Document ID: SEC-2009-0748-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2009-06-08T04:00Z

[Federal Register: June 8, 2009 (Volume 74, Number 108)]
[Notices]               
[Page 27222-27224]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jn09-118]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60019; File No. SR-BATS-2009-018]

 
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Change 
the Criteria for Becoming a Member of the Nominating Committee

June 1, 2009.
    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 May 28, 2009, BATS Exchange, Inc. (``BATS'' or the 
``Exchange'') 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.
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    \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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Article VI, Section 2 of the Amended 
and Restated By-Laws of BATS Exchange, Inc. (the ``By-Laws'').
    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

[[Page 27223]]

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 Exchange proposes to amend the Exchange's By-Laws, specifically 
Article VI, Section 2, for the purpose of allowing additional Directors 
to serve on the Nominating Committee. As currently written, the By-Laws 
allow only one Director in his or her final year of service on the 
Board to serve on the Nominating Committee, and that Director must be a 
Non-Industry Director. The Exchange proposes an amendment to Article 
VI, Section 2 to allow any Director whose class \5\ is not being 
considered for nomination and election in the coming year to serve on 
the Nominating Committee. The proposed amendment would expand the 
number of current Directors eligible for participation on the 
Nominating Committee, and allow more Directors to participate in the 
Nominating Committee and thereby be more closely involved in the 
process of identifying candidates to serve as Directors.\6\
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    \5\ As described in Article III, Section 3(b) of the By-Laws, 
Directors are divided into three classes and serve staggered terms.
    \6\ The proposed rule change would have no effect on the process 
of selecting Member Representative Directors as described in Article 
III, Section 4 and Article VI, Sections 1 and 3 of the By-Laws.
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    The Exchange believes that more than one Director, including 
Industry Directors, should be permitted to serve on the Nominating 
Committee and that the current By-Laws, which allow only a single Non-
Industry Director to serve on the Nominating Committee in his or her 
last year of service, is unduly restrictive. The Exchange is proposing 
to retain the requirement that the number of Non-Industry members of 
the Nominating Committee shall equal or exceed the number of Industry 
members on the Nominating Committee and believes that this requirement 
is sufficient to ensure adequate representation of Industry and Non-
Industry interests.
    In addition, as proposed, the Exchange would prohibit any Director 
from serving on the Nominating Committee if that Director's class is up 
for reelection, unless that Director is in his or her final year of 
service and is not standing for reelection. The Exchange believes that 
this prohibition would sufficiently prevent a Director from 
participating in nominating himself or herself to the Board. At the 
same time, the Exchange's proposal is less restrictive than the current 
prohibition and would, therefore, enable a larger number of current 
Directors to consider participation on the Nominating Committee.
    The Exchange has proposed these changes because it believes that 
Directors are particularly well-suited to nominate Director candidates 
due to the first-hand knowledge they gain through service on the Board. 
In particular, Directors serving on the Nominating Committee will be 
qualified to evaluate the strengths and weaknesses of the Board and 
find other candidates for Director that best fit the needs of the 
Board. Additionally, the experience brought by Directors to the 
Nominating Committee will be an asset to any non-Director members of 
the Nominating Committee through the sharing of knowledge and 
information about the operations of the Exchange and the Board.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \7\ in general, and furthers the objectives of: (1) 
Section 6(b)(1) of the Act,\8\ which requires a national securities 
exchange to be so organized and have the capacity to carry out purposes 
of the Act and to enforce compliance by its members and persons 
associated with its members with the provisions of the Act; (2) Section 
6(b)(3) of the Act,\9\ which requires that the rules of a national 
securities exchange assure the fair representation of its members in 
the selection of its directors and administration of its affairs, and 
provides that one or more directors shall be representative of issuers 
and investors and not be associated with a member of the exchange, 
broker or dealer (the ``fair representation requirement''); and Section 
6(b)(5) of the Act,\10\ in that it is designed, among other things, to 
prevent fraudulent and manipulative acts and practices, 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.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78(b)(1).
    \9\ 15 U.S.C. 78(b)(3).
    \10\ 15 U.S.C. 78f(b)(5).
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    Specifically, Members will continue to be represented on the Board 
and on key standing committees. Further, the Exchange's proposal does 
not alter the existing compositional requirements of the Board, which 
provide a balance between Industry, Member, Non-Industry, and 
Independent representatives, nor does the proposal alter the existing 
compositional balance between Industry and Non-Industry representatives 
on the Nominating Committee.

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

    No written comments were solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change is non-controversial and 
does not: (i) Significantly affect the protection of investors or the 
public interest; (ii) impose any significant burden on competition; and 
(iii) 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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to provide the Commission 
with 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. BATS has met this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate 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 proposal is 
consistent with the Act. Comments may

[[Page 27224]]

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 e-mail to rule-comments@sec.gov. Please include 
File No. SR-BATS-2009-018 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 No. SR-BATS-2009-018. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying 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 will also 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-2009-018 and should be 
submitted on or before June 29, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Florence E. Harmon,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E9-13208 Filed 6-5-09; 8:45 am]

BILLING CODE 8010-01-P