[Federal Register Volume 77, Number 199 (Monday, October 15, 2012)]
[Notices]
[Pages 62572-62576]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-25280]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68022; File No. SR-BATS-2012-039]


 Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing of Proposed Rule Change, as Modified by Amendment No.1, To Adopt 
Listing Standards Related to Certain Compensation Committee and 
Compensation Adviser Requirements

October 9, 2012.
    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 September 25, 2012, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which filing was amended and replaced in its entirety by 
Amendment No. 1 thereto on October 9, 2012, and which Items have been 
prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange's proposed rule change would amend BATS Rule 14.10, 
entitled ``Corporate Governance Requirements,'' in accordance with the 
provisions of Section 952 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010 (the ``Dodd-Frank Act'') requiring the 
listing rules of a national securities exchange to prohibit the listing 
of any equity security of an issuer that is not in compliance with 
certain compensation committee and compensation adviser requirements, 
as well as modifying the numbering of Rule 14.10 in order to 
accommodate the proposed amendments and additions.
    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. The proposed 
rule text can be found in Exhibit 5.

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
    This Amendment No. 1 to SR-BATS-2012-039 (the ``Filing'') amends 
and replaces in its entirety the Filing as originally submitted on 
September 25, 2012. Amendment No. 1 further clarifies

[[Page 62573]]

