58460 Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Notices 

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.’’ 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Notices 58461 

3See Exchange Act Release No. 62340 (June 21, 

2010), 75 FR 36768 (June 28, 2010) (SR–BATS– 

2010–014). 

4See Securities Exchange Act Release No. 62884 

(September 10, 2010), 75 FR 56618 (September 16, 

2010) (SR–BATS–2010–018). 

5See e-mail from Anders Franzon, Associate 

General Counsel, BATS, to David Liu, Senior 

Special Counsel, and Andrew Madar, Special 

Counsel, Commission, dated September 17, 2010. 

6As defined in Rule 11.9(c)(4). 

7 Defined in Rule 1.5(w) as 9:30 a.m. to 4 p.m. 

Eastern Time. 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78k–1(a)(1). 

They are also intended to augment and 

work in relation to the single stock 

pause standards already in place on a 

pilot basis for stocks in the S&P 

500 reg; Index,3 the Russell 1000® 

Index, as well as a pilot list of Exchange 

Traded Products.4

Under the proposal, the Exchange will 

require registered market makers to 

enter and maintain quotes priced at no 

more than a certain percentage away 

from the national inside bid and offer. 

Permissible quotes are determined by 

the individual character of the security, 

the time of day in which the quote is 

entered, and other factors which are 

summarized below. 

For issues subject to an individual 

stock trading pause, a permissible quote 

is determined by first looking at the 

applicable individual stock pause 

trigger percentage of the security and 

then reducing that number by 2%. Since 

currently the individual stock pause 

trigger percentage utilized by the 

primary listing markets is 10%, a market 

maker’s quote in a such a security may 

not be more than 8% away from the 

NBBO as appropriate. Once a compliant 

quote is entered, it may rest without 

adjustment until such time as it moves 

to within 1⁄2 of 1% of the applicable 

stock pause trigger percentage (i.e., 

currently 9.5%) whereupon the market 

maker must immediately move its quote 

back to at least the permissible default 

level of 8% away from the NBBO. 

During times in which a stock pause 

trigger percentage is not applicable 

(e.g., before 9:45 a.m. and after 3:35 

p.m.), a market maker must maintain a 

quote no further than 20% away from 

the inside (i.e., it may rest without 

adjustment until it reaches 21.5%). In 

the absence of a NBB or NBO, the above 

calculations will remain the same, but 

will use the national last sale instead of 

the absent bid or offer. 

For securities not subject to any 

individual stock trading pause, the 

proposal will a assume a hypothetical 

32% stock pause trigger percentage, 

apply a 2% reduction, and require 

market makers in those issues to 

maintain quotes no more than 30% 

away from the NBBO. Like securities 

subject to stock trading pauses, once a 

compliant quote is entered, it may rest 

without adjustment until such time as it 

moves to within 1⁄2 of 1% of its 

applicable pause trigger percentage 

(31.5%) whereupon the market maker 

must immediately move its quote back 

to at least the permissible default level 

of 30%. These requirements shall apply 

to Regulation NMS securities during 

normal market hours. 

Nothing in the above precludes a 

market maker from voluntarily quoting 

at price levels that are closer to the 

NBBO than required under the proposal. 

The Exchange proposes to offer 

optional functionality to Exchange 

Market Makers to assist such Market 

Makers with the quotation obligations 

proposed by this filing.5 Specifically, at 

9:00 a.m. Eastern Time, the Exchange 

will extract information submitted by 

the Market Maker that provides specific 

quote instructions for the Exchange to 

enter a quote on the Market Maker’s 

behalf consistent with proposed 

paragraph (d). The Exchange proposes 

to enter the initial bid and offer at the 

Designated Percentage and to cancel and 

replace the bid or offer if it drifts away 

from the NBBO to the Defined Limit or 

away from the Designated Percentage 

towards the NBBO by a number of 

percentage points determined by the 

Exchange. The Exchange will determine 

and publish this percentage in a circular 

distributed to Members from time to 

time; the Exchange wishes to retain this 

flexibility in the event it wishes to 

modify the number periodically in the 

future, for instance, to mitigate the 

amount of quotation information 

resulting from Exchange generated 

Market Maker quotes. If a bid or offer 

entered pursuant to proposed paragraph 

(e) is executed, the Exchange will reenter a new bid or offer on behalf of a 

Market Maker. Bids and offers entered 

by the Exchange consistent with 

proposed paragraph (e) to replace a 

cancelled or executed quotation will be 

entered at the Designated Percentage 

away from the NBBO. Such orders will 

be posted by the Exchange as BATS 

Only Orders,6 and will be maintained 

on the Exchange during Regular Trading 

Hours7 unless cancelled by the Market 

Maker pursuant to the Exchange’s Rules. 

