[Federal Register Volume 80, Number 10 (Thursday, January 15, 2015)]
[Notices]
[Pages 2125-2142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00531]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74028; File No. SR-EDGA-2015-03]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Certain Rules To Adopt or Align System Functionality With That 
Currently Offered by BATS Exchange, Inc. and BATS Y-Exchange, Inc.

January 9, 2015.
    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 9, 2015, EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') 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 Exchange has 
designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the

[[Page 2126]]

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.
---------------------------------------------------------------------------

    \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)(iii).
---------------------------------------------------------------------------

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

    The Exchange filed a proposal to amend certain rules to adopt or 
align system functionality with that currently offered by BATS 
Exchange, Inc. (``BZX'') and BATS Y-Exchange, Inc. (``BYX'', 
collectively with BZX, ``BATS'') in order to provide a consistent 
technology offering amongst the Exchange and its affiliates. These 
changes are described in detail below and include amending: (i) Rule 
11.1 regarding the Exchange's trading sessions and hours of operation; 
(ii) Rule 11.6, Definitions; (iii) Rule 11.7, Opening Process; (iv) 
Rule 11.8, Order Types; (v) Rule 11.9, Priority of Orders; (vi) Rule 
11.10, Order Execution; and (vii) Rule 11.11, Routing to Away Trading 
Centers.
    The proposed rule change does not propose to implement new or 
unique functionality that has not been previously filed with the 
Commission or is not available on BATS. The Exchange notes that the 
proposed rule text is based on the rules and is different only to the 
extent necessary to conform to the Exchange's current rules.
    The Exchange does not believe that the proposed rule change will 
have any direct or significant indirect effect on any other Exchange 
rule in effect at the time of this filing.
    The text of the proposed rule change is available at the Exchange's 
Web site at http://www.directedge.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 the 
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
    Earlier this year, the Exchange and its affiliate, EDGX Exchange, 
Inc. (``EDGX'') received approval to effect a merger (the ``Merger'') 
of the Exchange's parent company, Direct Edge Holdings LLC, with BATS 
Global Markets, Inc., the parent of BATS (together with BATS, EDGA and 
EDGX, the ``BGM Affiliated Exchanges'').\5\ In the context of the 
Merger, the BGM Affiliated Exchanges are working to migrate EDGX and 
EDGA onto the BATS technology platform, and align certain system 
functionality, retaining only intended differences between the BGM 
Affiliated Exchanges. As a result of these efforts, the Exchange 
proposes to amend: (i) Rule 11.1 regarding the Exchange's trading 
sessions and hours of operation; (ii) Rule 11.6, Definitions; (iii) 
Rule 11.7, Opening Process; (iv) Rule 11.8, Order Types; (v) Rule 11.9, 
Priority of Orders; (vi) Rule 11.10, Order Execution; and (vii) Rule 
11.11, Routing to Away Trading Centers.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
---------------------------------------------------------------------------

    The proposed amendments are intended to align certain system 
functionality with that currently offered by BATS in order to provide a 
consistent technology offering for Users \6\ of the BGM Affiliated 
Exchanges. The Exchange notes that the proposed rule text is based on 
the BATS Rule and is different only to the extent necessary to conform 
to the Exchange's current rules.\7\ The proposed amendments do not 
propose to implement new or unique functionality that has not been 
previously filed with the Commission or is not available on BZX or BYX.
---------------------------------------------------------------------------

    \6\ The term ``User'' is defined as ``any Member or Sponsored 
Participant who is authorized to obtain access to the System 
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
    \7\ To the extent a proposed rule change is based on an existing 
BATS Rule, the language of the BATS and Exchange Rules may differ to 
extent necessary to conform with existing Exchange rule text or to 
account for details or descriptions included in the Exchange Rules 
but not currently included in BATS rules based on the current 
structure of such rules.
---------------------------------------------------------------------------

Rule 11.1, Hours of Trading and Trading Days
    Current Functionality. Rule 11.1 sets forth when orders may be 
entered into the System \8\ and outlines a User's ability to select the 
trading sessions for which an order may be eligible for execution. 
Proposed Rule 11.1(a)(1), Session Indicator, describes each of the 
Exchange's existing trading sessions. A User may select the particular 
trading sessions for which their order(s) may be eligible for 
execution. Specifically, orders designated as: ``Pre-Opening Session'' 
are eligible for execution between 8:00 a.m. Eastern Time and 4:00 p.m. 
Eastern Time; ``Regular Session'' are eligible for execution between 
the completion of the Opening Process or a Contingent Open as defined 
in proposed Rule 11.7 (described below), whichever occurs first, and 
4:00 p.m. Eastern Time, unless otherwise noted; \9\ ``Post-Closing 
Session'' are eligible for execution between the start of the Regular 
Session and 8:00 p.m. Eastern Time; and ``All Sessions'' are eligible 
for execution between 8:00 a.m. and 8:00 p.m. Eastern Time.
---------------------------------------------------------------------------

    \8\ Exchange Rule 1.5(cc) defines ``System'' as ``the electronic 
communications and trading facility designated by the Board through 
which securities orders of Users are consolidated for ranking, 
execution and, when applicable, routing away.''
    \9\ Beginning at 9:30:00 a.m. Eastern Time, the System will 
accept: (i) Incoming orders designated as Intermarket Sweep Orders 
(``ISOs''), and (ii) orders with a time-in-force instruction other 
than Regular Hours Only. This is to assist Members' compliance with 
Rule 611 of Regulation NMS.
---------------------------------------------------------------------------

    Under Rule 11.1(a)(1), orders may be entered into the System from 
6:00 a.m. until 8:00 p.m. Eastern Time, but orders entered between 6:00 
a.m. and 8:00 a.m. Eastern Time are not eligible for execution until 
the start of the session selected by the User. All orders are eligible 
for execution during the Regular Session. A User may designate that 
their order to be eligible for the Pre-Opening and/or Post-Closing 
Sessions. If the User does not select a particular session or sessions, 
the order will default to the Regular Session only.
    Proposed Functionality. To align with BATS functionality, the 
Exchange proposes to amend Rule 11.1(a)(1) to allow Users to designate 
when their order is eligible for execution by selecting the desired 
Time-In-Force (``TIF'') instruction under Exchange Rule 11.6(q) \10\ 
and not by selecting a particular trading session, as is currently 
required. Therefore, the Exchange proposes to delete references to the 
Pre-Opening Session, Regular Session, Post-Closing Session, and All 
Sessions indicators set forth under Rule 11.1(a)(1)(A)-(D). These 
session indicators will no longer be available upon completion of the 
technology integration and Users will designate the session(s) during 
which their order is eligible for execution by selecting the

[[Page 2127]]

desired TIF instruction under Exchange Rule 11.6(q). The Exchange also 
proposes to no longer default orders to the Regular Session where 
another session indicator is not selected by the User. Thus, Users will 
be required to select a TIF instruction. Pre-Opening Session \11\ and 
Post-Closing Session \12\ will continue to be defined under Exchange 
Rule 1.5. The Exchange also proposes to retain but relocate the 
definition of Regular Session to Rule 1.5 as new paragraph (hh).
---------------------------------------------------------------------------

    \10\ The Exchange also proposes to and its TIF instructions 
under Rule 11.6(q) to align with BATS Rule 11.9(b). The changes are 
described in more detail below.
    \11\ Pre-Opening Session is defined as ``the time between 8:00 
a.m. and 9:30 a.m. Eastern Time.'' See Exchange Rule 1.5(s).
    \12\ Post-Closing Session is defined as ``the time between 4:00 
p.m. and 8:00 p.m. Eastern Time.'' See Exchange Rule 1.5(r).
---------------------------------------------------------------------------

    The Exchange also proposes to amend Rule 11.1(a)(1) to align with 
recent rule changes filed with the Commission by BATS.\13\ As proposed, 
orders entered between 6:00 a.m. and 8:00 a.m. Eastern Time are not 
eligible for execution until the start of the Pre-Opening Session or 
Regular Trading Hours, depending on the time-in-force selected by the 
User. The Exchange proposes to further amend Rule 11.1(a)(1) to state 
that the following orders will not be accepted prior to 8:00 a.m. 
Eastern Time: orders with a Post Only instruction, ISOs, Market Orders 
with a TIF instruction other than Regular Hours Only (``RHO''), orders 
with a Minimum Execution Quantity instruction that also include a TIF 
instruction of RHO, and all orders with a TIF instruction of Immediate 
or Cancel (``IOC'') or Fill Or Kill (``FOK''). At the commencement of 
the Pre-Opening Session, orders entered between 6:00 a.m. and 8:00 a.m. 
Eastern Time orders will be handled in time sequence, beginning with 
the order with the oldest time stamp, and will be placed on the EDGA 
Book, routed, cancelled, or executed in accordance with the terms of 
the order.
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release Nos. 73745 (December 4, 
2014), 79 FR 73359 (December 10, 2014) (SR-BATS-2014-062); 73744 
(December 4, 2014), 79 FR 73369 (December 10, 2014) (SR-BYX-2014-
036).
---------------------------------------------------------------------------

Rule 11.6, Definitions
    Rule 11.6, Definitions, sets forth in one rule current defined 
terms and order instructions that are utilized in Chapter XI. Rule 11.6 
also includes additional defined terms and instructions to aid in 
describing System functionality and the operation of the Exchange's 
order types. The Exchange proposes to amend Rule 11.6 to align certain 
sections with BATS functionality and rules as part of the technology 
integration. These changes are described below and include: (i) 
Amending subparagraph (a) regarding Attribution; (ii) amending 
paragraph (d) regarding Discretionary Range; (iii) amending paragraph 
(h) regarding Minimum Execution Quantity; (iv) amending subparagraph 
(j) regarding the Pegged order instruction; (v) amending subparagraph 
(k) regarding the definition of Permitted Price; (vi) amending 
subparagraph (l)(1)(A) regarding the Price Adjust Re-Pricing 
instruction to allow for multiple re-pricing; (vii) renaming the Hide 
Not Slide re-pricing instruction under Rule 11.8(l)(1)(B) as Displayed 
Price Sliding and amending the rule to allow for multiple re-pricing; 
(viii) deleting subparagraph (l)(1)(B)(i) to decommission the Routed 
and Returned Re-Pricing instruction; (ix) amending subparagraph (l)(2) 
to decommission Short Sale Price Adjust and Short Sale Price Sliding, 
and adopt the BATS short sale re-pricing process; (x) amending 
subparagraph (l)(3) regarding the re-pricing of Non-Displayed Orders; 
(xi) amending subparagraph (m)(1) regarding Replenishment Amounts; 
(xii) amending subparagraph (m)(2) regarding the Super Aggressive order 
instruction; and (xiii) amending subparagraph (q) regarding TIF 
instructions. As stated above, the proposed amendments to Rule 11.6 do 
not propose to implement new or unique functionality that has not been 
previously filed with the Commission or is not available on BZX or 
BYX.\14\ Each of these amendments are described in more detail below.
---------------------------------------------------------------------------

    \14\ See supra note 7.
---------------------------------------------------------------------------

Attribution (Rule 11.6(a))
    Pursuant to Rule 11.6(a), where a User includes an Attributable 
instruction with an order, the User's Market Participant Identifier 
(``MPID'') is visible via the Exchange's Book Feed.\15\ Conversely, if 
an order is to be Non-Attributable,\16\ the User's MPID is not visible 
via the Exchange's Book Feed. Under Exchange Rule 11.6(a)(1), unless 
the User elects otherwise, all orders are automatically defaulted by 
the System to Non-Attributable. Further, under Rule 11.6(a)(2), a User 
may elect an order to be Attributable on an order-by-order basis or 
instruct the Exchange to default all of its orders as Attributable on a 
port-by-port basis. However, pursuant to Rule 11.6(a), if a User 
instructs the Exchange to default all its orders as Attributable on a 
particular port, such User would not be able to designate any order 
from that port as Non-Attributable.
---------------------------------------------------------------------------

    \15\ See EDGA Rule 11.6(a). The EDGA Book Feed is a data feed 
that contains all displayed orders for listed securities trading on 
EDGA, order executions, order cancellations, order modifications, 
order identification numbers, and administrative messages. See 
Exchange Rule 13.8(a).
    \16\ See Exchange Rule 11.6(a)(1).
---------------------------------------------------------------------------

