Document ID: SEC-2012-0697-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2012-05-07T04:00Z

[Federal Register Volume 77, Number 88 (Monday, May 7, 2012)]
[Notices]
[Pages 26811-26812]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-10880]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66891; File No. SR-BATS-2012-016]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
Exchange Rule 11.9 and Rule 21.1 To Allow Optional Attribution of 
Orders

May 1, 2012.
    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 April 25, 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 
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 Rule 
11.9, entitled ``Orders and Modifiers'' and Rule 21.1, entitled 
``Definitions'', to allow optional attribution of orders submitted to 
the Exchange in Exchange data feeds.
    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 this filing is to allow Users to optionally enter 
orders into the Exchange's systems that will be displayed in Exchange 
data feeds with such User's market participant identifiers or 
``MPIDs''. Specifically, the Exchange proposes to amend Rule 11.9, 
which is applicable to the Exchange's equities platform (``BATS 
Equities'') to add a definition of an Attributable Order, which shall 
mean an order that is designated for display (price and size) including 
the User's MPID. The Exchange also proposes to adopt a definition in 
Rule 11.9 for a Non-Attributable Order, which shall mean an order that 
is designated for display (price and size) on an anonymous basis by the 
Exchange. Similarly, the Exchange propose to amend Rule 21.1, which is 
applicable to the Exchange's equity options platform (``BATS Options'') 
to add a definition of an Attributable Order, shall mean an order that 
is designated for display (price and size) next to the User's MPID. The 
Exchange also proposes to adopt a definition in Rule 21.1 for a Non-
Attributable Order, which shall mean an order that is designated for 
display (price and size) on an anonymous basis by the Exchange. The 
proposed definitions of Attributable Order and Non-Attributable Order 
are virtually identical between BATS Equities and BATS Options, and are 
also substantively identical to definitions contained in the Rules of 
The NASDAQ Stock Market LLC (``Nasdaq'') and the Nasdaq Options Market 
(``NOM''), respectively, as described in further detail below.
    All display-eligible orders entered into BATS Equities and BATS 
Options are currently displayed by the Exchange on an anonymous basis 
without attribution to the entering User. The Exchange is proposing to 
allow Users to utilize Attributable Orders to include their MPID on 
published quotations in the Exchange's data feeds. The Exchange 
believes that such display is consistent with traditional market making 
on the floor of an exchange as well as existing rules of the Exchange's 
competitors.\3\ The addition of Attributable Orders will allow a party 
engaged in market making to identify itself as the party willing to buy 
or sell securities on the Exchange.
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    \3\ See Nasdaq Rule 4751(e)(1) and (2) and NOM Chapter VI, 
Section (1)(d)(1) and (2); see also NYSE Arca Options Rule 6.62(x).
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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.\4\ In particular, the 
proposal is consistent with Section 6(b)(5) of the Act,\5\ 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 proposal 
will benefit market participants and help to promote transparency by 
providing additional information regarding quotations displayed on the 
Exchange. Specifically, any User that wishes to publicly disclose their 
identity when quoting on the Exchange will be permitted to do so, and 
such attributed quotations will be analogous to the quotations they 
provide in other contexts (e.g., on the floor of a floor-based stock 
exchange or in the over-the-counter market through direct interaction). 
The proposal also promotes transparency in that other Users will be 
able to see with whom they are interacting when trading against 
displayed, attributed orders.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is also consistent with Section 11A(a)(1) 
of the Act \6\ in that it seeks to assure fair competition among 
brokers and dealers by providing functionality that is

[[Page 26812]]

consistent with that of functionality offered by the Exchange's 
competitors.\7\ The Exchange believes that the proposed rule change 
promotes just and equitable principles of trade in that it promotes 
transparency and uniformity across markets concerning the ability to 
display an attributed order on an exchange.
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    \6\ 15 U.S.C. 78k-1(a)(1).
    \7\ See supra note 4.
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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 \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 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 believes that the proposed rule change is 
consistent with the protection of investors and the public interest 
because it would permit the Exchange to immediately implement the 
proposed rule change that would allow the Exchange to compete with 
other exchanges that offer a similar optional attribution of quotations 
functionality.\10\ The Exchange represented that the proposed rule is 
substantially similar to and based on rules of other exchanges and that 
the waiver of the 30-day operative delay would help ensure uniformity 
across market centers concerning the display of attributed quotations. 
Further, the Exchange believes that because the attribution 
functionality is optional, there will be no need for a phased 
implementation as Users that do not wish to avail themselves of the 
options functionality would not have to make any systems changes. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Such waiver would allow the Exchange to offer a functionality to market 
participants that is substantially similar other exchanges without 
delay. The Commission notes that the proposed rule change is based on 
and similar to NASDAQ Rule 4751(e)(1) and (2).\11\ Additionally, the 
Commission notes that this attribution functionality is optional. 
Therefore, the Commission designates the proposal operative upon 
filing.\12\
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    \10\ See SR-BATS-2012-016, Item 7.
    \11\ See supra note 3.
    \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-2012-016 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-2012-016. 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 publicly available. All 
submissions should refer to File Number SR-BATS-2012-016 and should be 
submitted on or before May 29, 2012.

    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. 2012-10880 Filed 5-4-12; 8:45 am]
BILLING CODE 8011-01-P