58456 Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Notices 

5 17 CFR 240.603. 

6 17 CFR 240.600. 

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

8 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78k–1(a)(1). 

10 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

DMM’s obligation). For times during the 

trading day when a Trading Pause is not 

in effect under Rule 80C (e.g., before 

9:45 a.m. and after 3:35 p.m.), the 

Designated Percentage calculation will 

assume a trigger percentage of 22%. 

Therefore, a DMM must maintain a 

quote no further than 20% away from 

the NBBO and the quote may rest 

without adjustment until it is more than 

21.5% from the NBBO. In the absence 

of an NBBO, the above calculations will 

remain the same, but will use the last 

reported sale from the single plan 

processor responsible for consolidation 

of information for the security pursuant 

to Rule 603 of Regulation NMS.5

For securities that are not subject to 

Trading Pauses, the Designated 

Percentage will assume a trigger 

percentage of 32% and apply the same 

2% reduction. Thus, DMMs registered 

in those securities shall be required to 

maintain quotes no more than 30% 

away from NBBO. As with securities 

subject to Trading Pauses, once a 

permissible quote is entered it may rest 

without adjustment until such time as it 

becomes more than the Defined Limit 

away from the NBBO (31.5%), 

whereupon the DMM must enter new 

interest at a price not more than the 

Designated Percentage of 30% away 

from the NBBO (or identify to the 

Exchange current resting interest that 

satisfies the DMM’s obligation). The 

Exchange proposes that these 

requirements shall apply to NMS stocks 

(as defined in Rule 600 under 

Regulation NMS) 6 during the trading 

day. 

Nothing in the proposal shall 

preclude a DMM from quoting at price 

levels that are closer to the NBBO than 

the levels required under the proposal. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Securities Exchange Act of 1934 

(the ‘‘Act’’),7 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,8

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, 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 believes 

that the proposed rule change also is 

consistent with the principles of Section 

11A(a)(1) 9 of the Act in that it seeks to 

assure fair competition among brokers 

and dealers and among exchange 

markets. The Exchange believes the 

proposed rule change meets these 

requirements in that it promotes 

transparency and uniformity concerning 

pricing obligations across markets for 

certain market participants. 

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 that is 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 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 (i) 

as the Commission may designate up to 

90 days of such date 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 

such 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–NYSE–2010–69 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2010–69. 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, 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 publicly available. All 

submissions should refer to File 

Number SR–NYSE–2010–69 and should 

be submitted on or before October 15, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23971 Filed 9–23–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62955; File No. SR–NYSE– 

2010–67] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

New York Stock Exchange LLC 

Relating to Execution Algorithm of 

NYBX Orders 

September 20, 2010. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Notices 58457 

notice is hereby given that, on 

September 9, 2010, the 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 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 Rule 1600 (New York Block 

ExchangeSM) (‘‘NYBXSM’’ or the 

‘‘Facility’’) to provide for simultaneous 

routing, rather than sequential routing 

as the Facility currently operates, of 

appropriate volume from an NYBX 

order to attempt to execute 

simultaneously against all available 

contra side liquidity within the limit 

price of the order that is revealed on the 

initial market evaluation, whether that 

liquidity (1) Is in the NYSE Display 

Book® (‘‘DBK’’), displayed and 

undisplayed, (2) is in the Facility, (3) 

consists of top-of-book contra side 

quotations displayed on other 

automated trading centers that must be 

routed to in order to avoid potential 

trade throughs (in compliance with 

Regulation NMS) or (4) consists of topof-book contra side quotations displayed 

on other automated trading centers 

where no potential trade through is 

involved and Regulation NMS does not 

require routing. There will no longer be 

an initial routing of the full amount of 

the order (less any shares routed to 

other automated trading centers to 

comply with Regulation NMS) to the 

DBK in the hope that there will be some 

additional volume executed (over and 

above the displayed and undisplayed 

contra side liquidity in the DBK) against 

available contra side interest, if any, in 

the Capital Commitment Schedule 

(‘‘CCS’’) of the Designated Market Maker 

provided for in NYSE Rule 1000(d)(i). 

