Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Notices 11179 

17 15 U.S.C. 78f(b)(1). 

18See generally Exchange Rules 1000A through 

1107A (Rules Applicable to Trading of Options on 

Indices) and Exchange Rules 1000 through 1094 

(Rules Applicable to Trading of Options on Stocks, 

Exchange-Traded Fund Shares and Foreign 

Currencies). 

19See Notice, supra note 3 and Exchange Rules 

1024–1029. See also supra notes 13 and 14. 

20 15 U.S.C. 78s(b)(2). 

21 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). 

capitalized stocks, the trading of options 

on the MSCI EM Index does not raise 

unique regulatory concerns. The 

Commission believes that the listing 

standards, which are created 

specifically and exclusively for the 

MSCI EM Index, are consistent with the 

Act, for the reasons discussed below. 

The Commission notes that proposed 

Rule 1009A(g) would require that the 

MSCI EM Index consist of 500 or more 

component securities. The component 

securities of the MSCI EM Index are 

listed and traded on markets spread 

over 21 different countries. Further, for 

options on the MSCI EM Index to trade, 

each of the minimum of 500 component 

securities would need to have a market 

capitalization of greater than $100 

million. Moreover, the Commission 

notes that, according to the Exchange, 

the MSCI EM Index is comprised of 

more than 800 components, all of which 

must meet the market capitalization 

requirement to permit an option on the 

index to begin trading. 

The Commission notes that the 

proposed listing standards for options 

on the MSCI EM Index would not 

permit any single security to comprise 

more than 15% of the weight of the 

index, and would not permit a group of 

five securities to comprise more than 

50% of the weight of the index. The 

Commission believes that, in view of the 

requirement on the number of securities 

in the index, the number of countries 

represented in the index, and the market 

capitalization, this concentration 

standard is consistent with the Act. 

Further, the Exchange stated that, of the 

more than 800 components that 

comprise the MSCI EM Index, no single 

component comprises more than 5% of 

the index. 

The Exchange has represented that it 

has an adequate surveillance program in 

place for options on the MSCI EM 

Index, and intends to apply the same 

procedures for surveillance that it 

applies to its other index options. The 

Exchange also is a member of the 

Intermarket Surveillance Group and an 

affiliate member of the International 

Organization of Securities Commissions, 

and has entered into various 

Information Sharing Agreements and/or 

Memoranda of Understandings with 

various stock exchanges. 

Under the proposed rule change, nonU.S. component securities of the MSCI 

EM Index that are not subject to 

comprehensive surveillance agreements 

will not, in the aggregate, represent 

more than 22.5% of the weight of the 

index. The Commission expects the 

Exchange to continue to work to secure 

comprehensive surveillance agreements 

with exchanges on which the 

component securities of the MSCI EM 

Index trade, but with which the 

Exchange currently does not have 

comprehensive surveillance agreements 

in place. 

The proposed listing standards 

require the current value of the MSCI 

EM Index to be widely disseminated at 

least once every 15 seconds by one or 

more major market data vendors during 

the time options on the index are traded 

on the Exchange. Further, the standards 

require that the Exchange have adequate 

system capacity to support the trading 

of options on the MSCI EM Index. The 

Exchange stated that these requirements 

will be met. 

As a national securities exchange, the 

Exchange is required, under Section 

6(b)(1) of the Act,17 to enforce 

compliance by its members, and persons 

associated with its members, with the 

provisions of the Act, Commission rules 

and regulations thereunder, and its own 

rules. In this regard, the Commission 

notes that Exchange rules that apply to 

the trading of options on broad-based 

indexes would apply to options on the 

MSCI EM Index.18 In addition, the 

Exchange has stated that options on the 

MSCI EM Index would be subject to the 

same rules that govern all Exchange 

index options, including rules that are 

designed to protect public customer 

trading.19

The Commission further believes that 

the Exchange’s proposed position and 

exercise limits, strike price intervals, 

minimum tick size, series openings, and 

other aspects of the proposed rule 

change are appropriate and consistent 

with the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,20 that the 

proposed rule change (SR–Phlx–2011– 

179), as modified by Amendment No. 1 

thereto, be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–4281 Filed 2–23–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66422; File No. SR–BATS– 

2012–010] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Related to Fees for Use 

of BATS Exchange, Inc. 

February 17, 2012. 

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 February 

8, 2012, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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 due, fee, 

or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act3 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to institute a 

fee change applicable to securities listed 

on the Exchange. Changes to the 

Exchange’s fees pursuant to this 

proposal will be effective upon filing. 

