[Federal Register Volume 74, Number 133 (Tuesday, July 14, 2009)]
[Notices]
[Pages 34068-34070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16576]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60236; File No. SR-BATS-2009-019]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Establish
Its New Sponsored Access Risk Management Tool Service
July 2, 2009.
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 June 26, 2009, BATS Exchange, Inc. (``BATS'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. The Exchange filed the proposed rule change pursuant to
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 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).
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[[Page 34069]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to establish its new Sponsored Access Risk
Management Tool (the ``Tool'') service.
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 those 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
The Exchange proposes to offer the Tool service to BATS Members and
Member organizations.
Background
The Exchange defines a ``Sponsored Participant'' as a person who
has entered into a sponsorship arrangement with a Sponsoring Member.\5\
A ``Sponsoring Member'' is defined as a broker-dealer that is a Member
of the Exchange and has been designated by a Sponsored Participant to
execute, clear and settle transactions occurring on the Exchange.\6\
Under BATS Rule 11.3(b), a Sponsoring Member may allow its customers to
enter orders directly into the trading systems of the Exchange as
Sponsored Participants, without the Sponsoring Member acting as an
intermediary.
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\5\ See BATS Rule 1.5(w).
\6\ See BATS Rule 1.5(x).
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Sponsored Access Risk Management Tool
To facilitate the ability of a Sponsoring Member to monitor and
oversee the sponsored access activity of its Sponsored Participants,
the Exchange will offer the Sponsored Access Risk Management Tool. This
optional service will act as a risk filter by causing the orders of
Sponsored Participants to be evaluated by the Tool prior to entering
the Exchange's trading systems for execution. When a Sponsored
Participant's order is evaluated by the Tool, it determines whether the
order complies with the order criteria established by the Sponsoring
Member for that Sponsored Participant. The order criteria pertain to
such matters as the size of the order (e.g., maximum notional value per
order and maximum shares per order), the order type (e.g., pre-market,
post-market, short sales and ISOs), restricted securities, easy to
borrow securities, and order cut-off (e.g., block new orders and cancel
all open orders).
The Tool also offers Sponsoring Members the capability to receive
FIX Drop Order Copy sessions, which include the complete FIX
conversation, as well as web based management tools to configure the
Sponsored Access controls.
The Sponsoring Member, and not the Exchange, will have full
responsibility for ensuring that Sponsored Participants' sponsored
access to the Exchange complies with the Exchange's sponsored access
rules. The use of the Tool by a Sponsoring Member does not
automatically constitute compliance with Exchange Rules.
The Sponsored Participant's orders are validated in the FIX handler
prior to entering the matching engine. Based on parameters provided to
the Tool by the Sponsoring Member, the order is immediately passed on
to the matching engine or rejected back to the Sponsored Participant.
The Exchange does not require Sponsoring Members to use the Tool.
Sponsoring Members are free to use any appropriate risk-management tool
or service. The Exchange will not provide preferential treatment to
Sponsoring Members using the Tool.
The Exchange proposes to make the Tool available to its Members
upon request. The Exchange believes the Tool will offer the Exchange's
Members another option in the efficient risk management of its
Sponsored Participants' access to BATS Exchange.
2. Statutory Basis
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.\7\ Specifically, the
proposed change is consistent with Section 6(b)(5) of the Act,\8\
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 proposed rule change also is designed to
support the principles of Section 11A(a)(1) \9\ in that it seeks to
assure economically efficient execution of securities transactions,
make it practicable for brokers to execute investors' orders in the
best market, and provide an opportunity for investors' orders to be
executed without the participation of a dealer. Specifically, the
Exchange believes that the proposed rule change is consistent with all
of the aforementioned principles because it fosters competition by
providing another option in the efficient risk management of trading on
the Exchange. BATS notes that a similar functionality has already been
found to be consistent with the Act by the Commission.\10\
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78k-1(a)(1).
\10\ Securities Exchange Act Release No. 59354 (February 3,
2009), 74 FR 6683 (February 10, 2009) (SR-NYSE-2008-101) (Approval
of NYSE Risk Management Gateway).
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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: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) by its terms, does not become operative for 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, it has become effective pursuant to Section
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.\13\
However, Rule 19b-
[[Page 34070]]
4(f)(6)(iii) \14\ 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 requested that the Commission waive
the 30-day operative delay and designate the proposed rule change
operative upon filing so that the expected benefits to Exchange Users
from use of the Tool would not be delayed. The Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest. The Commission notes that other
self-regulatory organizations have similar functionality \15\ and that
this filing raises no new regulatory issues. Therefore, the Commission
designates the proposal operative upon filing.\16\
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\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
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 Exchange has complied with this requirement.
\14\ Id.
\15\ See Securities Exchange Act Release No. 59354 (February 3,
2009), 74 FR 6683 (February 10, 2009) (SR-NYSE-2008-101) (Approval
of NYSE Risk Management Gateway).
\16\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 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 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 [email protected]. Please include
File Number SR-BATS-2009-019 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-2009-019. 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 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 Number SR-
BATS-2009-019 and should be submitted on or before August 4, 2009.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-16576 Filed 7-13-09; 8:45 am]
BILLING CODE 8010-01-P