Federal Register / Vol. 79, No. 196 / Thursday, October 9, 2014 / Notices 61117 

6We also note that timely compliance with Rule 

10b–17(b)(1)(v)(a) and (b) would be impractical in 

light of the nature of the Fund. This is because it 

is not possible for the Fund to accurately project ten 

days in advance what dividend, if any, would be 

paid on a particular record date. 7 17 CFR 200.30–3(a)(6) and (9). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6)(iii). 

5As defined in Rule 1.5(e). 

Shares and the Fund’s NAV is expected, 

the Commission finds that it is 

appropriate in the public interest and 

consistent with the protection of 

investors to grant the Trust an 

exemption under paragraph (e) of Rule 

102 of Regulation M with respect to the 

Fund, thus permitting the Fund to 

redeem Shares of the Fund during the 

continuous offering of such Shares. 

Rule 10b–17 

Rule 10b–17, with certain exceptions, 

requires an issuer of a class of publicly 

traded securities to give notice of certain 

specified actions (for example, a 

dividend distribution) relating to such 

class of securities in accordance with 

Rule 10b–17(b). Based on the 

representations and facts in the Letter, 

and subject to the conditions below, we 

find that it is appropriate in the public 

interest, and consistent with the 

protection of investors to grant the Trust 

a conditional exemption from Rule 10b– 

17 because market participants will 

receive timely notification of the 

existence and timing of a pending 

distribution, and thus the concerns that 

the Commission raised in adopting Rule 

10b–17 will not be implicated.6

Conclusion 

It is hereby ordered, pursuant to Rule 

101(d) of Regulation M, that the Trust, 

based on the representations and facts 

presented in the Letter, is exempt from 

the requirements of Rule 101 with 

respect to the Fund, thus permitting 

persons who may be deemed to be 

participating in a distribution of Shares 

of the Fund to bid for or purchase such 

Shares during their participation in 

such distribution. 

It is further ordered, pursuant to Rule 

102(e) of Regulation M, that the Trust, 

based on the representations and the 

facts presented in the Letter, is exempt 

from the requirements of Rule 102 with 

respect to the Fund, thus permitting the 

Fund to redeem Shares of the Fund 

during the continuous offering of such 

Shares. 

It is further ordered, pursuant to Rule 

10b–17(b)(2), that the Trust, based on 

the representations and the facts 

presented in the Letter and subject to 

the conditions below, is exempt from 

the requirements of Rule 10b–17 with 

respect to transactions in the shares of 

the Fund. 

This exemptive relief is subject to the 

following conditions: 

• The Trust will comply with Rule 

10b–17 except for Rule 10b– 

17(b)(1)(v)(a) and (b); and 

• The Trust will provide the 

information required by Rule 10b– 

17(b)(1)(v)(a) and (b) to the Exchange as 

soon as practicable before trading begins 

on the ex-dividend date, but in no event 

later than the time when the Exchange 

last accepts information relating to 

distributions on the day before the exdividend date. 

This exemptive relief is subject to 

modification or revocation at any time 

the Commission determines that such 

action is necessary or appropriate in 

furtherance of the purposes of the 

Exchange Act. This exemption is based 

on the facts presented and the 

representations made in the Letter. Any 

different facts or conditions may require 

a different response. In the event that 

any material change occurs in the facts 

or representations in the Letter, 

transactions in Shares of the Fund must 

be discontinued, pending presentation 

of the facts for our consideration. In 

addition, persons relying on this 

exemption are directed to the anti-fraud 

and anti-manipulation provisions of the 

Exchange Act, particularly Sections 9(a), 

10(b), and Rule 10b–5 thereunder. 

Responsibility for compliance with 

these and any other applicable 

provisions of the federal securities laws 

must rest with the persons relying on 

this exemption. This order should not 

be considered a view with respect to 

any other question that the proposed 

transactions may raise, including, but 

not limited to the adequacy of the 

disclosure concerning, and the 

applicability of other federal or state 

laws to, the proposed transactions. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24101 Filed 10–8–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73295; File No. SR–BYX– 

2014–026] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Rule 11.13 of BATS YExchange, Inc. 

October 3, 2014. 

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 

September 25, 2014, 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 ‘‘non-controversial’’ 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 filed a proposal to 

amend Rule 11.13(a) regarding the 

handling of orders that have been 

posted to the Exchange’s order book 

(‘‘BATS Book’’) 5 that are subsequently 

locked or crossed by other Trading 

Centers. 

