Document ID: SEC-2016-0906-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2016-05-26T04:00Z

[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)]
[Notices]
[Pages 33567-33568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12382]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77871; File No. SR-BATS-2015-100]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Designation of a Longer Period for Commission Action on Proceedings To 
Determine Whether To Approve or Disapprove a Proposed Rule Change, as 
Modified by Amendments Nos. 1, 3, and 4 Thereto, To Amend BATS Rule 
14.11(i) To Adopt Generic Listing Standards for Managed Fund Shares

May 20, 2016.
    On November 18, 2015, BATS Exchange, Inc. (now known as Bats BZX 
Exchange, Inc., ``Exchange'') \1\ filed with the Securities and 
Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 
thereunder,\3\ a proposed rule change to amend BATS Rule 14.11(i) by, 
among other things, adopting generic listing standards for Managed Fund 
Shares. The proposed rule change was published for comment in the 
Federal Register on November 25, 2015.\4\ On January 4, 2016, the 
Commission designated a longer period within which to approve the 
proposed rule change, disapprove the proposed rule change, or institute 
proceedings to determine whether to disapprove the proposed rule 
change.\5\ On February 9, 2016, the Exchange filed Amendment No. 1 to 
the proposed rule change,\6\ which replaced the originally filed 
proposed rule change in its entirety.\7\ On February 11, 2016, the 
Exchange both filed and withdrew Amendment No. 2 to the proposed rule 
change. On February 11, 2016, the Exchange filed Amendment No. 3 to the 
proposed rule change.\8\ On February 17, 2016, the Exchange filed 
Amendment No. 4 to the proposed rule change.\9\ On February 22, 2016, 
the Commission issued notice of filing of Amendment Nos. 1, 3, and 4 to 
the proposed rule change and instituted proceedings under Section 
19(b)(2)(B) of

[[Page 33568]]

the Act \10\ to determine whether to approve or disapprove the proposed 
rule change, as modified by Amendment Nos. 1, 3, and 4 thereto.\11\ In 
the Order Instituting Proceedings, the Commission solicited comments to 
specified matters related to the proposal.\12\ The Commission has not 
received any comments on the proposed rule change.
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    \1\ In March 2016, BATS changed its name from ``BATS Exchange, 
Inc.'' to ``Bats BZX Exchange, Inc.'' See Securities Act Release No. 
77307 (Mar. 7, 2016), 81 FR 12996 (Mar. 11, 2016) (SR-BATS-2016-25) 
(publishing notice of the name change to Bats BZX Exchange, Inc.).
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 76478 (Nov. 19, 
2015), 80 FR 73841 (``Notice'').
    \5\ See Securities Exchange Act Release No. 76820, 81 FR 989 
(Jan. 8, 2016). The Commission designated February 23, 2016 as the 
date by which the Commission shall either approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change. See id.
    \6\ Amendment No. 1: (1) Clarifies the proposed treatment of 
convertible securities under the proposed generic listing criteria; 
(2) modifies the proposed criterion regarding American Depositary 
Receipts (``ADRs'') to provide that no more than 10% of the equity 
weight of the portfolio shall consist of non-exchange traded (rather 
than unsponsored) ADRs; (3) modifies the proposed portfolio limit on 
listed derivatives to require that at least 90% of the weight of 
such holdings invested in futures, exchange-traded options, and 
listed swaps shall, on both an initial and continuing basis, consist 
of futures, options, and swaps for which the Exchange may obtain 
information via the Intermarket Surveillance Group (``ISG'') from 
other members or affiliates of the ISG or for which the principal 
market is a market with which the Exchange has a comprehensive 
surveillance sharing agreement (``CSSA''); (4) provides that a 
portfolio's investments in listed and over-the-counter derivatives 
will be calculated for purposes the proposed limits on such holdings 
as the total absolute notional value of the derivatives; (5) makes 
certain other conforming and clarifying changes. The amendments to 
the proposed rule change are available at: http://www.sec.gov/comments/sr-bats-2015-100/bats2015100.shtml.
    \7\ See Amendment No. 1, supra note 6, at 4.
    \8\ Amendment No. 3 deletes from the proposal the following two 
sentences: (1) ``Such limitation will not apply to listed swaps 
because swaps are listed on swap execution facilities (``SEFs''), 
the majority of which are not members of ISG.'' and (2) ``Such 
limitation would not apply to listed swaps because swaps are listed 
on SEFs, the majority of which are not members of ISG.'' Amendment 
No. 3 also corrects an erroneous statement in Item 11 to indicate 
that an Exhibit 4 was included in Amendment No. 1.
    \9\ Amendment No. 4 deletes from the proposal the following 
sentence: ``Thus, if the limitation applied to swaps, there would 
effectively be a cap of 10% of the portfolio invested in listed 
swaps.'' Amendment No. 4 also amends two representations as follows 
(added language in brackets): The Exchange or FINRA, on behalf of 
the Exchange, will communicate as needed regarding trading in 
Managed Fund Shares [and their underlying components] with other 
markets that are members of the ISG, including all U.S. securities 
exchanges and futures exchanges on which the components are traded[, 
or with which the Exchange has in place a CSSA.] In addition, the 
Exchange or FINRA[,] on behalf of the Exchange[,] may obtain 
information regarding trading in Managed Fund Shares [and their 
underlying components] from other markets that are members of the 
ISG, including all U.S. securities exchanges and futures exchanges 
on which the components are traded, or with which the Exchange has 
in place a CSSA.''
    \10\ 15 U.S.C. 78s(b)(2)(B).
    \11\ See Securities Exchange Act Release No. 77202, 81 FR 9889 
(Feb. 26, 2016) (``Order Instituting Proceedings''). Specifically, 
the Commission instituted proceedings to allow for additional 
analysis of the proposed rule change's consistency with Section 
6(b)(5) of the Act, which requires, among other things, that the 
rules of a national securities exchange be ``designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade,'' and ``to protect investors and the 
public interest.'' See id., 81 FR at 9897.
    \12\ See id.
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    Section 19(b)(2) of the Act \13\ provides that, after initiating 
disapproval proceedings, the Commission shall issue an order approving 
or disapproving the proposed rule change not later than 180 days after 
the date of publication of notice of the filing of the proposed rule 
change. The Commission may, however, extend the period for issuing an 
order approving or disapproving the proposed rule change by not more 
than 60 days if the Commission determines that a longer period is 
appropriate and publishes the reasons for such determination. The 
proposed rule change was published for notice and comment in the 
Federal Register on November 25, 2015.\14\ The 180th day after 
publication of the notice of the filing of the proposed rule change in 
the Federal Register is May 23, 2016.
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    \13\ 15 U.S.C. 78s(b)(2).
    \14\ See supra note 4 and accompanying text.
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    The Commission finds that it is appropriate to designate a longer 
period within which to issue an order approving or disapproving the 
proposed rule change so that it has sufficient time to consider the 
proposed rule change, as modified by Amendment Nos. 1, 3, and 4 
thereto.
    Accordingly, the Commission, pursuant to Section 19(b)(2) of the 
Act,\15\ designates July 22, 2016, as the date by which the Commission 
shall either approve or disapprove the proposed rule change, as 
modified by Amendment Nos. 1, 3, and 4 thereto (File No. SR-BATS-2015-
100).
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    \15\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(57).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-12382 Filed 5-25-16; 8:45 am]
 BILLING CODE 8011-01-P