Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 73367 

24 15 U.S.C. 78s(b)(2)(B). 

25 17 CFR 200.30–3(a)(12). 

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). 

5The term ‘‘Market Maker’’ is defined as ‘‘a 

Member that acts as a Market Maker pursuant to 

Chapter XI.’’ See Exchange Rule 1.5(l). 

6The term ‘‘UTP Derivative Security’’ is defined 

as ‘‘[a]ny UTP Security that is a ‘new derivative 

securities product’ as defined in Rule 19b–4(e) 

under the Exchange Act . . . and traded pursuant 

to Rule 19b–4(e) under the Exchange Act.’’ See 

Exchange Rule 14.11(j). 

7See Securities Exchange Act Release No. 67066 

(May 29, 2012), 77 FR 33010 (June 4, 2012) (SR– 

NYSEArca–2012–46) (Notice of Filing and 

Immediate Effectiveness of Proposed Rule Change 

Regarding the Extension of Unlisted Trading 

Privileges to New Derivative Securities Products 

That Are Listed on Another Exchange and to Make 

Other Conforming and Technical Amendments). 

The Commission also waived the 30-day operative 

delay for SR–NYSEArca–2012–46 under Rule 19b– 

4(f)(6) of the Act. Id. 

8See Securities Exchange Act Release No. 69858 

(June 25, 2013), 78 FR 39432 (July 1, 2013) (SR– 

Nasdaq–2013–085) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change [sic] Rule 

4630 to Remove a Restriction on a Member Acting 

as a Registered Market Maker in a CommodityRelated Security). 

9See supra note 7. 

10See supra note 8. 

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) 24 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 rulecomments@sec.gov. Please include File 

Number SR–BYX–2014–035 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–2014–035. 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– 

2014–035 and should be submitted on 

or before December 31, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28904 Filed 12–9–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73743; File No. SR–BATS– 

2014–057] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rule 14.11(j)(5) 

of BATS Exchange, Inc., To Remove 

the Restriction Prohibiting Market 

Makers in UTP Derivative Securities 

From Acting or Registering as a Market 

Maker in Any Reference Asset of That 

UTP Derivative Security or Any 

Derivative Instrument Based on Such 

Reference Asset 

December 4, 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 November 

21, 2014, BATS Exchange, Inc. 

(‘‘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 filed a proposal to 

amend Rule 14.11(j)(5) to harmonize its 

restrictions on Market Makers 5 in UTP 

Derivative Securities 6 with NYSE Arca, 

Inc. (‘‘NYSE Arca’’) Rule 5.1(a)(2)(v) 7

and the Nasdaq Stock Market LLC 

(‘‘Nasdaq’’) Rule 4630(e).8

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in Sections A, B, and C below, of 

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 14.11(j)(5) to harmonize its 

restrictions on Market Makers in UTP 

Derivative Securities with NYSE Arca 

Rule 5.1(a)(2)(v) 9 and Nasdaq Rule 

4630(e).10 The purpose of the proposed 

rule change is to remove the restriction 

that a Member acting as a registered 

Market Maker in a UTP Derivative 

Security on the Exchange will not act or 

mstockstill on DSK4VPTVN1PROD with NOTICES

73368 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 

11A ‘‘Reference Asset’’ is defined as one or more 

currencies, or commodities, or derivatives based on 

one or more currencies, or commodities, or is based 

on a basket or index comprised of currencies or 

commodities that a UTP Derivative Security derives 

its value from. See Exchange Rule 14.11(j)(5). 

12See supra notes 7 and 8. 

13See Exchange Rules 5.5 and 14.1(j)(5)(B). 

14 15 U.S.C. 78o(g). 

15See Securities Exchange Act Release No. 60604 

(September 1, 2009), 74 FR 46272 (September 8, 

2009) (SR–NYSEArca–2009–78). 

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

17 15 U.S.C. 78f(b)(5). 

18See supra notes 7 and 8. 

19See supra notes 7 and 8. 

register as a market maker in any 

Reference Asset 11 that a UTP Derivative 

Security derives its value from. The 

Exchange also proposes to amend a 

related cross-reference contained in 

Exchange Rule 3.21. 

Exchange Rule 14.11(j)(5) prohibits a 

Market Maker in a UTP Derivative 

Security from acting or registering as a 

market maker on another exchange in 

any Reference Asset of that UTP 

Derivative Security, or any derivative 

instrument based on a Reference Asset 

of that UTP Derivative Security 

(collectively, with Reference Assets, 

‘‘Related Instruments’’). NYSE Arca 

Rule 5.1(a)(2)(v) and Nasdaq Rule 

4630(e) recently amended their 

respective rules to permit market 

makers to trade in securities underlying 

the derivative security so long as that 

market maker discloses to NYSE Arca or 

Nasdaq all accounts within which it 

trades the underlying securities.12 As 

amended, Exchange Rule 14.11(j)(5), 

would similarly remove this 

prohibition, which states that a Market 

Maker in a UTP Derivative Security is 

prohibited from acting or registering as 

a market maker on another exchange in 

any Related Instruments. 

Similar to NYSE Arca Rule 5.1(a)(2)(v) 

and Nasdaq Rule 4630(e), amended Rule 

14.11(j)(5) would require a Member 

acting as a registered Market Maker in 

a UTP Derivative Security to file with 

the Exchange, in a manner prescribed by 

the Exchange, and to keep a current list 

identifying all accounts for trading the 

underlying physical asset or 

commodity, related futures or options 

on futures, or any other related 

derivatives, which the Member acting as 

registered Market Maker may have or 

over which it may exercise investment 

discretion. Rule 14.11(j)(5) would also 

prohibit a Member from acting as 

registered Market Maker in the UTP 

Derivative Security from trading in the 

underlying physical asset or 

commodity, related futures or options 

on futures, or any other related 

derivatives in an account in which a 

Member acting as a registered Market 

Maker, directly or indirectly, controls 

trading activities, or has a direct interest 

in the profits or losses thereof, that has 

not been reported to the Exchange. 

