Document ID: SEC-2016-0072-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2016-01-13T05:00Z

[Federal Register Volume 81, Number 8 (Wednesday, January 13, 2016)]
[Notices]
[Pages 1657-1661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00464]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76849; File No. SR-BATS-2015-121]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Changes to Rules 
11.5, Registration of Market Makers, 11.6, Obligations of Market Maker 
Authorized Traders, 11.7, Registration of Market Makers in a Security, 
and 11.8, Obligations of Market Makers

January 7, 2016.
    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 29, 2015, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated this proposal as a ``non-controversial'' 
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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend Rules 11.5, Registration of 
Market Makers, 11.6, Obligations of Market Maker Authorized Traders, 
11.7, Registration of Market Makers in a Security, and 11.8, 
Obligations of Market Makers, in order to update certain provisions and 
conform to the rules of EDGA Exchange, Inc. (``EDGA''), EDGX Exchange, 
Inc. (``EDGX''), Exchange's equity options trading platform (``BZX 
Options''), EDGX's equity options trading platform (``EDGX Options''), 
and the Nasdaq Stock Market LLC (``Nasdaq'').\5\
---------------------------------------------------------------------------

    \5\ See EDGA and EDGX Rules 11.17, 11.18, 11.19, and 11.20; BZX 
Options Rule 22.6(d)(4), (5), and (7); EDGX Options Rule 22.6(d)(4), 
(5), and (7); and Nasdaq Rules Rule 4613(a)(2)(ii) [sic], 
4613(a)(2)(D) and (E).
---------------------------------------------------------------------------

    The text of the proposed rule change is available at the Exchange's 
Web site at 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.

[[Page 1658]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In early 2014, the Exchange and its affiliate, BATS Y-Exchange, 
Inc. (``BYX''), 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'').\6\ 
In the context of the Merger, the BGM Affiliated Exchanges are working 
to align their rules, retaining only intended differences between the 
BGM Affiliated Exchanges. Thus, the Exchange proposes to amend Rules 
11.5, Registration of Market Makers, 11.6, Obligations of Market Maker 
Authorized Traders, 11.7, Registration of Market Makers in a Security, 
and 11.8, Obligations of Market Makers, in order to update certain 
provisions and conform to the rules of EDGA and EDGX and provide a 
consistent rule set across each of the BGM Affiliated Exchanges.\7\ As 
amended, Exchange Rules 11.5, 11.6, 11.7, and 11.8 would be identical 
to EDGA and EDGX Rules 11.17, 11.18, 11.19, and 11.20 but for different 
cross references to Exchange Rules that are due to the different rule 
numbering amongst the Exchange, EDGA and EDGX.\8\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 71375 (January 23, 
2014), 79 FR 4771 (January 29, 2014) (SR-BATS-2013-059; SR-BYX-2013-
039).
    \7\ The Exchange notes that BYX intends to file an identical 
proposal with the Commission to amend its Rules 11.5, 11.6, 11.7, 
and 11.8 to updated certain provisions and conform to EDGA and EDGX 
Rules 11.17, 11.18, 11.19, and 11.20. The Exchange also notes that 
EDGA and EDGX intend to file proposals with the Commission to amend 
Rules 11.17, 11.18, 11.19, and 11.20 to update certain provisions to 
harmonize with the changes to Exchange Rules 11.5, 11.6, 11.7, and 
11.8 proposed herein.
    \8\ The Exchange notes that the substance of the rules that are 
cross-referenced in Rule 11.5, 11.6, 11.7 and 11.8 are identical or 
substantially similar to the corresponding EDGA and EDGX Rules.
---------------------------------------------------------------------------