The text of the proposed rule change is 

available at the Exchange’s principal 

office, the Commission’s Public 

Reference Room, and the Exchange’s 

Web site at http://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, 

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 Exchange proposes to amend 

Exchange Rule 1600 (New York Block 

ExchangeSM) to provide for 

simultaneous routing, rather than 

sequential routing as the facility 

currently operates, of appropriate 

volume from an NYBX order to attempt 

to execute simultaneously against all 

available contra side liquidity within 

the limit price of the order that is 

revealed on the initial market 

evaluation, whether that liquidity (1) Is 

in the DBK, displayed and undisplayed, 

(2) is in the Facility, (3) consists of topof-book contra side quotations displayed 

on other automated trading centers that 

must be routed to in order to avoid 

potential trade throughs (in compliance 

with Regulation NMS) or (4) consists of 

top-of-book contra side quotations 

displayed on other automated trading 

centers where no potential trade 

through is involved and Regulation 

NMS does not require routing. The 

following is a description of how the 

NYBX Facility currently operates, 

complete with examples, followed by a 

description of the ‘‘Proposed Change in 

the Process,’’ also with examples. 

Current Operation of the Facility 

As currently provided in NYSE Rule 

1600, an order in the NYBX Facility 

interacts with contra side liquidity in 

the DBK and the Facility itself through 

a series of separate transactions that 

may involve the order moving 

sequentially from one price level to 

another (all within the limit price of the 

order) and/or back and forth between 

the Facility and the DBK. In addition, if 

an NYBX order would execute in the 

DBK or in the Facility at a price that 

may potentially trade through a 

protected quotation of another 

automated trading center(s), applicable 

volume from the order will be routed 

immediately to such automated trading 

center(s) to assure compliance with 

Regulation NMS. Further, when contra 

side liquidity is available in the DBK at 

prices that are within the limit price of 

the NYBX order, the full amount of the 

order (less any shares routed to other 

automated trading centers to comply 

with Regulation NMS) is sent to the 

DBK in the hope that, in addition to 

execution with the displayed and 

undisplayed contra side liquidity in the 

DBK at the particular price, there will be 

some additional execution with 

available contra side interest, if any, in 

the CCS of the Designated Market 

Maker. 

As the execution of the order 

proceeds, the Facility reevaluates the 

market at various points to check for 

updated market data and adjusts the 

routing of the remaining portion of the 

order accordingly. Finally, after all 

available executions in the DBK and the 

Facility have taken place, including the 

routing of appropriate volume to other 

automated trading centers to prevent 

trade throughs of protected quotations, 

any remaining portion of the order will 

be routed away for execution with all 

remaining available top-of-book contra 

side quotations within the limit price of 

the order displayed by other automated 

trading centers even though not 

required by Regulation NMS. 

The following examples demonstrate 

how NYBX orders are currently 

processed prior to implementation of 

the proposed amendment. In the 

examples, ‘‘MTV’’ stands for the 

optional, user-defined Minimum 

Triggering Volume Quantity of an NYBX 

order provided for in NYSE Rule 1600. 

NYBX Market Evaluation 

NYBX (Sell orders): 

5000 shares @ 21.00 (MTV = 100) 

5000 shares @ 22.00 (MTV = 100) 

DBK (Sell orders): 

1000 shares @ 21.00 (hidden) 

1000 shares @ 22.00 

1000 shares @ 23.00 

CHX (Sell orders): 

1000 shares @ 21.00 

BATS (Sell orders): 

1000 shares @ 22.00 

Scenario A: NYBX Buy order for 5000 

shares at 21.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 5000 shares routed to DBK at 21.00 

and 1000 are executed at 21.00. 

2. 4000 shares remain and are sent 

back to NYBX at 21.00. 

3. Verify no market data updates. 

4. 4000 shares execute in NYBX at 

21.00. 

The full amount of the above order is 

initially routed to DBK due to the 

possibility of interaction with CCS 

interest. Note that no orders were routed 

to other automated trading centers 

because (i) there were no potential trade 

throughs that would violate Regulation 


srobinson on DSKHWCL6B1PROD with NOTICES
58458 Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Notices 

NMS and (ii) DBK and NYBX had 

priority for executions at 21.00 and 

there were no shares left from the order 

to execute at that price on CHX. 

Scenario B: NYBX Buy order for 6500 

shares at 21.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 6500 shares routed to DBK at 21.00 

and 1000 are executed at 21.00. 

2. 5500 shares remain and are sent 

back to NYBX at 21.00. 

3. Verify no market data updates. 

4. 5000 shares execute in NYBX at 

21.00. 

5. Verify no market data updates. 

6. 500 shares routed to CHX at 21.00 

and all are executed at 21.00. 

Again, the full amount of the order is 

initially routed to DBK and no orders 

are initially routed to other automated 

trading centers because there were no 

potential trade throughs that would 

violate Regulation NMS. However, 

shares are routed to CHX at the end of 

the sequence because all interest at 

21.00 in both DBK and NYBX is 

exhausted and additional shares at that 

price are available on CHX even though 

Regulation NMS does not require shares 

to be routed there. 

