23294 Federal Register / Vol. 77, No. 75 / Wednesday, April 18, 2012 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 66571 

(March 12, 2012), 77 FR 15153 (‘‘Notice’’). 

4BATS Trading operates as a facility of BATS-Y 

that provides outbound routing from BATS-Y to 

other market centers, subject to certain conditions. 

See Securities Exchange Act Release No. 62716 

(August 13, 2010), 75 FR 51295 (August 19, 2010) 

(File No. 10–198) (Order granting the exchange 

registration of BATS-Y Exchange, Inc.) (‘‘BATS-Y 

Approval Order’’). 

5See Securities Exchange Act Release No. 58375 

(August 18, 2008), 73 FR 49498 (August 21, 2008) 

(File No. 10–182) (order granting the exchange 

registration of BATS Exchange, Inc.). 

6See generally BATS-Y Approval Order, supra 

note 4. 

7See Securities Exchange Act Release No. 62901 

(September 13, 2010), 75 FR 57097 (September 17, 

2010) (SR–BATS–2010–024) (‘‘Inbound Router 

Notice’’). 

8See Securities Exchange Act Release No. 65516 

(October 7, 2011), 76 FR 63977 (October 14, 2011) 

(SR–BATS–2011–040). 

9See Notice, supra note 3. 

10 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition and capital 

formation. 15 U.S.C. 78c(f). 

11 15 U.S.C. 78f(b)(1). 

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

13See Inbound Router Notice, 75 FR at 57097. 

14See Notice, 77 FR at 15154. 

audiocast may be accessed via the 

Commission’s Web site at http:// 

www.prc.gov. A period for public 

comment will be offered following 

consideration of the last numbered item 

in the open session. 

MATTERS TO BE CONSIDERED: The agenda 

for the Commission’s May 2, 2012 

meeting includes the items identified 

below. 

PORTIONS OPEN TO THE PUBLIC: 

1. Report on legislative activities. 

2. Report on communications with the 

public. 

3. Report on status of Commission 

dockets. 

4. Report from the Office of the 

Secretary and Administration. 

5. Report from the Office of 

Accountability and Compliance. 

6. Report on international activities. 

7. Presentation on the GSA Mail 

Management program. Chairman’s 

public comment period. 

PORTION CLOSED TO THE PUBLIC: 

8. Discussion of pending litigation. 

CONTACT PERSON FOR MORE INFORMATION: 

Stephen L. Sharfman, General Counsel, 

Postal Regulatory Commission, 901 New 

York Avenue NW., Suite 200, 

Washington, DC 20268–0001, at 202– 

789–6820 (for agenda-related inquiries) 

and Shoshana M. Grove, Secretary of the 

Commission, at 202–789–6800 or 

shoshana.grove@prc.gov (for inquiries 

related to meeting location, access for 

handicapped or disabled persons, the 

audiocast, or similar matters). 

Dated: April 16, 2012. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2012–9429 Filed 4–16–12; 4:15 pm] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66808; File No. SR–BATS– 

2012–013] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Order Approving a 

Proposed Rule Change To Amend 

BATS Exchange, Inc. Rule 2.12 To 

Make Permanent the Pilot Program 

That Permits BATS Exchange, Inc. To 

Receive Inbound Routes of Equities 

Orders Through BATS Trading, Inc., 

BATS Exchange’s Routing BrokerDealer, From BATS-Y Exchange, Inc. 

April 13, 2012. 

I. Introduction 

On March 8, 2012, BATS Exchange, 

Inc. (‘‘BATS’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change requesting permanent approval 

of the Exchange’s pilot program that 

permits the Exchange to receive 

inbound routes of equities orders 

through BATS Trading, Inc. (‘‘BATS 

Trading’’), the Exchange’s routing 

broker-dealer, from BATS Y-Exchange, 

Inc. (‘‘BATS-Y’’). The proposed rule 

change was published for comment in 

the Federal Register on March 14, 

2012.3 The Commission received no 

comment letters regarding the proposed 

rule change. This order approves the 

proposed rule change. 

