[Federal Register Volume 77, Number 88 (Monday, May 7, 2012)]
[Notices]
[Pages 26808-26809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10879]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66890; File No. SR-BYX-2012-008]


Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
Exchange Rule 11.9 To Allow Optional Attribution of Orders

May 1, 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 April 25, 2012, 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 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposal to amend Rule 
11.9, entitled ``Orders and Modifiers'', to allow optional attribution 
of orders submitted to the Exchange in Exchange data feeds.
    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
    The purpose of this filing is to allow Users to optionally enter 
orders into the Exchange's systems that will be displayed in Exchange 
data feeds with such User's market participant identifiers or 
``MPIDs''. Specifically, the Exchange proposes to amend Rule 11.9 to 
add a definition of an Attributable Order, which shall mean an order 
that is designated for display (price and size) including the User's 
MPID. The Exchange also proposes to adopt a definition in Rule 11.9 for 
a Non-Attributable Order, which shall mean an order that is designated 
for display (price and size) on an anonymous basis by the Exchange. The 
proposed definitions of Attributable Order and Non-Attributable Order 
are substantively identical to definitions contained in the Rules of 
The NASDAQ Stock Market LLC (``Nasdaq''), as described in further 
detail below.
    All display-eligible orders entered into the Exchange are currently 
displayed by the Exchange on an anonymous basis without attribution to 
the entering User. The Exchange is proposing to allow Users to utilize 
Attributable Orders to include their MPID on published quotations in 
the Exchange's data feeds. The Exchange believes that such display is 
consistent with traditional market making on the floor of an exchange 
as well as existing rules of at least one of the Exchange's 
competitors.\3\ The addition of Attributable Orders will allow a party 
engaged in market making to identify itself as the party willing to buy 
or sell securities on the Exchange.
---------------------------------------------------------------------------

    \3\ See Nasdaq Rule 4751(e)(1) and (2).
---------------------------------------------------------------------------

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.\4\ In particular, the 
proposal is consistent with Section 6(b)(5) of the Act,\5\ 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 proposal 
will benefit market participants and help to

[[Page 26809]]

promote transparency by providing additional information regarding 
quotations displayed on the Exchange. Specifically, any User that 
wishes to publicly disclose their identity when quoting on the Exchange 
will be permitted to do so, and such attributed quotations will be 
analogous to the quotations they provide in other contexts (e.g., on 
the floor of a floor-based stock exchange or in the over-the-counter 
market through direct interaction). The proposal also promotes 
transparency in that other Users will be able to see with whom they are 
interacting when trading against displayed, attributed orders.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change is also consistent with Section 11A(a)(1) 
of the Act \6\ in that it seeks to assure fair competition among 
brokers and dealers by providing functionality that is consistent with 
that of functionality offered by at least one of the Exchange's 
competitors.\7\ The Exchange believes that the proposed rule change 
promotes just and equitable principles of trade in that it promotes 
uniformity across markets concerning the ability to display an 
attributed order on an exchange.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78k-1(a)(1).
    \7\ See supra note 4.
---------------------------------------------------------------------------

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 Changes and Timing for 
Commission Action

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest, does not 
impose any significant burden on competition, and, 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) thereunder.\9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and 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. The 
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Exchange believes that the proposed rule change is 
consistent with the protection of investors and the public interest 
because it would permit the Exchange to immediately implement the 
proposed rule change that would allow the Exchange to compete with 
other exchanges that offer a similar optional attribution of quotations 
functionality.\10\ The Exchange represented that the proposed rule is 
substantially similar to and based on rules of other exchanges and that 
the waiver of the 30-day operative delay would help ensure uniformity 
across market centers concerning the display of attributed quotations. 
Further, the Exchange believes that because the attribution 
functionality is optional, there will be no need for a phased 
implementation as Users that do not wish to avail themselves of the 
options functionality would not have to make any systems changes. The 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Such waiver would allow the Exchange to offer a functionality to market 
participants that is substantially similar other exchanges without 
delay. The Commission notes that the proposed rule change is based on 
and similar to NASDAQ Rule 4751(e)(1) and (2).\11\ Additionally, the 
Commission notes that this attribution functionality is optional. 
Therefore, the Commission designates the proposal operative upon 
filing.\12\
---------------------------------------------------------------------------

    \10\ See SR-BYX-2012-008, Item 7.
    \11\ See supra note 3.
    \12\ 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).
---------------------------------------------------------------------------

    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 Number SR-BYX-2012-008 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-BYX-2012-008. 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 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 publicly available. All 
submissions should refer to File Number SR-BYX-2012-008 and should be 
submitted on or before May 29, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-10879 Filed 5-4-12; 8:45 am]
BILLING CODE 8011-01-P