9452 Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices 

22 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). 

5As defined in Exchange Rule 11.9(c)(5). 

6The Exchange currently charges $0.0025 per 

share removed from the BATS Book, except for 

securities priced below $1.00, for which no access 

fee is charged. 

7Because the Exchange cannot post a bid or offer 

with a partial share amount (e.g., 99.9 shares), any 

Maximum Remove Percentage that would result in 

such an amount will be rounded down to the next 

whole share amount (e.g., 99 shares). 

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–NYSEALTR–2009–10 on 

the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEALTR–2009–10. 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 inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549–1090. Copies of the filing will 

also be available for inspection and 

copying at the NYSE’s principal office 

and on its Internet Web site at http:// 

www.nyse.com. 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– 

NYSEALTR–2009–10 and should be 

submitted on or before March 25, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4558 Filed 3–3–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59457; File No. SR–BATS– 

2009–006] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend BATS Rule 

11.9, Entitled ‘‘Orders and Modifiers’’ 

February 26, 2009. 

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 

20, 2009, BATS Exchange, Inc. (‘‘BATS’’ 

or the ‘‘Exchange’’) 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 11.9, entitled ‘‘Orders and 

Modifiers,’’ to provide for a new order 

type, a Partial Post Only at Limit Order. 

In addition, the Exchange is proposing 

to eliminate an Exchange order 

processing behavior described in Rule 

11.9(c)(4) and (c)(5) as the ‘‘price sliding 

process’’ due to the fact that this 

functionality is rarely selected by Users 

of the Exchange. 

The text of the proposed rule change 

is available at the Exchange’s website at 

http://www.batstrading.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to provide a new order type 

to Users of the Exchange, a Partial Post 

Only at Limit Order. The Exchange 

currently allows Users to enter BATS 

Post Only Orders,5 which do not remove 

liquidity from the Exchange. Frequently, 

Exchange Users utilize BATS Post Only 

Orders because such Users do not want 

to be charged the access fee for 

removing liquidity from the BATS 

Book.6 However, if such Users could 

receive a price better than their limit 

price (i.e., price improvement), then the 

Exchange believes that such Users may 

wish to remove that liquidity and pay 

the access fee. In addition, regardless of 

whether any part of the order is 

executed with price improvement, the 

Exchange believes that some Users of 

BATS Post Only Orders would be 

willing to remove from the BATS Book 

a certain amount of liquidity at the 

order’s limit price if the residual of the 

order could then post to the BATS Book 

at that limit price. Accordingly, as 

proposed, the new order type will 

enable Users to: (i) enter an order to the 

Exchange that will remove liquidity 

from the Exchange when the order will 

receive price improvement; and (ii) 

designate a ‘‘Maximum Remove 

Percentage,’’ instructing the Exchange to 

execute up to a designated percentage of 

the order size remaining after any 

applicable price improvement execution 

by removing liquidity at the order’s 

limit price if the residual, after 

executions at the limit price, can be 

posted on the BATS Book.7

If no Maximum Remove Percentage is 

entered, then a Partial Post Only at 

Limit Order will only remove liquidity 

to the extent the order will obtain price 

improvement from its limit price. If no 

price improvement on an order is 

obtained, but a Maximum Remove 

Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices 9453 

8As set forth in Exchange Rule 11.9(c)(4), the 

displayed price sliding process is the default but 

Users can elect instead to opt-out of displayed price 

sliding, in which case, any remainder of the order 

would be cancelled back to the User. 

9 15 U.S.C. 78f(b). 

10 15 U.S.C. 78f(b)(5). 

Percentage has been entered with the 

order, then the order would execute at 

the limit price up to the Maximum 

Remove Percentage size only if, after 

removal of the shares set by the 

Maximum Remove Percentage, the order 

could then post to the BATS Book. As 

with BATS Only and BATS Post Only 

orders, Users may designate Partial Post 

Only at Limit Orders as being subject to 

the Exchange’s displayed price sliding 

process or may opt-out of displayed 

price sliding. Regardless of which 

setting is selected, an order with a 

Maximum Remove Percentage will only 

execute at its limit price if it can be 

posted to the BATS Book at its limit 

price after executions permitted by the 

Maximum Remove Percentage. Thus, if 

an order’s Maximum Remove 

Percentage would otherwise allow 

removal of all liquidity from the BATS 

Book at the order’s limit price, but 

would lock or cross another market if 

posted to the BATS Book and displayed 

by the Exchange at that limit price, the 

order would not remove any liquidity at 

its limit price, but rather, would be 

cancelled or price slid, depending on 

the User’s instructions.8

The following examples demonstrate 

how the Partial Post Only at Limit Order 

will operate on the Exchange. For 

purposes of these examples, assume that 

in security ‘‘ABC’’ the Exchange has 

1,000 shares of liquidity at a $10.00 

offer price and also has resting orders on 

its book to sell 1,000 shares at $10.01 

and 1,000 shares at $10.03. 