Scenario C: NYBX Buy order for 13500 

shares at 22.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 1000 shares routed to CHX at 21.00 

(Reg. NMS) and all are executed at 

21.00. 12500 shares simultaneously 

routed to DBK at 21.00 and 1000 are 

executed at 21.00. 

2. 11500 shares remain and are sent 

back to NYBX at 21.00. 

3. Verify no market data updates. 

4. 5000 shares execute in NYBX at 

21.00. 

5. Verify no market data updates. 

6. 6500 shares remain and are routed 

to DBK at 22.00 and 1000 are executed 

at 22.00. 

7. 5500 shares remain and are sent 

back to NYBX at 22.00. 

8. Verify no market data updates. 

9. 5000 shares execute in NYBX at 

22.00. 

10. Verify no market data updates. 

11. 500 shares routed to BATS at 

22.00 and all are executed at 22.00. 

In Scenario C, 1000 shares are 

initially routed to CHX at 21.00 to 

eliminate the potential of a trade 

through of this protected quotation 

(since the size and price limit of the 

order mean that contra side liquidity in 

the DBK and the Facility at 22.00 will 

be executed against) that is prohibited 

by Regulation NMS. The full amount of 

the remaining portion of the order is 

simultaneously routed to the DBK at 

21.00 even though only 1000 shares are 

available there at that price, because of 

the potential to interact with CCS 

interest. Later in the sequence of events, 

the full amount of the remaining order 

at that point (6500 shares) is routed to 

the DBK at 22.00 for the same reason, 

even though only 1000 shares are 

available there at that price. At the end 

of the sequence, the routing of 500 

shares to BATS at 22.00 is not for the 

purpose of compliance with Regulation 

NMS (since no executions at a higher 

price will be triggered by the size and 

price limit of this order), but is made to 

access additional top-of-book contra 

side liquidity at another automated 

market center because no additional 

liquidity at that price is available in 

either the DBK or the Facility. 

Scenario D: NYBX Buy order for 14500 

shares at 23.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 1000 shares routed to CHX at 21.00 

(Reg. NMS) and all are executed at 

21.00. 1000 shares routed to BATS at 

22.00 (Reg. NMS) and all are executed 

at 22.00. 12500 shares simultaneously 

routed to DBK at 21.00 and 1000 are 

executed at 21.00. 

2. 11500 shares remain and are sent 

back to NYBX at 21.00. 

3. Verify no market data updates. 

4. 5000 shares execute in NYBX at 

21.00. 

5. Verify no market data updates. 

6. 6500 shares remain and are routed 

to DBK at 22.00 and 1000 are executed 

at 22.00. 

7. 5500 shares remain and are sent 

back to NYBX at 22.00. 

8. Verify no market data updates. 

9. 5000 shares execute in NYBX at 

22.00. 

10. Verify no market data updates. 

11. 500 shares routed to DBK at 23.00 

and all are executed at 23.00. 

Scenario D is very similar to Scenario 

C, except that the increase in order size 

and the increase in the limit price to 

23.00 create a potential trade through at 

23.00 in the DBK of the 22.00 protected 

quotation at BATS. Consequently, in 

addition to the 1000 shares that are 

initially routed to CHX at 21.00 to 

eliminate the potential for a trade 

through of that protected quotation that 

is prohibited by Regulation NMS, an 

additional 1000 shares are initially 

routed to BATS at 22.00 to eliminate the 

potential for a trade through of that 

protected quotation as well. The 

remaining execution sequence is the 

same as Scenario C except that the final 

500 shares of the order are routed to the 

DBK and executed at 23.00 because all 

lower contra side prices in the market 

have been executed against. 

Proposed Change in the Process 

In practice, the fact that the NYBX 

order proceeds through a series of steps 

that take place sequentially rather than 

simultaneously results in the 

disappearance or the adjustment of a 

substantial portion of the available 

contra side liquidity that shows up on 

the initial market evaluation, before the 

NYBX order is able to execute against 

that liquidity. Consequently, the 

purpose of the proposed amendment is 

to capture a higher percentage of the 

available contra side liquidity by 

attempting to execute simultaneously 

against all such liquidity within the 

limit price of the order that is revealed 

on the initial market evaluation, 

whether that liquidity (1) Is in the DBK 

(displayed and undisplayed), (2) is in 

the NYBX or (3) consists of top-of-book 

contra side quotations displayed on 

other automated trading centers. The 

initial portion of the order routed to the 

DBK will no longer be oversized in the 

hope of interacting with CCS interest, 

but will be sized based on the total 

amount of displayed and undisplayed 

contra side liquidity in the DBK that is 

available for execution within the limit 

price of the order. The same principle 

(no oversizing) will continue to be 

applicable to portions of the order that 

attempt to execute against available 

contra side interest in the Facility and 

against such interest that is displayed 

on other automated trading centers. 

