Document ID: SEC-2012-1087-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2012-07-06T04:00Z

[Federal Register Volume 77, Number 130 (Friday, July 6, 2012)]
[Notices]
[Pages 40109-40110]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16516]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67306; File No. SR-BATS-2012-025]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Extend 
the Penny Pilot Program

June 28, 2012.
    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 June 19, 2012, 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. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \4\ and Rule 19b-
4(f)(6)(iii) thereunder,\5\ 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal for the BATS Options Market (``BATS 
Options'') to extend through December 31, 2012, the Penny Pilot Program 
(``Penny Pilot'') in options classes in certain issues (``Pilot 
Program'') previously approved by the Commission.\6\
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    \6\ The rules of BATS Options, including rules applicable to 
BATS Options' participation in the Penny Pilot, were approved on 
January 26, 2010. See Securities Exchange Act Release No. 61419 
(January 26, 2010), 75 FR 5157 (February 1, 2010) (SR-BATS-2009-
031). BATS Options commenced operations on February 26, 2010. The 
Penny Pilot was extended for BATS Options through June 30, 2012. See 
Securities Exchange Act Release No. 65965 (December 15, 2011), 76 FR 
79244 (December 21, 2011) (SR-BATS-2011-050).
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    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 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 purpose of this filing is to extend through December 31, 2012, 
the Penny Pilot in options classes in the Pilot Program as previously 
approved by the Commission, and to provide a revised date for adding 
replacement issues to the Pilot Program. The Exchange proposes that any 
Pilot Program issues that have been delisted may be replaced on the 
second trading day following July 1, 2012. The replacement issues will 
be selected based on trading activity for the six month period 
beginning December 1, 2011, and ending May 31, 2012.
    In the Exchange's filing to propose the rules to govern BATS 
Options,\7\ the Exchange proposed commencing operations for BATS 
Options by trading all options classes that were, as of such date, 
traded by other options exchanges pursuant to the Penny Pilot and then 
expanding the Penny Pilot on a quarterly basis, 75 classes at a time, 
through August 2010. Consistent with this proposal, since it commenced 
operations the Exchange has twice expanded the options classes subject 
to the Penny Pilot.\8\ The Exchange represents that the Exchange has 
the necessary system capacity to continue to support operation of the 
Penny Pilot.
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    \7\ See Securities Exchange Act Release No. 61097 (December 2, 
2009), 74 FR 64788 (December 8, 2009) (SR-BATS-2009-031) (Notice of 
Filing of Proposed Rule Change to Establish Rules Governing the 
Trading of Options on the BATS Options Exchange).
    \8\ See Securities Exchange Act Release No. 62595 (July 29, 
2010), 75 FR 47043 (August 4, 2010) (SR-BATS-2010-019); Securities 
Exchange Act Release No. 62033 (May 4, 2010), 75 FR 26301 (May 11, 
2010) (SR-BATS-2010-009).
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    The Exchange believes the benefits to public customers and other 
market participants who will be able to express their true prices to 
buy and sell options have been demonstrated to outweigh the increase in 
quote traffic.
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.\9\ In particular, the 
proposal is consistent with Section 6(b)(5) of the Act,\10\ 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. The Exchange believes that the Pilot 
Program promotes just and equitable principles of trade by enabling 
public customers and other market participants to express their true 
prices to buy and sell options. Accordingly, the Exchange believes that 
the proposal is consistent with the Act because it will allow the 
Exchange to extend the Pilot Program prior to its expiration on June 
30, 2012. The Exchange notes that this proposal does not propose any 
new policies or provisions that are unique or unproven, but instead 
relates to the continuation of an existing program that operates on a 
pilot basis.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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.

[[Page 40110]]

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 \11\ and Rule 19b-4(f)(6) thereunder.\12\ 
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 \13\ and Rule 19b-
4(f)(6)(iii) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing.\15\ 
However, pursuant to Rule 19b-4(f)(6)(iii),\16\ 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 immediately upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because doing so will 
allow the Pilot Program to continue without interruption in a manner 
that is consistent with the Commission's prior approval of the 
extension and expansion of the Pilot Program and will allow the 
Exchange and the Commission additional time to analyze the impact of 
the Pilot Program.\17\ Accordingly, the Commission designates the 
proposed rule change as operative upon filing with the Commission.\18\
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    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 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. The 
Exchange has satisfied this pre-filing requirement.
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ See supra note 6.
    \18\ For 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).
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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-2012-025 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-2012-025. 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 the 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-BATS-2012-025 and should be 
submitted on or before July 27, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-16516 Filed 7-5-12; 8:45 am]
BILLING CODE 8011-01-P