Exchange Rules 13 ensure that Market 

Makers in UTP Derivative Securities 

would continue to have in place 

reasonably designed policies and 

procedures to prevent the misuse of 

material non-public information with 

regard to also acting as a Market Maker 

in any Related Instruments.14 In the 

context of approving a more flexible, 

principled-based approach to 

information barriers by NYSE Arca, the 

Commission stated that, ‘‘while 

information barriers are not specifically 

required under the proposal, a [firm’s] 

business model or business activities 

may dictate that an information barrier 

or a functional separation be part of the 

appropriate set of policies and 

procedures that would be reasonably 

designed to achieve compliance with 

applicable securities law and 

regulations, and with applicable 

Exchange rules.’’ 15 Rule 14.11(j)(5)(B) 

will continue to prohibit Market Makers 

from using material non-public 

information in connection with trading 

a Related Instrument. Rule 14.11(j)(5)(B) 

will also continue to require that, in 

addition to the existing obligations 

under Exchange rules regarding the 

production of books and records, a 

Market Maker shall, upon request by the 

Exchange, make available to the 

Exchange any books, records or other 

information pertaining to any Related 

Instrument trading account or to the 

account of any registered or nonregistered employee affiliated with the 

Market Maker for which Related 

Instruments are traded. Lastly, under 

Exchange Rule 14.11(j)(6) the Exchange 

will enter into comprehensive 

surveillance sharing agreement with 

other markets that offer trading in 

Related Instruments to the same extent 

as the listing exchange’s rules require 

the listing exchange to enter into a 

comprehensive surveillance sharing 

agreement with such markets. This 

amendment does not lessen the 

protection of Members from the risks 

associated with integrated market 

making and any possible misuse of nonpublic information. 

In addition to the proposal set forth 

above, the Exchange also proposes to 

amend a related cross-reference 

contained in Exchange Rule 3.21. 

Specifically, Rule 3.21 currently refers 

to Rule 14.1(c) as the source of the 

definition for UTP Derivative Securities 

but that definition is, in fact, contained 

in Rule 14.11(j). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act 16 and furthers 

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

Act,17 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 NYSE Arca Rule 

5.1(a)(2)(v) and Nasdaq Rule 4630(e).18

In addition, the Exchange believes that 

amending Exchange Rule 14.11(j)(5) to 

permit a Member acting as a registered 

Market Maker in a UTP Derivative 

Security on the Exchange the flexibility 

to act or register as a market maker in 

any Reference Asset that a UTP 

Derivative Security derives its value 

from consistent with Commission and 

Exchange Rules will remove 

impediments to and perfect the 

mechanism of a free and open market by 

providing the same flexibility to the 

Exchange that is already available to 

NYSE Arca and Nasdaq regarding the 

market maker activities for derivativerelated Securities. Additionally, 

Exchange Rule 14.11(j)(5), as amended, 

would continue to serve to prevent 

fraudulent and manipulative acts and 

practices, as well as to protect investors 

and the public interest from concerns 

that may be associated with integrated 

market making and any possible misuse 

of non-public information. Finally, the 

Exchange believes that the correction to 

the cross-reference contained in Rule 

3.21 is consistent with the Act in that 

it will protect investors and the public 

interest by avoiding potential confusion 

with respect to Exchange Rules. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The proposed rule change would not 

impose any burden on competition. On 

the contrary, the Exchange believes that 

the proposal will promote competition 

because it is a competitive response to 

recently amended NYSE Arca and 

Nasdaq rules which permit market 

makers to trade in the reference assets 

or components underlying the 

derivative security on the same terms as 

that proposed by the Exchange.19 Thus, 

the Exchange believes this proposed 

rule change is necessary to permit fair 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 73369 

20 15 U.S.C. 78s(b)(3)(A). 

21 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. 

22See NYSE Arca Equities Rule 5.1(a)(2)(v) and 

Nasdaq Rule 4630(e). 

23For 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). 24 15 U.S.C. 78s(b)(2)(B). 

25 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

competition among national securities 

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 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 20 and Rule 19b–4(f)(6)(iii) 

thereunder.21

The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Commission believes that 

waiver of the 30-day operative delay 

period is consistent with the protection 

of investors and the public interest. The 

Commission notes that the proposal 

would allow Market Makers in a UTP 

Derivative Security on the Exchange to 

act or register as a Market Maker in any 

Related Instruments. The Commission 

believes that proposal could allow the 

Exchange to attract more Market Makers 

to the Exchange, thereby potentially 

increasing liquidity in UTP Derivative 

Securities, provide more price 

competition, and enhance the markets 

for those securities. The Commission 

further notes that the proposal is similar 

to the rules of other national securities 

exchanges.22 Therefore, the Commission 

designates the proposed rule change to 

be operative upon filing.23

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) 24 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– 

BATS–2014–057 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–BATS–2014–057. 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–BATS– 

2014–057 and should be submitted on 

or before December 31, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28905 Filed 12–9–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73744; File No. SR–BYX– 

2014–036] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Rule 11.1 of BATS 

Y-Exchange, Inc. 

December 4, 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 November 

28, 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 the Substance 

of the Proposed Rule Change 

The Exchange filed a proposal to 

amend Rule 11.1 to accept orders 

beginning at 6:00 a.m. Eastern Time. 

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 

mstockstill on DSK4VPTVN1PROD with NOTICES