certain aspects of proposed Rule 14.10 as originally filed.\3\
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    \3\ The Commission notes that the filed Amendment No. 1 changed 
language in sections (ii), (iii), and (iv) of Rule 14.10(c)(4)(C) to 
clarify the responsibilities and obligations of Independent 
Directors responsible for determining executive compensation, as 
well as their rights and obligations regarding Compensation 
Consultants. In addition, the Commission notes that Amendment No. 1 
made clarifying descriptive changes in the Purpose section of the 
filing regarding: Changes to the rule text; the factors for 
determining compensation committee independence; the elimination of 
existing exemptions for asset-backed issuers and cooperatives; the 
phase-in period for initial public offerings; and the exemption for 
Smaller Reporting Companies.
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    Section 952 of the Dodd-Frank Act added Section 10C to the Act,\4\ 
which requires the listing rules of each national securities exchange 
to prohibit the listing of any equity security of an issuer that is not 
in compliance with the compensation committee and compensation adviser 
requirements of Rule 10C-1 under the Act (``Rule 10C-1'').\4\ 
Specifically, Rule 10C-1 requires the Exchange to establish listing 
standards that require each member of a listed issuer's compensation 
committee to be a member of the board and to be independent, as well as 
establish certain factors that an issuer must consider when evaluating 
the independence of a director. Rule 10C-1 also requires the Exchange 
to establish standards for evaluating the independence of a 
compensation consultant, legal counsel, or other adviser 
(``Compensation Consultant'') and requires a Company to provide funding 
to a compensation committee to retain such Compensation Consultant. 
Accordingly, in order to carry out the requirements of Section 952 of 
the Dodd-Frank Act, the Exchange proposes to make several amendments to 
Rule 14.10.
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    \4\ 15 U.S.C. 78f(b).
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    The Exchange proposes to amend Rule 14.10(c)(4)(A) and (B) to 
require that, in addition to meeting the criteria listed under Rule 
14.10(c)(1)(B), in evaluating the independence of a director acting in 
the capacity described in Rule 14.10(c)(4)(B), the board of directors 
of a Company \5\ shall consider the following factors: (i) The source 
of compensation of the director, including any consulting, advisory or 
other compensatory fee paid by the Company to such director; and (ii) 
whether the director is affiliated with the Company, a subsidiary of 
the Company, or an affiliate of a subsidiary of the Company.
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    \5\ As defined in BATS Rule 14.1(a)(3).
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    The Exchange believes that the adoption of proposed Rule 
14.10(c)(4)(A), along with the existing bright line tests for director 
independence under Rule 14.10(c)(1)(B), would bring the Exchange in 
compliance with Rule 10C-1(b)(1), because the Rules would require that 
each director that is acting in the capacity described in Rule 
14.10(c)(4)(B) be independent based on an evaluation by the board that 
include the consideration of the proposed factors in Rule 
14.10(c)(4)(A). In determining these independence requirements, the 
Exchange considered relevant factors, including, but not limited to: 
The source of compensation of a director, including any consulting, 
advisory or other compensatory fee paid by the Company to such director 
and whether the director of a Company is affiliated with the Company, a 
subsidiary of the Company, or an affiliate of a subsidiary of the 
Company. Rule 10C-1 permits the Exchange to consider other relevant 
factors in determining the independence requirements for compensation 
committee members.\6\ After reviewing its current and proposed listing 
rules, the Exchange concluded that these rules are sufficient to ensure 
the independence of Independent Directors acting in the capacity 
described in Rule 14.10(c)(4)(B). The Exchange believes that its 
existing ``bright line'' independence standards as set forth in Rule 
14.10(c)(1)(B) are sufficiently broad to encompass the types of 
relationships which would generally be material to a director's 
independence for determining executive officer compensation. Therefore, 
the Exchange determined not to propose independence requirements in 
addition to those specific considerations required by proposed Rule 
14.10(c)(4)(A). After considering the factors provided in Rule 10C-
1(b)(1)(ii) and evaluating how the factors could impact the ability of 
a director to act independently in the determination [sic] executive 
compensation, the Exchange believes that it can best comply with Rule 
10C-1 by adopting in its Rules the factors set forth in Rule 10C-
1(b)(1)(ii). The Exchange believes that this approach will best provide 
the board of directors of a Company with the requisite guidance and 
discretion to evaluate the independence of each director as it relates 
to the determination of executive compensation.
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    \6\ See 17 CFR 240.10C-1(b)(1)(ii).
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    The Exchange is also proposing to amend Rule 14.10(c)(4)(B) to add 
a title to and adjust the numbering of the Rule. The changes are being 
proposed in order to remain consistent with existing rule structure and 
to ensure that the rules are well-organized and easily understandable.
    The Exchange is also proposing to delete existing Rule 
14.10(c)(4)(C). As currently written, Rule 14.10(c)(4)(C) provides an 
exception to the independence standards under Rule 14.10(c)(4)(A) and 
(B) where the compensation committee is comprised of at least three 
members, permitting one director who is not independent and is not a 
current officer or employee or a family member of an officer or 
employee to be appointed to the compensation committee if the board 
determines that such individual's membership is required by the best 
interest of the Company. However, no such exception exists under Rule 
10C-1 and, after considering the factors relevant to compensation 
committee independence under Rule 10C-1, the Exchange believes that 
deletion of the exception under its rules would comply with Rule 10C-1.
    Additionally, the Exchange is proposing to add Rule 
14.10(c)(4)(C)(i) to permit the compensation committee of a Company, 
acting in its capacity as a committee of the Company's board of 
directors and in its sole discretion, to retain or obtain the advice of 
a Compensation Consultant. The Company must provide for appropriate 
funding, as determined by the compensation committee, for payment of 
reasonable compensation to a Compensation Consultant retained by the 
compensation committee. The Exchange believes that this proposed Rule 
14.10(c)(4)(C)(i) would comply with Rule 10C-1 and, more specifically, 
Rule 10C-1(b)(2)(i) in that it would provide the compensation committee 
of the Company's board of directors with the authority to retain or 
obtain the advice of a Compensation Consultant. Further, proposed Rule 
14.10(c)(4)(C)(i) would require the Company to provide appropriate 
funding to the compensation committee for such Compensation Consultant, 
as required under Rule 10C-1(b)(3).
    The Exchange is also proposing to amend Rule 14.10(c)(4)(C)(ii) to 
require Independent Directors of a Company that are acting in the 
capacity described in Rule 14.10(c)(4)(B), regardless of whether the 
Independent Directors are acting as a committee of the Company's board 
of directors, that are selecting a Compensation Consultant to perform 
an independence assessment of the Compensation Consultant, as described 
below, prior to selecting the Compensation Consultant. An independence 
assessment is not required for the receipt of advice from in-house 
legal counsel. An independence assessment would include the 
consideration of the

