Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Notices 64767 

21See paragraph 2 of the proposed 17d–2 Plan. 

22See paragraph 6 of the proposed 17d–2 Plan. 

23See paragraph 2 of the proposed 17d–2 Plan. 

24See paragraph 3 of the proposed 17d–2 Plan. 

25The Commission also notes that the addition to 

or deletion from the Certification of any federal 

securities laws, rules, and regulations for which 

FINRA would bear responsibility under the Plan for 

examining, and enforcing compliance by, Dual 

Members, also would constitute an amendment to 

the Plan. 

26See paragraph 12 of the proposed 17d–2 Plan. 

27The Commission notes that paragraph 12 of the 

Plan reflects the fact that FINRA’s responsibilities 

under the Plan will continue in effect until the 

Commission approves any termination of the Plan. 

28 17 CFR 200.30–3(a)(34). 

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). 

Markets, Inc.21 Apparent violations of 

any BYX rules by any broker-dealer 

subsidiary of BATS Global Markets, Inc. 

will be processed by, and enforcement 

proceedings in respect thereto will be 

conducted by, FINRA.22 The effect of 

these provisions is that regulatory 

oversight and enforcement 

responsibilities for any broker-dealer 

subsidiary of BATS Global Markets, 

Inc., which is the parent company of 

BYX, will be vested with FINRA. These 

provisions should help avoid any 

potential conflicts of interest that could 

arise if BYX was primarily responsible 

for regulating any affiliated brokerdealer. 

According to the Plan, BYX will 

review the Certification at least 

annually, or more frequently if required 

by changes in either the rules of BYX or 

FINRA, and, if necessary, submit to 

FINRA an updated list of Common 

Rules to add BYX rules not included on 

the then-current list of Common Rules 

that are substantially similar to FINRA 

rules; delete BYX rules included in the 

then-current list of Common Rules that 

are no longer substantially similar to 

FINRA rules; and confirm that the 

remaining rules on the list of Common 

Rules continue to be BYX rules that are 

substantially similar to FINRA rules.23

FINRA will then confirm in writing 

whether the rules listed in any updated 

list are Common Rules as defined in the 

Plan. Under the Plan, BYX will also 

provide FINRA with a current list of 

Dual Members and shall update the list 

no less frequently than once each 

quarter.24

The Commission is hereby declaring 

effective a plan that, among other 

things, allocates regulatory 

responsibility to FINRA for the 

oversight and enforcement of all BYX 

rules that are substantially similar to the 

rules of FINRA for Dual Members of 

BYX and FINRA. Therefore, 

modifications to the Certification need 

not be filed with the Commission as an 

amendment to the Plan, provided that 

the Parties are only adding to, deleting 

from, or confirming changes to BYX 

rules in the Certification in conformance 

with the definition of Common Rules 

provided in the Plan. However, should 

the Parties decide to add a BYX rule to 

the Certification that is not substantially 

similar to a FINRA rule; delete a BYX 

rule from the Certification that is 

substantially similar to a FINRA rule; or 

leave on the Certification a BYX rule 

that is no longer substantially similar to 

a FINRA rule, then such a change would 

constitute an amendment to the Plan, 

which must be filed with the 

Commission pursuant to Rule 17d–2 

under the Act and noticed for public 

comment.25

The Plan also permits BYX and 

FINRA to terminate the Plan, subject to 

notice.26 The Commission notes, 

however, that while the Plan permits 

the Parties to terminate the Plan, the 

Parties cannot by themselves reallocate 

the regulatory responsibilities set forth 

in the Plan, since Rule 17d–2 under the 

Act requires that any allocation or reallocation of regulatory responsibilities 

be filed with the Commission.27

IV. Conclusion 

This Order gives effect to the Plan 

filed with the Commission in File No. 

4–613. The Parties shall notify all 

members affected by the Plan of their 

rights and obligations under the Plan. 

It is therefore ordered, pursuant to 

Section 17(d) of the Act, that the Plan 

in File No. 4–613, between FINRA and 

BYX, filed pursuant to Rule 17d–2 

under the Act, is approved and declared 

effective. 

It is therefore ordered that BYX is 

relieved of those responsibilities 

allocated to FINRA under the Plan in 

File No. 4–613. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26337 Filed 10–19–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63097; File No. SR–BYX– 

2010–002] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing of 

Proposed Rule Change To Amend 

BATS Y-Exchange Rules To Conform 

to the Current Rules of BATS 

Exchange 

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 Y-Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’) 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 

BYX Rules 11.9, 11.13, 11.17, and 11.18 

in order to bring BYX Rules up to date 

with recent changes that have been 

made to the rules of the Exchange’s 

affiliate, BATS Exchange, Inc. (‘‘BATS 

Exchange’’). 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 


emcdonald on DSK2BSOYB1PROD with NOTICES
64768 Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Notices 

5 15 U.S.C. 78f. 