• Example #1: A User submits a 

Partial Post Only at Limit Order to the 

Exchange to buy 1,000 shares of ABC at 

$10.01 with no Maximum Remove 

Percentage. The order would be filled in 

its entirety at $10.00. 

• Example #2: A User submits a 

Partial Post Only at Limit Order to the 

Exchange to buy 2,500 shares of ABC at 

$10.01 with no Maximum Remove 

Percentage. 1,000 shares of the order 

would be filled at $10.00, and the 

remaining 1,500 shares would be subject 

to the Exchange’s displayed price 

sliding process or would be cancelled 

back to the User because posting such 

remainder at its limit price would lock 

the BATS Book and the User did not 

specify a Maximum Remove Percentage 

permitting removal of any liquidity at 

the order’s limit price. 

• Example #3: A User submits a 

Partial Post Only at Limit Order to the 

Exchange to buy 2,500 shares of ABC at 

$10.02 with no Maximum Remove 

Percentage. 1,000 shares of the order 

would be filled at $10.00, 1,000 shares 

of the order would be filled at $10.01 

and the remaining 500 shares would be 

posted as a bid on the BATS Book at 

$10.02. 

• Example #4: A User submits a 

Partial Post Only at Limit Order to the 

Exchange to buy 5,000 shares of ABC at 

$10.01 with a Maximum Remove 

Percentage of 10 percent. 1,000 shares of 

the order would be filled at $10.00 but 

the remainder of the order (4,000 shares) 

would be subject to the Exchange’s 

displayed price sliding process or 

would be cancelled back to the User 

because the order could only remove up 

to 10% of the remaining order, after 

price improvement, at its limit price (or 

400 shares) and removal of that amount 

would leave 600 shares of liquidity 

resting on the BATS Book at the limit 

price of $10.01. Accordingly, the 

remainder of the User’s order could not 

be posted because it would lock the 

BATS Book at $10.01, and the 

parameters of the designated Maximum 

Remove Percentage would not permit 

additional shares to be removed at that 

price. 

• Example #5: A User submits a 

Partial Post Only at Limit Order to the 

Exchange to buy 5,000 shares of ABC at 

$10.01 with a Maximum Remove 

Percentage of 25 percent. 1,000 shares of 

the order would be filled at $10.00, 

1,000 shares would be filled at $10.01, 

the order’s limit price, based on the 

designated Maximum Remove 

Percentage (25% of 4,000 remaining 

shares would permit maximum removal 

at the limit price of 1,000 shares), and 

the remaining 3,000 shares would be 

posted as a bid on the BATS Book at 

$10.01. 

• Example #6: A User submits a 

Partial Post Only at Limit Order to the 

Exchange to buy 5,000 shares of ABC at 

$10.00 with a Maximum Remove 

Percentage of 25 percent. Although the 

order would not receive any price 

improvement, 1,000 shares of the order 

would be filled at $10.00, the order’s 

limit price, based on the designated 

Maximum Remove Percentage (25% of 

the 5,000 share order would permit 

maximum removal at the limit price of 

up to 1,250 shares), and the remaining 

4,000 shares would be posted as a bid 

on the BATS Book at $10.00. 

The Exchange believes that the 

proposed order type benefits its Users 

by providing additional flexibility, in a 

single order type, to meet the true 

trading interests of market participants. 

The Exchange is also proposing to 

eliminate references to the ‘‘price 

sliding process,’’ from the Exchange 

Rule 11.9. Very few Exchange Users 

currently utilize the price sliding 

process, and in fact, on certain trading 

days, the Exchange does not receive any 

orders where a User has selected this 

process. Instead, most Users either 

submit orders with the default 

‘‘displayed price sliding’’ option 

selected or opt-out of displayed price 

sliding. Accordingly, the proposed rule 

change deleting the price sliding 

process and adopting Partial Post Only 

at Limit Orders without reference to the 

price sliding process would simplify the 

Exchange’s Rules by eliminating an 

option seldom used by Users of the 

Exchange. 