[[Page 62574]]

following factors: (i) The provision of other services to the Company 
by the person that employs the Compensation Consultant; (ii) the amount 
of fees received from the Company by the person that employs the 
Compensation Consultant, as a percentage of the total revenue of the 
person that employs the Compensation Consultant; (iii) the policies and 
procedures of the person that employs the Compensation Consultant that 
are designed to prevent conflicts of interest; (iv) any business or 
personal relationship of the Compensation Consultant with any of the 
Independent Directors acting in the capacity described in Rule 
14.10(c)(4)(B); (v) any stock of the Company owned by the Compensation 
Consultant; and (vi) any business or personal relationship of the 
Compensation Consultant, legal counsel, other adviser, or the person 
employing the Compensation Consultant with an executive officer of the 
Company. As proposed, Rule 14.10(c)(4)(C)(ii) would not include any 
specific additional factors for consideration, as the Exchange believes 
that the list included in Rule 10C-1(b)(4) is very comprehensive.
    The Exchange believes that proposed Rule 14.10(c)(4)(C)(ii) would 
comply with Rule 10C-1 and, more specifically, Rule 10C-1(b)(4) because 
the proposed rule would require the Independent Directors of a Company 
that are acting in the capacity described in Rule 14.10(c)(4)(B) to 
perform an independence assessment of the Compensation Consultant based 
on the factors required by Rule 10C-1(b)(4)(i)-(vi) before engaging 
such Compensation Consultant. Further, because proposed Rule 
14.10(c)(4)(C)(ii) would adopt the standards exactly as provided in 
Rule 10C-1(b)(4), the Exchange believes that it would be in compliance 
with Rule 10C-1.
    In addition, the Exchange is proposing to amend Rule 
14.10(c)(4)(C)(iii) and (iv), also regarding Compensation Consultants. 
Specifically, the Exchange is proposing that Independent Directors of a 
Company that are acting in the capacity described in Rule 
14.10(c)(4)(B): (i) shall be directly responsible for the appointment, 
compensation and oversight of the work of any retained Compensation 
Consultant; and (ii) shall not be required to implement or act 
consistently with the advice or recommendations of the retained 
Compensation Consultant, nor be restricted in their ability or 
obligation to exercise their own judgment in fulfilling their duties. 
The Exchange believes that proposed Rules 14.10(c)(4)(C)(iii) and (iv) 
comply with Rule 10C-1 and, more specifically, Rule 10C-1(b)(ii) and 
(iii), [sic] in that the proposed rules mirror exactly the requirements 
of Rule 10C-1(b)(ii) and (iii) [sic] and, therefore, would bring the 
Exchange's listing rules in compliance with Rule 10C-1.
    The Exchange is also proposing to add Rule 14.10(c)(4)(D), which 
provides a Company that fails to comply with the composition committee 
requirements under Rule 14.10(c)(4)(B) because a director ceases to be 
independent for reasons outside the director's reasonable control with 
a cure period during which the Company may allow that director to 
continue to act in the capacity described in Rule 14.10(c)(4)(B) until 
the earlier of its next annual shareholders meeting or one year from 
the occurrence of the event that caused the failure to comply with this 
requirement. A Company relying on this provision must provide notice to 
the Exchange immediately upon learning of the event or circumstances 
that caused the noncompliance. The Exchange believes that proposed Rule 
14.10(c)(4)(D) would comply with Rule 10C-1(a)(3), which requires the 
Exchange to provide for appropriate procedures for a listed issuer to 
have a reasonable opportunity to cure any defects that would be the 
basis for a prohibition before the imposition of such prohibition. Rule 
