[Federal Register Volume 75, Number 207 (Wednesday, October 27, 2010)]
[Notices]
[Pages 66183-66184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-27142]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63147; File No. SR-BATS-2010-029]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change by BATS 
Exchange, Inc. To Amend BATS Rule 11.13, Entitled ``Order Execution''

October 21, 2010.
    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 October 13, 2010, 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 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BATS Rule 11.13, entitled ``Order 
Execution,'' to add certain new routing strategies and to modify the 
description of certain existing Exchange routing strategies.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 11.13, which describes its 
order routing processes, to add certain new routing strategies and to 
modify the existing description of two Exchange routing strategies.
    Currently, various routing strategies are available through BATS, 
including the CYCLE routing strategy, variations of the Parallel 
routing strategy, DRT routing and Destination Specific Routing. The 
Exchange proposes to offer two new routing strategies, which are 
described below.
     TRIM. TRIM is a routing option under which an order will 
check the System for available shares if so instructed by the entering 
User and then will be sent to destinations on the System routing table.
     SLIM. SLIM is a routing option under which an order will 
check the System for available shares, will be routed to BATS Y-
Exchange, Inc. (``BYX''),\3\ and then will be sent to destinations on 
the System routing table.
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    \3\ BYX is a registered national securities exchange and 
affiliate of the Exchange. See Securities Exchange Act Release No. 
34-62716 (August 13, 2010), 75 FR 51295 (August 19, 2010) (order 
approving application of BATS Y-Exchange, Inc. for registration as a 
national securities exchange). BYX plans to commence operations on 
October 15, 2010.
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    In addition to the addition of the TRIM and SLIM routing 
strategies, the Exchange proposes modifying the description of the 
Parallel T routing strategy to make clear that when checking the 
Exchange's System for available shares, it will only check for 
displayed shares prior to routing away from the Exchange. The Parallel 
T routing strategy is intended to route only to Protected Quotations 
and only for displayed size, and thus, the Exchange believes that 
removal of only displayed size from its own System is most consistent 
with this strategy.
    Exchange Rule 11.13(a)(3)(E) includes a definition of DRT routing, 
which is routing option in which the entering firm instructs the System 
to route to alternative trading systems included in the System routing 
table. The definition of DRT currently states that it can be combined 
with three specified routing strategies offered by the Exchange. The 
Exchange proposes modifying the description of DRT routing to make 
clear that it can be combined with all routing strategies, including 
the new TRIM and SLIM routing strategies, unless otherwise specified. 
In addition, because some routing strategies offered by the Exchange 
might include DRT routing at a later stage, the Exchange proposes to 
remove the word ``first'' from the definition of the DRT routing 
strategy.
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.\4\ Specifically, the 
proposed change is consistent with Section 6(b)(5) of the Act,\5\ 
because it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to, and perfect 
the mechanism of, a free and open market and a national market system. 
The proposed change to introduce additional routing strategies and to 
modify certain existing routing strategies will provide market 
participants with greater flexibility in routing orders consistent with 
Regulation NMS without developing

[[Page 66184]]

complicated order routing strategies on their own.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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 \6\ and Rule 19b-
4(f)(6) thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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. 
BATS has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \8\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \9\ permits the Commission to 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. BATS requests that the 
Commission waive the 30-day operative delay in order to allow BATS to 
immediately offer Exchange Users new routing strategies at or around 
the time that its affiliated national securities exchange, BYX, 
commences operations. Further, the Exchange believes that the proposed 
TRIM and SLIM routing strategies are consistent with routing strategies 
offered by the Nasdaq Stock Market (``NASDAQ'').\10\ In addition, the 
Exchange believes that its proposed new routing strategies will benefit 
market participants and their customers by allowing them greater 
flexibility in their efforts to fill orders and minimize trading costs. 
The Exchange expects to have technological changes for one or more of 
the new routing strategies in place to support the proposed rule change 
in the near future, and believes that benefits to Exchange Users 
expected from the proposed rule change should not be delayed. In 
addition, BATS states a delay to the implementation date would put the 
Exchange at a competitive disadvantage to other markets that already 
offer similar functionalities. The Commission believes that waiving the 
30-day operative delay \11\ is consistent with the protection of 
investors and the public interest and designates the proposal operative 
upon filing.
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    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ Id.
    \10\ See NASDAQ Rule 4758.
    \11\ 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 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 e-mail to [email protected]. Please include 
File Number SR-BATS-2010-029 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-2010-029. 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,\12\ 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 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-2010-029 and should be submitted on or before 
November 17, 2010.
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    \12\ The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov/rules/sro.shtml.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-27142 Filed 10-26-10; 8:45 am]
BILLING CODE 8011-01-P