Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 62979 

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

16 17 CFR 240.19b–4(f). 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange. A Member will 

have the status of a ‘‘member’’ of the Exchange as 

that term is defined in Section 3(a)(3) of the Act. 

Membership may be granted to a sole proprietor, 

partnership, corporation, limited liability company 

or other organization which is a registered broker 

or dealer pursuant to Section 15 of the Act, and 

which has been approved by the Exchange.’’ See 

Exchange Rule 1.5(n). 

4Rule 600(b)(78) of Regulation NMS, 17 CFR 

242.600(b)(78), defines a ‘‘Trading Center’’ as ‘‘a 

national securities exchange or national securities 

association that operates an SRO trading facility, an 

alternative trading system, an exchange market 

maker, an OTC market maker, or any other broker 

or dealer that executes orders internally by trading 

as principal or crossing orders as agent.’’ See also 

Exchange Rule 2.11(a). 

5See EDGA Rules 11.12(d)(3) and (e); EDGX 

Rules 11.12(d)(3) and (e). See also Securities 

Exchange Act Release Nos. 71061 (December 12, 

2013), 78 FR 76685 (December 18, 2013) (SR– 

EDGA–2013–36) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change To Amend 

EDGX Rule 11.12, Limitations of Liability); and 

71062 (December 12, 2013), 78 FR 76693 (December 

18, 2013) (SR–EDGX–2013–45) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

To Amend EDGX Rule 11.12, Limitations of 

Liability). The Exchange notes that proposed Rule 

11.16(g)(4) refers the liability limits under BATS 

Rule 11.16(d)(1)–(3), which differ from the existing 

EDGA and EDGX monthly liability limit of $500,00 

referenced under EDGA and EDGX Rules 11.12(e)(4) 

and set forth under EDGA and EDGX Rules 

11.12(d)(1). The Exchange understands that both 

EDGA and EDGX intend to submit a proposed rule 

change to harmonize its liability limits with those 

of BATS and BYX. 

6 17 CFR 240.19b–4(f)(6)(iii). 

of the Act 15 and paragraph (f) of Rule 

19b–4 16 thereunder. 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 email to rule-comments@

sec.gov. Please include File No. SR– 

NSCC–2014–09 on the subject line. 

Paper Comments 

• Send in triplicate to Secretary, 

Securities and Exchange Commission, 

100 F Street NE., Washington, DC 

20549–1090. 

All submissions should refer to File No. 

SR–NSCC–2014–09. 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 the 

filing also will be available for 

inspection and copying at the principal 

office of NSCC and on NSCC’s Web site 

at (http://www.dtcc.com/legal/sec-rulefilings.aspx). 

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–NSCC–2014–09 and should be 

submitted on or before November 12, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24946 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73357; File No. SR–BYX– 

2014–027] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 11.16 of 

BATS Y-Exchange, Inc. 

October 15, 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 October 

7, 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 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 proposed rule 

change to amend paragraph (f) of Rule 

11.16 to provide Members 3 with 

additional time within which to submit 

a written claim for compensation for 

‘‘losses resulting directly from the 

malfunction of the Exchange’s physical 

equipment, devices and/or 

programming or the negligent acts or 

omissions of its employees’’ (‘‘Exchange 

Systems Issues’’). In addition, the 

Exchange proposes to add a new 

paragraph (g) to Rule 11.16 to permit the 

Exchange, subject to certain conditions 

and limitations, to compensate Members 

for certain losses incurred in connection 

with orders or portions of orders routed 

by the Exchange through its affiliated 

routing broker-dealer, BATS Trading, 

Inc. (‘‘BATS Trading’’), to Trading 

Centers 4 where such losses are claimed 

by the Member to have resulted directly 

from a malfunction of the physical 

equipment, devices and/or 

programming, or the negligent acts or 

omissions of the employees, of such 

Trading Centers (‘‘Trading Center 

Systems Issue’’). 

The proposed rule change is 

substantially similar to the existing 

functionality on EDGX Exchange, Inc. 

(‘‘EDGX’’) and EDGA Exchange, Inc. 

(‘‘EDGA’’).5 The Exchange has 

designated the proposed rule change as 

non-controversial and provided the 

Commission with the notice required by 

Rule 19b–4(f)(6)(iii) under the Act.6

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 

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7See Securities Exchange Act Release No. 71375 

(January 23, 2014), 79 FR 4771 (January 29, 2014) 

(SR–BATS–2013–059; SR–BYX–2013–039). 