14.10(c)(4)(D) also describes a cure period that would be compliant 
with Rule 10C-1(a)(3), which the Exchange has proposed to adopt. For 
these reasons, the Exchange believes that proposed Rule 14.10(c)(4)(D) 
would comply with Rule 10C-1(a)(3).
    The Exchange is also proposing to amend Rules 14.10(e)(1)(A) and 
(B) in order to eliminate exemptions to Rule 14.10(c)(4) for asset-
backed issuers and other passive issuers (collectively, ``Asset-backed 
Issuers'') and cooperatives. The Exchange believes that these changes 
comply with Rule 10C-1 because Rule 10C-1 provides exemptions to 
independence requirements in certain circumstances as well as general 
exemptions in other circumstances, however, Rule 10C-1 does not provide 
any exemptions for Asset-backed Issuers or for cooperatives. Rule 10C-1 
does provide the Exchange with some discretion to provide exemptions to 
the requirements of Rule 10C-1, however, the Exchange declines to 
propose exemptions for Asset-backed Issuers or cooperatives at this 
time. For these reasons, the Exchange believes that proposed Rules 
14.10(e)(1)(A) and (B) comply with the requirements of Rule 10C-1. In 
conjunction with this change, the Exchange is also proposing to 
eliminate the existing exemptions from the requirements of Rule 
14.10(c)(4) for Asset-backed Issuers and cooperatives. The Exchange 
recognizes the importance of independence in the process of determining 
executive officer compensation. Additionally, under the proposed Rules, 
Companies will not be required in all cases to comply, initially and on 
a continued basis, with the independence requirements. For example, 
Companies listing in connection with their initial public offering will 
have a phase-in period before compliance with Rules 14.10(c)(4)(A) and 
(B) becomes necessary, and all Companies will be subject to a cure 
period should an event occur that causes noncompliance with the Rules. 
The Exchange does recognize that certain issuers, including Asset-
backed Issuers and cooperatives, might have governance structures that 
make compliance with Rule 14.10(c)(4) difficult or impractical. 
However, due to the fact that the Exchange does not have any listed 
Asset-backed Issuers or cooperatives, the Exchange is proposing to 
remove the current exemption so that it can more fully review, as a 
whole, potential exemptions for Asset-backed Issuers and cooperatives. 
The Exchange will constantly evaluate the appropriateness of these 
exemptions as well as exemptions for all other categories of issuers 
and may propose to reinstitute these or other exemptions in the future.
    The Exchange is also proposing to amend Rule 14.10(e)(1)(C) to 
require foreign private issuers to comply with the Compensation 
Consultants requirement of Rule 14.10(c)(4)(C). The Exchange is 
proposing the amendment in order to make clear that, while 10C-
1(b)(iii)(4) [sic] exempts foreign private issuers from the 
independence requirements of 10C-1(b)(ii), [sic] which the proposed 
Rule 14.10(e)(1)(C) reflects, Rule 10C-1 does not exempt foreign 
private issuers from the Compensation Consultant requirements under 
Rule 10C-1(b)(4). As such, the Exchange is proposing to amend its Rules 
to continue to exempt foreign private issuers from the independence 
requirements of Rules 14.10(c)(4)(A) and (B), but to make clear that 
foreign private issuers are not exempt from the Compensation Consultant 
requirements of Rule 14.10(c)(4)(C). For these reasons, the Exchange 
believes that the proposed changes to Rule 14.10(e)(1)(C) comply with 
the requirements of Rule 10C-1.
    The Exchange is also proposing to amend Rule 14.10(e)(1)(D)(ix) to 
require limited partnerships to comply with the Compensation 
Consultants requirement of Rule 14.10(c)(4)(C). The Exchange is 
proposing the amendment in order to

