Federal Register / Vol. 79, No. 247 / Wednesday, December 24, 2014 / Notices 77555 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See EDGA Rule 11.8(a)(4) and EDGX Rule 

11.8(a)(4). 

4See Securities Exchange Act Release No. 71375 

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

(SR–BATS–2013–059; SR–BYX–2013–039). 

should refer to File Number SR–BATS– 

2014–068, and should be submitted on 

or before January 14, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–30119 Filed 12–23–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73874; File No. SR–BYX– 

2014–039] 

Self-Regulatory Organizations; BATS 

Y-Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Rules 11.9(a)(2) and 

11.18(e) of BATS Y-Exchange, Inc. 

December 18, 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 December 

10, 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 11.9(a)(2), which describes 

BATS market orders, and Rule 11.18(e), 

which describes the Exchange’s 

implementation of the Limit Up-Limit 

Down Plan, as defined below. 

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 11.9(a)(2), which describes BATS 

market orders, and Rule 11.18(e), which 

describes the Exchange’s 

implementation of the Limit Up-Limit 

Down Plan, as defined below. The 

proposed change to the operation of 

BATS market orders is based on existing 

behavior of Market Orders available on 

EDGA Exchange, Inc. (‘‘EDGA’’) and 

EDGX Exchange, Inc. (‘‘EDGX’’).3

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 and EDGX, the 

‘‘BGM Affiliated Exchanges’’).4 In the 

context of the Merger, the BGM 

Affiliated Exchanges are working to 

align certain system functionality, 

retaining only intended differences 

between the BGM Affiliated Exchanges. 

Thus, the proposal set forth below is 

intended to add certain system 

functionality currently offered by EDGA 

and EDGX in order to provide a 

consistent technology offering for users 

of the BGM Affiliated Exchanges. 

Currently, BATS market orders can be 

executed on the Exchange or routed to 

other destinations but cannot be posted 

to the BATS Book. The proposed 

modification to the operation of a BATS 

Market Order would allow such orders 

to post to the BATS Book under certain 

limited circumstances to the extent such 

BATS Market Order is designated with 

a time-in-force of Day. Specifically, as 

proposed, a BATS market order that is 

not eligible for routing (i.e., BATS Only) 

and contains a time-in-force of Day will 

be cancelled if, when reaching the 

Exchange, it cannot be executed on the 

System in accordance with Rule 

11.13(a)(1) unless the reason that such 

BATS market order cannot be executed 

is because it is entered into the System 

and the NBO (NBB) is greater (less) than 

the Upper (Lower) Price Band, as such 

term is defined in the Plan to Address 

Extraordinary Market Volatility 

Pursuant to Rule 608 of Regulation NMS 

under the Act (the ‘‘Limit Up-Limit 

Down Plan’’), in which case such order 

will be posted by the System to the 

BATS Book and priced at the Upper 

(Lower) Price Band, and re-priced as set 

forth in Rule 11.18(e)(5)(B), which the 

Exchange proposes to amend as 

described below. Similarly, a BATS 

market order to sell with a time-in-force 

of Day that is marked short that cannot 

be executed because of the existence of 

a Short Sale Circuit Breaker pursuant to 

Regulation SHO will be posted by the 

System to the BATS Book subject to the 

price sliding process as set forth in Rule 

11.9(g). 

The Exchange also proposes to modify 

Rule 11.18(e)(5)(A), which describes the 

handling of BATS market orders and 

other orders that are not currently 

posted to the Exchange’s order book 

when not executable pursuant to the 

Limit Up-Limit Down Plan. The 

Exchange proposes to make clear that a 

BATS market order that cannot be 

executed within the applicable Price 

Bands will be cancelled if it contains a 

time-in-force other than Day but if it 

maintains a time-in-force of Day that 

such an order will be posted and 

displayed at the applicable Price Band 

and re-priced to remain at such Price 

Band. Specifically, the Exchange 

proposes to state that a BATS market 

order to buy (sell) with a time-in-force 

of Day that is posted to the BATS Book 

and displayed at the Upper (Lower) 

Price Band will be re-priced and 

displayed at the Upper (Lower) Price 

Band if Price Bands move such that the 

price of the resting market order to buy 

(sell) would be above (below) the Upper 

(Lower) Price Band or if the Price Bands 

move such that the order is no longer 

posted and displayed at the most 

aggressive permissible price. The 

Exchange further proposes that the 

System shall re-price such displayed 

interest to the most aggressive 

permissible price until the order is 

executed in its entirety or cancelled. 