8The Exchange understands that BZX is to file a 

proposed rule change with the Commission to 

adopt similar requirements. 

9Regular trading hours for days when the markets 

close early are typically 9:30 a.m. to 1 p.m. Eastern 

Time on the day after Thanksgiving and on 

Christmas Eve, unless Christmas Eve happens to fall 

on a weekend. See, e.g., BATS Exchange Trading 

Hours available at http://batstrading.com/support/ 

hours/. 

10See supra note 5. 

11See supra note 5. 

12BATS Trading is considered a facility of the 

Exchange, and, therefore, claims for compensation 

due to an Exchange Systems Issue experienced by 

BATS Trading must be submitted in accordance 

with Exchange Rule 11.16(d). 

13Members receive reports from the Exchange 

shortly after a trade is consummated indicating 

whether their order, or a portion thereof, was 

executed at a Trading Center. The report will 

indicate the size and price of the execution on the 

Trading Center. 

14See Nasdaq Stock Market LLC Rule 4626 

(requiring claims for compensation to be submitted 

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 11.16 to: (i) Amend paragraph (f) 

to provide Members with additional 

time within which to submit a written 

claim for compensation for Exchange 

Systems Issues; and (ii) add a new 

paragraph (g) permitting the Exchange, 

subject to certain conditions and 

limitations, to compensate Members for 

certain losses incurred in connection 

with orders or portions of orders routed 

by the Exchange through BATS Trading 

to Trading Centers where such losses 

are claimed by the Member to have 

resulted directly from a Trading Center 

Systems Issue. 

Earlier this year, the Exchange and its 

affiliate BATS Exchange, Inc. (‘‘BZX’’) 

received approval to effect a merger (the 

‘‘Merger’’) of the Exchange’s parent 

company, BATS Global Markets, Inc., 

with Direct Edge Holdings LLC, the 

indirect parent of EDGX and EDGA 

(together with BZX, BYX, EDGA and 

EDGX, the ‘‘BGM Affiliated 

Exchanges’’).7 In the context of the 

Merger, the BGM Affiliated Exchanges 

are working to align certain rules, 

retaining only intended differences 

between the BGM Affiliated Exchanges. 

Thus, the proposal set forth below is 

intended to align the requirements for 

Member reimbursements with that of 

EDGX and EDGA in order to provide 

consistent requirement for users of the 

BGM Affiliated Exchanges.8

Extension of Deadline To Submit Claims 

Rule 11.16 currently states that, 

except as provided in subsection (d) of 

the Rule, the Exchange and its affiliates 

shall not be liable for any losses, 

damages, or other claims arising out of 

the Exchange or its use. Exchange Rule 

11.16(d) provides a limited exception to 

its general limitation of liability that 

allows for the payment of compensation 

to Members for Exchange Systems 

Issues, subject to certain conditions. 

Subsection (d)(1) thru (3) of Rule 11.16 

sets forth the aggregate limits of all 

claims made by market participants 

related to the use of the Exchange. 

Currently, Rule 11.16(f) requires 

Members to submit claims for 

compensation to the Exchange by the 

opening of trading on the business day 

following the day on which the 

Member’s use of the Exchange gave rise 

to the claim. To be consistent with 

EDGX and EDGA, the Exchange 

proposes to extend the deadline to 

submit a claim to no later than 4:00 p.m. 

Eastern Time, or 1 p.m. in the event of 

an early market close,9 on the second 

business day following the day on 

which the Member’s use of the 

Exchange gave rise to the claim. The 

Exchange believes that such expansion 

of time is reasonable given that 

Members often do not have all the 

necessary information to substantiate all 

facts bearing on the accuracy and 

completeness of a claim within the 

required current timeframe under Rule 

11.16(f). The expansion of time to 

submit compensation claims should, 

therefore, increase the likelihood that 

Members will be able to submit claims 

to the Exchange in a timely manner. In 

addition, the proposed extended 

deadline is identical to that contained in 

EDGX Rule 11.12(d)(3) and EDGA Rule 

11.12(d)(3).10

Reimbursement for Losses Sustained at 

Trading Centers 

The Exchange also proposes to amend 

Exchange Rule 11.16 to add a new 

paragraph (g) that would authorize the 

Exchange, subject to express conditions 

and limitations, to compensate Members 

for losses relating to orders routed by 

the Exchange through BATS Trading to 

Trading Centers that the Member claims 

resulted directly from a Trading Center 

Systems Issue. Proposed Rule 11.16(g) is 

substantially similar to EDGX Rule 

11.12(e) and EDGA Rule 11.12(e).11

The Exchange believes that the 

proposed rule change will provide a 

remedy, not currently available under 

Rule 11.16, to Members that experience 

losses due to Trading Center Systems 

Issues after BATS Trading routed the 

Members’ orders to a Trading Center 

that experienced such issues. The 

Exchange’s authority to compensate 

Members for losses under Rule 11.16(d) 