As is the case with respect to the 

current operation of the Facility and in 

compliance with Regulation NMS, 

applicable volume will be routed 

immediately to execute against all 

protected quotations of other automated 

trading centers that may potentially be 

traded through by the NYBX order. 

However, the routing of applicable 

volume to other automated trading 

centers for execution against available 

contra side top-of-book quotations 

displayed by such markets where no 

potential trade through is involved will 

no longer be delayed until the order has 

executed with all available contra side 

liquidity in the DBK and the Facility. 

Instead, such volume will be routed out 

at the same time that other portions of 

the order attempt to execute against 

available contra side liquidity in the 

Facility or are routed for execution to 

the DBK or to other automated trading 

centers in compliance with Regulation 

NMS. 

In a situation in which the size of the 

NYBX order is less than the total 

available contra side liquidity that is 

potentially executable within the limit 


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Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Notices 58459 

3 15 U.S.C. 78f(b). 

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

price in the Facility and the DBK and at 

the top-of-book at other automated 

trading centers, the ‘‘tie breaker’’ rules 

for routing decision purposes will 

provide that (i) an execution in the DBK 

will have priority over an execution at 

the same price in the Facility or on 

another automated trading center, and 

(ii) an execution in the Facility will 

have priority over an execution at the 

same price on another automated 

trading center. 

The following examples demonstrate 

how NYBX orders will be processed 

under the proposed amendment. 

Assume the same NYBX initial market 

evaluation as above and the same four 

scenarios. 

Scenario A: NYBX Buy order for 5000 

shares at 21.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 1000 shares routed to DBK at 21.00 

and all are executed at 21.00 4000 

shares simultaneously executed in 

NYBX at 21.00 

In Scenario A, no shares are routed to 

other automated trading centers because 

(i) there are no potential trade throughs 

for this price limit and order volume, 

and (ii) executions at 21.00 in DBK and 

NYBX at 21.00 have priority over 

executions at CHX at the same price. 

Even though the entire 5000 shares 

could execute within NYBX at 21.00 

with no routing necessary, 1000 shares 

are routed to the DBK to execute against 

contra side liquidity there at the same 

price because executions in DBK have 

priority over executions in NYBX. 

Unlike the current process, none of the 

routings to the DBK will be oversized 

(i.e., the number of shares routed will 

not exceed the displayed and 

undisplayed interest in the DBK at a 

given price). Therefore, only 1000 

shares will be initially routed to the 

DBK instead of the full order size of 

5000 shares. Note that everything in 

Scenario A takes place simultaneously 

under the proposed amendment, 

compared to four sequential steps as the 

Facility currently operates. 

Scenario B: NYBX Buy order for 6500 

shares at 21.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 1000 shares routed to DBK at 21.00 

and all are executed at 21.00. 5000 

shares simultaneously execute in NYBX 

at 21.00. 500 shares simultaneously 

routed to CHX at 21.00 and all are 

executed at 21.00. 

Again, only the amount of the 

displayed and undisplayed interest in 

the DBK is routed to the DBK, and no 

orders are routed to other automated 

trading centers for Regulation NMS 

compliance purposes (since there are no 

potential trade throughs that would 

violate Regulation NMS). However, 

shares are routed to CHX because all 

interest at 21.00 in both DBK and NYBX 

will be executed against by the order, 

and additional shares at that price are 

available on CHX even though 

Regulation NMS does not require shares 

to be routed there for execution. Note 

that everything in Scenario B takes 

place simultaneously under the 

proposed amendment, compared to six 

sequential steps as the Facility currently 

operates. 

Scenario C: NYBX Buy order for 13500 

shares at 22.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 1000 shares routed to CHX at 21.00 

(Reg. NMS) and all are executed at 

21.00. 1000 shares simultaneously 

routed to DBK at 21.00 and all are 

executed at 21.00. 5000 shares 

simultaneously execute in NYBX at 

21.00. 1000 shares simultaneously 

routed to DBK at 22.00 and all are 

executed at 22.00. 5000 shares 

simultaneously execute in NYBX at 

22.00. 500 shares simultaneously routed 

to BATS at 22.00 and all are executed 

at 22.00. 

