60 Federal Register / Vol. 80, No. 1 / Friday, January 2, 2015 / Notices 

18For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

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

20 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. 

4NYSE Euronext acquired The Amex 

Membership Corporation (‘‘AMC’’) pursuant to an 

Agreement and Plan of Merger, dated January 17, 

2008 (the ‘‘Merger’’). In connection with the Merger, 

the Exchange’s predecessor, the American Stock 

Exchange LLC (‘‘Amex’’), a subsidiary of AMC, 

became a subsidiary of NYSE Euronext called NYSE 

Alternext US LLC. See Securities Exchange Act 

Release No. 58673 (September 29, 2008), 73 FR 

57707 (October 3, 2008) (SR–NYSE–2008–60 and 

SR–Amex–2008–62) (approving the Merger); see 

also Securities Exchange Act Release Nos. 58705 

(Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008) 

(approving adoption of equities rules based on 

those of NYSE) and 59022 (Nov. 26, 2008), 73 FR 

73683 (Dec. 3, 2008) (amending equity rules to 

conform to NYSE NMM Pilot rules). Subsequently, 

NYSE Alternext US LLC was renamed NYSE Amex 

LLC, which was then renamed NYSE MKT LLC and 

continues to operate as a national securities 

exchange registered under Section 6 of the 

Securities Exchange Act of 1934, as amended (the 

‘‘Act’’). See Securities Exchange Act Release Nos. 

59575 (March 13, 2009), 74 FR 11803 (March 19, 

proposed rule change so that member 

organizations could continue to benefit 

from the pilot program without 

interruption after December 31, 2014. 

The Commission believes that waiver 

of the 30-day operative delay period is 

consistent with the protection of 

investors and the public interest. 

Specifically, the Commission believes 

that the proposal would allow the pilot 

to continue uninterrupted, thereby 

avoiding any potential investor 

confusion that could result from the 

temporary interruption in the pilot 

program. For these reasons, the 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest, and designates the 

proposed rule change to be operative on 

December 31, 2014.18

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.19

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– 

NYSE–2014–72 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–NYSE–2014–72. 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 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–NYSE– 

2014–72 and should be submitted on or 

before January 26, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30704 Filed 12–31–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73946; File No. SR– 

NYSEMKT–2014–109] 

Self-Regulatory Organizations; NYSE 

MKT, LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Extending the Operation 

of Its New Market Model Pilot, Until the 

Earlier of Securities and Exchange 

Commission Approval To Make Such 

Pilot Permanent or July 31, 2015 

December 24, 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 December 

18, 2014, NYSE MKT LLC (the 

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

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

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 Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

operation of its New Market Model 

Pilot, currently scheduled to expire on 

December 31, 2014, until the earlier of 

Securities and Exchange Commission 

(‘‘Commission’’) approval to make such 

pilot permanent or July 31, 2015. 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to extend the 

operation of its New Market Model Pilot 

(‘‘NMM Pilot’’) that was adopted 

pursuant to its merger with the New 

York Stock Exchange LLC (‘‘NYSE’’).4


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2009) (SR–NYSEALTR–2009–24) and 67037 (May 

21, 2012), 77 FR 31415 (May 25, 2012) (SR– 

NYSEAmex–2012–32). 

5See Securities Exchange Act Release No. 60758 

(October 1, 2009), 74 FR 51639 (October 7, 2009) 

(SR–NYSEAmex–2009–65). See also Securities 

Exchange Act Release Nos. 61030 (November 19, 

2009), 74 FR 62365 (November 27, 2009) (SR– 

NYSEAmex–2009–83) (extending Pilot to March 30, 

2010); 61725 (March 17, 2010), 75 FR 14223 (March 

24, 2010) (SR–NYSEAmex–2010–28) (extending 

Pilot to September 30, 2010); 62820 (September 1, 

2010), 75 FR 54935 (September 9, 2010) (SR– 

NYSEAmex–2010–86) (extending Pilot to January 

31, 2011); 63615 (December 29, 2010), 76 FR 611 

(January 5, 2011) (SR–NYSEAmex–2010–123) 

(extending Pilot to August 1, 2011); 64773 (June 29, 

2011), 76 FR 39453 (July 6, 2011) (SR–NYSEAmex– 

2011–43) (extending Pilot to January 31, 2012); 

66042 (December 23, 2011), 76 FR 82326 (December 

30, 2011) (SR–NYSEAmex–2011–102) (extending 

Pilot to July 31, 2012); 67495 (July 25, 2012), 77 FR 

45406 (July 31, 2012) (SR–NYSEMKT–2012–21) 

