Document ID: SEC-2008-1617-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc.
Posted Date: 2008-11-28T05:00Z

[Federal Register: November 28, 2008 (Volume 73, Number 230)]
[Notices]               
[Page 72533-72534]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28no08-125]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58989; File No. SR-BATS-2008-010]

 
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Fees of Other Market Centers Related to Clearly Erroneous Rulings

November 20, 2008.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 19, 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 one establishing or changing a 
member due, fee, or other charge imposed by the Exchange under section 
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposed rule change 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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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 implement the proposed rule change 
immediately. 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
    BATS Rule 11.17, which covers the breaking of trades determined to 
be clearly erroneous, includes a provision, paragraph (c)(2)(E), that 
assesses a fee of $500.00 for unsuccessful appeals of clearly erroneous 
adjudications by the Exchange. The Exchange is now adding a sentence to 
the rule to provide that in instances where the Exchange, on behalf of 
a Member, requests a determination by another market center that a 
transaction is clearly erroneous, the Exchange will pass any resulting

[[Page 72534]]

charges through to the relevant Member. The proposed change reflects 
the fact that other market centers impose a similar $500 appellate fee 
to that charged by the Exchange.
    If a Member enters an order into the Exchange that is routed to 
another market center and executed there, the Member may not have 
standing to file under that market center's rules to seek a 
determination that the execution was clearly erroneous if it is not a 
member of that market center. Accordingly, BATS Trading, Inc., the 
Exchange's routing broker-dealer, which is a member of various market 
centers, including the NASDAQ Stock Market LLC (``NASDAQ'') and NYSE 
Arca, Inc. (``NYSE Arca''), may file a petition under that market 
center's rules upon request of a Member. If an appeal is unsuccessful, 
the Exchange or its affiliated routing broker-dealer may be charged 
under the applicable market center's rules.\5\ Accordingly, the 
Exchange proposes to pass the charge through, on a dollar-for-dollar 
basis, to the Member that requested the appeal.
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    \5\ For instance, both NASDAQ and NYSE Arca currently charge 
$500.00 for unsuccessful appeals of clearly erroneous 
determinations. See NASDAQ Rule 11890(e)(3) and NYSE Arca Rule 
7.10(c)(5).
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2. Statutory Basis
    The Exchange believes that 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 of the 
Act.\6\ Specifically, the proposed rule change is consistent with 
section 6(b)(4) of the Act,\7\ in that it provides for the equitable 
allocation of reasonable dues, fees and other charges among members and 
other persons using any facility or system which the Exchange operates 
or controls. The Exchange believes that the change will appropriately 
allocate charges for adjudications under the clearly erroneous rules of 
other market centers to the Members that initiate such adjudications.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to section 19(b)(3)(A)(ii) of the Act \8\ and Rule 19b-
4(f)(2) thereunder,\9\ because it establishes or changes a due, fee or 
other charge imposed on members by the Exchange. Accordingly, the 
proposal is effective upon filing with the Commission.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(6).
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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 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-2008-010 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-2008-010. 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-2008-010 and should be submitted on or before December 19, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-28222 Filed 11-26-08; 8:45 am]

BILLING CODE 8011-01-P