Federal Register / Vol. 74, No. 110 / Wednesday, June 10, 2009 / Notices 27577 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

4As defined in BATS Rule 1.5(d). 

5Market orders are routed away pursuant to Rule 

11.13(a)(2)(A) and marketable limit orders are 

routed away pursuant to Rule 11.13(a)(2)(B). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60040; File No. SR–BATS– 

2009–014] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change, as Modified by 

Amendment No. 1 Thereto, To Amend 

BATS Rule 11.13, Entitled ‘‘Order 

Execution’’ 

June 3, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on May 22, 

2009, BATS Exchange, Inc. (‘‘BATS’’ or 

the ‘‘Exchange’’) 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 BATS. On May 29, 2009, BATS filed 

Amendment No. 1 to the proposed rule 

change. BATS has designated the 

proposed rule change, as amended, as 

constituting a rule change under Rule 

19b-4(f)(6) under the Act,3 which 

renders the proposal, as amended, 

effective upon filing with the 

Commission. 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 is proposing to amend 

BATS Rule 11.13, entitled ‘‘Order 

Execution,’’ to add a new order type (a 

‘‘BATS Only BOLT Order’’) and a prerouting processing method (‘‘BOLT 

Routing’’) that will each include an 

optional display period through which 

a marketable order will be displayed to 

Exchange Users (and market data 

recipients) for a brief period of time 

designated by the Exchange prior to 

being routed, cancelled, or posted to the 

BATS Book. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

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

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to provide Users of the 

Exchange with another order type, as 

well as another option with respect to 

the order processing methods offered by 

the Exchange in connection with 

routing away from the Exchange. 

Specifically, both the order type and the 

pre-routing processing method will, 

after first seeking to execute against the 

BATS Book, display a marketable order 

at the NBB for a sell order or the NBO 

for a buy order to Exchange Users and 

market data recipients for a brief, 

variable amount of time (not to exceed 

500 milliseconds) for potential 

execution. BATS notes that pre-routing 

display functionality has already been 

approved by the Commission for use by 

the CBOE Stock Exchange and that such 

functionality can be expected to provide 

System Users with greater control over 

their trading. Except for the addition of 

a variation of the BATS Only order type 

and changes to the routing functionality 

for market and marketable limit orders 

described herein, nothing in the 

proposal will modify or alter any 

existing rule or process related to order 

priority, order execution, trade-through 

protection or locked or crossed markets. 

The Exchange will implement the 

proposed changes such that marketable 

BATS Only BOLT Orders and routable 

orders will be distinguishable from the 

Exchange’s protected bid and protected 

offer while displayed by the Exchange 

for potential execution during the 

variable time period described in this 

filing. 

(i) Proposed BATS Only BOLT Order 

The proposed order type, a BATS 

Only BOLT Order, will first seek to 

execute against the BATS Book. If such 

order would lock or cross a Protected 

Quotation when entered it will be 

displayed at the NBB for a sell order or 

the NBO for a buy order to Exchange 

Users (and market data recipients) for 

potential execution for a variable time 

period not to exceed 500 milliseconds, 

such time period to be designated by the 

Exchange. Any unfilled balance of the 

order remaining after this variable 

period of time will be cancelled back to 

the User if such balance would continue 

to lock or cross a Protected Quotation. 

If, however, after the variable period of 

time the unfilled balance would not 

lock or cross a Protected Quotation, then 

such unfilled balance will remain 

posted in the BATS Book. 

(ii) Proposed BOLT Routing 

The proposed order processing 

method, set forth in BATS Rule 11.13, 

will apply when an unfilled balance of 

a routable market or limit order that is 

marketable against the existing NBBO 

remains after the Exchange has 

attempted to execute the order against 

the BATS Book. Specifically, the 

Exchange proposes to offer a method of 

processing that can be used in 

conjunction with, or instead of, routing 

options offered by the Exchange, 

through which such order will be briefly 

displayed to Users of the Exchange (and 

to Exchange market data recipients) for 

potential execution at a price equal to 

the NBB for a sell order or the NBO for 

a buy order. 