(extending the Pilot to January 31, 2013); 68559 

(January 2, 2013), 78 FR 1286 (January 8, 2013) (SR– 

NYSEMKT–2012–84) (extending Pilot to July 31, 

2013); 69812 (June 20, 2013), 78 FR 38766 (June 27, 

2013) (SR–NYSEMKT–2013–51) (extending Pilot to 

January 31, 2014); 71342 (January 17, 2014), 79 FR 

4197 (January 24, 2014) (SR–NYSEMKT–2014–02) 

(extending Pilot to July 31, 2014); and 72622 (July 

16, 2014), 79 FR 42600 (July 22, 2014) (SR– 

NYSEMKT–2014–57) (extending Pilot to December 

31, 2014). 

6See SR–NYSE–2014–71. 

7The information contained herein is a summary 

of the NMM Pilot. See Securities Exchange Act 

Release No. 58845 (October 24, 2008), 73 FR 64379 

(October 29, 2008) (SR–NYSE–2008–46) for a fuller 

description. 

8See NYSE MKT Rule 103—Equities. 

9See NYSE MKT Rule 104—Equities. 

10See NYSE MKT Rule 60—Equities; see also 

NYSE MKT Rules 104—Equities and 1000— 

Equities. 

11See NYSE MKT Rule 1000—Equities. 

12The Display Book system is an order 

management and execution facility. The Display 

Book system receives and displays orders to the 

DMMs, contains the order information, and 

provides a mechanism to execute and report 

transactions and publish the results to the 

Consolidated Tape. The Display Book system is 

connected to a number of other Exchange systems 

for the purposes of comparison, surveillance, and 

reporting information to customers and other 

market data and national market systems. 

13See NYSE MKT Rule 72(a)(ii)—Equities. 

14See supra note 5. 

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

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

The NMM Pilot was approved to operate 

until October 1, 2009. The Exchange 

filed to extend the operation of the Pilot 

to November 30, 2009, March 30, 2010, 

September 30, 2010, January 31, 2011, 

August 1, 2011, January 31, 2012, July 

31, 2012, January 31, 2013, July 31, 

2013, January 31, 2014, July 31, 2014, 

and December 31, 2014 respectively.5

The Exchange now seeks to extend the 

operation of the NMM Pilot, currently 

scheduled to expire on December 31, 

2014, until the earlier of Commission 

approval to make such pilot permanent 

or July 31, 2015. 

The Exchange notes that parallel 

changes are proposed to be made to the 

rules of NYSE.6

Background 7

In December 2008, the Exchange 

implemented significant changes to its 

equities market rules, execution 

technology and the rights and 

obligations of its equities market 

participants all of which were designed 

to improve execution quality on the 

Exchange. These changes are all 

elements of the Exchange’s enhanced 

market model that it implemented 

through the NMM Pilot. 

As part of the NMM Pilot, the 

Exchange eliminated the function of 

equity specialists on the Exchange 

creating a new category of market 

participant, the Designated Market 

Maker or DMM.8 The DMMs, like 

specialists, have affirmative obligations 

to make an orderly market, including 

continuous quoting requirements and 

obligations to re-enter the market when 

reaching across to execute against 

trading interest. Unlike specialists, 

DMMs have a minimum quoting 

requirement 9 in their assigned 

securities and no longer have a negative 

obligation. DMMs are also no longer 

agents for public customer orders.10

In addition, the Exchange 

implemented a system change that 

allowed DMMs to create a schedule of 

additional non-displayed liquidity at 

various price points where the DMM is 

willing to interact with interest and 

provide price improvement to orders in 

the Exchange’s system. This schedule is 

known as the DMM Capital 

Commitment Schedule (‘‘CCS’’).11 CCS 

provides the Display Book® 12 with the 

amount of shares that the DMM is 

willing to trade at price points outside, 

at and inside the Exchange Best Bid or 

Best Offer (‘‘BBO’’). CCS interest is 

separate and distinct from other DMM 

interest in that it serves as the interest 

of last resort. 

The NMM Pilot further modified the 

logic for allocating executed shares 

among market participants having 

trading interest at a price point upon 

execution of incoming orders. The 

modified logic rewards displayed orders 

that establish the Exchange’s BBO. 

During the operation of the NMM Pilot, 

orders or portions thereof that establish 

priority 13 retain that priority until the 

portion of the order that established 

priority is exhausted. Where no one 

order has established priority, shares are 

distributed among all market 

participants on parity. 