In addition to the proposed changes 

above, the Exchange is proposing to 

make certain non-substantive changes to 

Exchange Rule 11.12 to update and 

correct cross-references to other 

Exchange Rules. 

2. Statutory Basis 

The rule change proposed in this 

submission 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.9

Specifically, the proposed change is 

consistent with Section 6(b)(5) of the 

Act,10 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, and, in 

general, protect investors and the public 

interest, by allowing Users to enter a 

modified form of ‘‘post only’’ order that 

will execute to the extent such order 

will receive price improvement or 

remove a designated portion of the 

remaining order, after price 

improvement, at its limit price if such 

order could then post to the BATS Book. 

In addition, removal of the references to 

the price sliding process will simplify 

the Exchange’s Rules by deleting a 

functionality offered by the Exchange 

but not frequently used by market 

participants that submit orders to the 

Exchange. 

The Exchange believes that Users that 

submit BATS Post Only Orders to the 

Exchange are primarily seeking to avoid 

access fees charged for removing 

liquidity, but that such Users would be 

willing to pay an access fee to the extent 

their order could obtain price 

improvement. Because of this price 

improvement, the Exchange believes 

that the order proposed in this rule 

filing will help Users obtain better 

9454 Federal Register / Vol. 74, No. 41 / Wednesday, March 4, 2009 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission written 

notice of its intent to file the proposed rule change, 

along with a brief description and text of 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 Commission notes that the 

Exchange has satisfied the five-day pre-filing notice 

requirement. 

14See Securities Exchange Act Release No. 59259 

(January 15, 2009), 74 FR 4491 (January 26, 2009) 

(notice of immediate effectiveness of rule change to 

establish a Post Only Order for NASDAQ OMX BX, 

Inc.). 

15Telephone conversation between Anders 

Franzon, Associate General Counsel, BATS 

Exchange, Inc., and Rebekah Liu, Special Counsel, 

Division of Trading and Markets, Commission, on 

February 19, 2009. 

16For 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. 78c(f). 17 17 CFR 200.30–3(a)(12). 

prices for their orders submitted to the 

Exchange, even if such orders are 

subject to an access fee. In addition, the 

Exchange believes that some Users 

would like the added efficiency of being 

able to submit one order to the 

Exchange that will remove a certain 

amount of liquidity at the order’s limit 

price (based on the size of the order 

following price improvement), and then, 

provided all liquidity has been removed 

at its limit price, post to the BATS Book, 

rather than first submitting an order to 

remove liquidity at a certain price level 

and then submitting a BATS Post Only 

Order. 

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 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: 

(i) Significantly affect the protection 

of investors or the public interest; 

(ii) Impose any significant burden on 

competition; and 

(iii) Become operative for 30 days 

from the date on which it was filed, or 

such shorter time as the Commission 

may designate, if consistent with the 

protection of investors and public 

interest, it has become effective 

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

Act 11 and Rule 19b–4(f)(6) 

thereunder.12

Normally, a proposed rule change 

filed under 19b–4(f)(6) may not become 

operative prior to 30 days after the date 

of filing. However, Rule 19b– 

4(f)(6)(iii) 13 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 asked the Commission to 

waive the 30-day operative delay so that 

the proposal may become operative 

immediately upon filing. The Exchange 

represents that immediate 

implementation of the new proposed 

order type will permit the Exchange to 

remain competitive with another market 

center that has recently adopted a 

similar order type pursuant to an 

immediately effective rule filing.14 In 

addition, with respect to the Exchange’s 

proposal to eliminate the price sliding 

process, the Exchange represents that 

very few Exchange Users currently 

utilize the price sliding process, and in 

fact, on certain trading days, the 

Exchange does not receive any orders 

where a User has selected this process. 

Further, the Exchange represents that it 

has communicated with the limited 

number of Users that have utilized the 

price sliding process over the past 

several months to inform such Users of 

the Exchange’s intent to eliminate this 

functionality, and such Users have 

indicated that they have no objection to 

the elimination of this functionality.15

On this basis, the Commission has 

determined that waiving the 30-day 

operative date is consistent with the 

protection of investors and the public 

interest and designates the proposal as 

operative upon filing.16

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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

Number SR–BATS–2009–006 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–2009–006. 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 inspection and copying in 

the Commission’s Public Reference 

Room on official business days between 

the hours of 10 a.m. and 3 p.m. Copies 

of such filing also will be available for 

inspection and copying at the principal 

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– 

2009–006 and should be submitted on 

or before March 25, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4560 Filed 3–3–09; 8:45 am] 

BILLING CODE 8011–01–P