Rule 11.5, Registration of Market Makers
    Like EDGA and EDGX Rule 11.17, Exchange Rule 11.5 governs the 
registration of Market Makers on the Exchange. In particular, 
paragraphs (a) and (b) of Rule 11.5 sets forth the application process 
for Members seeking to register as Market Makers on the Exchange. The 
Exchange proposes to amend paragraphs (c) and (d) of Rule 11.5 to 
harmonize Rule 11.5 with EDGA and EDGX Rule 11.17.
    Paragraph (c) sets for [sic] the scenarios under which the Exchange 
may suspend or terminate a Market Maker's registration which include 
where the Market Maker has: (i) substantially of [sic] continuously 
failed to engage in dealings in accordance with Rule 11.8 (discussed 
below); (ii) failed to meet the minimum net capital requirements set 
forth under paragraph (a) of the Rule; and [sic] (iii) maintain a fair 
and orderly market. Rule 11.5(c) is substantially similar to EDGA and 
EDGX Rules 11.17(c)(1) thru (3). EDGA and EDGX contain an additional 
provision under Rule 11.17(c)(4) allowing them to suspend or terminate 
a Market Maker's registration where it does not have at least one 
registered Market Maker Authorized Trader (``MMAT'') qualified to 
perform market making activities as set forth in EDGA and EDGX Rule 
11.18(b)(5).\9\ Under proposed Rule 11.5(c)(4), a MMAT whose 
registration is suspended pursuant to Exchange Rule 11.6(c) shall not 
be deemed qualified within the meaning of Exchange Rule 11.6(c). In 
order to harmonize the scenarios under which the Exchange may suspend 
or terminate a Market Maker's registration under Rule 11.5(c) with EDGA 
and EDGX, the Exchange proposes to adopt the provisions under EDGA and 
EDGX Rule 11.17(c)(4) as new subparagraph (c)(4) under Rule 11.5. The 
Exchange believes it is reasonable to suspend or terminate a Market 
Maker's registration where it does not have at least one registered 
MMAT qualified to perform market making activities as the absence of a 
qualified MMAT would impede its ability to satisfy its market making 
obligations. To accommodate the addition of subparagraph (c)(4) under 
Rule 11.5, the Exchange also proposes to relocate the ``or'' from the 
end of subparagraph (c)(2) to the end of subparagraph (c)(3).
---------------------------------------------------------------------------

    \9\ Under Exchange Rule 11.6(b)(5), a Market Maker must ensure 
that a MMAT is properly qualified to perform market making 
activities, including but not limited to ensuring the MMAT has met 
the requirements set forth in Exchange Rule 11.6(b)(2). In addition, 
the Exchange notes that EDGA and EDGX Rules [sic] Rule 11.17(c)(4) 
currently reference EDGA and EDGX Rules 11.19(b)(5). The Exchange 
notes that this reference should be to EDGA and EDGX Rules 
11.18(b)(5) and that EDGA and EDGX intend to include this correction 
in an upcoming rule filing to be submitted to the Commission.
---------------------------------------------------------------------------

    Lastly, to conform to EDGA and EDGX Rules 11.17(d), the Exchange 
proposes to amend paragraph (d) or [sic] Rule 11.5 to remove the letter 
``s'' from after the word ``interests''.
Rule 11.6, Obligations of Market Maker Authorized Traders
    Like EDGA and EDGX Rules 11.18, Exchange Rule 11.6 governs the 
registration of MMATs. The Exchange proposes to amend paragraph (b)(4) 
to remove the letter ``s'' from after the word ``interests'' to 
harmonize Rule 11.6 with EDGA and EDGX Rule 11.18.
Rule 11.7, Registration of Market Makers in a Security
    Like EDGA and EDGX Rules 11.19, Exchange Rule 11.7 sets forth the 
process for a Market Maker to become registered in a newly authorized 
security or in a security already admitted to dealings on the Exchange. 
The Exchange proposes to make the following changes to harmonize Rule 
11.7 with EDGA and EDGX Rule 11.19:
     Amend paragraph (a) to state that registration in a 
security shall become effective on the same day as the Exchange's 
approval of the registration, unless otherwise provided by the 
Exchange; rather than the day following the following the Exchange's 
approval of the registration. This proposed amendment would harmonize 
Exchange Rule 11.7(a) with EDGA and EDGX Rules 11.19(a) in order to 
provide for consistent timeframes within which a registration may 
become effective across each of the BGM Affiliated Exchanges. Also, 
allowing for a registration to become effective on the same day as 
Exchange approval would enable a Market Maker to immediately provide 
liquidity in a security, rather than waiting until the following 
trading day. The Exchange would continue to maintain the authority to 
delay the effectiveness of the registration due to the Market Maker 
satisfying additional procedural requirements, such as the daily 
notification to the Exchange of the symbols to which it will make a 
market in on a particular trading day;
     Amend paragraph (a)(4) to replace the term ``they are'' 
with ``Market Maker is'';
     amend paragraph (a)(5) to add an ``and'' to the end of the 
paragraph; and
     amend paragraph (b) to remove the letter ``s'' from after 
the word ``interests''.
    The changes proposed above would harmonize Exchange Rule 11.7 with 
EDGA and EDGX Rules 11.19.
Rule 11.8, Obligations of Market Makers
    Like EDGA and EDGX Rules 11.20, Exchange Rule 11.8 sets forth the 
obligations of Market Makers. In short, Members who are registered as 
Market Makers in one or more securities traded on the Exchange must 
engage in a course of dealings for their own account to assist in the 
maintenance, insofar as reasonably practicable, of fair and orderly 
markets on the Exchange in accordance with these Rules. The