In the event a Market Maker cancels the 

quotations entered by the Exchange in 

accordance with proposed paragraph 

(e), such Market Maker remains 

responsible for compliance with the 

requirements of paragraph (d). 

In order to adopt the above-described 

market maker quotation obligations, the 

Exchange proposes to modify Rule 

11.18(a)(1), which currently contains a 

two-sided quotation obligation, to crossreference the above-described market 

maker quotation obligations in new 

paragraph (d). In addition, because 

proposed paragraph (d) makes clear that 

the obligations of that paragraph apply 

during Regular Trading Hours, the 

Exchange proposes to delete paragraph 

(b) of current Rule 11.8 related to when 

the current quoting obligations apply. 

Finally, the Exchange proposes deletion 

of current Rule 11.8(e), related to 

temporary withdrawal, because 

Exchange Rule 11.5(d) already provides 

a Market Maker with the ability to 

withdraw his or her status as a Market 

Maker and Rule 11.7(b) already provides 

a Market Maker with the ability to 

terminate his or her registration in a 

security. The Exchange believes that 

these mechanisms are sufficient for a 

Market Maker to withdraw or terminate 

its registration in a security or as a 

Market Maker without the need for an 

additional provision related to 

withdrawal. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the Act.8

In particular, the proposed change is 

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

Act,9 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. The proposed rule change is 

also designed to support the principles 

of Section 11A(a)(1)10 of the Act in that 

it seeks to assure fair competition 

among brokers and dealers and among 

exchange markets. The Exchange 

believes that the proposed rule meets 

these requirements in that it promotes 

uniformity across markets concerning 

minimum market maker quotation 

requirements. The Exchange believes 

that the proposed optional functionality 

to assist Exchange Market Makers in 

maintaining continuous, two-sided limit 

orders in the securities in which they 

are registered will encourage Market 

Makers to remain registered with and 

trade on the Exchange, thus providing 

valuable liquidity to the Exchange; at 

the same time, the Exchange believes 

that the proposed functionality will 

keep Exchange generated quotations 

within reasonable reach of the NBBO 


srobinson on DSKHWCL6B1PROD with NOTICES
58462 Federal Register / Vol. 75, No. 185 / Friday, September 24, 2010 / Notices 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term Designated Percentage is defined in 

proposed Rule 7.23(a)(1)(B)(iii). 

4See Securities Exchange Act Release No. 62252 

(June 10, 2010), 75 FR 34186 (June 16, 2010) (SR– 

NYSEArca–2010–41). See also Securities Exchange 

Act Release No. 62884 (September 10, 2010), 75 FR 

56618 (September 16, 2010) (SR–NYSEArca–2010– 

61). See also Rule 7.11. 

and that the elimination of ‘‘stub quotes’’ 

is important for 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 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 

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–BATS–2010–025 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–BATS–2010–025. 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 website (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–BATS–2010–025 and 

should be submitted on or before 

October 15, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–23955 Filed 9–23–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62946; File No. SR– 

NYSEArca–2010–83] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of a 

Proposed Rule Change Amending 

NYSE Arca Equities Rule 7.23 To 

Adopt Pricing Obligations for ETP 

Holders Who Are Registered as 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, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ 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 proposes to amend 

NYSE Arca Equities Rule 7.23 to adopt 

pricing obligations for ETP Holders who 

are registered as Market Makers. The 

text of the proposed rule change is 

available at the Exchange, the 

Commission’s Public Reference Room, 

and 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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

NYSE Arca Equities Rule 7.23 to adopt 

pricing obligations for Market Makers. 

Under the proposal, the Exchange will 

require Market Makers to continuously 

maintain two-sided Q Order trading 

interest within a Designated 

Percentage 3 from the National Best Bid 

and National Best Offer (‘‘NBBO’’) for 

each security in which they are 

registered. These pricing obligations are 

intended to eliminate trade executions 

against Market Maker placeholder Q 

Orders traditionally priced far away 

from the inside market, commonly 

known as ‘‘stub quotes.’’ They are also 

intended to augment and work in 

conjunction with Trading Pauses in 

individual securities due to 

extraordinary market volatility, which 

are already in place on a pilot basis for 

stocks in the S&P 500® Index and the 

Russell 1000® Index, under Exchange 

Rule 7.11.4


srobinson on DSKHWCL6B1PROD with NOTICES