only covers losses incurred as a result 

of Exchange Systems Issues, and does 

not currently extend to Trading Center 

Systems Issues. Even if the Exchange, 

via BATS Trading, were to seek and 

receive compensation on behalf of a 

Member from a Trading Center relating 

to a Trading Center Systems Issue, it 

does not currently have the authority to, 

in turn, pass such compensation along 

to the affected Member. The Exchange, 

therefore, proposes to add a new 

paragraph (g) to Rule 11.16 as an 

accommodation to Members, whereby 

the Exchange, via BATS Trading, would 

employ reasonable efforts to submit 

Members’ claims for compensation on 

such Members’ behalf to a Trading 

Center, and pass along to such Members 

the full amount of compensation, if any, 

obtained by BATS Trading from such 

Trading Center.12

Under proposed Rule 11.16(g), the 

Exchange would undertake to accept 

claims for losses submitted by Members, 

which claims must contain 

representations from such Members as 

to the accuracy of the information 

contained therein and that any losses 

incurred were the direct result of a 

Trading Center Systems Issue.13 The 

Exchange would employ reasonable 

efforts to submit such claims, via BATS 

Trading, to the Trading Center in 

question. If and to the extent that BATS 

Trading were to receive compensation 

from a Trading Center in response to a 

claim submitted on behalf of a Member, 

the full amount of such compensation 

would be passed through to the 

Member. 

Proposed Rule 11.16(g)(1) would 

require that a Member seeking 

compensation for a loss due to a Trading 

Center Systems Issue must submit its 

claim to the Exchange in writing. The 

proposed rule would not include a 

specific deadline by which Members 

must submit claims for compensation. 

The Exchange notes that Trading 

Centers that are national securities 

exchanges impose different deadlines by 

which their Members must submit 

claims for compensation,14 and that 

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by 12:00 p.m. Eastern Time on T+1). See also NYSE 

Arca, Inc. Options Rule 14.2, NYSE MKT LLC Rule 

905NY, Chicago Board Options Exchange, 

Incorporated Rule 6.7 (requiring claims for 

compensation to be submitted by the open of 

regular trading hours on T+1). 

many Trading Centers that are not 

national securities exchanges either do 

not impose any deadline or otherwise 

handle requests for compensation on a 

case-by-case basis. It is, therefore, 

incumbent on, and the sole 

responsibility of, the Member to submit 

claims to the Exchange in a timely 

manner so that the Exchange may then 

forward such claim, via BATS Trading, 

in advance of any deadline required by 

that Trading Center. Upon receipt of a 

Member’s claim, the Exchange would 

only verify that a valid order was 

submitted by the Member and accepted 

and acknowledged by the Exchange, 

that the Member’s order or a portion of 

the order was routed by the Exchange 

via BATS Trading to a Trading Center, 

and that the Member represented that it 

incurred a loss as a result of a Trading 

Center Systems Issue. The Exchange 

would then use reasonable efforts to 

forward the claim, via BATS Trading, to 

such Trading Center. 

Proposed Rule 11.16(g)(2) would state 

that the Exchange would pass along to 

the Member the full amount of any 

compensation that the Exchange, via 

BATS Trading, received from a Trading 

Center as a result of a claim submitted 

on behalf of the Member. Any 

compensation paid to the Member 

would be paid solely from the 

compensation, if any, recovered from 

that Trading Center and not from any 

other source. 

Proposed Rule 11.16(g)(3) would 

account for the circumstance where 

more than one Member submitted a 

claim for loss resulting from the same 

Trading Center Systems Issue and the 

total amount of compensation received 

from the Trading Center is insufficient 

to fully satisfy the claims of all such 

Members. In such case, the Exchange 

would proportionally allocate the total 

amount received from the Trading 

Center, if any, among all such Members’ 

claims based on the proportion that 

each such claim bears to the sum of all 

such claims. The Exchange believes that 

this provision will provide for equitable 

compensation among all Members that 

submit a valid claim related to a Trading 

Center Systems Issue by ensuring that 

Members are compensated on a pro rata 

basis. 