6See Securities Exchange Act Release No. 34– 

62716 (August 13, 2010), 75 FR 51295 (August 19, 

2010) (order approving application of BATS Y– 

Exchange, Inc. for registration as a national 

securities exchange). 

7Securities Exchange Act Release No. 62102 (May 

13, 2010), 75 FR 28670 (May 21, 2010) (SR–BATS– 

2010–11). 

8Securities Exchange Act Release No. 61883 

(April 9, 2010), 75 FR 20418 (April 19, 2010) (SR– 

BATS–2010–007). 

9Securities Exchange Act Release No. 62886 

(September 10, 2010), 75 FR 56613 (September 16, 

2010) (SR–BATS–2010–016). 

10Securities Exchange Act Release No. 62884 

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

2010) (SR–BATS–2010–018). 

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

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

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 

BYX Rules 11.9, 11.13, 11.17, and 11.18 

in order to bring BYX Rules up to date 

with the changes that were made to the 

rules of BATS Exchange while BYX’s 

Form 1 Application to register as a 

national security exchange was pending 

approval. 

Background: 

BYX plans to commence operations as 

a national securities exchange registered 

under Section 6 of the Act 5 on October 

15, 2010. As described more fully in 

BYX’s Form 1 application,6 the 

Exchange is an affiliate of BATS 

Exchange: both are wholly owned 

subsidiaries of BATS Global Markets, 

Inc. (‘‘BGM’’). BYX Rules, in their 

current form, were filed as part of 

Amendment No. 1 to its Form 1 on July 

1, 2010 and, at that time, were nearly 

identical to BATS Exchange Rules. In 

the time between when BYX was 

preparing to file Amendment No. 1 to its 

Form 1 and the filing of this proposed 

rule change, BATS Exchange has made 

several changes to its rule book. Despite 

the limited time frame since the 

Commission approved BYX to operate 

as a national stock exchange, BYX and 

BATS Exchange already have many 

common members and the Exchange 

anticipates that the number of common 

members will only continue to grow. In 

order to prevent confusion among 

common members, to ensure consistent 

operation of both BYX and BATS 

Exchange, and to bring the Exchange’s 

Rules in line with industry standards, 

the Exchange proposes to amend BYX 

Rules as described below. 

Match Trade Prevention: 

The Exchange proposes to make a 

minor change to its Member Match 

Trade Prevention, or MMTP, 

functionality, described in BYX Rule 

11.9(f) and to rename the functionality 

as Match Trade Prevention. Specifically, 

the Exchange is proposing to allow 

Users to opt-out of the default behavior 

of the MMTP Decrement and Cancel 

(‘‘MDC’’) modifier to automatically 

cancel two orders in their entirety when 

the resting order contains an MMTP 

modifier rather than MDC and is larger 

than the incoming order. Also, as 

mentioned above, the Exchange also 

proposes to rename the functionality as 

Match Trade Prevention (‘‘MTP’’). These 

changes would make BYX Rule 11.9(f) 

consistent with BATS Exchange Rule 

11.9(f) and are identical to changes 

made by BATS Exchange when 

modifying its MMTP rules.7

Routing Strategies: 

The Exchange also proposes to amend 

Rule 11.13(a), which describes its order 

routing processes, to modify the existing 

general description of Exchange routing 

functionality, to describe available 

routing options in greater detail, and to 

add certain new routing options. 

Specifically, the Exchange is proposing 

various modifications to its general 

routing standards, which modifications, 

the Exchange believes, will help clarify 

the rule, including adding a reference to 

the ‘‘RECYCLE Option’’ in its rule. 

