Document ID: SEC-2008-1281-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2008-09-19T04:00Z

[Federal Register: September 19, 2008 (Volume 73, Number 183)]
[Notices]               
[Page 54440-54442]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19se08-107]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58546; File No. SR-BATS-2008-003]

 
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
BATS Rule 11.5, Entitled ``Orders and Modifiers,'' To Provide for a New 
Order Type--Modified Destination Specific Order

September 15, 2008.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 54441]]

(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 8, 2008, 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. BATS has 
designated the proposed rule change as constituting a non-controversial 
rule change under Rule 19b-4(f)(6) under the Act,\3\ which renders the 
proposal 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend BATS Rule 11.5, entitled 
``Orders and Modifiers,'' to provide for a new order type, a Modified 
Destination Specific Order.
    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 the proposed rule change is to provide an additional 
order type to Users of the Exchange. The proposed new order type is a 
``Modified Destination Specific Order,'' which is a market or limit 
order that instructs the System to route the order to a specified away 
trading center or centers as approved by the Exchange from time to 
time. Such trading centers may include execution venues know as ``dark 
books.'' The order would not be exposed to the BATS Book before being 
routed to a specified destination or destinations. An order that is not 
executed in full after routing away would return to the Exchange, 
receive a new timestamp, and be processed in the manner described in 
Rule 11.9(a)(2). The routing performed in connection with this new 
order type will be conducted by an affiliate of the Exchange, BATS 
Trading, Inc. (the ``Outbound Router''), which is regulated as a 
facility of the Exchange (as defined in Section 3(a)(2) of the Act),\4\ 
subject to Section 6 of the Act.\5\ The role and functions of the 
Outbound Router are set forth in BATS Rule 2.11, which has previously 
been approved by the Commission. Routing of Modified Destination 
Specific Orders will be subject to the same requirements as other 
orders routed by the Outbound Router, which are contained in Rule 2.11. 
Accordingly, the Exchange believes that routing of Modified Destination 
Specific Orders is consistent with the previously approved functions of 
the Outbound Router, and the Exchange does not believe that such 
functions are expanded through the addition of this order type.
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    \4\ 15 U.S.C. 78c(a)(2).
    \5\ 15 U.S.C. 78f.
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    The Exchange believes that a Modified Destination Specific Order 
will enhance order execution opportunities for market participants by 
allowing such participants to access, at a potentially reduced fee, 
pools of liquidity in addition to orders resting on the Exchange. 
Accordingly, the addition of a Modified Destination Specific Order type 
to BATS Rule 11.5 promotes just and equitable principles of trade, 
removes impediments to, and perfects the mechanism of, a free and open 
market and a national market system.
2. Statutory Basis
    The Exchange believes the 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).\6\ In particular, for the 
reasons described above, the proposed change is consistent with Section 
6(b)(5) of the Act,\7\ 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, and, in 
general, protect investors and the public interest.
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    \6\ 15 U.S.C. 78(f)(b). [sic]
    \7\ 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.

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 \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). Upon request from BATS, the 
Commission has waived the requirement that the Exchange provide 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing. 17 CFR 
240.19b-4(f)(6)(iii).
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    The Exchange believes that the addition of the new order type, a 
Modified Destination Specific Order, is consistent with other rules of 
the Exchange previously approved by the Commission, including: (1) Its 
Destination Specific Order, which operates similarly to the proposed 
order type, except that a Destination Specific Order does not bypass 
the BATS Book when first received by the Exchange,\10\ and (2) Rule 
2.11, which governs the Outbound Router of the Exchange. Furthermore, 
the Exchange believes that a Modified Destination Specific Order will 
enhance order execution opportunities for market participants by 
allowing such participants to access, at a potentially reduced fee, 
pools of liquidity in addition to orders resting on the Exchange.
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    \10\ See BATS Rule 11.5(c)(10).
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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.

[[Page 54442]]

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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-BATS-2008-003 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 Number SR-BATS-2008-003. 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, on official business 
days between the hours of 10 a.m. and 3 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-2008-003 and should be submitted on or before October 10, 2008.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-21947 Filed 9-18-08; 8:45 am]

BILLING CODE 8010-01-P