The payment of claims submitted in 

response to an Exchange Systems Issue 

would be separate and apart from any 

pass-through of compensation paid due 

to a Trading Center Systems Issue. 

Proposed Rule 11.16(g)(4) would state 

that any pass-through of compensation 

to a Member in accordance with Rule 

11.16(g) would be unrelated to any other 

claims for compensation that are made 

due to an Exchange Systems Issues 

under Exchange Rule 11.16(d). 

Accordingly, proposed Rule 11.16(g)(4) 

would state that any compensation paid 

to Members from reimbursement 

recovered from a Trading Center would 

not count against the Exchange’s 

liability limits set forth in Rule 11.16(d), 

nor any applicable insurance 

maintained by the Exchange. 

Notwithstanding the foregoing, the 

Exchange is not proposing to undertake 

or assume any responsibility to: (1) 

Independently validate information 

submitted by a Member in connection 

with a claim for compensation for loss 

arising out of a Trading Center Systems 

Issue, other than the ticker, size and 

side of the affected orders and the 

Trading Center to which the affected 

orders were routed and alleged to have 

experienced a Trading Center Systems 

Issue; (2) ascertain or comply with any 

mandatory deadlines within which to 

submit claims for compensation to a 

Trading Center; (3) guarantee that any 

compensation will be procured from a 

Trading Center; (4) negotiate agreements 

with any Trading Centers to require 

compensation under any circumstances; 

or (5) take any additional steps with 

respect to a Trading Center Systems 

Issue if such Trading Center denies or 

fails to respond to any claim for 

compensation, in whole or in part. In 

other words, the Exchange will, upon 

receipt of a claim for compensation from 

a Member for loss resulting from a 

Trading Center Systems Issue, 

reasonably endeavor to submit such 

claim, via BATS Trading, to the 

applicable Trading Center as soon as 

reasonably practicable, and if BATS 

Trading in turns receives an 

accommodation from such Trading 

Center, such accommodation will be 

passed along to the Member via the 

Exchange. Neither the Exchange nor 

BATS Trading will be under any 

obligation to know any Trading Center’s 

rules, procedures and/or customs, to the 

extent any exist, for the submission of 

claims for compensation, nor to dispute 

a Trading Center’s denial of a claim, 

whether in whole or in part, nor to take 

any further actions with respect to such 

claim in the event that the Trading 

Center does not respond at all to the 

claim. Accordingly, with this proposed 

rule change, the Exchange is not 

assuming any additional liability to 

Members for losses claimed to have 

resulted from Trading Center Systems 

Issues; rather, it proposes to serve a 

purely ministerial role, given the 

contractual privity that exists between 

BATS Trading and Trading Centers, in 

the submission of Members’ claims for 

compensation to such Trading Centers 

on their behalf. To that end, proposed 

Rule 11.16(g)(5) would make clear that 

under no circumstances will the 

Exchanges’ inability to procure 

compensation from a Trading Center, in 

whole or in part, for whatever reason, 

give rise to a claim for compensation 

from the Exchange pursuant to 

paragraph (d) of Rule 11.16 as a 

‘‘negligent act or omission of an 

Exchange employee.’’ Proposed Rule 

11.16(g)(5) would further state that the 

Exchange would not be liable should 

the Trading Center deny such claim 

made pursuant to proposed Rule 

11.16(g), in whole or in part, for any 

reason. 

The Exchange believes that the 

provisions outlined in the above 

paragraph are equitable because any 

claim submitted under the proposed 

Rule 11.16(g) would be subject to the 

rules, procedures, and discretion of the 

Trading Center in question. It is the 

Trading Center, and not the Exchange or 

BATS Trading, that ultimately decides 

whether to approve or deny a Member’s 

claim, or even whether to act on such 

request at all. For example, the 

Exchange has no discretion over or 

responsibility for the information 

provided by the Member in its claim, 

and no discretion over or responsibility 

for whether such information is 

sufficient for the Trading Center to 

provide compensation. In addition, any 

claim submitted under the proposal 

would be subject to compensation only 

to the extent that the Trading Center 

provided such compensation to BATS 

Trading. Accordingly, because it is the 

Trading Center, and not the Exchange or 

BATS Trading, that ultimately decides 

whether a claim for compensation 

would be granted, the Exchange believes 

the proposal is fair and just in limiting 

the Exchange’s liability in the event a 

Trading Center determines, for any 

reason, to deny a claim, in whole or in 

part, or even not to respond to such 

claim. 