In Scenario C, 1000 shares are routed 

to CHX at 21.00 to eliminate the 

potential of a trade through at 22.00 of 

this protected quotation (since the size 

and price limit of the order mean that 

contra side liquidity in the DBK and the 

Facility at 22.00 will be executed 

against) that is prohibited by Regulation 

NMS. The simultaneous routing of 500 

shares to BATS at 22.00 is not for the 

purpose of compliance with Regulation 

NMS (since no executions at a higher 

price will be triggered by the size and 

price limit of this order), but is made to 

access additional top-of-book contra 

side liquidity at another automated 

market center because no additional 

liquidity at that price is available in 

either the DBK or the Facility. As before, 

only the amount of the displayed and 

undisplayed interest in the DBK is 

routed to the DBK. Note that everything 

in Scenario C takes place 

simultaneously under the proposed 

amendment, compared to eleven 

sequential steps as the Facility currently 

operates. 

Scenario D: NYBX Buy order for 14500 

shares at 23.00 (MTV = 100 shares) 

Results (each number below 

represents a separate step): 

1. 1000 shares routed to CHX at 21.00 

(Reg. NMS) and all are executed at 

21.00. 1000 shares simultaneously 

routed to BATS at 22.00 (Reg. NMS) and 

all are executed at 22.00. 1000 shares 

simultaneously routed to DBK at 21.00 

and all are executed at 21.00. 5000 

shares simultaneously execute in NYBX 

at 21.00. 1000 shares simultaneously 

routed to DBK at 22.00 and all are 

executed at 22.00. 5000 shares 

simultaneously execute in NYBX at 

22.00. 500 shares simultaneously routed 

to DBK at 23.00 and all are executed at 

23.00. 

Scenario D is very similar to Scenario 

C, except that the increase in order size 

and the increase in the limit price to 

23.00 mean that a full 1000 shares also 

need to be routed to BATS at 22.00 to 

eliminate the potential for a trade 

through in the DBK at 23.00 of that 

protected quotation in violation of 

Regulation NMS. Consequently, in 

addition to the 1000 shares that are 

initially routed to CHX at 21.00 to 

eliminate the potential for a trade 

through of that protected quotation that 

is prohibited by Regulation NMS, an 

additional 1000 shares are 

simultaneously routed to BATS at 22.00 

to eliminate the potential for a trade 

through of that protected quotation as 

well. Scenario D also differs from 

Scenario C in that the final routing to 

DBK is against a portion of the available 

contra side liquidity there at 23.00, 

since all lower contra side prices in the 

market have been executed against. Note 

that everything in Scenario D takes 

place simultaneously under the 

proposed amendment, compared to 

eleven sequential steps as the Facility 

currently operates. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 3 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’), in general, and furthers the 

objectives of Section 6(b)(5) 4 in 

particular in that it is 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 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. More specifically, the 

Exchange believes that the proposed 

rule change will improve the quality of 

the market and the outcomes for 

investors by capturing a higher 

percentage of the available contra side 

liquidity through attempting to execute 


srobinson on DSKHWCL6B1PROD with NOTICES
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5 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

simultaneously against all such 

liquidity within the limit price of the 

order that is revealed on the initial 

market evaluation, thereby increasing 

the probability that a large order placed 

in the Facility will achieve a complete 

and timely fill. The proposed rule 

change will thereby contribute to 

perfecting the mechanism of a free and 

open market and a national market 

system and is also consistent with the 

protection of investors and the public 

interest. 

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 that is 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 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–NYSE–2010–67 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–NYSE–2010–67. 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–NYSE– 

2010–67 and should be submitted on or 

before October 15, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.5

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23924 Filed 9–23–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62945; File No. SR–BATS– 

2010–025] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing of a 

Proposed Rule Change To Amend 

BATS Rule 11.8, Entitled ‘‘Obligations 

of Market Makers’’ 

September 20, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b-4 thereunder,2

notice is hereby given that on 

September 17, 2010, 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 

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 11.8, which relates to the 

obligations of market makers registered 

with BATS (‘‘Market Makers’’). 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to adopt rules 

to enhance minimum quotation 

requirements for market makers. Under 

the proposal, the Exchange will require 

market makers for each stock in which 

they are registered to continuously 

maintain a two-sided quotation within a 

designated percentage of the National 

Best Bid (‘‘NBB’’) and National Best 

Offer (‘‘NBO’’) (or, if there is no NBB or 

NBO, the last reported sale). These 

enhanced market maker quotation 

requirements are intended to eliminate 

trade executions against market maker 

placeholder quotations traditionally 

priced far away from the inside market, 

commonly known as ‘‘stub quotes.’’ 


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