The Exchange currently allows Users 

to submit various types of orders to the 

Exchange that are processed pursuant to 

Rules 11.13(a)(1) and 11.13(a)(2). Rule 

11.13(a)(1) describes the process by 

which an incoming order would execute 

against the BATS Book.4 To the extent 

an order has not been executed in its 

entirety against the BATS Book, Rule 

11.13(a)(2)(A) and (B) then describe the 

process of routing orders 5 to one or 

more Trading Centers. The Exchange 

proposes to offer the display process to 

Users as an additional option for 

processing the unfilled balance of an 

order that remains after an initial 

attempt to execute against the BATS 

Book. 

Under the proposal, after first 

executing a market or marketable limit 

order against the BATS Book, any 

remaining shares will be displayed at 

the NBB for a sell order or the NBO for 

a buy order to Users of the Exchange 

and Exchange market data recipients for 

potential execution for a variable time 

period not to exceed 500 milliseconds, 


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27578 Federal Register / Vol. 74, No. 110 / Wednesday, June 10, 2009 / Notices 

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

7 15 U.S.C. 78f(b)(5). 

8Securities Exchange Act Release No. 54422 

(September 11, 2006), 71 FR 54537 (September 15, 

2006) (SR–CBOE–2004–21); Securities Exchange 

Act Release No. 59359 (February 4, 2009), 74 FR 

6927 (February 11, 2009) (SR–CBOE–2008–123). 

NASDAQ also recently adopted a similar rule 

pursuant to an immediately effective rule filing. See 

Securities Exchange Act Release No. 59875 (May 6, 

2009), 74 FR 22794 (May 14, 2009) (SR–NASDAQ– 

2009–043) (notice of filing and immediate 

effectiveness of NASDAQ proposal to incorporate 

an optional pre-routing display period for all orders 

using NASDAQ routing strategies). 

9 15 U.S.C. 78s(b)(3)(A). 

10 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. BATS has satisfied this requirement. 

11 17 CFR 240.19b–4(f)(6). 

12 17 CFR 240.19b–4(f)(6). 

13For 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). 

14For purposes of calculating the 60-day period 

within which the Commission may summarily 

abrogate the proposed rule change under Section 

19(b)(3)(C) of the Act, the Commission considers 

the period to commence on May 29, 2009, the date 

on which BATS submitted Amendment No. 1. See 

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

such time period to be designated by the 

Exchange. The BOLT routing display 

process will be the default processing 

preference, and thus, Users that do not 

wish to have their orders displayed 

pursuant to this process prior to routing 

will be required to opt-out of the BOLT 

routing display period. 

2. Statutory Basis 

The rule change proposed in this 

submission is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the Act.6

Specifically, the proposed change is 

consistent with Section 6(b)(5) of the 

Act,7 because it would 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, by allowing Users to select 

another method of processing for 

routable and non-routable marketable 

orders that may result in the efficient 

execution of such orders. Specifically, 

the Exchange believes that Users may 

receive more efficient order executions 

by briefly displaying their marketable 

orders to BATS Users for potential 

execution. BATS notes that similar brief 

marketable order display functionality 

has already been found to be consistent 

with the Act by the Commission.8

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change imposes any 

burden on competition. 

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 from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 9 and Rule 19b– 

4(f)(6) thereunder.10

A proposed rule change filed 

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

Act 11 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6) 12

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. BATS requests that the 

Commission waive the 30-day operative 

delay because the Exchange expects to 

have technologies in place to support 

the proposed rule change, as amended, 

on or about June 5, 2009, and believes 

that the expected benefits to Exchange 

Users from the proposed rule change, as 

amended, should not be delayed. The 

Commission believes that waiving the 

30-day operative delay 13 is consistent 

with the protection of investors and the 

public interest and designates the 

proposal operative on June 5, 2009. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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.14

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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–BATS–2009–014 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–BATS–2009–014. This file 

number should be included on the 

subject line if e-mail 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 inspection and copying 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 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 publicly available. All 

submissions should refer to File 

Number SR–BATS–2009–014 and 

should be submitted on or before July 1, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13552 Filed 6–9–09; 8:45 am] 

BILLING CODE 8010–01–P 


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