[Federal Register Volume 76, Number 245 (Wednesday, December 21, 2011)]
[Notices]
[Pages 79244-79246]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32660]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65965; File No. SR-BATS-2011-050]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Penny Pilot Program
December 15, 2011.
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 December 2, 2011, BATS Exchange, Inc. (the ``Exchange'' or
``BATS''), 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 BATS. 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 Substance
of the Proposed Rule Change
The Exchange filed a proposal for the BATS Options Market (``BATS
Options'') to extend through June 30, 2012, the Penny Pilot Program
(``Penny Pilot'') in options classes in certain issues (``Pilot
Program'') previously approved by the Commission.\3\
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\3\ The rules of BATS Options, including rules applicable to
BATS Options' participation in the Penny Pilot, were approved on
January 26, 2010. See Securities Exchange Act Release No. 61419
(January 26, 2010), 75 FR 5157 (February 1, 2010) (SR-BATS-2009-
031). BATS Options commenced operations on February 26, 2010. The
Penny Pilot was extended for BATS Options through December 31, 2011.
See Securities Exchange Act Release No. 63385 (November 29, 2010),
75 FR 75526 (December 3, 2010) (SR-BATS-2010-035).
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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
[[Page 79245]]
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this filing is to extend through June 30, 2012, the
Penny Pilot in options classes in the Pilot Program as previously
approved by the Commission, and to provide a revised date for adding
replacement issues to the Pilot Program. The Exchange proposes that any
Pilot Program issues that have been delisted may be replaced on the
second trading day following January 1, 2012. The replacement issues
will be selected based on trading activity for the six month period
beginning June 1, 2011, and ending November 30, 2011.
In the Exchange's filing to propose the rules to govern BATS
Options,\4\ the Exchange proposed commencing operations for BATS
Options by trading all options classes that were, as of such date,
traded by other options exchanges pursuant to the Penny Pilot and then
expanding the Penny Pilot on a quarterly basis, 75 classes at a time,
through August 2010. Consistent with this proposal, since it commenced
operations the Exchange has twice expanded the options classes subject
to the Penny Pilot.\5\ The Exchange represents that the Exchange has
the necessary system capacity to continue to support operation of the
Penny Pilot.
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\4\ See Securities Exchange Act Release No. 61097 (December 2,
2009), 74 FR 64788 (December 8, 2009) (SR-BATS-2009-031) (Notice of
Filing of Proposed Rule Change to Establish Rules Governing the
Trading of Options on the BATS Options Exchange).
\5\ See Securities Exchange Act Release No. 62595 (July 29,
2010), 75 FR 47043 (August 4, 2010) (SR-BATS-2010-019); Securities
Exchange Act Release No. 62033 (May 4, 2010), 75 FR 26301 (May 11,
2010) (SR-BATS-2010-009).
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The Exchange agrees to provide reports that will analyze the impact
of the Pilot Program on market quality and options capacity. These
reports will include: (1) Data and analysis on the number of quotations
generated for options included in the report; (2) an assessment of the
quotation spreads for the options included in the report; (3) an
assessment of the impact of the Pilot Program on the capacity of the
Exchange's automated systems; (4) data reflecting the size and depth of
markets, and (5) any capacity problems or other problems that arose
related to the operation of the Pilot Program and how the Exchange
addressed them.
The Exchange believes the benefits to public customers and other
market participants who will be able to express their true prices to
buy and sell options have been demonstrated to outweigh the increase in
quote traffic.
In addition to the proposed extension of the Pilot Program, the
Exchange proposes to modify Interpretation and Policy .01 to make clear
the date on which the Pilot Program is set to expire and to specify
that options subject to the Pilot Program will be identified in
Exchange Information Circulars that are distributed to members of the
Exchange and posted on the Exchange's Web site.
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.\6\ In particular, the
proposal is consistent with Section 6(b)(5) of the Act,\7\ 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. The Exchange believes that the Pilot
Program promotes just and equitable principles of trade by enabling
public customers and other market participants to express their true
prices to buy and sell options.
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\6\ 15 U.S.C. 78f(b).
\7\ 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
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 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 \8\ and Rule 19b-
4(f)(6)(iii) thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 notes that the Exchange has satisfied this
requirement.
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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 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 No. SR-BATS-2011-050 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-BATS-2011-050. 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.,
[[Page 79246]]
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 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-BATS-2011-050 and should be
submitted on or before January 11, 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. 2011-32660 Filed 12-20-11; 8:45 am]
BILLING CODE 8011-01-P