Document ID: SEC-2012-0544-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Y-Exchange, Inc.
Posted Date: 2012-04-06T04:00Z

[Federal Register Volume 77, Number 67 (Friday, April 6, 2012)]
[Notices]
[Pages 20860-20861]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-8360]

[[Page 20860]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66722; File No. SR-BYX-2012-007]

Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Certificate of Incorporation of BATS Global Markets, Inc.

April 3, 2012.
    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 March 19, 2012, BATS Y-Exchange, Inc. (the ``Exchange'' or ``BYX'') 
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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 
certificate of incorporation of BATS Global Markets, Inc. (the 
``Corporation'').
    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
    On May 13, 2011, the Corporation, the sole stockholder of the 
Exchange, filed a registration statement on Form S-1 with the 
Commission seeking to register shares of Class A common stock and to 
conduct an initial public offering of those shares, which will be 
listed for trading on the Exchange (the ``IPO''). In connection with 
its IPO, the Corporation intends to amend and restate its certificate 
of incorporation (the ``New Certificate of Incorporation''). The 
Exchange previously received Commission approval of certain substantive 
amendments to the certificate of incorporation of the Corporation that 
comprise changes included in the New Certificate of Incorporation.\3\ 
Since that date, the Corporation has determined it to be necessary to 
further amend its certificate of incorporation to achieve the final, 
pre-IPO version of the New Certificate of Incorporation. These 
additional amendments will be achieved through the filing with the 
State of Delaware of an Amended and Restated Certificate of 
Incorporation as well as a certificate of amendment to the Amended and 
Restated Certificate of Incorporation. The additional amendments are 
described in further detail below.
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    \3\ See Securities Exchange Act Release No. 65647 (October 27, 
2011), 76 FR 67784 (November 2, 2011) (SR-BYX-2011-021).
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    First, to avoid confusion in the numbering of its certificate of 
incorporation, rather than re-naming the New Certificate of 
Incorporation the ``Third Amended and Restated Certificate of 
Incorporation,'' the Corporation intends to simply name the New 
Certificate of Incorporation the ``Amended and Restated Certificate of 
Incorporation.'' Accordingly, the Exchange proposes to change certain 
references throughout the New Certificate of Incorporation to delete 
all references to the ``Second'' and ``Third'' Amended and Restated 
Certificate of Incorporation.
    Second, the Exchange, on behalf of the Corporation, proposes 
changes to the New Certificate of Incorporation in connection with a 
4.75-for-1 reverse stock split (the ``Reverse Stock Split'') of the 
outstanding shares of common stock of the Corporation (``Common 
Stock''). Accordingly, the number of authorized shares of the 
Corporation's, both in the aggregate and as set forth by class, as 
codified in Section 4.01 of the New Certificate of Incorporation, will 
be adjusted. The Corporation also plans to adjust the preferred stock 
of the Corporation consistent with the Reverse Stock Split. In light of 
the Reverse Stock Split, the proposed amendment also recalculates the 
share holding threshold below which a holder of Class B shares loses 
the right to hold Class B shares, resulting in those shares 
automatically converting into Class A shares, as set forth in Section 
4.04(c)(v)(B) of the New Certificate of Incorporation. The par value of 
the Corporation's Common Stock will remain $0.01 per share.
    Finally, the Exchange, on behalf of the Corporation, proposes to 
correct certain cross-referencing errors in Sections 5.01(c) and 
5.01(d) of the certificate of incorporation.
    The purpose of this rule filing is to permit the Corporation, the 
sole stockholder of the Exchange, to adopt the New Certificate of 
Incorporation, as modified by this proposal. The changes described 
herein relate to the certificate of incorporation of the Corporation 
only, not to the governance of the Exchange. The Exchange will continue 
to be governed by its existing certificate of incorporation and by-
laws. The stock in, and voting power of, the Exchange will continue to 
be directly and solely held solely by the Corporation. The governance 
of the Exchange will continue under its existing structure, which 
provides for a ten member board of directors reflecting diverse 
representation of industry, non-industry and exchange members, 
currently including (i) the chief executive officer of the Exchange, 
(ii) two industry directors, (iii) two Exchange member directors, and 
(iv) five non-industry directors.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and 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.\4\ In particular, the 
proposal is consistent with Section 6(b)(1) of the Act, because it 
retains, without modification, the existing limitations on ownership 
and total voting power that currently exist and that are designed to 
prevent any stockholder from exercising undue control over the 
operation of the Exchange and to assure that the Exchange is able to 
carry out its regulatory obligations under the Act. Under the proposal, 
the Corporation is making certain administrative and

[[Page 20861]]

structural changes to the Corporation's certificate of incorporation. 
These changes, however, do not impact the governance of the Exchange 
nor do they modify the relative ownership of the shareholders of the 
Corporation.
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    \4\ 15 U.S.C. 78f(b).
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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 Changes and Timing for 
Commission Action

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, by its terms, does 
not 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 \5\ and Rule 19b-
4(f)(6) thereunder.\6\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 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 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.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Exchange has argued that the proposed rule change 
is consistent with the protection of investors and the public interest 
because it would permit the Corporation to immediately amend its 
certificate of incorporation to facilitate the Corporation's IPO, and 
because the proposed amendments would not impact the ownership or 
governance of the Exchange.\7\ The Exchange has stated that the 
Corporation's IPO may occur in the near future, and that the changes 
described in this proposal are a critical component of such IPO. The 
Exchange has represented that a waiver of the operative waiting period 
will allow the Corporation to promptly move forward with the IPO 
without delay. The Commission notes that the Exchange has also 
represented that the proposed amendments to the Corporation's 
certificate of incorporation would not impact the Corporation's 
existing governance structure or ownership and voting limitations or 
the Exchange's self-regulatory functions. Therefore, the Commission 
believes that a waiver of the 30-day operative delay is consistent with 
the protection of investors and the public interest. For this reason, 
the Commission hereby waives the 30-day operative delay requirement and 
designates the proposed rule change as operative upon filing.\8\
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    \7\ See SR-BATS-2012-014, Item 7.
    \8\ 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-BYX-2012-007 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-BYX-2012-007. 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 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-BYX-2012-007 and should be 
submitted on or before April 27, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-8360 Filed 4-5-12; 8:45 am]
BILLING CODE 8011-01-P