Document ID: SEC-2011-1725-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2011-11-09T05:00Z

[Federal Register Volume 76, Number 217 (Wednesday, November 9, 2011)]
[Notices]
[Pages 69779-69780]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28995]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65676; File No. SR-BATS-2011-045]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
the Market Opening Procedures of BATS Options

November 3, 2011.
    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 October 25, 2011, 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 the proposed rule change as constituting a non-
controversial rule change under Rule 19b-4(f)(6) under the Act,\3\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposal to amend the 
Rules applicable to the BATS options market (``BATS Options'') in order 
to modify the opening procedures for 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
    BATS Options currently opens options, other than index options,\4\ 
for trading based on the first transaction after 9:30 a.m. Eastern Time 
in the securities underlying the options as reported on the first print 
disseminated pursuant to an effective national market system plan. The 
Exchange proposes to modify this procedure to wait for the first 
transaction on the primary listing market for each underlying security 
prior to opening trading in the related options. The Exchange believes 
this change is appropriate because on the primary listing market a 
security typically opens through an auction mechanism that provides for 
additional price discovery as compared to non-listing markets.\5\ 
Accordingly, the Exchange believes the proposed change will help to 
improve the opening process of BATS Options by ensuring that an 
underlying security has been opened pursuant to a robust price 
discovery process before opening the overlying options for trading.
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    \4\ BATS Rule 21.7 states that index options will open for 
trading at 9:30 a.m. Eastern Time, without requiring an execution in 
any underlying security. The Exchange notes that BATS Options does 
not currently offer trading of index options.
    \5\ See, e.g., NYSE and NASDAQ.
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2. Statutory Basis
    The Exchange believes that its proposal 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\ In particular, the 
proposal 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. In particular, the proposed rule change will allow 
the Exchange to protect investors and the public interest by waiting to 
open options for trading until the primary listing market for the 
applicable underlying security has opened such security, which should 
lead to more accurate prices on BATS Options at the market open.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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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) 
by its terms, 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

[[Page 69780]]

pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the self-regulatory organization to submit to the 
Commission written notice of its intent to file the proposed rule 
change, along with a brief description and text of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    The Exchange has requested that the Commission 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 would allow the Exchange to immediately implement the 
proposed modifications to its market opening procedures, which are 
designed to protect investors and other market participants by ensuring 
that an underlying security has opened pursuant to a robust price 
discovery process before opening of the overlying options for trading. 
The Exchange represents that the proposed change will not require a 
significant programming effort by Users \10\ of BATS Options or other 
market participants and that it expects to have operational and 
technological changes in place to support the proposed rule change on 
or about November 4, 2011.\11\ As such, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest and designates the proposal operative 
upon filing.\12\
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    \10\ As defined in BATS Rule 16.1(a)(62), a ``User'' on BATS 
Options is either a member of BATS Options (``Options Member'') or a 
sponsored participant who is authorized to obtain access to the 
Exchange's system pursuant to BATS Rule 11.3 (``Sponsored 
Participant'').
    \11\ See SR-BATS-2011-045, Item 7.
    \12\ For 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).
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    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 Number SR-BATS-2011-045 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-2011-045. 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 also will be available for 
inspection and copying at the principal offices 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-2011-045, and should be 
submitted on or before November 30, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-28995 Filed 11-8-11; 8:45 am]
BILLING CODE 8011-01-P