[[Page 1659]]

Exchange proposes to make the following changes to harmonize Rule 
11.8(a), (c), and (d) with EDGA and EDGX Rule 11.19:
     Amend subparagraph (a)(1) to clarify that the Market Maker 
must maintain continuous, two-sided quotations; \10\
---------------------------------------------------------------------------

    \10\ The Exchange does not propose to amend a Market Maker's 
quoting obligations. The proposed change is simply intended to make 
clear that the obligation is to maintain a continuous, two-sided 
quotation.
---------------------------------------------------------------------------

     amend paragraph (c) to: (i) Replace in the first sentence 
``or'' with ``including, but without limitation'' and ``the'' with 
``its''; (ii) delete the ``other'' from the second sentence; and (iii) 
add an ``s'' to the word ``power'' in the second sentence;
     amend paragraph (d)(1) to: (i) Add ``Continuous'' to the 
title ``Two-Sided Quote Obligations''; \11\
---------------------------------------------------------------------------

    \11\ Id.
---------------------------------------------------------------------------

     amend paragraphs (d)(2) and (d)(2)(C) to replace the word 
``under'' with ``of'' before Regulation NMS;
     amend paragraph (d)(2)(A) to replace ``from'' with ``as 
reported by'' before reference to the responsible single plan 
processor; and
     amend paragraph (d)(2)(B) to replace ``received from'' 
with ``reported by'' before reference to the responsible single plan 
processor.
    The Exchange also proposes to amend Rule 11.8(d)(1) to clarify the 
scenarios in which a Market Maker's two-sided quoting obligation may be 
temporarily suspended or alleviated. The provisions proposed to be 
added are each substantially similar to the rules of BZX Options and 
EDGX Options.\12\ Proposed Rule 11.8(d)(1)(A) addresses a Market 
Maker's ability to satisfy the quoting standard in the event of a 
technical failure or system limitation. In particular, if a technical 
failure or limitation of a system of the Exchange prevents the Market 
Maker from maintaining or communicating to the Exchange timely and 
accurate quotes in each security in which a Member is registered as a 
Market Maker, the duration of such failure shall not be considered in 
determining whether the Market Maker has satisfied the quoting standard 
with respect to that security.\13\
---------------------------------------------------------------------------

    \12\ See BZX Options Rule 22.6(d)(4), (5), and (7). See also 
EDGX Options Rule 22.6(d)(4), (5), and (7).
    \13\ See Securities Exchange Act Release No. 71229 [sic] 
(December 18, 2013), 78 FR 77736 (December 24, 2013) (SR-BATS-2013-
062) (Notice of Filing and Immediate Effectiveness of a Proposed 
Rule Change to Modify BATS Options Market Maker Continuous Quoting 
Obligation Rules).
---------------------------------------------------------------------------

    In addition, proposed Rule 11.8(d)(1)(B) addresses a Market Maker's 
ability to satisfy the quoting standard during a halt, suspension or 
pause. A Market Maker's quoting obligation under Rule 11.8 would be 
suspended during a trading halt, suspension, or pause in the 
security.\14\ A Market Maker's quoting obligation would recommence 
after the first regular way transaction on the primary listing market 
following such halt, suspension, or pause in the security, as reported 
by the responsible single plan processor.\15\ A Market Maker's quoting 
obligation would also be suspended under Rule 11.8(d)(1)(B) for the 
duration that an NMS stock is in a Limit State or a Straddle State 
declared pursuant to the Plan to Address Extraordinary Market 
Volatility Pursuant to Rule 608 of Regulation NMS under the Act (the 
``Limit Up-Limit Down Plan'' or ``Plan'').\16\
---------------------------------------------------------------------------