    The Exchange proposes to amend Rule 11.6(a)(2) to provide Users 
with additional flexibility when designating all of its orders as 
Attributable on a particular port consistent with BATS functionality. 
As amended, Rule 11.6(a)(2) would provide a User that instructs the 
Exchange to default all of its orders as Attributable on a particular 
port the ability to override that setting and designate an individual 
order from that port as Non-Attributable. This proposed rule change is 
representative of additional detail with regard to the operation of 
orders with an Attributable instruction in the Exchange's rules. While 
the proposed rule change is not directly based on an existing BATS 
Rule, as BATS rules do not currently address port level settings with 
respect to attribution, the Exchange believes that amending its current 
rule text to accurately describe how a Member may designate their 
orders as Attributable or Non-Attributable will provide them with 
increased transparency regarding how the System operates.
Cancel Back (Rule 11.6(b))
    Cancel Back is an instruction a User may attach to an order 
instructing the System to cancel an order, when, if displayed by the 
System on the EDGA Book \17\ at the time of entry, the order would 
create a violation of Rule 610(d) of Regulation NMS, Rule 201 of 
Regulation SHO, or the order cannot otherwise be executed or posted by 
the System to the EDGA Book at its limit price.
---------------------------------------------------------------------------

    \17\ The term ``EDGA Book'' is defined as ``the System's 
electronic file of orders.'' See EDGA Rule 1.5(d).
---------------------------------------------------------------------------

    The Exchange proposes to amend the definition of Cancel Back to 
remove the requirement that the order only be cancelled where it 
creates a violation of Rule 610(d) of Regulation NMS, Rule 201 of 
Regulation SHO, or cannot otherwise be executed or posted by the System 
to the EDGA Book at its limit price upon entry. Removal of the phrase 
``upon entry'' from Rule 11.6(b) would enable an order with a Cancel 
Back instruction that is posted to the EDGA Book to be cancelled if it 
subsequently creates a violation of Rule 610(d) of Regulation NMS, Rule 
201 of Regulation SHO, or the cannot otherwise be executed or continue 
to be posted by the System to the EDGA Book at its limit price. The 
proposed amendment would align the operation of the Exchange's

[[Page 2128]]

Cancel Back instruction with current BATS Rule 11.13.\18\
---------------------------------------------------------------------------

    \18\ Under BATS Rule 11.13, ``an order will be cancelled back to 
the User if, based on market conditions, User instructions, 
applicable Exchange Rules and/or the Act and the rules and 
regulations thereunder, such order is not executable, cannot be 
routed to another Trading Center pursuant to Rule 11.13(a)(2) below 
and cannot be posted to the BATS Book.'' The cancelling back of an 
order under Rule 11.13 is not limited to cancellation upon entry. 
See also BATS Rule 11.9(g)(1)(D).
---------------------------------------------------------------------------

Discretionary Range (Rule 11.6(d))
    Discretionary Range is an instruction the User may attach to an 
order to buy (sell) a stated amount of a security at a specified, 
displayed price with discretion to execute up (down) to a specified, 
non-displayed price. The Exchange proposes to remove the prohibition 
that the Discretionary Range of an order to buy (sell) cannot be more 
than $0.99 higher (lower) than the order's displayed price because, 
upon migration of the Exchange onto BATS technology, the Discretionary 
Range of an order will not be limited to $0.99. This proposed rule 
change is representative of additional detail with regard to the 
operation of orders with Discretionary Range in the Exchange's rules. 
In addition, no such limitation is included in BATS or BYX Rules 
11.9(c)(10) regarding Discretionary Orders and the BATS systems 
effectively do not incorporate such a limitation.
Minimum Execution Quantity (Rule 11.6(h))
    Minimum Execution Quantity is an instruction a User may attach to 
an order with a Non-Displayed \19\ instruction requiring the System to 
execute the order only to the extent that a minimum quantity can be 
satisfied by execution against a single order or multiple aggregated 
orders simultaneously. Unless the User elects otherwise, any shares 
remaining after a partial execution will be executed at a size that is 
equal to or exceeds the Minimum Execution Quantity. Thus, under current 
Exchange Rules and functionality a User can elect that a Minimum 
Execution Quantity only apply to an initial execution but not any 
remaining shares after such execution. The Exchange proposes to amend 
Minimum Execution Quantity to reflect that, upon migration of the 
Exchange onto BATS technology, any shares remaining after a partial 
execution will continue to be executed at a size that is equal to or 
exceeds the Minimum Execution Quantity, regardless of the Users 
instructions. A User who wishes otherwise may cancel and resubmit their 
order without a Minimum Execution Quantity. In addition, currently the 
Minimum Execution Quantity instruction will not apply where the number 
of shares remaining after a partial execution are less than the 
quantity provided in the instruction. As amended, in such case, the 
Minimum Execution Quantity will equal the number of remaining shares, 
which is similar to current Exchange functionality. Like above, a User 
who wishes otherwise may cancel and resubmit their order with a new 
Minimum Execution Quantity. As amended, the Minimum Execution Quantity 
instruction will operate similarly to the BATS Minimum Quantity Order 
under BATS Rule 11.9(c)(5).\20\
---------------------------------------------------------------------------

    \19\ The term ``Non-Displayed'' is defined as ``[a]n instruction 
the User may attach to an order stating that the order is not to be 
displayed by the System on the EDGA Book.'' See Exchange Rule 
1.5(e)(2).
    \20\ See Securities Exchange Act Release Nos. 72646 (July 21, 
2014), 79 FR 43516 (July 25, 2014) (SR-BATS-2014-027) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Rules 11.9, 11.12, 11.18, 21.1 and 21.7 of BATS Exchange, Inc.); 
72647 (July 21, 2014), 79 FR 43522 (July 25, 2014) (SR-BYX-2014-010) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change to Rules 11.9, 11.12, and 11.18 of BATS Y-Exchange, Inc.). As 
amended, Exchange Rule 11.6(h) only differs from BATS Rule 
11.9(c)(5) to extent necessary to conform with existing rule text or 
to account for details or descriptions currently included in the 
Exchange's Rule that are not included in BATS Rule 11.9(c)(5).
---------------------------------------------------------------------------

Pegged (Rule 11.6(j))
    Current Functionality. An order with a Pegged instruction enables a 
User to specify that the order's price will peg to a price a certain 
amount away from the NBB or NBO (offset). If an order with a Pegged 
instruction displayed on the Exchange would lock the market, the price 
of the order will be automatically adjusted by the System to one 
Minimum Price Variation below the current NBO (for bids) or to one 
Minimum Price Variation above the current NBB (for offers). A new time 
stamp is created for the order each time it is automatically adjusted 
and orders with a Pegged instruction are not eligible for routing 
pursuant to Rule 11.11. For purposes of the Pegged instruction, the 
System's calculation of the NBBO does not take into account any orders 
with Pegged instructions that are resting on the EDGA Book. An order 
with a Pegged instruction is cancelled if an NBB or NBO, as applicable, 
is no longer available.
    An order with a Pegged instruction may be a Market Peg or Primary 
Peg. An order that includes a Primary Peg instruction will have its 
price pegged by the System to the NBB, for a buy order, or the NBO for 
a sell order. A User may, but is not required to, select an offset 
equal to or greater than one Minimum Price Variation \21\ above or 
below the NBB or NBO that the order is pegged to. An order with a 
Primary Peg instruction is currently eligible to join the Exchange's 
Best Bid or Offer (``Exchange BBO'') when the EDGA Book has been locked 
or crossed by another market. If an order with a Primary Peg 
instruction creates a Locking Quotation \22\ or Crossing Quotation,\23\ 
the price of the order is automatically adjusted by the System to one 
Minimum Price Variation below the current NBO (for bids) or to one 
Minimum Price Variation above the current NBB (for offers).
---------------------------------------------------------------------------

    \21\ The term ``Minimum Price Variation'' is defined as 
``[b]ids, offers, or orders in securities traded on the Exchange 
shall not be made in an increment smaller than: (i) $0.01 If those 
bids, offers, or orders are priced equal to or greater than $1.00 
per share; or (ii) $0.0001 if those bids, offers, or orders are 
priced less than $1.00 per share; or (iii) any other increment 
established by the Commission for any security which has been 
granted an exemption from the minimum price increments requirements 
of SEC Rule 612(a) or 612(b) of Regulation NMS.'' See Exchange Rule 
11.6(i).
    \22\ The term ``Locking Quotation'' is defined as ``[t]he 
display of a bid for an NMS stock at a price that equals the price 
of an offer for such NMS stock previously disseminated pursuant to 
an effective national market system plan, or the display of an offer 
for an NMS stock at a price that equals the price of a bid for such 
NMS stock previously disseminated pursuant to an effective national 
market system plan in violation of Rule 610(d) of Regulation NMS.'' 
See Exchange Rule 11.6(g).
    \23\ The term ``Crossing Quotation'' is defined as ``[t]he 
display of a bid (offer) for an NMS stock at a price that is higher 
(lower) than the price of an offer (bid) for such NMS stock 
previously disseminated pursuant to an effective national market 
system plan in violation of Rule 610(d) of Regulation NMS.'' See 
Exchange Rule 11.6(c).
---------------------------------------------------------------------------

    An order that includes a Market Peg instruction will have its price 
pegged by the System to the NBB, for a sell order, or the NBO, for a 
buy order. An order with a Market Peg instruction that is to be 
displayed by the System on the EDGA Book must include an offset for an 
order to buy (sell) that is equal to or greater than one Minimum Price 
Variation below (above) the NBO (NBB) that the order is pegged to. If a 
User does not select an offset, the System will automatically include 
an offset on an order to buy (sell) that is equal to one Minimum Price 
Variation below (above) the NBO (NBB) that the order is pegged to. For 
an order with a Non-Displayed instruction, a User may, but is not 
required to, select an offset for an order to buy (sell) that is equal 
to or greater than one Minimum Price Variation below (above) the NBO 
(NBB) that the order is pegged to.
    Proposed Functionality. The Exchange proposes to amend the Pegged 
instruction under Rule 11.6(j) to align

[[Page 2129]]

with BATS Rule 11.9(c)(8).\24\ First, the Exchange proposes to no 
longer cancel an order with a Pegged instruction where the NBB or NBO, 
as applicable, is no longer available. In such case, instead of being 
cancelled, the order will not be eligible for execution. The order will 
receive a new time stamp and be eligible for execution where the NBB or 
NBO it is pegged to becomes available.
---------------------------------------------------------------------------

    \24\ See Securities Exchange Act Release Nos. 73188 (September 
23, 2014), 79 FR 58004 (September 26, 2014) (SR-BATS-2014-041) 
(Notice of Filing and Immediate Effectiveness of a Proposed Rule 
Change to Rule 11.9 of BATS Exchange, Inc.); 73190 (September 23, 
2014), 79 FR 58019 (September 26, 2014) (SR-BYX-2014-022) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
11.9 of BATS Y-Exchange, Inc.). As amended, Exchange Rule 11.6(j) 
only differs from BATS Rule 11.9(c)(8) to extent necessary to 
conform with existing rule text or to account for details or 
descriptions currently included in the Exchange's Rule that are not 
included in BATS Rule 11.9(c)(8).
---------------------------------------------------------------------------

