Document ID: SEC-2009-0714-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BATS Rule 11.13, Entitled "Order Execution"
Posted Date: 2009-05-29T04:00Z

[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Notices]
[Pages 25793-25795]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12446]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59967; File No. SR-BATS-2009-015]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
BATS Rule 11.13, Entitled ``Order Execution''

May 21, 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 19, 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 and 
II 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).
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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 11.13, entitled 
``Order Execution,'' to provide Users \5\ of the Exchange with another 
option with respect to the Exchange's method of processing the unfilled 
balance of a limit order that returns to the Exchange and is posted to 
the BATS Book after being routed away to one or more away Trading 
Centers \6\ for execution.
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    \5\ As defined in BATS Rule 1.5(bb).
    \6\ As defined in BATS Rule 2.11.
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    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

[[Page 25794]]

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 Users of the 
Exchange with another option with respect to the Exchange's method of 
processing the unfilled balance of a limit order that returns to the 
Exchange and is posted to the BATS Book after being routed away to one 
or more away Trading Centers for execution. Specifically, the Exchange 
will allow Users to designate an order as eligible for re-routing after 
being posted to the BATS Book if another Trading Center has locked or 
crossed the posted order.
    The Exchange currently allows Users to submit various types of 
limit orders to the Exchange that are processed pursuant to Rules 
11.13(a)(1) and 11.13(a)(2)(B), as set forth below. Rule 11.13(a)(1) 
describes the process by which an incoming order would execute against 
the BATS Book.\7\ To the extent an order has not been executed in its 
entirety against the BATS Book, Rule 11.13(a)(2)(B) then describes the 
process of routing marketable limit orders \8\ to one or more Trading 
Centers, including a description of how the Exchange treats any 
unfilled balance that returns to the Exchange following the first 
attempt to fill the order through the routing process. If not filled 
through routing, and based on the order instructions, the unfilled 
balance of the order may be posted to the BATS Book. The Exchange is 
proposing to permit Users to designate the order as eligible to be 
routed away from the Exchange, after being posted, to the extent 
another Trading Center locks or crosses the posted order. The Exchange 
believes that the proposed change to Rule 11.13 will give additional 
flexibility with respect to the treatment of their orders and may 
result in such orders being executed more quickly. The proposed option 
to route a posted order to a locking or crossing market is offered by 
at least one of the Exchange's competitors.\9\
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    \7\ As defined in BATS Rule 1.5(d).
    \8\ Market orders are also routed away, pursuant to Rule 
11.13(a)(2)(A), however the Exchange is not proposing any changes to 
the treatment of routed market orders at this time.
    \9\ See, e.g., NASDAQ Rule 4758(a)(1)(A)(ii).
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2. Statutory Basis
    The rule change proposed in this submission 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.\10\ Specifically, the 
proposed change is consistent with Section 6(b)(5) of the Act,\11\ 
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, by allowing Users to instruct the Exchange to 
route a posted order away from the Exchange to the extent another 
market has locked or crossed such order. This functionality will allow 
the Exchange to seek to execute the resting order if market conditions 
have changed since such order was originally posted.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement of 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 Change and Timing for 
Commission Action

    Because the foregoing rule change does not: (1) Significantly 
affect the protection of investors or the public interest; (2) impose 
any significant burden on competition; and (3) become operative for 30 
days after the date of this filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b 4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing.\14\ 
However, Rule 19b 4(f)(6)(iii)\15\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has requested that the 
Commission waive the 30-day operative delay. The Commission notes that 
BATS' proposal is substantially similar to the rules of another 
national securities exchanges and does not raise any new substantive 
issues.\16\ BATS expects to have operational and technological changes 
in place to support the proposed rule change on May 22, 2009.\17\ In 
addition, BATS states that the proposed functionality is completely 
optional, and will not require any programming changes by Users of the 
Exchange unless they choose to use the new functionality. Based on the 
foregoing, the Commission believes that waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest and hereby designates the proposal operative upon filing.\18\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
the Commission 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. The Commission deems this requirement to have been 
satisfied.
    \15\ Id.
    \16\ See supra note 9.
    \17\ See SR-BATS-2009-015, Item 7.
    \18\ For the 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 such 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 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 No. SR-BATS-2009-015 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 25795]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File No. SR-BATS-2009-015. 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 also will be available for 
inspection and copying at the principal office of BATS. 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-2009-015 and should be 
submitted on or before June 19, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-12446 Filed 5-28-09; 8:45 am]
BILLING CODE 8010-01-P