    \14\ The Exchange notes that proposed Rule 11.8(d)(B) would 
differ from BZX Options and EDGX Options Rules 22.6(d)(5) in so far 
as proposed Rule 11.8(d)(B) references ``security'' rather than 
``underlying security'' in order to conform to the equities markets.
    \15\ See also Nasdaq Stock Market LLC (``Nasdaq'') Rule 
4613(a)(2)(ii).
    \16\ See BZX and BYX Rules 11.18(e). See also EDGA and EDGX 
Rules 11.16(e). See also Securities Exchange Act Release No. 67091 
(May 31, 2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit 
Down Release'').
---------------------------------------------------------------------------

    Under proposed Rule 11.8(d)(1)(C), the Exchange would have the 
ability to consider other exceptions to the Two-Sided Obligation based 
on demonstrated legal or regulatory requirements or other mitigating 
circumstances. For example, a Market Maker must implement the pre-trade 
and other risk controls required by Rule 15c3-5 of the Act (the 
``Market Access Rule'') with respect to all of their quoting activity. 
These pre-trade risk controls must be reasonably designed to 
systemically limit financial exposure and ensure compliance with all 
regulatory requirements. The risk controls a Market Maker may have in 
place to comply with the Market Access Rule may prevent that Market 
Maker from satisfying its quoting obligation. In such case, the 
Exchange would consider whether the Market Maker's failure to satisfy 
its quoting obligation due to its compliance with the Market Access 
Rule was proper.
    Lastly, the Exchange proposes to amend its definitions of 
``Designated Percentage'' and ``Defined Limit'' under Rules 
11.8(d)(2)(D) and (E) respectively to be substantially similar to 
Nasdaq Rules 4613(a)(2)(D) and (E). The pricing obligations applicable 
to quotations of Market Makers are based on the Designated Percentage 
and the Defined Limit, which are determined based on the applicable 
trigger percentage. The amended definitions would include revised 
percentages and updated descriptions of the categories of securities 
that are subject to those percentages. The Exchange notes that the 
percentages discussed below in the proposed definitions of Designated 
Percentage and Defined Limit are currently included in Interpretation 
and Policy .01 to Rule 11.8. Therefore, the Exchange is not proposing 
new percentages governing a Market Maker's quoting obligations; it is 
seeking to adopt revised definitions that are substantially similar to 
that of Nasdaq in order to provide consistent rules with regard to 
Market Maker's quoting obligations.\17\ The Exchange believes 
consistent definitions would avoid confusion amongst market 
participants that make markets on multiple venues.
---------------------------------------------------------------------------

    \17\ The Exchange proposed to categorize securities included in 
the S&P 500[supreg] Index, Russell 1000[supreg] Index, and a pilot 
list of Exchange Traded Products as Tier 1 NMS Stocks under the 
under the Limit Up-Limit Down Plan. Securities not included in the 
S&P 500[supreg] Index, Russell 1000[supreg] Index, or in the pilot 
list of Exchange Traded Products would be categorized as Tier 2 NMS 
Stocks under the under the Limit Up-Limit Down Plan. Nasdaq Rule 
4613(a)(2)(D) and (E) references securities as included in the S&P 
500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of 
Exchange Traded Products as such and those that are not as Tier 2 
NMS Stocks. The Exchange notes that EDGA and EDGX also intent [sic] 
to amend their definitions of Designated Percentage and Defined 
Limit to mirror that proposed herein.
---------------------------------------------------------------------------

    The Exchange currently defines Designated Percentage under Rule 
11.8(d)(2)(D) as the individual stock pause trigger percentage under 
the applicable rules of a primary listing market less: Two (2) 
percentage points for securities that are included in the S&P 
500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of 
Exchange Traded Products and for all other NMS stocks with a price 
equal to or greater than $1.00 per share; and twenty (20) percentage 
points for all NMS stocks with a price less than $1.00 per share that 
are not included in the S&P 500[supreg] Index, Russell 1000[supreg] 
Index, and a pilot list of Exchange Traded Products. Exchange Rule 
11.8(d)(2)(D) also states that for times during Regular Trading Hours 
\18\ when stock pause triggers are not in effect under the rules of the 
primary listing market, the Designated Percentage will be 20% for 
securities included in the S&P 500[supreg] Index, Russell 1000[supreg] 
Index, and a pilot list of Exchange Traded Products. The Designated 
Percentage will remain the same throughout Regular Trading Hours for 
all other NMS stocks.
---------------------------------------------------------------------------

