[Federal Register Volume 78, Number 29 (Tuesday, February 12, 2013)]
[Notices]
[Pages 9955-9957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03186]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68851; File No. SR-BATS-2013-009]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Extend 
the Pilot Program Related to Trading Pauses Due to Extraordinary Market 
Volatility

February 6, 2013.
    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 January 30, 2013, BATS Exchange, Inc. (``BATS'' or 
``Exchange'') 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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to extend a pilot program previously 
approved by the Commission related to Rule 11.18, entitled ``Trading 
Halts Due to Extraordinary Market Volatility.''
    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 extend the effectiveness of the 
Exchange's rule related to individual stock circuit breakers, which is 
contained in Rule 11.18(d) and Interpretation and Policy .05 to Rule 
11.18. The rule, explained in further detail below, is currently 
operating as a pilot program set to expire on February 4, 2013.
    On June 10, 2010, the Commission approved on a pilot basis changes 
to BATS Rule 11.18 to provide for uniform market-wide trading pause 
standards for individual securities in the S&P 500[supreg] Index that 
experience rapid price movement.\5\ Later, the Exchange and other 
markets proposed extension of the trading pause standards on a pilot 
basis to individual securities in the Russell 1000[supreg] Index and 
specified Exchange Traded Products, which changes the Commission 
approved on September 10, 2010.\6\ More recently, the Exchange proposed 
expansion of the pilot program to apply to all NMS stocks.\7\ This 
expansion was approved on June 23, 2011.\8\ The pilot program relating 
to trading pause standards has been extended five times since its 
inception.\9\ The Exchange believes the benefits to market participants 
from the individual stock trading pause rule should be continued on a 
pilot basis until individual stocks become, on a rolling basis, subject 
to the Plan to Address Extraordinary Market Volatility Pursuant to Rule 
608 of Regulation NMS

[[Page 9956]]

under the Act (the ``Limit Up-Limit Down Plan'' or ``Plan'').\10\
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    \5\ Securities Exchange Act Release No. 62252 (June 10, 2010), 
75 FR 34186 (June 16, 2010) (SR-BATS-2010-014).
    \6\ Securities Exchange Act Release No. 62884 (September 10, 
2010), 75 FR 56618 (September 16, 2010) (SR-BATS-2010-018).
    \7\ Securities Exchange Act Release No. 64435 (May 6, 2011), 76 
FR 27684 (May 12, 2011) (SR-BATS-2011-016).
    \8\ Securities Exchange Act Release No. 64735 (June 23, 2011), 
76 FR 38243 (June 29, 2011) (File Nos. SR-BATS-2011-016; SR-BYX-
2011-011; SR-BX-2011-025; SR-CBOE-2011-049; SR-CHX-2011-09; SR-EDGA-
2011-15; SR-EDGX-2011-14; SR-FINRA-2011-023; SR-ISE-2011-028; SR-
NASDAQ-2011-067; SR-NYSE-2011-21; SR-NYSEAmex-2011-32; SR-NYSEArca-
2011-26; SR-NSX-2011-06; SR-Phlx-2011-64).
    \9\ Securities Exchange Act Release No. 63497 (December 9, 
2010), 75 FR 78315 (December 15, 2010) (SR-BATS-2010-037); 
Securities Exchange Act Release No. 64207 (April 6, 2011), 76 FR 
20424 (April 12, 2011) (SR-BATS-2011-011); Securities Exchange Act 
Release No. 65081 (August 9, 2011), 76 FR 50798 (August 16, 2011) 
(SR-BATS-2011-027); Securities Exchange Act Release No. 66190 
(January 19, 2012), 77 FR 3834 (January 25, 2012) (SR-BATS-2012-
001); Securities Exchange Act Release No. 67520 (July 27, 2012), 77 
FR 46129 (August 2, 2012) (SR-BATS-2012-031).
    \10\ See Securities Exchange Act Release No. 67091 (May 31, 
2012), 77 FR 33498 (June 6, 2012) (the ``Limit Up-Limit Down 
Release'').
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    The Exchange, in conjunction with other national securities 
exchanges and FINRA, recently filed an amendment to the Plan to change 
the date of initial operations of the Plan from February 4, 2013 to 
April 8, 2013. The extension proposed herein would allow the pilot to 
continue to operate without interruption until implementation of the 
Limit Up-Limit Down Plan, which will occur on a rolling basis.
    The Exchange proposes to extend the effective date of the pilot 
from the current scheduled expiration date of February 4, 2013 until 
February 4, 2014. The Exchange also proposes to modify the definition 
of ``Circuit Breaker Securities'' subject to the individual stock 
circuit breaker pilot to mean all NMS stocks other than NMS stocks 
subject to the Limit Up-Limit Down Plan. Accordingly, as securities 
become subject to the Limit Up-Limit Down Plan, they will no longer be 
Circuit Breaker Securities subject to the individual stock trading 
pause pilot.
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.\11\ In particular, 
the proposal is consistent with Section 6(b)(5) of the Act,\12\ 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 proposed rule change is also 
consistent with Section 11A(a)(1) of the Act \13\ in that it seeks to 
assure fair competition among brokers and dealers and among exchange 
markets. The Exchange believes that the pilot program promotes just and 
equitable principles of trade in that it promotes transparency and 
uniformity across markets concerning decisions to pause trading in a 
security when there are significant price movements. The Exchange 
believes that the pilot program is working well, that it has been 
infrequently invoked during the previous months, and that the extension 
of the pilot will allow the Exchange to further assess the effect of 
the pilot on the market until securities become subject to the Limit 
Up-Limit Down Plan on a rolling basis.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed changes are 
being made to extend the operation of the trading pause pilot to allow 
the pilot to continue to operate without interruption until 
implementation of the Limit Up-Limit Down Plan, which contributes to 
the protection of investors and the public interest. Other competing 
equity exchanges are subject to the same trading pause requirements 
specified in the Plan. Thus, the proposed changes will not impose any 
burden on competition while providing trading pause requirements 
specified in the Plan.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\ 
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 and Rule 19b-
4(f)(6)(iii) thereunder.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\17\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
would allow the pilot program to continue uninterrupted. Accordingly, 
the Commission hereby grants the Exchange's request and designates the 
proposal operative upon filing. \18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \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.

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-BATS-2013-009 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-2013-009. 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

[[Page 9957]]

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-BATS-2013-009 and should be submitted on or before March 
5, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-03186 Filed 2-11-13; 8:45 am]
BILLING CODE 8011-01-P