[Federal Register Volume 79, Number 187 (Friday, September 26, 2014)]
[Notices]
[Pages 58010-58012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-22908]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73176; File No. SR-BYX-2014-021]
Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rules
11.9 and 11.13 of BATS Y-Exchange, Inc.
September 22, 2014.
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 11, 2014, BATS Y-Exchange, Inc. (the ``Exchange'' or
``BYX'') 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 filed a proposal to amend Rules 11.9 and 11.13 to add
an additional routing strategy.
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
Earlier this year, the Exchange and its affiliate BATS Exchange,
Inc. (``BZX'') received approval to effect a merger (the ``Merger'') of
the Exchange's parent company, BATS Global Markets, Inc., with Direct
Edge Holdings LLC, the indirect parent of EDGX Exchange, Inc.
(``EDGX'') and EDGA Exchange, Inc. (``EDGA'', and together with BZX,
BYX and EDGX, the ``BGM Affiliated Exchanges'').\5\ In the context of
the Merger, the BGM Affiliated Exchanges are working to align certain
system functionality, retaining only intended differences between the
BGM Affiliated Exchanges. Thus, the proposal set forth below is
intended to add certain system functionality currently offered by EDGA
in order to provide a consistent technology offering for users of the
BGM Affiliated Exchanges.
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\5\ See Securities Exchange Act Release No. 71375 (January 23,
2014), 79 FR 4771 (January 29, 2014) (SR-BATS-2013-059; SR-BYX-2013-
039).
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The specific proposal set forth in more detail below would amend
Rule 11.13, which describes the Exchange's routing processes, to add
the RMPT routing strategy, specifically RMPT. Currently, Mid-Point Peg
Orders are not eligible for routing. As described in proposed Rule
11.13(a)(3)(J), however, RMPT is a routing option under which a Mid-
Point Peg Order checks the System \6\ for available shares and any
remaining shares are then sent to destinations on the System routing
table that support midpoint eligible orders. If any shares remain
unexecuted after routing, they are posted to the BATS Book \7\ as a
Mid-Point Peg Order, unless otherwise instructed \8\ by the User.\9\ As
mentioned above, orders routed pursuant to RMPT are only sent to those
destinations on the System routing table that support midpoint eligible
orders, which means that a destination is not
[[Page 58011]]
necessarily included in the RMPT routing strategy by virtue of
supporting midpoint eligible orders. Rather, a destination must be
included in the System routing table to be included in RMPT routing.
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\6\ System is defined in Rule 1.5(aa).
\7\ BATS Book is defined in Rule 1.5(e).
\8\ As set forth in Rule 11.13(a)(3), the term ``System routing
table'' refers to the proprietary process for determining the
specific trading venues to which the System routes orders and the
order in which it routes them.
\9\ User is defined in Rule 1.5(cc).
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The Exchange is also proposing to amend Rule 11.9, which describes
the Exchange's order types, in order to allow for Mid-Point Peg Orders
\10\ to be routed pursuant to RMPT. As described above, Mid-Point Peg
Orders are not currently eligible for routing, so, in conjunction with
the proposed addition of the RMPT routing strategy, the Exchange is
also proposing to amend Rule 11.9(c)(9) to provide that Mid-Point Peg
Orders may be eligible for routing where the User elects to route the
order pursuant to the RMPT Routing Option defined in proposed Rule
11.13(a)(3)(J).
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\10\ Mid-Point Peg Order is defined in Rule 11.9(c)(9).
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The Exchange notes that the proposed rule text is based on the
current rules of EDGA \11\ and is different only to the extent
necessary to conform to the Exchange's current rules. The Exchange also
notes that the proposed implementation of the RMPT routing strategy is
substantively identical to the RMPT routing strategy offered by
EDGA.\12\
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\11\ See EDGA Rules 11.5(c)(7) and 11.9(b)(2)(t).
\12\ See Exchange Act Release No. 66557 (March 9, 2012), 77 FR
15405 (March 15, 2012) (SR-EDGA-2012-006); EDGA Rules 11.5(c)(7) and
11.9(b)(2)(t).
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2. Statutory Basis
The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act \13\ and further the objectives of Section
6(b)(5) of the Act \14\ because they are designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and, in general, to protect
investors and the public interest. The proposed rule change also is
designed to support the principles of Section 11A(a)(1) \15\ of the Act
in that it seeks to assure fair competition among brokers and dealers
and among exchange markets. In particular, the proposed change to
introduce additional routing strategies and allow for the routing of
Mid-Point Peg Orders will provide market participants with greater
flexibility in routing orders consistent with Regulation NMS without
developing order routing strategies on their own.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78k-1(a)(1).
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As noted above, the proposed rule changes to add functionality are
generally intended to add certain system functionality currently
offered by EDGA in order to provide a consistent technology offering
for the BGM Affiliated Exchanges, which the Exchange believes is
designed to remove impediments to and perfect the mechanism of a free
and open market and a national market system. Further to this point, a
consistent technology offering, in turn, will simplify the technology
implementation, changes and maintenance by Users of the Exchange that
are also participants on BYX, EDGA and/or EDGX. The proposed rule
changes would also provide Users with access to functionality that may
result in the efficient execution of such orders and will provide
additional flexibility as well as increased functionality to the
Exchange's System and its Users, further removing impediments to and
perfecting the mechanism of a free and open market and a national
market system. As explained elsewhere in this proposal, the proposed
RMPT routing option is similar to routing strategies on other market
centers, including EDGA.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
provides routing services in a highly competitive market in which
participants may avail themselves of a wide variety of routing options
offered by self-regulatory organizations, alternative trading systems,
other broker-dealers, market participants' own proprietary routing
systems, and service bureaus. In such an environment, system
enhancements such as the changes proposed in this rule filing do not
burden competition, because they can succeed in attracting order flow
to the Exchange only if they offer investors higher quality and better
value than services offered by others. The Exchange reiterates that the
proposed rule change is being proposed in the context of the technology
integration of the BGM Affiliated Exchanges. Thus, the Exchange
believes this proposed rule change is necessary to permit fair
competition among national securities exchanges. In addition, the
Exchange believes the proposed rule change will benefit Exchange
participants in that it is one of several changes necessary to achieve
a consistent technology offering by the BGM Affiliated Exchanges.
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 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule 19b-
4(f)(6)(iii) thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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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 stated that waiver of this requirement would allow
the Exchange to continue to strive towards a complete integration of
the BGM Affiliated Exchanges, with gradual roll-outs of new
functionality to ensure stability of the System. The Exchange also
stated that its proposed variations of the RMPT routing strategy, which
it noted are directly based on the rules of EDGA, would benefit market
participants and their customers by allowing them greater flexibility
in their efforts to fill orders and minimize trading costs, and that
expected benefits to Exchange Users from the proposed rule change
should not be delayed. The Commission believes that the waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest. Therefore, the Commission designates the
proposed rule change to be operative upon filing.\18\
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\18\ 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 such 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \19\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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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 [email protected]. Please include
File Number SR-BYX-2014-021 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BYX-2014-021. 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. 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 Number SR-BYX-2014-021 and should be
submitted on or before October 17, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-22908 Filed 9-25-14; 8:45 am]
BILLING CODE 8011-01-P