The NMM Pilot was originally 

scheduled to end operation on October 

1, 2009, or such earlier time as the 

Commission may determine to make the 

rules permanent. The Exchange filed to 

extend the operation of the Pilot on 

several occasions 14 in order to prepare 

a rule filing seeking permission to make 

the above described changes permanent. 

The Exchange is currently still 

preparing such formal submission but 

does not expect that filing to be 

completed and approved by the 

Commission before December 31, 2014. 

Proposal To Extend the Operation of the 

NMM Pilot 

The Exchange established the NMM 

Pilot to provide incentives for quoting, 

to enhance competition among the 

existing group of liquidity providers and 

to add a new competitive market 

participant. The Exchange believes that 

the NMM Pilot allows the Exchange to 

provide its market participants with a 

trading venue that utilizes an enhanced 

market structure to encourage the 

addition of liquidity, facilitate the 

trading of larger orders more efficiently 

and operates to reward aggressive 

liquidity providers. As such, the 

Exchange believes that the rules 

governing the NMM Pilot should be 

made permanent. Through this filing the 

Exchange seeks to extend the current 

operation of the NMM Pilot until July 

31, 2015, in order to allow the Exchange 

time to formally submit a filing to the 

Commission to convert the pilot rules to 

permanent rules. 

The proposed change is not otherwise 

intended to address any other issues 

and the Exchange is not aware of any 

problems that member organizations 

would have in complying with the 

proposed change. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,15 in general, and 

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

of the Act,16 in particular, because it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, to 

remove impediments to, and perfect the 

mechanisms of, a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest and because it is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The Exchange believes the proposed 

rule change is designed to prevent 


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17 15 U.S.C. 78f(b)(8). 

18 15 U.S.C. 78s(b)(3)(A)(iii). 

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

4(f)(6) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). 

22For 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). 

fraudulent and manipulative acts and 

practices and to promote just and 

equitable principles of trade because it 

seeks to extend a pilot program that has 

already been approved by the 

Commission. The Exchange believes the 

proposed rule change is designed to 

facilitate transactions in securities and 

to remove impediments to, and perfect 

the mechanisms of, a free and open 

market and a national market system 

because the NMM Pilot provides its 

market participants with a trading 

venue that utilizes an enhanced market 

structure to encourage the addition of 

liquidity, facilitate the trading of larger 

orders more efficiently and operates to 

reward aggressive liquidity providers. 

Moreover, requesting an extension of 

the NMM Pilot will permit adequate 

time for: (i) The Exchange to prepare 

and submit a filing to make the rules 

governing the NMM Pilot permanent; 

(ii) public notice and comment; and (iii) 

completion of the 19b–4 approval 

process. Finally, the Exchange believes 

that it is subject to significant 

competitive forces, as described below 

in the Exchange’s statement regarding 

the burden on competition. For these 

reasons, the Exchange believes that the 

proposal is consistent with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,17 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes that extending the 

operation of the NMM Pilot will 

enhance competition among liquidity 

providers and thereby improve 

execution quality on the Exchange. The 

Exchange will continue to monitor the 

efficacy of the program during the 

proposed extended pilot period. 

Finally, the Exchange notes that it 

operates in a highly competitive market 

in which market participants can 

readily favor competing venues. In such 

an environment, the Exchange must 

continually review, and consider 

adjusting the services it offers and the 

requirements it imposes to remain 

competitive with other U.S. equity 

exchanges. For the reasons described 

above, the Exchange believes that the 

proposed rule change reflects this 

competitive environment. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to 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 18 and Rule 

19b–4(f)(6) thereunder.19 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)(iii) 

thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 20 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),21 the 

Commission may 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 before the pilot’s 

expiration. The Exchange states that an 

immediate operative date is necessary in 

order to immediately implement the 

proposed rule change so that member 

organizations could continue to benefit 

from the pilot program without 

interruption after December 31, 2014. 

The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Specifically, the Commission believes 

that the proposal would allow the pilot 

to continue uninterrupted, thereby 

avoiding any potential investor 

confusion that could result from the 

temporary interruption in the pilot 

program. For this reason, the 

Commission designates the proposed 

rule change to be operative on December 

31, 2014.22

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. 

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– 

NYSEMKT–2014–109 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–NYSEMKT–2014–109. 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 


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23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 71449 

(January 30, 2014), 79 FR 6961 (February 5, 2014) 

(SR–EDGX–2013–43; SR–EDGA–2013–34). 