II. Background 

BATS Trading is a broker-dealer that 

is a member of the Exchange and is 

permitted to provide members of BATSY optional routing services to other 

market centers.4 BATS Trading is 

owned by BATS Global Markets 

(‘‘Corporation’’). The Corporation also 

owns two registered securities 

exchanges—the Exchange 5 and BATSY.6 Thus, BATS Trading is an affiliate 

of the Exchange and BATS-Y. 

On September 9, 2010, the Exchange 

filed an immediately effective proposed 

rule change to, among other things, 

permit the Exchange to receive inbound 

routes of orders that BATS Trading 

routes in its capacity as a facility of 

BATS-Y on a pilot basis ending October 

15, 2011.7 On September 29, 2011, the 

Exchange filed an immediately effective 

proposed rule change to extend the pilot 

period six months ending April 15, 

2012.8 The Exchange now seeks 

permanent approval of this inbound 

routing pilot.9

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.10 Specifically, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(1) of the Act,11 which requires, 

among other things, that a national 

securities exchange be so organized and 

have the capacity to carry out the 

purposes of the Act, and to comply and 

enforce compliance by its members and 

persons associated with its members, 

with the provisions of the Act, the rules 

and regulation thereunder, and the rules 

of the Exchange. Further, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,12 which requires, 

among other things, that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices; to 

promote just and equitable principles of 

trade; to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, and 

processing information with respect to, 

and facilitating transactions in 

securities; 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. 

Section 6(b)(5) also requires that the 

rules of an exchange not be designed to 

permit unfair discrimination among 

customers, issuers, brokers, or dealers. 

Recognizing that the Commission has 

previously expressed concern regarding 

the potential for conflicts of interest in 

instances where a member firm is 

affiliated with an exchange to which it 

is routing orders, the Exchange 

previously implemented limitations and 

conditions to BATS Trading’s affiliation 

with the Exchange to permit the 

Exchange to accept inbound orders that 

BATS Trading routes in its capacity as 

a facility of BATS-Y, on a pilot basis.13

The Exchange now seeks to make this 

pilot permanent. Specifically, the 

Exchange states it is in compliance with 

the following limitations and 

conditions: 14

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Federal Register / Vol. 77, No. 75 / Wednesday, April 18, 2012 / Notices 23295 

15See id. 

16See, e.g., Securities Exchange Act Release Nos. 

54170 (July 18, 2006), 71 FR 42149 (July 25, 2006) 

(SR–NASDAQ–2006–006) (order approving 

Nasdaq’s proposal to adopt Nasdaq Rule 2140, 

restricting affiliations between Nasdaq and its 

members); 53382 (February 27, 2006), 71 FR 11251 

(March 6, 2006) (SR–NYSE–2005–77) (order 

approving the combination of the New York Stock 

Exchange, Inc. and Archipelago Holdings, Inc.); 

58673 (September 29, 2008), 73 FR 57707 (October 

8, 2008) (SR–Amex–2008–62) (order approving the 

combination of NYSE Euronext and the American 

Stock Exchange LLC); 59135 (December 22, 2008), 

73 FR 79954 (December 30, 2008) (SR–ISE–2009– 

85) (order approving the purchase by ISE Holdings 

of an ownership interest in DirectEdge Holdings 

LLC); and 59281 (January 22, 2009), 74 FR 5014 

(January 28, 2009) (SR–NYSE–2008–120) (order 

approving a joint venture between NYSE and BIDS 

Holdings L.P.). 

17This oversight will be accomplished through a 

17d–2 Agreement. See Inbound Router Notice, 75 

FR at 57097. 