    Second, the Exchange proposes to amend the Market Peg instruction 
under Rule 11.6(j)(1) to state that such orders are not eligible for 
display on the EDGA Book. As a result, the Exchange also proposes to 
delete the requirement that an order with a Market Peg instruction that 
is to be displayed on the EDGA Book must include an offset for an order 
to buy (sell) that is equal to or greater than one Minimum Price 
Variation below (above) the NBO (NBB) that the order is pegged to.
    Third, the Exchange proposes to amend the Primary Peg instruction 
under Rule 11.6(j)(2) to define an offset equal to or greater than one 
Minimum Price Variation above or below the NBB or NBO that the order is 
pegged to as the ``Primary Offset Amount''. The Exchange also proposes 
to specify that the Primary Offset Amount for an order with a Primary 
Peg instruction that is to be displayed on the EDGA Book must result in 
the price of such order being inferior to or equal to the inside quote 
on the same side of the market.
    Fourth, the Exchange proposes to amend the provisions governing the 
operation of an order with a Primary Peg instruction during a locked or 
crossed market. As proposed, an order with a Primary Peg instruction 
will no longer be able to join the Exchange BBO when the EDGX Book 
[sic] is locked or crossed by another market. When the EDGX Book [sic] 
is crossed by another market, the Exchange proposes to automatically 
adjust an order with a Primary Peg instruction to the current NBO (for 
bids) or the current NBB (for offers). For example, assume the NBBO is 
$10.08 x $10.09. An order with a Primary Peg instruction to buy with a 
limit price of $10.10 is entered and displayed by the System at $10.08, 
the current NBB. Assume the NBO updates to $10.07, resulting in a 
crossed market. The order with a Primary Peg instruction to buy would 
then be pegged and displayed at $10.07, the updated NBO.
    Rule 11.6(j)(2) will continue to require that an order with a 
Primary Peg instruction that would otherwise be a Locking Quotation or 
Crossing Quotation be automatically adjusted by the System to one 
Minimum Price Variation below the current NBO (for bids) or to one 
Minimum Price Variation above the current NBB (for offers). For 
example, assume the NBBO is $10.09 x $10.08, resulting in a crossed 
market. An order with a Primary Peg instruction to buy with a limit 
price of $10.10 is entered and displayed by the System at $10.07, one 
Minimum Price Variation below the current NBB. Assume the NBBO is 
updated to $10.08 x $10.09, the order with a Primary Peg instruction to 
buy would then be pegged and displayed at $10.08, the updated NBB now 
that the market is no longer crossed. This proposed rule change is 
representative of additional detail with regard to the operation of 
orders with a Pegged instruction during locked or crossed markets that 
is currently included in Rule 11.6(j) and is consistent with Exchange's 
current re-pricing options under Rule 11.6(l), as well as Exchange Rule 
11.10(f) and BATS Rule 11.20(a)(3), which outline the prohibition 
against displaying locking and crossing quotations under Rule 610 of 
Regulation NMS.
Permitted Price (Rule 11.6(k))
    Permitted Price is currently defined as the price at which a sell 
order will be priced, ranked and displayed at one Minimum Price 
Variation above the NBB. As amended, the definition of Permitted Price 
will only state that it is the price that the order is displayed at one 
Minimum Price Variation above the NBBO.\25\ This is to update the 
definition of Permitted Price to reflect the decommissioning of the 
Short Sale Price Adjust and Short Sale Price Sliding instructions and 
the proposed amendment that an order with both a Short Sale instruction 
and Hide Not Slide instruction will be ranked at the mid-point of the 
NBBO, but displayed at the Permitted Price discussed below. While the 
amended definition of Permitted Price is not identical to the 
definition of Permitted Price under BATS Rules, any differences are 
necessary to conform the proposed rule text with the other proposed 
rule changes described above.
---------------------------------------------------------------------------

    \25\ The proposed definition of Permitted Price is also similar 
to that of other exchange. See e.g., Nasdaq Rule 4763(e); NYSE MKT 
Rule 440B(e); Rule 7016(f)(v)(C).
---------------------------------------------------------------------------

Re-Pricing (Rule 11.6(l))
    The Exchange currently offers re-pricing instructions which, in all 
cases, result in the ranking and/or display of an order at a price 
other than the order's limit price in order to comply with applicable 
securities laws and Exchange Rules. Specifically, the Exchange's re-
pricing instructions are designed to permit Users to comply with Rule 
610(d) of Regulation NMS or Rule 201 of Regulation SHO. Rule 11.6(l) 
sets forth the re-pricing instructions currently available to Users 
with regard to Regulation NMS compliance--Price Adjust, Hide Not Slide, 
and Routed and Returned Re-Pricing, and with regard to Regulation SHO 
compliance--Short Sale Price Adjust and Short Sale Price Sliding. The 
Exchange now proposes to amend its re-pricing instructions to 
streamline the re-pricing options available to Users in order to align 
Exchange functionality with that of BATS.
Re-Pricing Instructions To Comply With Rule 610(d) of Regulation NMS
    The Exchange proposes to amend its re-pricing instructions to 
comply with Rule 610(d) of Regulation NMS as follows: (i) Amend the 
Price Adjust instruction to enable Users to elect that their order be 
adjusted multiple times in response to changes in the NBBO; rename the 
Hide Not Slide instruction as Displayed Price Sliding and amend it to 
allow for multiple re-pricing; and (iii) delete Routed and Returned Re-
Pricing.
    Routed and Returned Re-Pricing (Rule 11.6(l)(1)(B)(i)). The 
Exchange proposes to delete the Routed and Returned Re-Pricing 
instruction under Rule 11.6(l)(1)(B)(i). Pursuant to current Exchange 
Rules and Functionality, under the Routed and Returned Re-Pricing 
instruction, a Limit Order that is returned to the EDGA Book after 
being routed to an away Trading Center with a limit price that would 
cause the order to be a Locking Quotation or Crossing Quotation will be 
displayed by the System on the EDGA Book at a price that is one Minimum 
Price Variation lower (higher) than the Locking Price \26\ for orders 
to buy (sell), will be ranked at the Locking Price with the ability to 
execute at the Locking Price. Each time the NBBO is updated, a buy 
(sell) order

[[Page 2130]]

subject to the Routed and Returned Re-Pricing instruction will be 
further adjusted so that it continues to be displayed by the System on 
the EDGA Book at one Minimum Price Variation below (above) the NBO 
(NBB) and will be ranked at the Locking Price with the ability to 
execute at the Locking Price until the price of such order reaches its 
limit price, at which point it will remain displayed by the System on 
the EDGA Book at that price and cease to be further adjusted pursuant 
to the Routed and Returned Re-Pricing instruction. The order will 
receive a new time stamp when it is returned to the EDGA Book and each 
time it is subsequently re-ranked.
---------------------------------------------------------------------------

    \26\ The term ``Locking Price'' is defined as ``the price at 
which an order to buy (sell), that if displayed by the System on the 
EDGA Book, either upon entry into the System, or upon return to the 
System after being routed away, would be a Locking Quotation.'' See 
Exchange Rule 11.6(i).
---------------------------------------------------------------------------

    Upon completion of the migration of the Exchange to BATS 
technology, Limit Orders that are returned to the EDGA Book after being 
routed to an away Trading Center with a limit price that would cause 
the order to be a Locking Quotation or Crossing Quotation will be 
subject to the Exchange's standard re-pricing instructions; i.e., 
automatically defaulted by the System to the Price Adjust Re-Pricing 
instruction, unless the User affirmatively elects the Cancel Back 
instruction or the Hide Not Slide instruction. The Exchange also 
proposes to remove a reference to the Routed and Returned Re-Pricing 
instruction from Rule 11.6(l)(1)(B).
    Price Adjust Re-Pricing (Rule 11.6(l)(1)(A)). Under the Price 
Adjust instruction, where a buy (sell) order would be a Locking 
Quotation or Crossing Quotation if displayed by the System on the EDGA 
Book at the time of entry, the order will be displayed and ranked \27\ 
at a price that is one Minimum Price Variation lower (higher) than the 
Locking Price. The order will be displayed and ranked by the System on 
the EDGA Book at the Locking Price if: (i) The NBBO changes such that 
the order, if displayed at the Locking Price, would not be a Locking 
Quotation or Crossing Quotation, including where an ISO with a TIF 
instruction of Day is entered into the System and displayed on the EDGA 
Book on the same side of the market as the order at a price that is 
equal to or more aggressive than the Locking Price.\28\ An order re-
priced as set forth above would not be subject to further re-ranking 
and will be displayed by the System on the EDGA Book at the Locking 
Price until executed or cancelled by the User. The order will receive a 
new time stamp at the time it is re-ranked.
---------------------------------------------------------------------------

    \27\ For purposes of the description of the re-pricing 
instructions under proposed Rule 11.6(l), the terms ``ranked'' and 
``priced'' are synonymous and used interchangeably.
    \28\ See Division of Trading and Markets: Response to Frequently 
Asked Questions Concerning Rule 611 and Rule 610 of Regulation NMS, 
Question 5.02, available at http://www.sec.gov/divisions/marketreg/nmsfaq610-11.htm (last visited March 6, 2014).
---------------------------------------------------------------------------

    The Exchange proposes to amend the Price Adjust instruction to 
provide Users with additional flexibility by enabling them to elect 
that their order be adjusted multiple times in response to changes in 
the NBBO. The ranked and displayed prices of an order subject to the 
Price Adjust instruction will only be adjusted once, unless the User 
elects that the order be adjusted multiple times in response to changes 
to the prevailing NBBO. Unless a User has elected the multiple re-
pricing option, the order would not be subject to further re-ranking 
and will be displayed on the EDGA Book at the Locking Price until 
executed or cancelled by the User. An order subject to the multiple re-
pricing option will be further re-ranked and re-displayed to the extent 
it can permissibly be ranked and displayed at a more aggressive price 
based on changes to the prevailing NBBO. Multiple re-pricing pursuant 
to Price Adjust would be optional and would have to be explicitly 
selected by a User before it will be applied. Orders subject to 
multiple re-pricing for Price Adjust will be permitted to move all the 
way back to their most aggressive price, whereas orders subject to 
Price Adjust may not be adjusted to their most aggressive price, 
depending upon market conditions and the limit price of the order upon 
entry. The Exchange notes that this functionality is identical to the 
operation of BATS Rule 11.9(g)(2).\29\ The Exchange does not propose to 
amend any other aspect of the Price Adjust instruction.
---------------------------------------------------------------------------

    \29\ See Securities Exchange Act Release Nos. 73359 (October 15, 
2014), 79 FR 63003 (October 21, 2014) (SR-BATS-2014-038) (Order 
Granting Approval of Proposed Rule Change to Rule 11.9 of the BATS 
Exchange, Inc. to Add Price Adjust Functionality); and 73366 
(October 15, 2014), 79 FR 62993 (October 21, 2014) (SR-EDGA-2014-
019) [sic] (Order Granting Approval of Proposed Rule Change to Rule 
11.9 of the BATS Y-Exchange, Inc. to Add Price Adjust 
Functionality).
---------------------------------------------------------------------------

    As an example of multiple re-pricing for Price Adjust assume the 
Exchange has a posted and displayed bid to buy 100 shares of a security 
priced at $10.10 per share and a posted and displayed offer to sell 100 
shares at $10.14 per share. Assume the NBBO is $10.10 by $10.12. If the 
Exchange receives a non-routable bid to buy 100 shares at $10.13 per 
share, the Exchange would rank and display the order to buy at $10.11 
because displaying the bid at $10.13 would cross an external market's 
Protected Offer to sell for $10.12. If the NBO then moved to $10.13, 
the Exchange would un-slide the bid to buy and rank and display it at 
$10.12. Under existing Price Adjust functionality, the Exchange does 
not further adjust the ranked or displayed price following this un-
slide. However, under multiple re-pricing for Price Adjust if the NBO 
then moved to $10.14, the Exchange would un-slide the bid to buy and 
rank and display it at its full limit price of $10.13.
    Hide Not Slide Re-Pricing (Rule 11.6(l)(1)(B)). The Exchange 
proposes to rename the Hide Not Slide Re-Pricing instruction under Rule 
11.6(l)(1)(B) as Displayed Price Sliding and to amend the rule to allow 
for multiple re-pricing.\30\ Under the renamed Displayed Price Sliding 
instruction, where an order would be a Locking Quotation or Crossing 
Quotation if displayed by the System on the EDGA Book at the time of 
entry, the order will be displayed at a price that is one Minimum Price 
Variation lower (higher) than the Locking Price for orders to buy 
(sell), will be ranked at the Locking Price with the ability to execute 
at the Locking Price; provided, however, that if a contra-side order 
that equals the Locking Price is displayed by the System on the EDGA 
Book, the order's ability to execute at the Locking Price will be 
suspended unless and until there is no contra-side displayed order on 
the EDGA Book that equals the Locking Price. However, in such case, an 
order subject to the Displayed Price Sliding instruction may execute 
against other orders at its displayed price. Where the NBBO changes 
such that the order, if displayed by the System on the EDGA Book at the 
Locking Price, would not be a Locking Quotation or Crossing Quotation, 
the System will rank and display such orders at the Locking Price. The 
order will not be subject to further re-ranking and will be displayed 
on the EDGA Book at the Locking Price retaining its time stamp until 
executed or cancelled by the User. Currently, an order subject to the 
Displayed Price Sliding instruction will only receive a new time stamp 
when it is re-ranked by