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). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer, or any person associated 

with a 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.’’ See Exchange Rule 1.5(n). 

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– 

NYSEMKT–2014–109 and should be 

submitted on or before January 23, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30705 Filed 12–31–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73940; File No. SR–EDGX– 

2014–35] 

Self-Regulatory Organizations; EDGX 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Rules 2.11, 

2.12, 11.11 and 11.14 To Replace 

References to ‘‘Direct Edge ECN LLC 

d/b/a DE Route’’ and ‘‘DE Route’’ With 

‘‘BATS Trading, Inc.’’ 

December 24, 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 

22, 2014, EDGX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGX’’) 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 proposed rule 

change to amend Rules 2.11, 2.12, 11.11 

and 11.14 to replace references to 

‘‘Direct Edge ECN LLC d/b/a DE Route’’ 

and ‘‘DE Route’’ with ‘‘BATS Trading, 

Inc.’’ (‘‘BATS Trading’’). The Exchange 

does not propose to amend the 

requirements of any of these rules. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.directedge.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 

Earlier this year, the Exchange and its 

affiliate, EDGA Exchange, Inc. 

(‘‘EDGA’’) received approval to effect a 

merger (the ‘‘Merger’’) of the Exchange’s 

parent company, Direct Edge Holdings 

LLC, with BATS Global Markets, Inc., 

the parent of BATS Exchange, Inc. 

(‘‘BZX’’) and BATS Y-Exchange, Inc. 

(‘‘BYX’’, together with BZX, EDGA and 

EDGX, the ‘‘BGM Affiliated Exchanges’’ 

or ‘‘BATS Exchange’’).3 As a result, the 

Exchange amended Rule 2.12 to reflect 

that BATS Trading, Inc., the affiliated 

BZX and BYX routing broker dealer, 

would also act as the inbound router for 

routing orders from BYX and BZX to the 

Exchange. In the context of the Merger, 

the BGM Affiliated Exchanges are 

working to migrate EDGX and EDGA 

onto the BATS technology platform, and 

align certain system functionality, 

retaining only intended differences 

between the BGM Affiliated Exchanges. 

As a result of these efforts, the Exchange 

proposes to amend Rules 2.11, 2.12, 

11.11 and 11.14 to replace references to 

‘‘Direct Edge ECN LLC d/b/a DE Route’’ 

and ‘‘DE Route’’ with ‘‘BATS Trading’’ 

to reflect that BATS Trading, Inc. will 

replace DE Route at [sic] the Exchange’s 

routing broker-dealer upon migration of 

the Exchange onto the BATS technology 

platform. Thereafter, BATS Trading will 

serve as the sole inbound and outbound 

routing broker-dealer for the Exchange. 

The Exchange does not propose to 

amend the requirements of any of these 

rules. 

Rule 2.11, BATS Trading as Outbound 

Router 

Pursuant to Exchange Rule 2.11, the 

Exchange relies on DE Route to provide 

outbound routing services from itself to 

other Trading Centers.4 The Exchange 

proposes to amend Rules 2.11 to replace 

all references to DE Route with BATS 

Trading, as BATS Trading will replace 

DE Route as the outbound routing 

service for the Exchange upon migration 

of the Exchange onto the BATS 

technology platform. The Exchange does 

not propose to amend the requirements 

of this rule. Therefore, the conditions 

and limitations set forth in Exchange 

Rule 2.11 will continue to require that: 

• The Exchange will regulate the 

BATS Trading as a facility (as defined 

in Section 3(a)(2) of the Act), subject to 

Section 6 of the Act. The Exchange will 

file with the Commission proposed rule 

changes and fees relating to the BATS 

Trading outbound router function and 

BATS Trading will be subject to the 

Exchange’s non-discrimination 

requirements. 

• FINRA will carry out oversight and 

enforcement responsibilities as the 

designated examining authority 

designated by the Commission pursuant 

to Rule 17d–1 of the Act with the 

responsibility for examining BATS 

Trading for compliance with applicable 

financial responsibility rules. 

• A Member’s 5 use of BATS Trading 

to route orders to another Trading 

Center will be optional. 

• BATS Trading will not engage in 

any business other than (a) its outbound 

router function, (b) its inbound router 

function as described in Rule 2.12, (c) 

its usage of an error account in 

accordance with Exchange Rule 

2.11(a)(7) and (d) any other activities it 

may engage in as approved by the 

Commission. 

• The Exchange shall establish and 

maintain procedures and internal 

controls reasonably designed to 

adequately restrict the flow of 

confidential and proprietary 


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