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 purpose of the proposed rule 

change is to provide Users of the 

Exchange with additional options with 

respect to the Exchange’s method of 

processing the unfilled balance of a 

mstockstill on DSK4VPTVN1PROD with NOTICES

61118 Federal Register / Vol. 79, No. 196 / Thursday, October 9, 2014 / Notices 

6Market orders are also routed away, pursuant to 

Rule 11.13(a)(2)(A), however the Exchange is not 

proposing any changes to the treatment of routed 

market orders at this time. 

7See Rule 11.13(a)(2). 

8As defined in Rule 1.5(aa), the System is the 

electronic communications and trading facility 

designated by the Board through which securities 

orders of Users are consolidated for ranking, 

execution and, when applicable, routing away. 

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

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

11 15 U.S.C. 78k–1(a)(1). 

routable limit order that is posted to the 

BATS Book. 

The Exchange currently allows Users 

to submit various types of limit orders 

to the Exchange that are processed 

pursuant to Exchange Rules 11.13(a)(1) 

and 11.13(a)(2)(B), as set forth below. 

Rule 11.13(a)(1) describes the process by 

which an incoming order would execute 

against the BATS Book. To the extent an 

order has not been executed in its 

entirety against the BATS Book, Rule 

11.13(a)(2)(B) then describes the process 

of routing marketable limit orders 6 to 

one or more Trading Centers, including 

a description of how the Exchange treats 

any unfilled balance that returns to the 

Exchange following the first attempt to 

fill the order through the routing 

process. If not filled through routing, 

and based on the order instructions, the 

unfilled balance of the order may be 

posted to the BATS Book. 

Pursuant to current Exchange rules,7

to the extent the unfilled balance of an 

order has been posted to the BATS 

Book, should the order subsequently be 

locked or crossed by another accessible 

Trading Center, the System 8 shall route 

the order to the locking or crossing 

Trading Center if instructed to do so by 

the User (the ‘‘RECYCLE Option’’). The 

Exchange proposes to modify the 

RECYCLE Option as set forth below. At 

the outset, the Exchange notes that it 

proposes to re-name the RECYCLE 

Option as Re-Route instructions. 

The Exchange currently offers only 

one form of RECYCLE, namely, that an 

order will be subject to the RECYCLE 

Option if it is either locked or crossed. 

The Exchange proposes to retain this 

functionality and to name such 

functionality the Super Aggressive ReRoute instruction, which reference 

reflects the willingness of the routable 

order posted to the BATS Book to route 

to away Trading Centers and to remove 

liquidity from such Trading Centers any 

time such order is locked or crossed 

(i.e., rather than passively waiting for an 

execution on the BATS Book). The 

Exchange also proposes to add new 

optional functionality that will allow a 

User to instruct the Exchange to apply 

the Super Aggressive Re-Route 

instruction solely to routable orders 

posted to the BATS Book with 

remaining size of less than one round 

lot. 

In addition to the Super Aggressive 

Re-Route instruction described above, 

the Exchange proposes to add a second 

option, the Aggressive Re-Route 

instruction, which would subject an 

order to the routing process after being 

posted to the BATS Book only if the 

order is subsequently crossed by 

another Trading Center (rather than if 

the order is locked or crossed). 

The Exchange proposes to retain 

language making clear that unless 

otherwise specified the Re-Route 

options described above may be 

combined with any of the System 

routing options specified in paragraph 

(a)(3) of Rule 11.13. 

Examples 

Example 1—Aggressive Re-Route 

As an example of an order with an 

Aggressive Re-Route instruction, assume 

the Exchange receives an order to buy 

300 shares of a security at $10.10 per 

share. Assume further that the NBBO is 

$10.09 by $10.10 when the order is 

received, and the Exchange’s lowest 

priced offer is priced at $10.11. The 

Exchange will route the order away 

from the Exchange as a bid to buy 300 

shares at $10.10. Assume that the order 

obtains one 100 share execution through 

the routing process and then returns to 

the Exchange. The Exchange will post 

the order as a bid to buy 200 shares at 

$10.10. If displayed liquidity then 

appears at one or more Trading Centers 

priced at $10.09 or lower (i.e., crossing 

the posted bid to buy at $10.10), the 

Exchange will take the displayed bid off 

of the BATS Book and again route such 

order to the displayed liquidity at other 

Trading Centers. 

Example 2—Super Aggressive Re-Route 

As an example of an order with a 

Super Aggressive Re-Route instruction, 

assume the Exchange receives an order 

to buy 300 shares of a security at $10.10 

per share designated with such 

instruction. Assume further that the 

NBBO is $10.09 by $10.10 when the 

order is received, and the Exchange’s 

lowest priced offer is priced at $10.11. 