The Exchange proposes to post to the 

BATS Book all BATS market orders 

with a time-in-force of Day in these 

circumstances (i.e., when an execution 

would otherwise occur but cannot due 

to the application of Price Bands 

pursuant to the Limit Up-Limit Down 

Plan or due to a Regulation SHO Short 

Sale Circuit Breaker), because the 

sender of a market order typically 

expects an execution when such order 

is sent. In these circumstances although 

an execution could not occur, the 

Exchange believes that Users would 

mstockstill on DSK4VPTVN1PROD with NOTICES

77556 Federal Register / Vol. 79, No. 247 / Wednesday, December 24, 2014 / Notices 

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

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

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

8 17 CFR 240.19b–4(f)(6). 

9 17 CFR 240.19b–4(f)(6). 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. 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6)(iii). 

12For 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). 

prefer to have their orders posted to the 

Exchange’s book in compliance with the 

Limit Up-Limit Down Plan and 

Regulation SHO to potentially receive a 

later execution. 

A BATS market order will default to 

a time-in-force of Day unless otherwise 

specified by a User, however, Users that 

do not want their orders posted to the 

BATS Book in these circumstances can 

choose a different time-in-force, in 

which case their order will be cancelled 

back in such circumstances. A BATS 

market order that is not eligible for 

routing with a time-in-force other than 

Day will be cancelled if, when reaching 

the Exchange, it cannot be executed on 

the System in accordance with Rule 

11.13(a)(1). Further, the Exchange 

proposes to make clear that BATS 

market orders that are designated as 

BATS Post Only are rejected. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule changes are consistent 

with section 6(b) of the Act 5 and further 

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

Act 6 because they are 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. 

The proposed rule change adds 

certain system functionality currently 

offered by EDGA and EDGX in order to 

provide a consistent technology offering 

across the BGM Affiliated Exchanges. A 

consistent technology offering, in turn, 

will simplify the technology 

implementation, changes and 

maintenance by Users of the Exchange 

that are also participants on BZX, EDGA 

and/or EDGX. The proposed rule 

changes would also provide Users with 

access to functionality that may result in 

the execution of such orders when they 

would otherwise be cancelled and will 

provide additional flexibility as well as 

increased functionality to the 

Exchange’s System and its Users. 

Therefore, the Exchange believes that 

the proposed change removes 

impediments to and perfects the 

mechanism of a free and open market 

and a national market system. 

As explained elsewhere in this 

proposal, the proposed operation of 

BATS Market Orders with a time-inforce of Day is intended to allow such 

orders to post to the BATS Book, rather 

than cancel back to the User 

unexecuted, when an execution would 

have occurred but did not because of the 

application of Limit Up-Limit Down 

Price Bands or a Regulation SHO Short 

Sale Circuit Breaker. The Exchange 

believes that Users in such 

circumstances would prefer to have 

their orders posted to the BATS Book in 

compliance with the Limit Up-Limit 

Down Plan and Regulation SHO, to 

potentially receive a later execution. 

Similarly, the Exchange believes that it 

is reasonable and consistent with the 

Act to continue to re-price and display 

BATS market orders at their most 

aggressive permissible price because 

this functionality will be more likely to 

result in an execution of such order and 

is consistent with the overall intent of 

a BATS market order, which is to 

receive an execution not bounded by 

price but at the going price for the 

security. Specifically, the Exchange 

believes that its proposed handling of 

BATS market orders in this way is 

consistent with the Act because it is 

designed to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. Lastly, the Exchange does not 

believe that this will permit unfair 

discrimination among customers, 

brokers, or dealers because it will be 

available to all Users and will be 

applied as the default for BATS market 

orders. The Exchange notes that Users 

that do not want to have their orders 

posted to the BATS Book in such 

circumstances can elect a different timein-force. 