[[Page 2131]]

the System upon clearance of a Locking Quotation due to the receipt of 
an ISO with a TIF instruction of Day that establishes a new NBBO at the 
Locked Price in accordance with Rule 11.9(a)(2)(B).
---------------------------------------------------------------------------

    \30\ The Exchange notes that it is proposing to re-name the Hide 
Not Slide Re-Pricing instruction to the Displayed Price Sliding 
instruction, which is the same name used to describe analogous 
functionality on BATS. The Exchange understands that, its affiliate, 
EDGX, will retain the current name with respect to the Hide Not 
Slide Re-Pricing instruction because such functionality is 
distinguishable from Displayed Price Sliding functionality. The 
primary difference between Hide Not Slide functionality and 
Displayed Price Sliding functionality is that an order with a Hide 
Not Slide re-pricing instruction will be ranked at the mid-point of 
the NBBO with discretion to execute at the Locking Price whereas an 
order with a Displayed Price Sliding instruction (including an 
analogous order on BZX or BYX) is ranked at the Locking Price.
---------------------------------------------------------------------------

    Like as proposed for the Price Adjust instruction described above, 
the Exchange proposes to amend the Displayed Price Sliding instruction 
to provide Users with additional flexibility by enabling them to elect 
that their order be adjusted multiple times in response to changes in 
the NBBO. The ranked and displayed prices of an order subject to the 
Displayed Price Sliding instruction will only be adjusted once, unless 
the User elects that the order be adjusted multiple times in response 
to changes to the prevailing NBBO. Unless a User has elected the 
multiple re-pricing option, the order would not be subject to further 
re-ranking and will be displayed on the EDGA Book at the Locking Price 
until executed or cancelled by the User. An order subject to the 
multiple re-pricing option will be further re-ranked and re-displayed 
to the extent it can permissibly be ranked and displayed at a more 
aggressive price based on changes to the prevailing NBBO. Multiple re-
pricing pursuant to Displayed Price Sliding would be optional and would 
have to be explicitly selected by a User before it will be applied. 
Orders subject to multiple re-pricing for Displayed Price Sliding will 
be permitted to move all the way back to their most aggressive price, 
whereas orders subject to Price Adjust may not be adjusted to their 
most aggressive price, depending upon market conditions and the limit 
price of the order upon entry. The Exchange notes that this 
functionality is identical to the operation of BATS Rule 
11.9(g)(1).\31\ To account for option multiple price sliding, the 
Exchange proposes to state that an order subject to the Displayed Price 
Sliding instruction will receive a new time stamp each time is re-
ranked, which will include when the order is re-ranked by the System 
upon clearance of a Locking Quotation due to the receipt of an ISO with 
a TIF instruction of Day that establishes a new NBBO at the Locked 
Price in accordance with Rule 11.9(a)(2)(B).The Exchange does not 
propose to amend any other aspect of the Displayed Price Sliding 
instruction.
---------------------------------------------------------------------------

    \31\ See Securities Exchange Act Release Nos. 67657 (August 14, 
2012), 77 FR 50199 (August 20, 2012) (SR-BATS-2012-035) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change by the 
BATS Exchange, Inc. to Amend BATS Rules Related to Price Sliding 
Functionality); and 67656 (August 14, 2012), 77 FR 50193 (August 20, 
2012) (SR-BYX-2012-018) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the BATS Y-Exchange, Inc. 
to Amend BYX Rules Related to Price Sliding Functionality).
---------------------------------------------------------------------------

    As an example of multiple Displayed Price Sliding, assume the 
Exchange has a posted and displayed bid to buy 100 shares of a security 
priced at $10.10 per share and a posted and displayed offer to sell 100 
shares at $10.13 per share. Assume the NBBO is $10.10 by $10.12. If the 
Exchange receives a non-routable bid to buy 100 shares at $10.12 per 
share the Exchange will rank the order to buy at $10.12 and display the 
order at $10.11 because displaying the bid at $10.12 would lock an 
external market's Protected Offer to sell for $10.12. If the NBO then 
moved to $10.13, the Exchange would un-slide the bid to buy and display 
it at its ranked price (and limit price) of $10.12.
Re-Pricing Instructions To Comply With Rule 201 of Regulation SHO
    The Exchange proposes to amend its Re-Pricing instructions to 
comply with Rule 201 of Regulation SHO by deleting Short Sale Price 
Adjust and Short Sale Price Sliding and adopting a new, streamlined 
rule to align with BATS Rule 11.9(g)(5).
    Current Functionality. The Exchange currently offers two re-pricing 
instructions to comply with Rule 201 of Regulation SHO--Short Sale 
Price Adjust and Short Sale Price Sliding. Under the Short Sale Price 
Adjust instruction, an order to sell with a Short Sale instruction will 
be ranked and displayed by the System on the EDGA Book at the Permitted 
Price. Following the initial ranking, the order will, to the extent the 
NBB declines, continue to be re-ranked and displayed by the System on 
the EDGA Book at the Permitted Price down to the order's limit price. 
The Short Sale Price Sliding instruction operates similarly to the 
Short Sale Price Adjust instruction; except that after its initial 
ranking, the order will, to the extent the NBB declines, be re-ranked 
and displayed by the System on the EDGA Book one additional time at a 
price that is equal to the NBB at the time the order was received by 
the System. In both cases, the order to sell with a Short Sale 
instruction will receive a new time stamp each time it is re-ranked.
    Proposed Functionality. The Exchange proposes to delete the Short 
Sale Price Adjust and Short Sale Price Sliding and adopt a new, 
streamlined rule to align with BATS Rule 11.9(g)(5). Under the amended 
Rule 11.6(l)(2), an order to sell with a Short Sale instruction that, 
at the time of entry, could not be executed or displayed in compliance 
with Rule 201 of Regulation SHO will be re-priced by the System at the 
Permitted Price. Like BATS Rule 11.9(g)(5), proposed Exchange Rule 
11.6(l)(2)(A) would state that the default short sale re-pricing 
process will only re-price an order upon entry.
    As proposed, depending upon the instructions of a User, to reflect 
declines in the NBB the System will continue to re-price and re-display 
a short sale order at the Permitted Price down to the order's limit 
price. In the event the NBB changes such that the price of an order 
with a Non-Displayed instruction subject to Rule 201 of Regulation SHO 
would be a Locking Quotation or Crossing Quotation, the order will 
receive a new time stamp, and will be re-priced by the System to the 
Permitted Price. Like the Short Sale Price Adjust process that is to be 
decommissioned, an order to sell with a Short Sale instruction that is 
re-priced will be ranked at the Permitted Price.
    Like BATS Rule 11.9(g)(5), amended Rule 11.6(l)(2) would state 
that: (i) When a Short Sale Circuit Breaker is in effect, the System 
will execute a sell order with a Displayed and Short Sale instruction 
at the price of the NBB if, at the time of initial display of the sell 
order with a Short Sale instruction, the order was at a price above the 
then current NBB; (ii) orders with a Short Exempt instruction will not 
be subject to re-pricing under amended Rule 11.6(l)(2); and (iii) the 
re-pricing instructions to comply with Rule 610(d) of Regulation NMS 
will be continue to be ignored for an order to sell with a Short Sale 
instruction when a Short Sale Circuit Breaker is in effect and the re-
pricing instructions to comply with Rule 201 of Regulation SHO under 
this Rule will apply.
Re-Pricing of Orders With a Non-Displayed Instruction (Rule 11.6(l)(3))
    Rule 11.6(l)(3) currently sets forth the re-pricing process for 
orders with a Non-Displayed instruction to avoid potentially trading 
through Protected Quotations of external markets. Currently, under Rule 
11.6(l)(3), a non-routable order with a Non-Displayed instruction that 
would be a Crossing Quotation of an external market will be ranked at 
the Locking Price, unless the User affirmatively elects that the order 
Cancel Back. Rule 11.6(l)(3) states that to avoid potentially trading 
through Protected Quotations of external markets, a non-routable order 
with a Non-Displayed instruction that would be a Crossing Quotation of 
an external market will be ranked at the Locking Price, unless the User 
affirmatively elects that the order Cancel Back. Each time the NBBO is 
updated and the order continues to be a Locking Quotation or

[[Page 2132]]

Crossing Quotation of an external market, the order will be adjusted so 
that it continues to be ranked at the current Locking Price. Once an 
order with a Non-Displayed instruction has been ranked at its limit 
price it will only be adjusted in the event the NBBO is updated and the 
order would again be a Crossing Quotation of an external market. The 
order will receive a new time stamp each time it is subsequently re-
ranked. For example, assume the NBBO is $24.00 x $26.00 and there are 
no orders resting on the EDGA Book. If an incoming order with a Non-
Displayed instruction is entered into the System to buy at $27.00, it 
will be ranked by the System at $26.00, the Locking Price. Assume the 
NBBO changes to $24.00 x $25.00. The buy order with a Non-Displayed 
instruction will be re-ranked at $25.00, the new Locking Price, and be 
given a new time stamp.
    The Exchange proposes to amend Rule 11.6(l)(3) to align with BATS 
Rule 11.9(g)(4).\32\ As amended, an order with a Non-Displayed 
instruction that has been re-ranked by the System in accordance with 
Rule 11.6(l)(3) will not be re-ranked by the System each time the NBBO 
is adjusted. Rather, such order will only be re-ranked by the System 
should it is again be Crossing Quotation of an external market upon the 
NBBO being updated. Assume the same facts as the above example. Assume 
the NBBO again changes to $24.00 x $27.00. The buy order with a Non-
Displayed instruction will be remain ranked at $25.00 because it is not 
a Crossing Quotation upon the NBBO changing. However, assume the NBBO 
changed to $23.00 x $24.00. The buy order with a Non-Displayed 
instruction will be remain ranked at $24.00, and be given a new time 
stamp, because it would be a Crossing Quotation if it remained ranked 
at $25.00.
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

Reserve Quantity and Replenishment Amounts (Rule 11.6(m))
    Current Functionality. If the portion of the order with a Displayed 
instruction is reduced to less than a Round Lot, the System will, in 
accordance with the User's instruction, replenish the displayed 
quantity from the Reserve Quantity by at least a single Round-Lot using 
either the Random or Fixed Replenishment instructions. A new time stamp 
is created for the displayed quantity of the order each time it is 
replenished from the Reserve Quantity, while the Reserve Quantity 
retains the time stamp of its original entry. Where the combined amount 
of the displayed quantity and Reserve Quantity of an order are reduced 
to less than one Round Lot, the order converts to an order with a 
Displayed instruction and be treated as Displayed for purposes of 
execution priority under Rule 11.9.
    Proposed Functionality. The Exchange proposes to amend Rule 11.6(m) 
to align with BATS Rule 11.9(c)(1).\33\ First, the Exchange proposes to 
no longer require that the displayed quantity from the Reserve Quantity 
be replenished by at least a single Round-Lot. Instead, the displayed 
quantity will be replenished in accordance with the replenishment 
instruction the User selects. Specifically, like on BATS, Users will be 
required to designate the original display quantity of an order, which 
is also the amount to which an order is replenished (unless the 
remainder of an order is smaller than the original displayed quantity) 
under the current replenishment functionality. The Exchange refers to 
this quantity as ``max floor'' in its specifications. The Exchange 
proposes to add a defined term of ``Max Floor'' to Rule 11.6(m), which 
would be a mandatory value entered by a User that will determine the 
quantity of the order to be initially displayed by the System and will 
also be used to determine the replenishment amount under both 
replenishment options described below. If the remainder of an order is 
less than the replenishment amount, the Exchange will replenish and 
display the entire remainder of the order.
---------------------------------------------------------------------------

    \33\ See supra note 20.
---------------------------------------------------------------------------