[[Page 62575]]

make its rules reflect that, while 10C-1(b)(iii)(1) [sic] exempts 
limited partnership from the independence requirements of 10C-1(b)(ii), 
[sic] which the proposed Rule 14.10(e)(1)(D) reflects, Rule 10C-1 does 
not exempt limited partnerships from the Compensation Consultant 
requirements under Rule 10C-1(b)(4). As such, the Exchange is proposing 
to amend its rules to continue to exempt limited partnerships from the 
independence requirements of Rules 14.10(c)(4)(A) and (B), but to make 
clear that limited partnerships are not exempt from the Compensation 
Consultant requirements of Rule 14.10(c)(4)(C). For these reasons, the 
Exchange believes that the proposed changes to Rule 14.10(e)(1)(D)(ix) 
comply with the requirements of Rule 10C-1.
    The Exchange is also proposing to amend Rule 14.10(e)(1)(E) to make 
clear that not all managed investment companies are exempt from Rules 
14.10(c)(4)(A) and (B), but rather, only open-end management investment 
companies registered under the Investment Company Act of 1940 are 
exempt from the requirements. The Exchange is making this proposal in 
order to make its rules reflect that, while Rule 10C-1(b)(iii)(3) [sic] 
exempts open-end management investment companies registered under the 
Investment Company Act of 1940 from the independence requirements of 
Rule 10C-1(b)(ii), [sic] this exemption does not apply to all 
management investment companies. In addition, Rule 10C-1 does not 
exempt open-end management investment companies from the Compensation 
Consultant requirements under Rule 10C-1(b)(4). As such, the Exchange 
is proposing to amend its rules to reflect that open-end management 
investment companies will not be exempt from the Compensation 
Consultant requirements under Rule 14.10(c)(4)(C). Because these 
changes have been made to make Rule 14.10(e)(1)(E) reflect the language 
of Rule 10C-1, the Exchange believes that the proposed changes comply 
with the requirements of Rule 10C-1.
    The Exchange is also proposing to add Rule 14.10(e)(1)(F), which 
will provide that Companies in bankruptcy proceedings are exempt from 
the independence requirements of Rules 14.10(c)(4)(A) and (B). The 
Exchange is making this proposal in order to make its rules reflect 
that, while Rule 10C-1(b)(iii)(2) [sic] exempts Companies in bankruptcy 
proceedings from the independence requirements of 10C-1(b)(ii), Rule 
10C-1 does not exempt Companies in bankruptcy proceedings from the 
Compensation Consultant requirements under Rule 10C-1(b)(4). As such, 
the Exchange is proposing to amend its rules to exempt Companies in 
bankruptcy proceedings from the independence requirements of Rules 
14.10(c)(4)(A) and (B), but to make clear that Companies in bankruptcy 
proceedings are not exempt from the Compensation Consultant 
requirements of Rule 14.10(c)(4)(C). Because these changes have been 
made to make Rule 14.10(e)(1)(F) reflect the requirements of Rule 10C-
1, the Exchange believes that the proposed changes comply with the 
requirements of Rule 10C-1.
    The Exchange is also proposing to add Rule 14.10(e)(1)(G), which 
will provide that smaller reporting companies, as defined in Rule 12b-2 
under the Act (``Smaller Reporting Companies''), are exempt from all of 
the requirements of Rule 14.10(c)(4). The Exchange is making this 
proposal in order to make its rules reflect that Rule 10C-1(b)(5)(ii) 
exempts Smaller Reporting Companies from the entirety of Rule 10C-1(b), 
including the independence and Compensation Consultant requirements 
under Rule 10C-1. As such, the Exchange is proposing to amend its rules 
to exempt Smaller Reporting Companies from the independence 
requirements of Rules 14.10(c)(4)(A) and (B) as well as the 
Compensation Consultant requirements of Rule 14.10(c)(4)(C). Because 
these changes have been made to make Rule 14.10(e)(1)(G) reflect the 
requirements of Rule 10C-1, the Exchange believes that the proposed 
changes comply with the requirements of Rule 10C-1. In addition, this 
approach will minimize new costs imposed on Smaller Reporting Companies 
and allow them some flexibility not allowed for larger Companies.
    The Exchange also proposes to amend Rule 14.10(e)(2)(A) to allow a 
Company listing in connection with its initial public offering to 
phase-in the independent committee requirements set forth in Rules 
14.10(c)(4)(A) and (B) as follows: (1) One independent member at the 
time of listing; (2) a majority of independent members within 90 days 
of listing; and (3) all independent members within one year of listing. 
The Exchange believes that this amendment complies with Rule 10C-1 
because it provides a Company with the opportunity to gradually meet 
the requirements of Rules 14.10(c)(4)(A) and (B) after becoming listed 
in connection with an initial public offering, rather than forcing a 
Company to meet independence requirements prior to its initial public 
offering. Since Companies listing in connection with an initial public 
offering may not have previously had an independent compensation 
committee, the Exchange believes that allowing such Companies to phase 
in compliance with the independent compensation committee requirements 
will reasonably provide these Companies with a window identical to that 
of the Independent Director Oversight of Director Nominations under 
Rule 14.10(c)(5) and the independent audit committee requirement 
pursuant to Rule 10A-3(b)(1)(iv)(A) under the Act.\7\ As noted above, 
proposed Rule 14.10(e)(2)(A) would require that the Company have at 
least one independent member at the time of listing, meaning that even 
though it is described as a ``phase-in period,'' the Company would 
never actually be without at least one independent member.
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    \7\ See 17 CFR 240.10A-3(b)(1)(iv)(A).
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    The Exchange also proposes to add Rule 14.10(e)(2)(D) in order to 
permit a Company listed on the Exchange prior to the effective date of 
this proposal, commencing on June 1, 2013, to phase-in compliance with 
the Independent Director Oversight of Executive Officer Compensation 
requirements set forth in Rules 14.10(c)(4)(A) and (B) on the same 
schedule as Companies listing in conjunction with their initial public 
offering.
    The Exchange also proposes to make a clarifying amendment to Rule 
14.10(c)(1)(B), which defines an Independent Director, in order to 
indicate that there are additional factors involved in the 
determination of independence for directors acting in the capacity 
described in Rule 14.10(c)(4)(B). Lastly, the Exchange proposes to 
modify the numbering of Rule 14.10 in order to accommodate the 
amendments and additions proposed above.
2. Statutory Basis
    Approval of 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.\8\ The Exchange believes that proposed Rule 14.10 is 
consistent with Section 6(b)(5) of the Act,\9\ 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. The 
Exchange is adopting proposed Rule