    \18\ See Exchange Rule 1.5(w).
---------------------------------------------------------------------------

    As amended, Designated Percentage would be defined as 8% for Tier 1 
NMS Stocks under the Limit Up-Limit Down

[[Page 1660]]

Plan,\19\ 28% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan 
\20\ with a price equal to or greater than $1.00, and 30% for Tier 2 
NMS Stocks under the Limit Up-Limit Down Plan with a price less than 
$1.00, except that between 9:30 a.m. and 9:45 a.m. and between 3:35 
p.m. and the close of trading, when Exchange Rule 11.18(b) is not in 
effect, the Designated Percentage shall be 20% for Tier 1 NMS Stocks 
under the Limit Up-Limit Down Plan, 28% for Tier 2 NMS Stocks under the 
Limit Up-Limit Down Plan with a price equal to or greater than $1.00, 
and 30% for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a 
price less than $1.00.
---------------------------------------------------------------------------

    \19\ Tier 1 NMS Stocks under the Limit Up-Limit Down Plan are 
securities that are included in the S&P 500[supreg] Index, Russell 
1000[supreg] Index, and a pilot list of Exchange Traded Products. 
See the Limit Up-Limit Down Release supra note 16.
    \20\ Tier 2 NMS Stocks under the Limit Up-Limit Down Plan are 
securities that are not included in the S&P 500[supreg] Index, 
Russell 1000[supreg] Index, and a pilot list of Exchange Traded 
Products. Id.
---------------------------------------------------------------------------

    The Exchange currently defines Defined Limit under Rule 
11.8(d)(2)(E) as the individual stock pause trigger percentage under 
the applicable rules of a primary listing market less one-half (\1/2\) 
percentage point for securities that are included in the S&P 
500[supreg] Index, Russell 1000[supreg] Index, and a pilot list of 
Exchange Traded Products and for all other NMS stocks with a price 
equal to or greater than $1.00 per share; and eighteen and one-half 
(18.5) percentage points for all NMS stocks with a price less than 
$1.00 per share that are not included in the S&P 500[supreg] Index, 
Russell 1000[supreg] Index, and a pilot list of Exchange Traded 
Products. As amended, Defined Limit would be defined as 9.5% for Tier 1 
NMS Stocks under the Limit Up-Limit Down Plan, 29.5% for Tier 2 NMS 
Stocks under the Limit Up-Limit Down Plan with a price equal to or 
greater than $1.00, and 31.5% for Tier 2 NMS Stocks under the Limit Up-
Limit Down Plan with a price less than $1.00, except that between 9:30 
a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, when 
Exchange Rule 11.18(b) is not in effect, the Defined Limit shall be 
21.5% for Tier 1 NMS Stocks under the Limit Up-Limit Down Plan, 29.5% 
for Tier 2 NMS Stocks under the Limit Up-Limit Down Plan with a price 
equal to or greater than $1.00, and 31.5% for Tier 2 NMS Stocks under 
the Limit Up-Limit Down Plan with a price less than $1.00. Exchange 
Rule 11.8(d)(2)(E) also states that for times during Regular Trading 
Hours when stock pause triggers are not in effect under the rules of 
the primary listing market, the Defined Limit will be 21.5% for 
securities included in the S&P 500[supreg] Index, Russell 1000[supreg] 
Index, and a pilot list of Exchange Traded Products. The Defined Limit 
will remain the same throughout Regular Trading Hours for all other NMS 
stocks.
    The Exchange proposes to delete Interpretation and Policy .01 to 
Rule 11.8 as its content would now be duplicative with the definitions 
of Designated Percentage and Defined Limit under proposed Rules 
11.8(d)(2)(D) and (E).
2. Statutory Basis
    The Exchange believes that the proposed rule change 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.\21\ 
Specifically, the proposed change is consistent with Section 6(b)(5) of 
the Act,\22\ because it is 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, and, 
in general, to protect investors and the public interest. As mentioned 
above, the proposed rule changes, combined with the planned filing for 
the BYX, EDGA, and EDGX, would allow the BGM Affiliated Exchanges to 
provide a consistent set of rules as it relates to the registration and 
obligations of Market Makers. Consistent rules, in turn, will simplify 
the regulatory requirements for Market Makers on the Exchange that are 
also Market Makers on EDGA, EDGX and/or BYX. The proposed rule change 
would provide greater harmonization between rules of similar purpose on 
the BGM Affiliated Exchanges, resulting in greater uniformity and less 
burdensome and more efficient regulatory compliance and understanding 
of Exchange Rules. As such, the proposed rule change would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and would remove impediments to and perfect 
the mechanism of a free and open market and a national market system. 
Similarly, the Exchange also believes that, by harmonizing the rules 
across each BGM Affiliated Exchange, the proposal will enhance the 
Exchange's ability to fairly and efficiently regulate its Market Makers 
by utilizing a consistent rule set and obligations across each of the 
BGM Affiliated Exchanges. Consistent rules would enable the Exchange to 
apply identical standards to that of its affiliates, alleviating 
confusion by Market Makers on who may also be registered as such on 
BYX, EDGA, or EDGX, thereby promoting just and equitable principles of 
trade in accordance with Section 6(b)(5) of the Act.\23\
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ Id.
---------------------------------------------------------------------------