Implementation Date 

The Exchange intends to implement 

the proposed rule changes as soon as 

practicable and will announce its 

availability via a trading notice to be 

posted on the Exchange’s Web site. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

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

16 15 U.S.C. 78f(b)(5). 

17See supra note 5. 

18See supra note 5. 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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. 

Section 6(b) of the Act 15 and furthers 

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

Act,16 in that it is designed 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. In addition, the Exchange 

believes that the proposed rule change 

is not designed to permit unfair 

discrimination between customers, 

issuers, brokers or dealers. The 

proposed rule change is substantially 

similar to the existing rules of EDGX 

and EDGA.17 The proposed rule change 

is intended to add certain requirements 

for Member reimbursements currently 

offered by EDGA and EDGX in order to 

provide consistent rules across the BGM 

Affiliated Exchanges. Consistent rules, 

in turn, will simplify the regulatory 

requirements for Members of the 

Exchange that are also participants on 

EDGA and EDGX. The proposed rule 

change would provide greater 

harmonization between Exchange and 

EDGX and EDGA rules of similar 

purpose, resulting in greater uniformity 

and less burdensome and more efficient 

regulatory compliance. As such, the 

proposed rule change would foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities and would 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

Extension of Deadline To Submit Claims 

Extending the deadline by which 

claims for compensation are submitted 

to the Exchange is designed to increase 

the likelihood that Members will be able 

to submit claims in a timely manner. 

The Exchange believes that such 

expansion of time is reasonable given 

that Members often do not have all the 

necessary information to substantiate all 

facts bearing on the accuracy and 

completeness of a claim within the 

required current timeframe under Rule 

11.16(f). Therefore, the Exchange 

believes the proposed rule change is 

equitable and will promote fairness in 

the market place by providing Members 

increased time to submit claims that 

result from an Exchange Systems Issue. 

Reimbursement for Losses Sustained at 

Other Trading Centers 

Like EDGX Rule 11.12(e) and EDGA 

Rule 11.12(e),18 proposed Rule 11.16(g) 

would enable the Exchange to pass 

through to Members any compensation 

that the Exchange is able to procure, via 

BATS Trading, from a Trading Center 

for losses claimed by Members to have 

resulted from a Trading Center Systems 

Issue. The proposal specifies a 

standardized method for Members to 

submit claims for compensation from a 

Trading Center, and for the Exchange to 

pass through to its Members any such 

compensation obtained, if and to the 

extent the Exchange, via BATS Trading, 

is able to obtain such compensation 

from the Trading Center. Furthermore, 

any compensation obtained by the 

Exchange from a Trading Center would 

be passed on to the Member who 

requested such reimbursement. If the 

amount received by the Exchange from 

the Trading Center was insufficient to 

satisfy all claims, it would be allocated 

among the claimants proportionally 

based on the percentage that each 

claimant’s claim in relation to the sum 

of all claims received by the Exchange. 

In addition, the proposed pro-rata 

allocation methodology that the 

Exchange would employ would provide 

for equitable compensation among all 

Members who submit a claim related to 

a Trading Center Systems Issue and 

deter the risk of preferential treatment of 

certain Members by the Exchange. 

Therefore, the Exchange believes that 

the proposed rule change would protect 

investors and the public interest by 

potentially providing Members with a 

remedy not currently available to them 

to recover for losses incurred as a result 

of Trading Center Systems Issues, which 

generally arise from factors unrelated to 

their trading activities. 

(B) Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change would not 

impose any burden on competition. The 

proposed rule change is designed to 

promote fairness in the marketplace by 

increasing the time within which a 

Member is to submit claims for 

Exchange System Issues and to be 

compensated for losses that result from 

Trading Center Systems Issues. The 

Exchange believes that the proposed 

rule changes will not burden 

intramarket competition because all 

Members would be subject to the same 

deadline to submit a claim for Exchange 

Systems Issues and be able to submit 

claims for reimbursement for certain 

losses incurred due to Trading Center 

System Issues. The proposed rule 

change is not designed to address any 

competitive issues but rather is 

designed to provide greater 

harmonization among Exchange and 

EDGA and EDGX rules of similar 

purpose, resulting in less burdensome 

and more efficient regulatory 

compliance for common members of the 

BGM Affiliated Exchanges. 