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 


srobinson on DSK4SPTVN1PROD with NOTICES
11180 Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Notices 

5See Securities Exchange Act Release No. 65225 

(August 30, 2011), 76 FR 55148 (September 6, 

2011). 

6See Securities Exchange Act Release No. 64546 

(May 25, 2011), 76 FR 31660 (June 1, 2011) (SR– 

BATS–2011–018); see also id. 

7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(4) and (b)(5). 

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 

On August 30, 2011, the Exchange 

received approval of rules applicable to 

the qualification, listing and delisting of 

companies on the Exchange.5 The 

Exchange proposes to modify Rule 

14.13, entitled ‘‘Company Listing Fees’’ 

to: (i) Adopt specified pricing for certain 

exchange traded products (‘‘ETPs’’) 

listed on the Exchange pursuant to Rule 

14.11; (ii) provide an exemption from 

annual listing fees for any security listed 

on the Exchange that has a consolidated 

average daily volume (‘‘CADV’’) equal to 

or greater than 2 million shares per day 

for the prior two (2) calendar months; 

and (iii) apply all annual fees on the 

anniversary date of a security’s listing 

on the Exchange and make other 

clarifying changes. 

Listing Fees for ETPs 

The Exchange currently has in place 

specified fees for listing of Tier I and 

Tier II securities on the Exchange, 

including both initial and annual listing 

fees. The Exchange proposes to amend 

Rule 14.13(b) to adopt initial and annual 

fees for ETPs listed pursuant to Rule 

14.11. The Exchange proposes to 

commence its listings business by 

charging Initial Listing Fees of $10,000 

for all ETPs. This initial primary listing 

fee will include a $5,000 non-refundable 

application fee. The Exchange also 

proposes to charge an annual fee of 

$35,000 for ETPs, provided, however, 

that ETPs with CADV equal to or greater 

than 2 million shares per day for the 

prior two (2) calendar months will not 

be assessed an annual fee, as described 

below. The Exchange also proposes to 

re-number the remainder of Rule 

14.13(b) following the insertion of the 

proposed fees for ETPs. 

Waiver of Annual Listing Fees for 

Certain Listed Securities 

In order to incentivize larger, more 

established companies and ETP 

sponsors to list securities on the 

Exchange and to incentivize companies 

that list on the Exchange and grow to be 

more established companies to maintain 

their listings on the Exchange, the 

Exchange proposes to waive the annual 

listing fee for any security that is listed 

on the Exchange and has had a CADV 

equal to or greater than 2 million shares 

per day for the prior two (2) calendar 

months. This fee waiver will apply 

equally to securities that transfer from 

another listings market and become 

listed on the Exchange as well as those 

securities already listed on the 

Exchange when the annual listing fee 

becomes due (upon the anniversary of 

the security’s listing, as described 

below). 

Billing of Annual Fees and Additional 

Clarifying Changes 

The Exchange proposes to modify its 

intended billing of annual fees, which 

the Exchange originally intended to 

assess on a pro-rated basis. The 

Exchange proposes to make clear that 

unless otherwise specified, the 

Exchange will assess all annual fees set 

forth in Rule 14.13(b)(2) upon a 

security’s initial listing and then on 

each anniversary of a security’s listing 

on the Exchange. The Exchange believes 

that billing each issuer on an annual 

basis from the date the applicable 

security is first listed on the Exchange 

is a more straightforward billing process 

than billing on a calendar year basis, 

which requires pro-rating of annual 

listing fees in the initial billing cycle. 

The Exchange also proposes to delete 

current paragraphs (F) and (G) of Rule 

14.13(b)(2), as such paragraphs are 

duplicative of existing paragraphs (C) 

and (D) (which the Exchange proposes 

to re-number as (D) and (E)). 

Finally, the Exchange proposes to 

correct and expand an internal crossreference set forth in Rule 14.13(b)(2)(E) 

(proposed to be re-numbered as subparagraph (b)(2)(F)). As currently in 

effect, BATS Rule 14.13(b)(2)(E), states 

that the Exchange will not apply the 

standard annual fee for a dually-listed 

security but will instead charge an 

annual fee of $15,000. Although this 

was intended and described as 

applicable to both Tier I and Tier II 

securities in the Exchange’s rule filing 

that proposed rules applicable to 

Exchange-listed securities,6 the rule text 

inaccurately limits this dual-listings fee 

to Tier I securities. The Exchange 

proposes to expand the cross-reference 

to include Tier II securities as well as 

the newly added provision setting forth 

annual listing fees for ETPs. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change 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 of the Act.7

Specifically, the Exchange believes that 

the proposed rule change is consistent 

with Sections 6(b)(4) and (b)(5) of the 

Act,8 in that it provides for the equitable 

allocation of reasonable dues, fees and 

other charges among issuers, and it does 

not unfairly discriminate between 

customers, issuers, brokers or dealers. 

