more 

securities; and (2) in the event 

transactions occur that result in the 

issuance of an individual stock trading 

pause by the primary market and 

subsequent transactions that occur 

before the trading pause is in effect on 

the Exchange.4 The Exchange also 

adopted additional changes to Rule 

11.17 that reduced the ability of the 

Exchange to deviate from the objective 

standards set forth in Rule 11.17.5 The 

Exchange believes the benefits to market 

participants from the more objective 

clearly erroneous executions rule 

should be approved to continue on a 

pilot basis. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the Act.6

In particular, the proposal is consistent 

with Section 6(b)(5) of the Act,7 because 

it would promote just and equitable 

principles of trade, remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system. The 


emcdonald on DSK2BSOYB1PROD with NOTICES