The Exchange will route the order away 

from the Exchange as a bid to buy 300 

shares at $10.10. Assume that the order 

obtains one 100 share execution through 

the routing process and then returns to 

the Exchange. The Exchange will post 

the order as a bid to buy 200 shares at 

$10.10. If displayed liquidity then 

appears in the marketplace priced at 

$10.10 or lower, the Exchange will take 

the displayed bid off of the BATS Book 

and again route such order to the 

displayed liquidity at other Trading 

Centers. 

Example 3—Super Aggressive Re-Route 

for Odd Lots Only 

Assuming the facts from Example 2 

above that results in a 200 share order 

posting to the BATS Book after routing 

away, if a User has elected to apply the 

Super Aggressive Re-Route instruction 

solely to routable orders posted to the 

BATS Book with remaining size of less 

than one round lot, then the posted bid 

to buy 200 shares at $10.10 would not 

route off of the BATS Book if displayed 

liquidity appeared at one or more other 

Trading Centers priced at $10.10 or 

lower. Assume, however, that the 

posted order to buy 200 shares is later 

executed on the BATS Book against an 

incoming order to sell 150 shares at 

$10.10, leaving a 50 share order to buy 

at $10.10. Such order would now be 

subject to the Super Aggressive ReRoute functionality and would route to 

away Trading Centers if locked or 

crossed. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act 9 and further the 

objectives of Section 6(b)(5) of the Act 10

because it is designed 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, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and, in 

general, to protect investors and the 

public interest. Specifically, the 

proposed changes are designed to 

provide Users with additional control 

over their orders in the context of a 

national market system where 

quotations may lock or cross orders 

posted to the BATS Book. Thus, the 

proposals are directly targeted at 

removing impediments to and perfect 

[sic] the mechanism of a free and open 

market and national market system. The 

proposed rule change also is designed to 

support the principles of Section 

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

assure fair competition among brokers 

and dealers and among exchange 

markets. 

The proposed rule changes would 

also provide Users with access to 

functionality that may result in the 

efficient execution of such orders and 

will provide additional flexibility as 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 196 / Thursday, October 9, 2014 / Notices 61119 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f)(6)(iii). As required under 

Rule 19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the 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. 

14For 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). 

15 15 U.S.C. 78s(b)(2)(B). 16 17 CFR 200.30–3(a)(12). 

well as increased functionality to the 

Exchange’s System and its Users. 

The Exchange reiterates that the 

Super Aggressive Re-Route instruction 

is currently contained in Exchange rules 

as the RECYCLE Option. The Exchange 

believes that adding an optional 

functionality that will only treat orders 

with size less than a round lot as orders 

with Super Aggressive Re-Route 

instruction is reasonable because such 

orders are not Protected Quotations 

under the Act, and thus, are more likely 

to be locked or crossed by external 

markets. Accordingly, allowing such 

orders to only apply the Super 

Aggressive Re-Route instruction will 

enhance the likelihood of their prompt 

execution. The Exchange believes that 

the proposed addition of the Aggressive 

Re-Route instruction is consistent with 

the Act as it will provide Users with 

another option that may result in the 

efficient execution of such orders and 

will provide additional flexibility as 

well as increased functionality to the 

Exchange’s System and its Users. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes that Re-Route 

functionality generally encourages 

competition by increasing the likelihood 

of executions of orders that have been 

posted to the Exchange. 

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 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 prior to 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, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 12 and Rule 19b–4(f)(6)(iii) 

thereunder.13

The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange stated that waiver 

of this requirement would allow the 

Exchange to immediately offer Exchange 

Users additionally variations of 

functionality that is already available on 

the Exchange. The Exchange also stated 

that the addition of a variation of ReRoute functionality that applies only 

when an order is crossed by an 

accessible Trading Center and the odd 

lot variation to the Super-Aggressive ReRoute instruction will benefit market 

participants and their customers by 

allowing them greater flexibility in their 

efforts to fill orders. The Commission 

believes that the waiver of the 30-day 

operative delay is consistent with the 

protection of investors and the public 

interest. Therefore, the Commission 

designates the proposed rule change to 

be operative upon filing.14

At any time within 60 days of the 

filing of such 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 15 of the Act to 

determine whether the proposed rule 

change should be approved or 

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 email to rule-comments@

sec.gov. Please include File Number SR– 

BYX–2014–026 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BYX–2014–026. This file 

number should be included on the 

subject line if email 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 

10:00 a.m. and 3:00 p.m. 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 Number SR–BYX– 

2014–026 and should be submitted on 

or before October 30, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24099 Filed 10–8–14; 8:45 am] 

BILLING CODE 8011–01–P 

mstockstill on DSK4VPTVN1PROD with NOTICES