[[Page 62576]]

14.10 to comply with the requirements of Section 952 of the Dodd-Frank 
Act, and therefore believes the proposed rule change to be consistent 
with the Act, particularly with respect to the protection of investors 
and the public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange also believes that the proposal will contribute to 
investor protection and the public interest by requiring that only 
Independent Directors of an issuer oversee executive officer 
compensation matters, consider independence criteria before retaining 
compensation advisers, and have ultimate responsibility for the 
appointment, compensation, and oversight of these advisers. As 
discussed above, after considering the factors provided in Rule 10C-
1(b)(1)(ii) and evaluating how the factors could impact the ability of 
a director to act independently in the determination of executive 
compensation, the Exchange believes that it can best comply with Rule 
10C-1 by adopting in its Rules the factors set forth in Rule 10C-
1(b)(1)(ii). The Exchange believes that this approach will best provide 
the board of directors of a Company with the requisite guidance and 
discretion to evaluate the independence of each director as it relates 
to the determination of executive compensation.

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

    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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

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 email to rule-comments@sec.gov. Please include 
File Number SR-BATS-2012-039 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 Number SR-BATS-2012-039. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room on official business 
days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal offices 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-2012-039, and should be submitted on or before 
November 5, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25280 Filed 10-12-12; 8:45 am]
BILLING CODE 8011-01-P