18 15 U.S.C. 78s(b)(2). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

• The Exchange shall enter into a 

plan pursuant to Rule 17d–2 under the 

Exchange Act with a non-affiliated selfregulatory organization (‘‘SRO’’) to 

relieve the Exchange of regulatory 

responsibilities for BATS Trading with 

respect to rules that are common rules 

between the Exchange and the nonaffiliated SRO, and enter into a 

regulatory contract (‘‘Regulatory 

Contract’’) with a non-affiliated SRO to 

perform regulatory responsibilities for 

BATS Trading for unique Exchange 

rules. 

• The Regulatory Contract shall 

require the Exchange to provide the 

non-affiliated SRO with information, in 

an easily accessible manner, regarding 

all exception reports, alerts, complaints, 

trading errors, cancellations, 

investigations, and enforcement matters 

(collectively ‘‘Exceptions’’) in which 

BATS Trading is identified as a 

participant that has potentially violated 

Exchange or Commission Rules, and 

shall require that the non-affiliated SRO 

provide a report, at least quarterly, to 

the Exchange quantifying all Exceptions 

in which BATS Trading is identified as 

a participant that has potentially 

violated Exchange or Commission 

Rules. 

• The Exchange, on behalf of the 

Corporation, shall establish and 

maintain procedures and internal 

controls reasonably designed to ensure 

that BATS Trading does not develop or 

implement changes to its system on the 

basis of non-public information 

regarding planned changes to Exchange 

systems, obtained as a result of its 

affiliation with the Exchange, until such 

information is available generally to 

similarly situated member organizations 

of the Exchange in connection with the 

provision of inbound order routing to 

the Exchange. 

• The Exchange may furnish to BATS 

Trading the same information on the 

same terms that the Exchange makes 

available in the normal course of 

business to any other member 

organization. 

The Exchange believes that by meeting 

the above-listed conditions it has set up 

mechanisms that protect the 

independence of the Exchange’s 

regulatory responsibility with respect to 

BATS Trading, and has demonstrated 

that BATS Trading cannot use any 

information that it may have because of 

its affiliation with the Exchange to its 

advantage.15

In the past, the Commission has 

expressed concern that the affiliation of 

an exchange with one of its members 

raises potential conflicts of interest, and 

the potential for unfair competitive 

advantage.16 Although the Commission 

continues to be concerned about 

potential unfair competition and 

conflicts of interest between an 

exchange’s self-regulatory obligations 

and its commercial interest when the 

exchange is affiliated with one of its 

members, for the reasons discussed 

below, the Commission believes that it 

is consistent with the Act to permit 

BATS Trading, in its capacity as a 

facility of BATS-Y, to provide inbound 

routing to the Exchange on a permanent 

basis instead of a pilot basis, subject to 

the other conditions described above. 

The Exchange has proposed four 

ongoing conditions applicable to BATS 

Trading’s inbound routing activities in 

its capacity as a facility of BATS-Y, 

which are enumerated above. The 

Commission believes that these 

conditions mitigate its concerns about 

potential conflicts of interest and unfair 

competitive advantage. In particular, the 

Commission believes that a nonaffiliated SRO’s oversight of BATS 

Trading,17 combined with a nonaffiliated SRO’s monitoring of BATS 

Trading’s compliance with the 

Exchange’s rules and quarterly reporting 

to the Exchange, will help to protect the 

independence of the Exchange’s 

regulatory responsibilities with respect 

to BATS Trading. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,18 that the 

proposed rule change (SR–BATS–2012– 

013) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9342 Filed 4–17–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66789; File No. SR–ISE– 

2012–30] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change Relating to Increasing Certain 

Rebates and Taker Fees for Complex 

Orders in Options on the SPDR®

S&P500® ETF Trust 

April 12, 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 April 10, 

2012, the International Securities 

Exchange, LLC (the ‘‘Exchange’’ or the 

‘‘ISE’’) 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 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 ISE proposes to increase certain 

rebates and taker fees for complex 

orders in options on the SPDR®

S&P500® ETF Trust (‘‘SPY’’). The text of 

the proposed rule change is available on 

the Exchange’s Web site (http:// 

www.ise.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 

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 these statements may be examined at 

the places specified in Item IV below. 

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