(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 after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

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

of the Act 19 and Rule 19b–4(f)(6) 20

thereunder. 

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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

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 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 email to rule-comments@

sec.gov. Please include File No. SR– 

BYX–2014–027 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 203 / Tuesday, October 21, 2014 / Notices 62983 

21 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities and Exchange Release No. 55156 

(January 23, 2007), 72 FR 4759 (January 23, 2007) 

(SR–NYSEArca–2006–73). 

5See Securities and Exchange Release No. 61977 

(April 23, 2010), 75 FR 22884 (April 30, 2010) (SR– 

NYSEArca–2010–30). See also OLPP, available at, 

http://www.theocc.com/clearing/industry-services/ 

olpp.jsp. 

6Rule 6.4A codified Amendment No. 3 to the 

OLPP. See Securities and Exchange Release No. 

60531 (August 19, 2009) 74 FR 43173 (File No. 4– 

443). See also Rule 6.4A. 

7 Id., 74 FR at 43174. 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File No. 

SR–BYX–2014–027. 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 

a.m. and 3 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 No. SR–BYX–2014– 

027 and should be submitted on or 

before November 12, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–24944 Filed 10–20–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73362; File No. SR– 

NYSEArca–2014–117] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Modifying Its Quote 

Mitigation Plan and Amending Rule 

6.86 

October 15, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on October 

2, 2014, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. 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 

The Exchange proposes to modify its 

quote mitigation plan and to amend 

Rule 6.86 (Firm Quotes). The text of the 

proposed rule change is available on the 

Exchange’s Web site at www.nyse.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 

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 is proposing to modify 

its quote mitigation plan and to amend 

Rule 6.86 (Firm Quotes). As discussed 

below, the Exchange believes the 

modified quote mitigation plan will 

adequately accommodate the number of 

quotations sent to the Exchange and the 

message traffic that the Exchange sends 

to the Options Price Reporting 

Authority (‘‘OPRA’’). 

Rule 6.86 

In connection with the adoption of 

the Penny Pilot Program, the Exchange 

adopted a quote mitigation plan 

designed to reduce the number of 

quotations generated by the Exchange 

for all options traded on the Exchange, 

not just issues included in the Penny 

Pilot Program.4 The current plan 

reduces the number of messages the 

Exchange sends to OPRA by only 

submitting quote messages for ‘‘active’’ 

series. Commentary .03 to Rule 6.86 

defines active series as: (i) The series 

has traded on any options exchange in 

the previous 14 calendar days; or, (ii) 

the series is solely listed on the 

Exchange; or (iii) the series has been 

trading ten days or less, or; (iv) the 

Exchange has an order in the series. 

Alternatively, the Exchange may define 

a series as active on an intraday basis if: 

(i) The series trades at any options 

exchange; (ii) the Exchange receives an 

order in the series; or (iii) the Exchange 

receives a request for quote from a 

Customer in that series. 

The Exchange believes it no longer 

needs the quote mitigation provided by 

Commentary .03 to Rule 6.86 because 

rules adopted since Commentary .03 to 

Rule 6.86 provide sufficient quote 

mitigation. 

Current Market Structure and Controls 

on the Exchange 

In 2010, the Exchange incorporated 

select provisions of the Options Listing 

Procedures Plan (‘‘OLPP’’) in Rule 6.4A 

as a quote mitigation strategy.5

The OLPP is a national market system 

plan that, among other things, sets forth 

procedures governing the listing of new 

options series. From the OLPP, the 

Exchange incorporated in Rule 6.4A, 

‘‘applied uniform standards to the range 

of options series exercise (or strike) 

prices available for trading on the 

[Exchange] as a quote mitigation 

strategy.’’ 6 In approving the OLPP 

provisions subsequently incorporated in 

Rule 6.4A, the Commission indicated 

that ‘‘adopting uniform standards to the 

range of options series exercise (or 

strike) prices available for trading on the 

[Exchange] should reduce the number of 

option series available for trading, and 

thus should reduce increases in the 

options quote message traffic because 

market participants will not be 

submitting quotes in those series.’’ 7

One year after adopting select 

provisions of the OLPP, the Exchange 

refined the quoting obligations 

mstockstill on DSK4VPTVN1PROD with NOTICES