    Second, the Exchange proposes to amend the time stamp functionality 
of an order with a Reserve Quantity. Currently, when an order is 
replenished from Reserve Quantity, the displayed quantity receives a 
new time stamp while the Reserve Quantity retains the time stamp of its 
original entry. As amended, a new time stamp will be created for the 
displayed quantity and Reserve Quantity of the order each time it is 
replenished from the Reserve Quantity. This functionality is identical 
to functionality set forth in BATS Rule 11.12(a)(5).\34\
---------------------------------------------------------------------------

    \34\ Id.
---------------------------------------------------------------------------

    Random Replenishment is an instruction that a User may attach to an 
order with Reserve Quantity where replenishment quantities for the 
order are randomly determined by the System within a replenishment 
range established by the User. The Exchange proposes to minor 
amendments to the operation of Random Replenishment to align with BATS 
Rule 11.9(c)(1).\35\ Currently, both the actual quantity of the order 
that will be initially displayed by the System on the EDGA Book and 
subsequent displayed replenishment quantities are randomly determined 
by the System within a replenishment range established by the User. As 
amended, only the replenishment quantities for the order will be 
randomly determined by the System within a replenishment range 
established by the User. A User will be required to select a 
replenishment value and Max Floor. The Max Floor will be the initial 
quantity to be displayed. The displayed replenishment quantities will 
then be determined by the System by randomly selecting a number of 
shares within a replenishment range that is between: (i) The Max Floor 
minus the replenishment value; and (ii) the Max Floor plus the 
replenishment value. The displayed replenishment quantities randomly 
determined by the System will no longer be limited to Round Lots. Nor 
will the replenishment quantity be within a replenishment range that is 
between the quantity around which the replenishment range is 
established plus or minus the replenishment value. In addition, the 
Exchange will no longer prohibit the displayed replenishment quantity 
from: (i) Exceeding the remaining Reserve Quantity of the order; (ii) 
from being less than a single Round Lot or greater than the remaining 
unexecuted shares in the order.
---------------------------------------------------------------------------

    \35\ Id.
---------------------------------------------------------------------------

    In addition to the changes set forth above, the Exchange proposes 
to modify Rule 11.10(e)(3) to state that the Max Floor set for an order 
can be modified through the use of a replace message rather than 
requiring a User to cancel and re-enter an order. The Exchange also 
proposes to modify Rule 11.9(a)(4) to align with BATS Rule 
11.12(a)(3)\36\ to make clear that a modification to the Max Floor of 
an order with a Reserve Quantity will not cause such order to lose 
priority. When a replenishment occurs (based on the new Max Floor), the 
order will receive a new timestamp, and thus, will have a new priority.
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    Under Fixed Replenishment, the displayed quantity of an order is 
replenished for a Fixed Replenishment quantity designated by the User. 
The Fixed Replenishment quantity for the order equals the initial 
displayed quantity designated by the User. The Exchange proposes to 
amend Rule 11.6(m) to specify that the Fixed Replenishment quantity 
will be the Max Floor designated by the User. In addition, Rule 11.6(m) 
will also specify

[[Page 2133]]

that Fixed Replenishment will apply to any order for which Random 
Replenishment has not been selected. Lastly, like proposed for Random 
Replenishment discussed above, the Exchange will no longer prohibit the 
displayed replenishment quantity from being less than a single Round 
Lot or greater than the remaining unexecuted shares in the order. As 
amended, Fixed Replenishment will be identical to BATS Rule 
11.9(c)(1)(B).\37\
---------------------------------------------------------------------------

    \37\ See supra note 20.
---------------------------------------------------------------------------

Super Aggressive (Rule 11.6(n)(2))
    Super Aggressive is an order instruction that directs the System to 
route the order if an away Trading Center locks or crosses the limit 
price of the order resting on the EDGA Book. Like BATS Rule 
11.13(a)(4)(B), the Exchange proposes to also permit a User to 
designate an order as Super Aggressive solely to routable orders posted 
to the EDGA Book with remaining size of an Odd Lot.\38\ To the extent 
the amended text of Exchange Rule 11.6(n)(2) differs from BATS Rule 
11.13(a)(4)(B), such differences are necessary to conform the rule with 
existing rule text, and in this case, to account for details or 
descriptions currently included in BATS Rule 11.9(d) [sic] that are not 
necessary under the structure of the Exchange's Rules.
---------------------------------------------------------------------------

    \38\ See Securities Exchange Act Release Nos. 73295 (October 3, 
2014), 79 FR 61117 (October 9, 2014) (SR-BATS-2014-044) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Rules 
11.13 and 21.9 of the BATS Exchange, Inc.); and 73296 (October 3, 
2014), 79 FR 61121 (October 9, 2014) (SR-BYX-2014-026) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Rule 
11.13 of the BATS Y-Exchange, Inc.). As amended, Exchange Rule 
11.6(n)(2) only differs from BATS Rule 11.13(a)(4)(B) to extent 
necessary to conform the rule with existing Exchange rule text or to 
account for details or descriptions currently included in the 
Exchange's Rule but not included in BATS Rule 11.13(a)(4)(B). An 
``Odd Lot' is defined as ``any amount less than a Round Lot. See 
Exchange Rule 11.8(s)(2).
---------------------------------------------------------------------------

Time-In-Force (Rule 11.6(q))
    The Exchange proposes to amend its TIF instructions to align with 
BATS Rule 11.9(b). To the extent the amended text of Exchange Rule 
11.6(q) differs from BATS Rule 11.9(b), such differences are necessary 
to conform the rule with existing Exchange rule text or to account for 
details or descriptions currently included in the Exchange's Rule but 
not included in BATS Rule 11.9(b). Where necessary, the Exchange has 
proposed rule changes consistent with the Exchange's operation on BATS 
technology, which the Exchange also believes are consistent with User 
expectations of how the System operates.
    First, the Exchange proposes minor modifications to align the 
definition of IOC with BATS Rule 11.9(b)(1), the most notable of which 
is to specify that an order with a TIF instruction of IOC is eligible 
for routing. BATS rules do not restrict an order with an IOC 
instruction from being eligible for routing. In addition, permitting 
orders with an IOC instruction to be eligible for routing is consistent 
with BATS technology as well as with Users' expectations to use orders 
with an IOC instruction in combination with available routing 
functionality and strategies. As amended, an IOC would be an 
instruction the User may attach to an order stating the order is to be 
executed in whole or in part as soon as such order is received. The 
portion not executed immediately on the Exchange or another trading 
center is treated as cancelled and is not posted to the EDGA Book.
    Second, the Exchange proposes to amend the definition of the Day 
TIF instruction to state that an order with a TIF instruction of Day, 
if not executed, expires at the end of Regular Trading Hours and not at 
the end of the specified trading session. In addition, orders with a 
Day TIF instruction will be eligible for execution as soon as received 
by the Exchange. Therefore, the Exchange proposes to no longer require 
that any order with a Day instruction entered into the System before 
the start of the specified trading session will be placed by the System 
in a pending state and activated for potential execution upon the start 
of that trading session. Lastly, any Day Order entered into the System 
before the opening for business on the Exchange as determined pursuant 
to Rule 11.1 (which is currently 6:00 a.m.), or after the closing of 
Regular Trading Hours, will be rejected.
    Third, Good-`til Time will be renamed as Good-`til Day (``GTD''). 
GTD will continue to be defined as an instruction the User may attach 
to an order specifying the time of day at which the order expires. Any 
unexecuted portion of an order with a TIF instruction of GTD will be 
continue to be cancelled at the expiration of the User's specified 
time, which can be no later than the close of the Post-Market Session. 
A User will no longer be able to designate that an order with a GTD 
instruction be cancelled at the end of a specified trading session(s).
    Lastly, the Exchange proposes to adopt two new TIF instructions 
which are currently available on BATS: \39\ Good `til Extended Day 
(``GTX'') and RHO. GTX will be defined as an instruction the User may 
attach to an order to buy or sell which, if not executed, will be 
cancelled by the close of the Post-Market Session. RHO will be defined 
as an instruction a User may attach to an order designating it for 
execution only during Regular Trading Hours, which includes the Opening 
Process and Re-Opening Process following a halt suspension or pause. 
The proposed definition of RHO under Exchange Rule 11.6(q)(6) is 
substantially similar to BYX Rule 11.9(b)(7) and any differences are 
necessary to conform the rule with existing Exchange rule text or to 
account for details or descriptions currently included in the 
Exchange's rules but not in BYX Rule 11.9(b)(7). The Exchange notes 
that the proposed definition of RHO is also similar to BZX Rule 
11.9(b)(7) but such rule includes additional detail not necessary in 
the proposed rule because the Exchange does not have any listed 
securities or a separate process for handling such listed securities 
whereas BZX does.
---------------------------------------------------------------------------

    \39\ See supra note 20.
---------------------------------------------------------------------------

Rule 11.7, Opening Process
    The Exchange proposes to amend Rule 11.7 regarding the Opening 
Process to align with BATS Rule 11.24 and BYX Rule 11.23.\40\ The 
Exchange proposes to modify paragraph (a) to specify that buy or sell 
orders that wish to participate in the Opening Process are to include a 
TIF instruction of RHO and that any order that does not include a TIF 
instruction of RHO will not be eligible for participation in the 
Opening Process. Paragraph (a)(1) would be amended to make clear that 
only orders without a TIF instruction of RHO and ISOs designated RHO 
may execute against eligible Pre-Opening Session contra-side interest 
resting in the EDGA Book in the time period between the start of 9:30 
a.m. Eastern Time and the Exchange's Opening Process or a Contingent 
Open, as described in paragraph (b) and (d).\41\ Orders with a TIF 
instruction of IOC or FOK will continue to be eligible for execution 
during this time period as they would be considered orders without a 
TIF instruction of RHO. Paragraph (a)(1) would also state that

[[Page 2134]]

any unexecuted portion of an ISO that is designated RHO will be 
converted into a non-ISO and be queued for participation in the Opening 
Process.
---------------------------------------------------------------------------

    \40\ See Securities Exchange Act Release Nos. 73473 (October 30, 
2014), 79 FR 65744 (November 5, 2014) (SR-BATS-2014-037) (Order 
Granting Approval of Proposed Rule Change to Establish an Opening 
Process for Non-BATS-Listed Securities); and 73472 (November 5, 
2014), 79 FR 65735 (October 9, 2014) (SR-BYX-2014-018) (Order 
Granting Approval of Proposed Rule Change to Establish an Opening 
Process). As amended, Exchange Rule 11.7 only differs from BZX Rule 
11.24 and BYX Rule 11.23 to extent necessary to conform the rule 
with existing Exchange rule text or to account for details or 
descriptions currently included in the Exchange's Rule but not 
contained in BZX or BYX rules.
    \41\ See supra note 9.
---------------------------------------------------------------------------