    The Exchange also believes the proposed amendments to Rule 11.8(d) 
are consistent with Section 6(b)(5) of the Act,\24\ 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, and, in general, to protect investors and 
the public interest. The proposed amendments to Rule 11.8(d)(1) are 
meant to clarify the scenarios in which a Market Maker's two-sided 
quoting obligation may be temporarily suspended or alleviated. The 
provisions proposed to be added are each substantially similar to the 
rules of the BZX Options, EDGX Options and Nasdaq.\25\ The Exchange 
believes it is appropriate to have consistent rules across its equities 
and options platforms. Consistent rules would aid in alleviating 
confusion amongst those that are Members on both platforms. The 
Exchange believes it is reasonable to suspend or alleviate a Market 
Maker's quoting obligations in the event of a technical or system 
limitation, during a trading halt, suspension or pause, as well as 
where demonstrated legal or regulatory requirements prevent the Market 
Maker from quoting. In each scenario, the Exchange will review the 
reasons behind the Market Maker inability to quote for compliance with 
the Rule. In addition, the percentages included in the proposed 
definitions of Designated Percentage and Defined Limit are currently 
included in Interpretation and Policy .01 to Rule 11.8. Therefore, the 
Exchange is not proposing to new percentages governing a Market Maker's 
quoting obligations; it is seeking to adopt revised definitions that 
are substantially similar to that of Nasdaq in order to provide a 
consistent rules with regard to Market Makers quoting obligations.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b)(5).
    \25\ See supra notes 12 and 15.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the act. To the contrary, allowing the 
Exchange to

[[Page 1661]]

implement substantively identical rules across each of the BGM 
Affiliated Exchanges regarding Market Maker registration and their 
obligations does not present any competitive issues, but rather is 
designed to provide greater harmonization among Exchange, BYX, EDGX, 
and EDGA rules of similar purpose. The proposed rule change should, 
therefore, result in less burdensome and more efficient regulatory 
compliance and understanding of Exchange Rules for common members of 
the BGM Affiliated Exchanges and an enhanced ability of the BGM 
Affiliated Exchanges to fairly and efficiently regulate Market Makers.

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: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) 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 pursuant to Section 19(b)(3)(A) of the Act \26\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\27\ the Exchange has 
designated this rule filing as non-controversial. The Exchange has 
given 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 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A).
    \27\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    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: (1) 
Necessary or appropriate in the public interest; (2) for the protection 
of investors; or (3) otherwise in furtherance of the purposes of the 
Act. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule 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 No. SR-BATS-2015-121 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 No. SR-BATS-2015-121. 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 No. SR-BATS-2015-121, and should be 
submitted on or before February 3, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00464 Filed 1-12-16; 8:45 am]
BILLING CODE 8011-01-P