As proposed, consistent with pricing 

already in place for Tier I and Tier II 

securities, the Exchange is proposing a 

clear-cut and simple pricing structure 

for ETPs that is not variable based on 

the number of shares or other metrics. 

The proposed fees applicable to ETPs 

are therefore equitable and nondiscriminatory because they will apply 

equally to all ETPs listed on the 

Exchange. Further, the Exchange 

believes its proposed pricing for ETPs is 

reasonable, as the Exchange has not 

proposed additional fees that issuers 

incur at other exchanges, including fees 

for issuance of additional shares, name 

changes and other corporate actions. 

Finally, the Exchange notes that its 

proposed pricing, while not necessarily 

cheaper for all issuers at all other 

markets, is in many cases roughly 

equivalent or less than issuers would 

pay at other exchanges. For instance, 

derivative securities products and 

structured products listed on the NYSE 

Arca are assessed fees between $5,000 

and $45,000 initially (depending on the 

type of product and number of shares) 

and between $5,000 and $55,000 

annually, compared to proposed 

Exchange fees for ETP listings of 

$10,000 initially and $35,000 annually. 

Also, as noted above, most other listings 

markets charge multiple other fees 

applicable to additional shares issued 

by listed companies, corporate actions 

and related activities of issuers, whereas 

the Exchange’s proposed fees do not 

include such additional fees. 

The Exchange believes it is equitable, 

reasonable and non-discriminatory to 

waive the annual fee for issuers that 

have consolidated average daily volume 

(‘‘CADV’’) equal to or greater than 2 

million shares per day for the prior two 

(2) calendar months. As a general 

matter, listed companies that are better 

known and well-established are 

frequently more actively traded, liquid 

securities. The Exchange believes that 

the benefits to both the Exchange and 

other Exchange constituents of 

attracting and retaining such companies 

to list on the Exchange justifies the 

Exchange waiving annual listing fees for 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 37 / Friday, February 24, 2012 / Notices 11181 

9 15 U.S.C. 78s(b)(3)(A)(ii). 

10 17 CFR 240.19b–4(f)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

these issuers. As it relates to other 

issuers, the ability of the Exchange to 

attract well-known, recognizable 

companies to list on the Exchange will 

help the Exchange to establish its status 

and reputation as a primary listing 

market. The Exchange’s reputation as a 

primary listing market, in turn, will 

positively impact all issuers that are 

listed on the Exchange. Further, the 

Exchange believes that additional 

revenue generated from the Exchange’s 

auction processes for actively traded 

Exchange-listed securities will offset the 

cost of operating a program for listed 

companies on the Exchange. Because 

issuers with higher CADV are likely to 

generate additional revenue for the 

Exchange, the Exchange believes it is 

reasonable to waive annual listing fees 

for such issuers. Based on the foregoing, 

the Exchange believes that waiver of 

annual listing fees to companies with 

certain CADV is a fair and equitable 

allocation of fees to issuers. 

Finally, the Exchange believes it is 

reasonable and equitable to assess 

annual fees as of a security’s initial 

listing date, rather than pro-rating 

annual fees and billing on a calendar 

basis. In particular, the Exchange 

believes that this annual billing will 

provide for more certainty to issuers 

than a billing model that requires 

proration. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change imposes any 

burden on competition. 

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. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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

the Act 9 and Rule 19b–4(f)(2) 

thereunder,10 the Exchange has 

designated this proposal as establishing 

or changing a due, fee, or other charge 

applicable to the Exchange’s Members 

and non-members, which renders the 

proposed rule change effective upon 

filing. 

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. 

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 email to rulecomments@sec.gov. Please include File 

Number SR–BATS–2012–010 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–BATS–2012–010. 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 (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–BATS– 

2012–010 and should be submitted on 

or before March 16, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–4283 Filed 2–23–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66421; File No. SR–NYSE– 

2012–05] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change 

Amending NYSE Rule 476A To Update 

Its ‘‘List of Exchange Rule Violations 

and Fines Applicable Thereto Pursuant 

to Rule 476A’’ 

February 17, 2012. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on February 

7, 2012, New York Stock Exchange LLC 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. 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 

NYSE Rule 476A to update its ‘‘List of 

Exchange Rule Violations and Fines 

Applicable Thereto Pursuant to Rule 

476ARule XX [sic]. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and www.nyse.com. 

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 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 


srobinson on DSK4SPTVN1PROD with NOTICES