    Paragraph (a)(2) would be amended to state that all orders that 
include a TIF instruction of RHO may participate in the Opening Process 
except: Limit Orders with a Post Only instruction, the Discretionary 
Range of Limit Orders, and ISOs not modified by Rule 11.7(a)(1), and 
orders with a Minimum Execution Quantity instruction. Limit Orders with 
a Discretionary Range may participate up to their ranked limit price 
for buy orders or down to their ranked limit price for sell orders, 
rather than up or down to their discretionary price, as is currently 
allowed. Orders with a TIF instruction of IOC or FOK will continue to 
be ineligible for execution in the Opening Process as they would not be 
able to also include a TIF instruction of RHO. Orders with a Stop Price 
or Stop Limit Price instruction will be eligible to participate in the 
Opening Process where their stop prices have been trigged.
    Paragraph (b) defines the process by which the System will attempt 
to match buy and sell orders that are executable at the midpoint of the 
NBBO. The Exchange does not propose to alter this process other than to 
define it as the Opening Match. In addition, the Exchange propose to 
include in paragraph (b) that all ERSTP modifiers, as defined in Rule 
11.10(d), will be ignored as it relates to executions occurring during 
the Opening Match.
    Paragraph (d) sets forth the Exchange's Contingent Open process 
that occurs when the conditions to establish the price of the Opening 
Process set forth under Rule 11.7(c) do not occur by 9:45:00 a.m. 
Eastern Time. In such case, orders will be placed on the EDGA Book, 
routed, cancelled, or executed in accordance with the terms of the 
order. The Exchange proposes to state under paragraph (d) that the 
orders will be handled in time sequence, beginning with the order with 
the oldest times [sic] stamp.
    Paragraph (e) or Exchange Rule 11.7 states that re-openings after a 
halt, suspension or pause will occur at the midpoint of the: (i) First 
NBBO subsequent to the first reported trade on the listing exchange 
following the resumption of trading after a halt, suspension, or pause; 
or (ii) then prevailing NBBO when the first two-sided quotation 
published by the listing exchange following the resumption of trading 
after a halt, suspension, or pause if no first trade is reported by the 
listing exchange within one second of publication of the first two-
sided quotation by the listing exchange. The Exchange proposes to add 
additional language to paragraph (e) to align with BATS Rule 11.24 and 
BYX Rule 11.23. First, the Exchange proposes to specify that while a 
security is subject to a halt, suspension, or pause in trading, the 
Exchange will accept orders eligible pursuant to paragraph (a)(2) 
described above for queuing prior to the resumption of trading in the 
security for participation in the Re-Opening Process. In addition, 
proposed paragraph (e)(2) would specify that the Re-Opening Process 
will occur in the same manner described in paragraphs (a)(2) and (b) of 
Rule 11.7, with the following exceptions: (1) Orders without a TIF 
instruction of RHO will be eligible for participation in the Re-Opening 
Process, but orders that include a TIF instruction of IOC or FOK, a 
Post Only instruction or Minimum Execution Quantity instruction will be 
cancelled or rejected, as applicable, and any ISO that does not include 
a TIF instruction of IOC or FOK will be converted into a non-ISO and be 
queued for participation in the Re-Opening Process. Proposed paragraph 
(e)(2) would state that where neither of the conditions required to 
establish the price of the Re-Opening Process in paragraph (1) above 
have occurred, the security may be opened for trading at the discretion 
of the Exchange. Where the security is opened by the Exchange subject 
to this discretion, orders will be handled in the same manner described 
in paragraph (d) regarding a Contingent Open. Proposed paragraphs 
(e)(1)-(2) would be substantially similar to the functionality set 
forth in BATS Rule 11.24(e)(1)-(2) and BYX Rule 11.23(e)(1)-(2).
Rule 11.8, Order Types
    The Exchange proposes to amend the order types set forth under Rule 
11.8 to align their operation with existing BATS Rule and 
functionality.
    Market Orders (Rule 11.8(a)). The Exchange proposes to amend 
paragraph (a)(2) to state that Market Orders may also include a TIF 
instruction of RHO and any portion of a Market Order with a TIF 
instruction of RHO will be cancelled immediately following the Opening 
or Re-Opening Process in which it is not executed, unless it is 
eligible to be displayed on the EDGA Book pursuant to Rule 11.8(a)(4). 
A Market Order being canceled immediately following the Opening or Re-
Opening Process if not executed is a natural extension of the Opening 
Process. Exchange Rule 11.7(b) states that upon conclusion of the 
Opening Process, any remaining orders will be placed on the EDGA Book, 
cancelled, executed, or routed to an away in accordance with Rule 
11.11. As a result, the Market Order will be cancelled unless it is 
eligible to be displayed on the EDGA Book pursuant to Rule 11.8(a)(4).
    Under current Rule 11.10(a)(3)(A), where a non-routable buy (sell) 
Market Order is entered into the System and the NBO (NBB) is greater 
(less) than the Upper (Lower) Price Band, such order will be posted by 
the System to the EDGA Book and priced at the Upper (Lower) Price Band, 
unless (i) the order includes a TIF instruction of IOC or FOK, in which 
case it will be cancelled if not executed, or (ii) the User entered a 
Cancel Back instruction. The Exchange proposes to specify, consistent 
with BATS Rule 11.9(a)(2),\42\ that a Market Order to buy (sell) that 
is posted by the System to the EDGA Book and displayed at the Upper 
(Lower) Price Band will be re-priced and displayed at the Upper (Lower) 
Price Band if Price Bands move such that the price of the resting 
Market Order to buy (sell) would be above (below) the Upper (Lower) 
Price Band or if the Price Bands move such that the order is no longer 
posted and displayed at the most aggressive permissible price. The 
System shall re-price such displayed interest to the most aggressive 
permissible price until the order is executed in its entirety or 
cancelled. In addition, the amended rule would state that a Market 
Order that includes both a TIF instruction of RHO and a Short Sale 
instruction that cannot be executed because of the existence of a Short 
Sale Circuit Breaker will be posted and displayed by the System to the 
EDGA Book and priced in accordance with the Short Sale Re-Price 
instruction described in Rule 11.6(l)(2).
---------------------------------------------------------------------------

    \42\ See Securities Exchange Act Release Nos. 73875 (December 
18, 2014) (SR-BATS-2014-068) (Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change to Rules 11.0(a)(2) and 
11.18(e) of the BATS Exchange, Inc.); and 73874 (December 18, 2014) 
(SR-BYX-2014-039) (Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change to Rules 11.0(a)(2) and 11.18(e) of the BATS Y-
Exchange, Inc.).
---------------------------------------------------------------------------

    Currently, with the exception of a Market Order with a Destination-
on-Open instruction, any portion of a Market Order that would execute 
at a price more than the greater of $0.50 or 5 percent worse than the 
consolidated last sale as published by the responsible single plan 
processor at the time the order is entered into the System will be 
cancelled. As amended, such order will be cancelled where they would 
execute at a price more than $0.50 or 5 percent worse than the NBBO at 
the time the order initially reaches the Exchange,

[[Page 2135]]

whichever is greater. This is identical to BATS Rule 11.9(a)(2).
    Limit Orders (Rule 11.8(b)). The Exchange proposes to state that a 
Limit Order may also include a TIF instruction of RHO or GTX, in 
addition to IOC, FOK, Day or GTD. In addition, Limit Orders with a TIF 
instruction of IOC that do not include a Book Only \43\ instruction and 
will be eligible for routing away pursuant to Rule 11.11, while Limit 
Orders with a TIF instruction of FOK will not. This is designed to 
provide additional detail regarding the operation of Limit Order and is 
consistent with BATS Rule 11.13(a)(2), which states, in sum, that 
``[w]ith respect to an order that is eligible for routing, the System 
will designate orders as IOCs and will cause such orders to be routed 
to one or more Trading Centers.''
---------------------------------------------------------------------------

    \43\ Book Only is an order instruction stating that an order 
will be matched against an order on the EDGA Book or posted to the 
EDGA Book, but will not route to an away Trading Center. See EDGA 
Rule 11.6(n)(3).
---------------------------------------------------------------------------

    Rule 11.8(b)(11) describes the application of the re-pricing 
instruction to comply with Regulation SHO to Limit Orders. The Exchange 
proposes to amend this paragraph to reflect the decommissioning of 
Short Sale Price Adjust and Short Sale Price Sliding in order to align 
and streamline its short sale pricing functionality with BATS Rule 
11.9(g)(5) with no substantive differences from existing BATS Rules or 
functionality. The Exchange proposes to replace the reference to the 
Hide Not Slide instruction in Rule 11.8(b)(11) with Displayed Price 
Sliding to reflect the name change discussed above. The Exchange also 
proposes to delete Rule 11.8(b)(12) regarding the re-pricing of Routed 
and Returned orders as this functionality will not be available upon 
the Exchange being migrated to BATS technology as discussed above. 
Lastly, the Exchange proposes to renumber Rule 11.8(b)(13) regarding 
the re-pricing of non-displayed orders as 11.8(b)(12).
    ISOs (Rule 11.8(c)). The Exchange proposes to state that an ISO may 
also include a TIF instruction of RHO or GTX, in addition to IOC, Day 
or GTD. The Exchange also proposes to amend Rule 11.8(c) to reflect the 
ISO with a Post Only and TIF instruction of GTD, GTX, or Day will no 
longer be eligible for the Re-Pricing Instructions to Comply with Rule 
610 of Regulation NMS or Rule 201 of Regulation SHO. Also, as amended, 
an ISO that includes a Post Only instruction and a TIF instruction of 
GTD, GTX, or Day will be cancelled if the System is displaying orders 
at the Locking Price at the time of entry unless such order removes 
liquidity pursuant to current Rule 11.6(n)(4), which governs the 
execution of orders with a Post Only instruction against resting 
liquidity on the EDGA Book. Such orders that also include a Short Sale 
instruction that cannot be executed or displayed at their limit price 
at the time of entry because of the existence of a Short Sale Circuit 
Breaker will also be cancelled. This proposed rule change is 
representative of additional detail with regard to the re-pricing of 
ISOs that, if displayed on the EDGA Book, would be a Locking or 
Crossing Quotation in the Exchange's rules. Cancelling ISOs in the 
above situations is reasonable because ISOs would no longer be eligible 
for the Re-Pricing Instructions to comply with Rule 610 of Regulation 
NMS or 201 of Regulation SHO, thereby ensuring the Exchange does not 
post an order that would lock or cross the market or violate Rule 201 
of Regulation SHO consistent with BATS functionality. The Exchange 
notes, however, that absent a Short Sale Circuit Breaker being in 
effect, an ISO that includes a Post Only instruction and TIF 
instruction of GTD, GTX, or Day will remove liquidity when the System 
is displaying an order at the Locking price if the value of such 
execution equals or exceeds the value of such execution if the order 
instead posted to the EDGA Book and provided liquidity, including 
applicable fees and rebates, under current Rule 11.6(n)(4).
    MidPoint Peg Orders (Rule 11.8(d)). The Exchange proposes amend 
Rule 11.8(d) to reflect the operation of MidPoint Peg Orders once the 
Exchange is migrated onto BATS technology. As amended, a MidPoint Peg 
Order maybe pegged to the less aggressive of the midpoint of the NBBO 
or one minimum price variation inside the same side of the NBBO as the 
order, in addition to the mid-point of the NBBO. This is identical to 
current BATS Rule 11.9(c)(9). In addition, the rule would specify that 
a MidPoint Peg Order will not be eligible for execution when an NBBO is 
not available. In such case, a MidPoint Peg Order would rest on the 
EDGA Book and would not be eligible for execution in the System until 
an NBBO is available. The Exchange believes MidPoint Peg Orders being 
ineligible for execution when no NBBO exists is reasonable and 
consistent with a User's intent and the purpose of the order type. A 
User entering an MidPoint Peg Order is doing so to receive an execution 
at the mid-point of the NBBO and a mid-point does not exist in the 
absence of an NBBO. The MidPoint Peg Order will receive a new time 
stamp when an NBBO becomes available and a new midpoint of the NBBO is 
established. In such case, all MidPoint Peg Orders that are ranked at 
the midpoint of the NBBO will retain their priority as compared to each 
other based upon the time such orders were initially received by the 
System.
    The Exchange proposes to state that a MidPoint Peg Order may also 
include a TIF instruction of RHO or GTX, in addition to IOC, FOK, Day 
or GTD. In addition, Users will be able to enter MidPoint Peg Orders as 
an Odd Lot, in addition to a Round Lot or Mixed Lot. Currently, 
MidPoint Peg Orders may only be executed during Regular Trading Hours. 
Upon migration of the Exchange onto BATS technology, MidPoint Peg 
Orders will also be eligible for execution during the Pre-Opening 
Session, Regular Session and Post Closing Session. While MidPoint Peg 
Orders may be submitted to be executed during the Opening Process 
described in Rule 11.7(c), any Minimum Execution Quantity instruction 
on aMidPoint Peg Order will not be applied during the Opening Process. 
Lastly, the Exchange proposes to specify that MidPoint Peg Orders may 
include a Book Only or Post Only instruction.
    MidPoint Discretionary Order (Rule 11.8(e)). In sum, a MidPoint 
Discretionary Order (``MDO'') is a limit order to buy that is displayed 
at and pegged to the NBB, with discretion to execute at prices up to 
and including the midpoint of the NBBO, and a limit order to sell that 
is displayed at and pegged to the NBO, with discretion to execute at 
prices down to and including the midpoint of the NBBO. The Exchange 
proposes to amend Rule 11.8(e)(1) to specify that an MDO may include a 
TIF instruction of RHO or GTX, in addition to GTD or Day. The Exchange 
also proposes to state that MDOs may be entered as Odd Lots, in 
addition to Round Lots and Mixed Lots. Currently, MDOs may only be 
executed during Regular Trading Hours. Upon migration of the Exchange 
onto BATS technology, MDOs will also be eligible for execution during 
the Pre-Opening Session and Post Closing Session. The Exchange does not 
proposes any other changes to MDO.
    In addition, similar to the changes to orders with a Primary Peg 
instruction described above, the Exchange proposes to amend the 
provisions governing when an MDO is locked or crossed by another market 
and when an MDO would itself create a Locking or Crossing Quotation 
(i.e., locking or crossing another market's quotation). As proposed, an 
MDO will no longer be able to join the Exchange BBO when the EDGA Book 
is locked by another