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 does not believe that the 

proposed rule change raises any 

competitive issues, as it will simply 

allow certain orders that would 

otherwise be cancelled to post to the 

BATS Book. In addition, the Exchange 

believes the proposed rule change will 

benefit Exchange participants in that it 

is one of several changes necessary to 

achieve a consistent technology offering 

by 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 

The Exchange has filed the proposed 

rule change pursuant to section 

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

19b–4(f)(6) thereunder.8 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 and Rule 19b–4(f)(6) 

thereunder.9

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 

Act 10 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 11

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange has asked 

the Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing, noting that a waiver of the 

operative delay will allow the Exchange 

to continue to strive towards a complete 

technology integration of the BGM 

Affiliated Exchanges, with gradual rollouts of new functionality to ensure 

stability of the System. The Exchange 

also notes that waiver of the operative 

delay will allow orders that would 

otherwise be cancelled to post to the 

BATS Book for potential later execution. 

The Commission believes that waiving 

the 30-day operative delay is consistent 

with the protection of investors and the 

public interest. Therefore, the 

Commission hereby waives the 

operative delay and designates the 

proposed rule change operative upon 

filing.12

At any time within 60 days of the 

filing of such proposed rule change, the 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 247 / Wednesday, December 24, 2014 / Notices 77557 

13 15 U.S.C. 78s(b)(2)(B). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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) 13 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–2014–039 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–2014–039. 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 at 100 F Street NE., 

Washington, DC 20549–1090 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of such 

filing also will 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– 

2014–039, and should be submitted on 

or before January 14, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–30118 Filed 12–23–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73884; File No. SR–BATS– 

2014–067] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing of a 

Proposed Rule Change, as Modified by 

Amendment No. 1, to Rule 20.6 of 

BATS Exchange, Inc. 

December 18, 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 December 

4, 2014, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. On December 17, 

2014, the Exchange filed Amendment 

No. 1 to the proposed rule change, 

which amended and replaced the 

proposed rule change in its entirety. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, 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 

replace current Rule 20.6 (‘‘Current 

Rule’’), entitled ‘‘Obvious Error,’’ with 

new Rule 20.6 (‘‘Proposed Rule’’), 

entitled ‘‘Nullification and Adjustment 

of Options Transactions including 

Obvious Errors.’’ Rule 20.6 relates to the 

adjustment and nullification of 

transactions that occur on the 

Exchange’s equity options platform 

(‘‘BATS Options’’). 

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 

Background 

For several months the Exchange has 

been working with other options 

exchanges to identify ways to improve 

the process related to the adjustment 

and nullification of erroneous options 

transactions. The goal of the process 

that the options exchanges have 

undertaken is to adopt harmonized rules 

related to the adjustment and 

nullification of erroneous options 

transactions as well as a specific 

provision related to coordination in 

connection with large-scale events 

involving erroneous options 

transactions. As described below, the 

Exchange believes that the changes the 

options exchanges and the Exchange 

have agreed to propose will provide 

transparency and finality with respect to 

the adjustment and nullification of 

erroneous options transactions. 

Particularly, the proposed changes seek 

to achieve consistent results for 

participants across U.S. options 

exchanges while maintaining a fair and 

orderly market, protecting investors and 

protecting the public interest. 

The Proposed Rule is the culmination 

of this coordinated effort and reflects 

discussions by the options exchanges to 

universally adopt: (1) Certain provisions 

already in place on one or more options 

exchanges; and (2) new provisions that 

the options exchanges collectively 

believe will improve the handling of 

erroneous options transactions. Thus, 

although the Proposed Rule is in many 

ways similar to and based on the 

Exchange’s Current Rule, the Exchange 

is adopting various provisions to 

mstockstill on DSK4VPTVN1PROD with NOTICES