Document ID: SEC-2011-1054-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Y-Exchange, Inc.
Posted Date: 2011-07-22T04:00Z

[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Notices]
[Pages 44064-44065]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-18497]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64901; File No. SR-BYX-2011-015]

Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Make 
Certain Changes Consistent With the Upcoming Implementation of the 
Market Access Rule

 July 18, 2011.
    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 July 12, 2011, BATS Y-Exchange, Inc. (``BYX'' 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)(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 BYX Rule 11.13 to make certain 
changes consistent with the upcoming implementation of the adoption of 
Rule 15c3-5 under the Act (the ``Market Access Rule'').\5\
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    \5\ 17 CFR 240.15c3-5.
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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 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
    On November 3, 2010, the Commission adopted the Market Access 
Rule,\6\ pursuant to which, among other things, broker-dealers 
providing market access are required to implement certain pre-order 
entry checks in order to manage the financial, regulatory, and other 
risks associated with providing its customers with market access. In 
anticipation of the upcoming July 14, 2011 compliance date for the 
Market Access Rule, the Exchange is proposing to amend BYX Rule 11.13 
to describe the manner in which the Exchange's affiliated routing 
broker-dealer, BATS Trading, Inc. (``BATS Trading'') will handle 
routable orders consistent with the Market Access Rule.
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    \6\ See Securities Exchange Act Release No. 63241 (November 3, 
2010), 75 FR 69792 (November 15, 2010).
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    In order to comply with the Market Access Rule, BATS Trading 
proposes to implement, certain tests, on both an order-by-order basis 
and over a short period of time, that are designed to limit the 
financial exposure that could arise as a result of market access and to 
ensure compliance with all regulatory requirements that are applicable 
in connection with market access. Consistent with the requirements of 
the Market Access Rule, these tests are designed to reject orders that 
BATS Trading deems to be erroneous or duplicative, would cause the 
entering Member's credit exposure to exceed a preset credit threshold, 
or are non-compliant with applicable pre-trade regulatory requirements 
(as defined in the Market Access Rule). To the extent BATS Trading 
determines, based on its procedures, that an order should be rejected, 
BATS Trading may also seek to cancel orders that have already been 
routed away.
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.\7\ In particular, the 
proposed change is consistent with Section 6(b)(5) of the Act,\8\ 
because it would promote just and equitable principles of trade, and, 
in general, protect investors and the public interest. The proposed 
rule is consistent with the requirements of the Act because the change 
is necessary for the Exchange's affiliated broker-dealer, BATS Trading, 
to comply with the Market Access Rule. The Exchange also believes that 
the proposed changes will benefit Members of the Exchange because it 
provides clarity on the procedures employed by BATS Trading consistent 
with the Market Access Rule.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 Changes and Timing for 
Commission Action

    Because the foregoing proposed rule change 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 \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date

[[Page 44065]]

of filing.\11\ However, Rule 19b-4(f)(6)(iii) \12\ 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 asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
notes that waiving the 30-day operative delay will allow BATS Trading 
to comply with Rule 15c3-5 under the Act by July 14, 2011; \13\ the 
compliance date for Rule 15c3-5. For this reason, the Commission 
believes that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest, and designates the 
proposed rule change to be operative upon filing with the 
Commission.\14\
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    \11\ 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 Exchange has satisfied this requirement.
    \12\ Id.
    \13\ 17 CFR 240.15c3-5.
    \14\ 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 proposal 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-BYX-2011-015 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-BYX-2011-015. 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 changes 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 
am and 3 pm. 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-BYX-2011-015 and should be 
submitted on or before August 12, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-18497 Filed 7-21-11; 8:45 am]
BILLING CODE 8011-01-P