Federal Register / Vol. 75, No. 201 / Tuesday, October 19, 2010 / Notices 64387 

25 17 CFR 200.30–3(a)(57). 

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). 

also will be available for inspection and 

copying at the principal office of 

Nasdaq. 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–NASDAQ–2010–074 and 

should be submitted on or before 

December 3, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26215 Filed 10–18–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63090; File No. SR–BATS– 

2010–027] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change by BATS Exchange, Inc. 

To Amend BATS Rule 21.9, Entitled 

‘‘Order Routing’’ 

October 13, 2010. 

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 October 

4, 2010, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) 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, on behalf of the BATS 

Options Market (‘‘BATS Options’’), 

proposes to amend BATS Rule 21.9, 

entitled ‘‘Order Execution,’’ to modify 

the existing general description of 

Exchange routing functionality and to 

describe available routing strategies in 

greater detail. 

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, at the 

Commission’s Web site at http:// 

www.sec.gov, 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 amend 

Rule 21.9, which describes its order 

routing processes, to modify the existing 

general description of Exchange routing 

functionality and to describe available 

routing strategies in greater detail. Also, 

subject to User instructions, the 

Exchange currently allows orders that 

have been routed and then posted to the 

Exchange’s order book to be re-routed if 

the order is subsequently locked or 

crossed by another options exchange 

(‘‘RECYCLE Option’’). The Exchange 

proposes to add a reference to the 

‘‘RECYCLE Option’’ in its Rule, 

consistent with the general goal of the 

proposed changes to align the routing 

strategies offered by the Exchange with 

the rule text by providing additional 

specificity. The Exchange also wishes to 

make clear that, unless otherwise 

specified, the RECYCLE Option may be 

combined with any of the System 

routing strategies specified in Rule 21.9. 

The Exchange is also amending Rule 

21.9 to include a definition of ‘‘System 

routing table,’’ defined as the proprietary 

process for determining the specific 

options exchanges to which the 

Exchange System routes orders and the 

order in which it routes them. The 

definition reflects the fact that the 

Exchange, like other options exchanges, 

maintains different routing tables for 

different routing strategies and modifies 

them on a regular basis to reflect 

assessments about the destination 

markets. Such assessments consider 

factors such as a destination’s latency, 

fill rates, reliability, and cost. 

Accordingly, the definition specifies 

that the Exchange reserves the right to 

maintain a different routing table for 

different routing strategies and to 

modify routing tables at any time 

without notice. 

Although the current rule language for 

Exchange routing strategies describes 

the available variations of strategies in 

general terms, the Exchange believes 

that understanding of these strategies 

would be enhanced by describing the 

different versions as separately named 

routing strategies. 

Below is a description of the various 

routing strategies proposed pursuant to 

new paragraph (a)(2) of Rule 21.9. 

• CYCLE. CYCLE is a routing strategy 

offered by the Exchange under which an 

order checks the System for available 

shares and then is sent sequentially to 

destinations on the System routing table 

for the full remaining size of such order. 

• Parallel D. Parallel D is a routing 

strategy offered by the Exchange under 

which an order checks the System for 

available shares and then is sent to 

destinations on the System routing 

table. The System may route to multiple 

destinations at a single price level 

simultaneously through Parallel D 

routing. 

• Parallel 2D. Parallel 2D is a routing 

strategy offered by the Exchange under 

which an order checks the System for 

available shares and then is sent to 

destinations on the System routing 

table. The System may route to multiple 

destinations and at multiple price levels 

simultaneously through Parallel 2D 

routing. 

• Parallel T. Parallel T is a routing 

strategy offered by the Exchange under 

which an order checks the System for 

available displayed shares and then is 

sent only to Protected Quotations and 

only for displayed size. The System may 

route to multiple destinations and at 

multiple price levels simultaneously 

through Parallel T routing. 

• ‘‘Destination Specific Orders’’ and 

‘‘Directed ISOs’’ are routed orders 

described in Rule 21.1. 

In addition to the changes described 

above, the Exchange is proposing 

additional modifications to paragraph 

(a)(1) of Rule 21.9 to further align Rule 

21.9 with the corollary routing rule 

applicable to the Exchange’s equity 

securities platform. 

2. Statutory Basis 

The rule change proposed in this 

submission is consistent with the 

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64388 Federal Register / Vol. 75, No. 201 / Tuesday, October 19, 2010 / Notices 

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

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(6). 

9 17 CFR 240.19b–4(f)(6)(iii). 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 Exchange has satisfied this 

requirement. 

10 Id. 

11See SR–BATS–2010–027, Item7. 

12See SR–BATS–2010–027, Item7 and 8. See also 

BATS Rule 11.13 and The NASDAQ Stock Market 

LLC Rule 4758. 

13For the 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). 14 17 CFR 200.30–3(a)(12). 

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.5

Specifically, the proposed change is 

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

Act,6 because 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, 

and to remove impediments to, and 

perfect the mechanism of, a free and 

open market and a national market 

system. The proposed change to provide 

additional clarity and specificity to the 

Exchange’s Rules regarding routing 

strategies further enhances transparency 

with respect to Exchange routing 

offerings. Furthermore, the Exchange 

believes that the routing strategies that 

it offers provide market participants 

with greater flexibility in routing orders 

without developing complicated order 

routing strategies on their own. Finally, 

many of the Exchange’s Members that 

trade options on or through BATS 

Options also actively trade on the 

Exchange’s equity securities platform. 

The Exchange believes that aligning the 

rules between its options and equities 

platform will help to alleviate potential 

confusion for such Members. 

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, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 7 and Rule 19b– 

4(f)(6)(iii) thereunder.8

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing.9 However, Rule 19b– 

4(f)(6)(iii) 10 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 requested that the 

Commission waive the 30-day operative 

delay. The Exchange believes that its 

routing strategies benefit market 

participants and their customers by 

allowing them greater flexibility in their 

efforts to fill orders and minimize 

trading costs.11 In addition, the 

Exchange notes that the proposal is 

consistent with the Exchange’s existing 

equities routing rule as well as the 

existing rules of another national 

securities exchange.12 The Commission 

believes that waiving the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest and hereby designates the 

proposal operative upon filing.13

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

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

No. SR–BATS–2010–027 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 No. 

SR–BATS–2010–027. 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 BATS. 

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 No. 

SR–BATS–2010–027 and should be 

submitted on or before November 9, 

2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26209 Filed 10–18–10; 8:45 am] 

BILLING CODE 8011–01–P 

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