[[Page 2136]]

market. When the EDGA Book is crossed by another market, the Exchange 
proposes to automatically adjust an MDO to the current NBO (for bids) 
or the current NBB (for offers). Rule 11.8(e)(7) will continue to 
require that an MDO that would otherwise be a Locking Quotation or 
Crossing Quotation be automatically adjusted by the System to one 
Minimum Price Variation below the current NBO (for bids) or to one 
Minimum Price Variation above the current NBB (for offers) with no 
discretion to execute to the midpoint of the NBBO. This proposed rule 
change is representative of additional detail with regard to the 
operation of MDOs during locked or crossed markets that is currently 
included in Rule 11.8(e)(7) and is consistent with Exchange's current 
re-pricing options under Rule 11.6(l), as well as Exchange Rule 
11.10(f) and BATS Rule 11.20(a)(3) outlining the prohibition against 
locked and crossed markets under Rule 610 of Regulation NMS.
    NBBO Offset Peg Order (Rule 11.8(f)). The Exchange proposes to 
change the name of the NBBO Offset Peg Order to the Market Maker Peg 
Order, which is the equivalent order type on BATS.\44\ A Market Maker 
Peg Order is a Limit Order that, upon entry or at the beginning of 
Regular Trading Hours, as applicable, will be automatically priced by 
the System at the Designated Percentage \45\ away from the last 
reported sale, rather than then current NBO (in the case of an order to 
buy) or NBB (in the case of an order to sell), as is currently the 
case. A Market Maker Peg order may also include a TIF instruction of 
RHO or GTD, in addition to Day. Market Maker Peg Orders may also be 
entered as Odd Lots, in addition to Round Lots and Mixed Lots.
---------------------------------------------------------------------------

    \44\ See BATS Rule 11.9(c)(16).
    \45\ The term Designated Percentage is defined in Exchange Rule 
11.20(d)(2)(D) and (E).
---------------------------------------------------------------------------

    The Exchange also proposes to add definitions for Designated 
Percentage and Defined Limit under Rule 11.8(f) to account for 
securities priced below $1. For purposes of Market Maker Peg Order 
pricing, the Designated Percentage shall be the same as set forth in 
Rules 11.20(d)(2)(D) and 11.20(d)(2)(E), except that the Designated 
Percentage for securities priced below $1 as set forth in Rule 
11.20(d)(2)(E) shall be 28%. For purposes of Market Maker Peg Order 
pricing, the Defined Limit shall be the same as set forth in Rules 
11.20(d)(2)(F) and 11.20(d)(2)(G), except that the Defined Limit for 
securities priced below $1 as set forth in Rule 11.20(d)(2)(G) shall be 
29.5%. The proposed changes to Rule 11.8(f) are similar to the 
functionality set forth in BATS Rule 11.9(c)(16).
    Route Peg Order (Rule 11.8(g)). The Exchange proposes to change the 
name of the Route Peg Order to the Supplemental Peg Order, which is the 
equivalent order type on BATS.\46\ The Exchange also proposes to 
specify that a Supplemental Peg Order to buy (sell) will not be 
eligible for execution when an NBB (NBO) is not available. In such 
case, a Supplemental Peg Order to buy (sell) would rest on the EDGA 
Book and would not be eligible for execution in the System until an NBB 
(NBO) exists. This functionality is similar to that proposed for the 
MPM Order described above, and is based upon BATS Rule 11.9(c)(19). The 
Exchange believes Supplemental Peg Orders being ineligible for 
execution when an NBB or NBO is not available is reasonable and 
consistent with a User's intent and the purpose of the order type. A 
User entering a Supplemental Peg Order is doing so to receive an 
execution at the NBBO against an order that is in the process of being 
routed away. If no NBBO exists, there is no price at which to execute 
the Supplemental Peg Order.
---------------------------------------------------------------------------

    \46\ See BATS Rule 11.9(c)(19).
---------------------------------------------------------------------------

    A Supplemental Peg Order may include a TIF instruction of GTX or 
RHO, in addition to GTD or Day. Supplemental Peg Orders may also be 
entered as Odd Lots, in addition to Round Lots and Mixed Lots. As 
amended, a Supplemental Peg Order will be eligible for execution during 
the Pre-Opening Session, Regular Session, and Post-Closing Session. 
Therefore, the Exchange proposes to remove the restriction that 
Supplemental Peg Orders: (i) May only be entered, cancelled, and 
cancelled/replaced prior to and during the Regular Session; (ii) are 
only eligible for execution during the Regular Session, but not until 
such time that orders in that security during the Regular Session can 
be posted by the System to the EDGA Book. Any remaining unexecuted 
Supplemental Peg Orders are cancelled at the conclusion of the Regular 
Session. Supplemental Peg Orders will continue to be ineligible for 
execution in the Opening Process. The proposed changes to Rule 11.8(g) 
regarding Route Peg Orders are similar to BATS Rule 11.9(c)(19).
Rule 11.9, Priority of Orders
    The Exchange proposes to amend Rule 11.9 to align with BATS 
functionality and BATS Rule 11.12 regarding how orders with certain 
instructions are to be ranked by the System: (i) At a price other than 
the midpoint of the NBBO; (ii) at the midpoint of the NBBO; and (iii) 
where buy (sell) orders utilize instructions that cause them to be 
ranked by the System upon clearance of a Locking Quotation.\47\ The 
proposed amendment to Rules 11.9(a)(4) and (6) are described under the 
amendments to Reserve Quantity discussed above.
---------------------------------------------------------------------------

    \47\ For purposes of priority under proposed Rule 11.9(a)(2)(A) 
and (B), the Exchange notes that orders of Odd Lot, Round Lot, or 
Mixed Lot size are treated equally.
---------------------------------------------------------------------------

    Rule 11.9(a)(2)(A) currently states that the System will execute 
equally priced trading interest within the System in time priority in 
the following order: (i) The portion of a Limit order with a Displayed 
instruction; (ii) Limit Orders with a Non-Displayed instruction and the 
Reserve Quantity of Limit Orders; (iii) MidPoint Discretionary Orders 
executed within their Discretionary Range and Limit Orders executed 
within their Discretionary Range; and (iv) Route Peg Orders. As 
amended, the System will rank equally priced trading interest in such 
circumstances in the following order: (i) The portion of a Limit Order 
with a Displayed instruction; (ii) Limit Orders with a Non-Displayed 
instruction; (iii) Orders with a Pegged and Non-Displayed instruction; 
(iv) MidPoint Peg Orders; (v) Reserve Quantity of Limit Orders; (vi) 
MidPoint Discretionary Orders executed within their Discretionary Range 
and Limit Orders executed within their Discretionary Range; and (vii) 
Supplemental Peg Orders. Orders will be substantially ranked in same 
order except that, as amended, orders with a Pegged and Non-Displayed 
instruction will be distinguished from and placed behind Limit Orders 
with a Non-Displayed Instruction. In turn, the Reserve Quantity of 
Limit Orders will be separated from and placed behind Limit Orders with 
a Non-Displayed instruction and orders with a Pegged and Non-Displayed 
instruction. The Exchange believes it is reasonable to rank orders with 
a Pegged and Non-Displayed instruction behind Limit Orders with a 
Displayed instruction and Limit Orders with a Non-Displayed instruction 
because this priority sequence incentivizes the use of displayed 
liquidity on the EDGA Book as well as orders that provide liquidity at 
a specific limit price. These proposed changes are substantially 
similar to BATS functionality and Rules 11.12(a)(2). The Exchange notes 
that BATS Rule 11.12(a)(2) does not currently specify that BATS Pegged 
Orders referenced in the priority rule are limited to Pegged Orders 
that are not

[[Page 2137]]

displayed on BATS, however, the Exchange represents that BATS 
technology does treat Pegged Orders displayed on BATS as displayed 
orders and that only Pegged Orders that are not displayed on BATS are 
afforded later priority than displayed orders and other non-displayed 
orders. Thus, the Exchange's proposal (which would limit the later 
priority treatment to orders with a Pegged instruction and a Non-
Displayed instruction) is consistent with BATS technology.
    Lastly, the Exchange does not propose to make any changes to the 
ranking of orders that are re-ranked upon clearance of a Locking 
Quotation under Rule 11.9(a)(2)(B) other than to; (i) Remove a 
reference to the Routed and Returned Re-Pricing instruction because, as 
described above, it will be decommissioned upon migration of the 
Exchange onto BATS technology; and (ii) replace the term Hide Not Slide 
with Displayed Price Sliding to reflect the name change discussed 
above.
Rule 11.10, Order Execution
    Rule 11.10(a)(2) summarizes the Exchange compliance with Regulation 
NMS. The rule states that for any execution to occur during Regular 
Trading Hours, the price must be equal to or better than the Protected 
NBBO, unless the order is marked ISO or unless the execution falls 
within another exception set forth in Rule 611(b) of Regulation NMS. 
For any execution to occur during the Pre-Opening Session or the Post-
Closing Session, the price must be equal to or better than the highest 
bid or lowest offer in the EDGA Book or disseminated by the responsible 
single plan processor, unless the order is marked ISO. To align Rule 
11.10(a)(2) with BATS Rule 11.13, the Exchange proposed to further 
state that such executions may occur during the Pre-Opening Session or 
the Post-Closing Session where a Protected Bid is crossing a Protected 
Offer. A User may, in such circumstance, instruct the Exchange to 
cancel any incoming order from such User in the event a Protected Bid 
is crossing a Protected Offer.
    To further align Exchange Rule 11.10(a)(2) with BATS Rule 11.13, 
Rule 11.10(a)(2) will state that notwithstanding the above, in the 
event that a Protected Bid is crossing a Protected Offer, whether 
during or outside of Regular Trading Hours, unless an order is marked 
ISO, the Exchange will not execute any portion of a bid at a price more 
than the greater of 5 cents or 0.5 percent higher than the lowest 
Protected Offer or any portion of an offer that would execute at a 
price more than the greater of 5 cents or 0.5 percent lower than the 
highest Protected Bid.
    The Exchange also proposes to amend Rule 11.12(e)(3) to mirror BATS 
Rule 11.9(e)(3). Rule 11.12 currently states that only the price and 
quantity terms of the order may be changed by a Replace Message 
(including changing a Limit Order to a Market Order). As amended, Rule 
11.12 would also allow the Stop Price, the sell long indicator, Short 
Sale instruction, and Max Floor to be changed by a Replace Message.
Rule 11.11, Routing to Away Trading Centers
    The Exchange proposes to amend Rule 11.11, which describe the 
Exchange's routing options align with BATS Rule 11.13.\48\ In doing so, 
the Exchange proposes to eliminate obsolete routing options, modify 
certain routing options, and add to Rule 11.11 to offer many of the 
same routing options offered by BATS. The Exchange notes that the 
proposed rule text is based on the Rule 11.13 of BATS and is different 
only to the extent necessary to conform to the Exchange's current 
rules. The Exchange believes that it is appropriate to amend its 
routing options as described below to ensure consistency with BATS Rule 
upon migration of the Exchange onto BATS technology.
---------------------------------------------------------------------------

    \48\ The Exchange notes that BATS recently amended its Rule 
11.13 to harmonize certain of its routing options with the Exchange. 
See supra note 38.
---------------------------------------------------------------------------