Additionally, the Exchange is proposing 

to amend the Rule to include a 

definition of ‘‘System routing table,’’ in 

order to reflect the fact that the 

Exchange, like other trading venues, 

maintains different routing tables for 

different routing options and modifies 

them on a regular basis to reflect 

assessments about the destination 

markets. Finally, the Exchange proposes 

to add descriptions of the following 

routing options: CYCLE, Parallel D, 

Parallel 2D, Parallel T, DRT, and 

Destination Specific Orders. These 

changes would make BYX Rule 11.13 

consistent with BATS Exchange Rule 

11.13 and are substantively identical to 

changes made by BATS Exchange when 

modifying its execution and routing 

rules.8

Clearly Erroneous Executions: 

The Exchange also proposes to amend 

its Rule 11.17, entitled Clearly 

Erroneous Executions, to provide for 

uniform treatment: (1) Of clearly 

erroneous execution reviews in MultiStock Events involving twenty or more 

securities; and (2) in the event 

transactions occur that result in the 

issuance of an individual stock trading 

pause by the primary market and 

subsequent transactions that occur 

before the trading pause is in effect on 

the Exchange. The Exchange also 

proposes additional changes to Rule 

11.17 that reduce the ability of the 

Exchange to deviate from the objective 

standards set forth in the Rule. These 

changes would make BYX Rule 11.17 

consistent with BATS Exchange Rule 

11.17 and are identical to changes made 

by BATS Exchange when modifying its 

clearly erroneous executions rules.9

Individual Stock Trading Pause: 

The Exchange also proposes to amend 

its Rule 11.18, which describes BYX’s 

procedures for trading halts due to 

extraordinary market volatility, on a 

pilot basis so that the Exchange may, 

from time to time, pause trading in an 

individual stock when the primary 

listing market for such stock issues a 

trading pause in any of the securities 

covered by the pilot. The Exchange is 

proposing the rule change in order to 

recognize what is now a uniform 

market-wide trading pause standards for 

individual securities in the S&P 500® 

Index, the Russell 1000® Index and 

specified Exchange Trade Products that 

experience rapid price movement. 

These changes would make BYX Rule 

11.18 consistent with BATS Exchange 

Rule 11.18 and are identical to changes 

made by BATS Exchange when 

modifying its trading halt rule.10

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.11 In particular, the proposed 

changes are consistent with Section 

6(b)(5) of the Act,12 because they 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. 

Specifically, the Exchange believes that 

although BYX Rules may, in certain 

instances, intentionally differ from 

BATS Exchange rules, the proposed 

changes will promote uniformity with 

BATS Exchange with respect to rules 

that are intended to be identical but 

were difficult to modify until BYX’s 

Form 1 application had been approved. 

The Exchange believes that it will 

reduce the potential for confusion by its 

members that are also members of BATS 

Exchange if it commences operations 

with only those differences between 

BYX and BATS Exchange rules that are 

intentional. Furthermore, certain of the 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 202 / Wednesday, October 20, 2010 / Notices 64769 

13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the self-regulatory organization 

to 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. 

15For 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). 

16The text of the proposed rule change is 

available on the Commission’s Web site at http:// 

www.sec.gov/. 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

proposed changes will align the 

Exchange’s rules with rules of other 

market centers that were recently 

amended to address the type of sudden 

price declines that the market 

experienced on the afternoon of May 6, 

2010. 

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 the public 

interest, it has become effective 

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

Act 13 and Rule 19b–4(f)(6) 

thereunder.14

The Exchange has requested that the 

Commission waive the 30-day operative 

delay to permit the Exchange to 

commence operations as a national 

securities exchange with rules 

substantively identical to the equity 

trading rules of BATS Exchange. The 

Commission finds that waiver of the 

operative delay is consistent with the 

protection of investors and the public 

interest because such waiver will align 

the Exchange’s rules with recently 

amended rules of BATS Exchange. 

Therefore, the Commission designates 

the proposal operative upon 

commencement of Exchange operation, 

which the Exchange anticipates will be 

October 15, 2010.15

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 proposal 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–BYX–2010–002 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–BYX–2010–002. 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,16 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 changes 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. Copies of such 

filing will also 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 No. SR–BYX–2010– 

002 and should be submitted on or 

before November 10, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–26335 Filed 10–19–10; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63101; File No. SR– 

NASDAQ–2010–130] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Regarding 

Fees for the Clearly Erroneous Module 

October 14, 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 October 

7, 2010, The NASDAQ Stock Market 

LLC (‘‘NASDAQ’’), filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by NASDAQ. 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 the Substance 

of the Proposed Rule Change 

NASDAQ proposes to establish fees 

for the Clearly Erroneous Module. The 

text of the proposed rule change is 

below. Proposed new language is 

underlined. 

7024. Clearly Erroneous Module 

[Reserved] 

The Clearly Erroneous Module, which 

provides real-time clearly erroneous 

surveillance alerts and reports, is 

available to subscribers for a fee of $400 

per MPID, per month for the first 15 

MPIDs subscribed, and for a fee of $100 

per MPID, per month for each MPID 

subscribed in excess of 15. 

* * * * * 


emcdonald on DSK2BSOYB1PROD with NOTICES