    Deletions. The Exchange also proposes to delete from Rule 11.11 the 
following routing options that will be decommissioned upon migration of 
the Exchange onto BATS technology: ROBA, ROBX, ROBY, ROPA, IOCX, IOCT, 
and SWPC. Each of these routing options are described below.
     ROBA. The Exchange proposes to delete the ROBA routing 
option under which an order checks the System for available shares and 
then is sent, with a Time-in-Force instruction of IOC, to BATS. If 
shares remain unexecuted after routing, they are posted on the EDGA 
Book, unless otherwise instructed by the User.
     ROBX. The Exchange proposes to delete the ROBX routing 
option under which an order checks the System for available shares and 
then is sent, with a Time-in-Force instruction of IOC, to Nasdaq BX 
Exchange. If shares remain unexecuted after routing, they are posted on 
the EDGA Book, unless otherwise instructed by the User.
     ROBY. The Exchange proposes to delete the ROBY routing 
option under which an order checks the System for available shares and 
then is sent, with a Time-in-Force instruction of IOC, to BYX. If 
shares remain unexecuted after routing, they are posted on the EDGA 
Book, unless otherwise instructed by the User.
     ROPA. The Exchange proposes to delete the ROPA routing 
option under which an order checks the System for available shares and 
then is sent, with a Time-in-Force instruction of IOC, to NYSE Arca. If 
shares remain unexecuted after routing, they are posted on the EDGA 
Book, unless otherwise instructed by the User.
     IOCX. The Exchange proposes to delete the IOCX routing 
option under which an order checks the System for available shares and 
then is sent, with a Time-in-Force instruction of IOC, to EDGA. If 
shares remain unexecuted after routing, they are posted on the EDGA 
Book, unless otherwise instructed by the User.
     IOCT. The Exchange proposes to delete the IOCT routing 
option under which an order checks the System for available shares and 
then is sent to destinations on the System routing table. If shares 
remain unexecuted after routing, they are sent, with a Time-in-Force 
instruction of IOC, to EDGA. If shares remain unexecuted after routing, 
they are posted on the EDGA Book, unless otherwise instructed by the 
User.
     SWPC. The Exchange proposes to delete the SWPC routing 
option under which an order checks the System for available shares and 
then is sent to only Protected Quotations and only for displayed size. 
To the extent that any portion of the order is unexecuted, the 
remainder is posted on the EDGA Book at the order's limit price. The 
entire SWPC order will not be cancelled back to the User immediately if 
at the time of entry there is an insufficient share quantity in the 
SWPC order to fulfill the displayed size of all Protected Quotations. 
The Exchange also proposes to delete a reference to SWPC in Rule 
11.11(d).
    The Exchange believes that it is appropriate to eliminate the above 
routing options because they will be decommissioned upon migration of 
the Exchange onto BATS technology and are unlikely to be offered by the 
Exchange in the near future.
    Additions. The Exchange proposes to add a Destination Specific 
routing option, which is currently offered by BATS.\49\ Destination 
Specific is a routing option under which an order checks the System for 
available shares and then is sent to an away trading center or centers 
specified by the User. The Destination Specific routing option

[[Page 2138]]

is also similar to the Exchange's current Destination Specified order 
instruction in Rule 11.6(n)(5), in that both allow the User to select 
the destination the order shall be routed to. The only differences are 
that under the Destination Specific order instruction, the order is 
first exposed to the EDGA Book before routing and if the order is not 
executed in full after routing away will be processed by the Exchange 
as described in Exchange Rule 11.10(a)(4), unless the User has provided 
instructions that the order reside on the book of the relevant away 
Trading Center.
---------------------------------------------------------------------------

    \49\ See BATS Rule 11.13(a)(3)(E).
---------------------------------------------------------------------------

    The Exchange also proposes to add a Post to Away routing option, 
which is currently offered by BATS.\50\ Post to Away is a routing 
option under which the System will route the remainder of a routed 
order to and posts such order on the order book of a destination on the 
System routing table as specified by the User. The Post to Away routing 
option is an alternative to either cancelling a routed order back to a 
User or posting such order to the BATS Book to the extent an order is 
not completely filled through the routing process. The Post to Away 
routing option can be combined with the following routing options: 
ROUT, ROUX, ROUE, ROUD, ROUZ, ROUQ, RDOT, RDOX, ROBB, ROCO, ROLF, INET, 
IOCM and ICMT.\51\ As a result of adding the Post to Away routing 
option, the Exchange proposes to amend Rule 11.11(g)(3) to remove now 
redundant language that a User may instruct that any remainder of the 
order may be posted to the EDGA Book or another destination on the 
System routing table.
---------------------------------------------------------------------------

    \50\ See BATS Rule 11.13(a)(3)(H).
    \51\ The Exchange notes that Post to Away under BATS Rule 
11.13(a)(3)(H) may be combined with less routing options than are 
proposed above. This is because, due to the Exchange's taker-maker 
pricing model, Members may wish to send an order to the Exchange in 
order to take liquidity and receive a rebate, before being routed to 
and posted on another Trading Center that incorporates a maker-taker 
pricing model that provides a rebate to orders that provide 
liquidity.
---------------------------------------------------------------------------

    Lastly, the Exchange also proposes to specify for ROOC, ROUE, ROUT 
and ROUX that the entering User may select either Route To Improve 
(``RTI'') or Route To Fill (``RTF''). RTI may route to multiple 
destinations at a single price level simultaneously while RTF may route 
to multiple destinations and at multiple price levels simultaneously. 
RTI is similar to the RTI routing option available under BYX Rule 
11.13(a)(3)(G).
    Modifications. First, the Exchange proposes to modify Rule 11.11(a) 
regarding Regulation SHO to reflect the elimination of Short Sale Price 
Adjust and Short Sale Price Sliding discussed above, as well as to 
replace the phrase replace the phrase ``the short sale price 
restriction'' with the defined term ``Short Sale Circuit Breaker.'' The 
later change does not change the meaning of Rule 11.11(a) and simply 
ensures a consistent use of defined terms throughout the Exchange's 
Rules.
    Second, the Exchange proposes to modify the following routing 
options to ensure consistency with BATS Rule: ROUC, INET, ROLF, ROOC, 
SWPA, and SWPB. Each of these modifications are described below.
     ROUC. ROUC is a routing option under which an order checks 
the System for available shares and then is sent to destinations on the 
System routing table, Nasdaq OMX BX, and NYSE. If shares remain 
unexecuted after routing, they are posted on the EDGA Book. The ROUC 
routing option currently incorrectly states that any remaining shares 
will be post to EDGA. Therefore, the Exchange proposes to correct the 
ROUC routing option to state that any remaining shares will be posted 
to the EDGX Book, rather than EDGA. The Exchange also proposes to amend 
the ROUC routing option to state that any remaining shares will not be 
posted to EDGX Book where the User instructs the Exchange otherwise.
     INET. INET is a routing option under which an order will 
check the System for available shares and then will be sent to Nasdaq. 
If shares remain unexecuted after routing through the INET routing 
option, they will be posted on the Nasdaq book. The Exchange proposes 
to amend the INET routing option to state that any remaining shares 
will not be posted to Nasdaq where the User instructs the Exchange 
otherwise.
     ROLF. ROLF is a routing option under which an order will 
check the System for available shares and then will be sent to LavaFlow 
ECN. The Exchange proposes to amend the ROLF routing option to states 
that any remaining shares will be cancelled unless the User instructs 
otherwise.
     ROOC. ROOC is a routing option for orders that the 
entering firm wishes to designate for participation in the opening, re-
opening (following a halt, suspension, or pause), or closing process of 
a primary listing market (BATS, NYSE, Nasdaq, NYSE MKT, or NYSE Arca) 
if received before the opening/re-opening/closing time of such market. 
The Exchange proposes to amend the ROOC routing option to add BATS to 
the list of primary listing markets and to specify that, due to current 
system limitations, orders in BATS listed securities designated for 
participation in the re-opening process on BATS following a halt, 
suspension, or pause will remain on the EDGA Book and be eligible for 
execution once the halt, suspension, or pause has been lifted. Lastly, 
to ensure consistency with the ROOC routing option available on BATS, 
the Exchange proposes to states that any remaining shares will either 
be posted to the EDGA Book, executed, or routed to destinations on the 
System routing table, rather than like a ROUT routing option under Rule 
11.11(g)(3). The proposed modifications to the ROOC routing option is 
similar to the ROOC routing option available under BYX Rule 
11.13(a)(3)(N).
     SWPA. SWPA is a routing option under which an order checks 
the System for available shares and then is sent to only Protected 
Quotations and only for displayed size. The entire SWPA order will not 
be cancelled back to the User immediately if at the time of entry there 
is an insufficient share quantity in the SWPA order to fulfill the 
displayed size of all Protected Quotations. The Exchange proposes to 
amend the SWPA routing option to state that, rather than cancelling any 
remaining unexecuted shares, those shares will be posted to the EDGA 
Book at the order's limit price, unless otherwise instructed by the 
User. This is consistent with BATS Rule 11.13(a)(2)(A), which states 
that any unfilled balance of a Limit Order will be posted to the BATS 
book.
     SWPB. SWPB is a routing option under which an order checks 
the System for available shares and then is sent to only Protected 
Quotations and only for displayed size. The entire SWPB order will be 
cancelled back to the User immediately if at the time of entry there is 
an insufficient share quantity in the SWPB order to fulfill the 
displayed size of all Protected Quotations. Like as proposes for SWPA 
above, the Exchange proposes to amend the SWPB routing option to state 
that, rather than cancelling any remaining unexecuted shares, those 
shares will be posted to the EDGA Book at the order's limit price, 
unless otherwise instructed by the User. This is consistent with BATS 
Rule 11.13(a)(2)(A), which states that any unfilled balance of a Limit 
Order will be posted to the BATS book.
Implementation Date
    The Exchange intends to implement the proposed rule change on or 
about January 12, 2015, which is the anticipated date upon which the 
migration of the Exchange to the BATS technology platform will be 
complete.\52\
---------------------------------------------------------------------------

    \52\ Implementation of the proposed rule change on or about 
January 12, 2015 is contingent upon the Commission granting a waiver 
of the 30-day operative delay. 17 CFR 240.19b-4(f)(6)(iii).

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

[[Page 2139]]

 2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent 
with Section 6(b) of the Act \53\ and further the objectives of Section 
6(b)(5) of the Act \54\ because they are designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, to 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and, in general, to protect 
investors and the public interest. The proposed rule change also is 
designed to support the principles of Section 11A(a)(1) \55\ of the Act 
in that it seeks to assure fair competition among brokers and dealers 
and among exchange markets.
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 78f(b).
    \54\ 15 U.S.C. 78f(b)(5).
    \55\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

    The proposed rule changes are generally intended to add or align 
certain system functionality currently offered by BATS in order to 
provide a consistent technology offering for the BGM Affiliated 
Exchanges. A consistent technology offering, in turn, will simplify the 
technology implementation, changes and maintenance by Users of the 
Exchange that are also participants on BATS. The proposed rule changes 
would also provide Users with access to functionality that is generally 
available on markets other than the BGM Affiliated Exchanges and may 
result in the efficient execution of such orders and will provide 
additional flexibility as well as increased functionality to the 
Exchange's System and its Users. The proposed rule change does not 
propose to implement new or unique functionality that has not been 
previously filed with the Commission or is not available on BATS. The 
Exchange notes that the proposed rule text is based on the BATS Rule 
and is different only to the extent necessary to conform to the 
Exchange's current rules. To the extent a proposed rule change is based 
on an existing BATS Rule, the language of the BATS and Exchange Rules 
may differ to extent necessary to conform with existing Exchange rule 
text or to account for details or descriptions included in the 
Exchange's Rules but not in the applicable BATS rule. Where possible, 
the Exchange has mirrored BATS rules, because consistent rules will 
simplify the regulatory requirements and increase the understanding of 
the Exchange's operations for Members of the Exchange that are also 
participants on BATS. The proposed rule change would provide greater 
harmonization between the rules of the BGM Affiliated Exchanges, 
resulting in greater uniformity and less burdensome and more efficient 
regulatory compliance. As such, the proposed rule change would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and would remove impediments to and perfect 
the mechanism of a free and open market and a national market system. 
The Exchange also believes that the proposed amendments will contribute 
to the protection of investors and the public interest by making the 
Exchange's rules easier to understand. Where necessary, the Exchange 
has proposed language consistent with the Exchange's operations on BATS 
technology, even if there are specific details not contained in the 
current structure of BATS rules. The Exchange believes it is consistent 
with the Act to maintain its current structure and such detail, rather 
than removing such details simply to conform to the structure or format 
of BATS rules, again because the Exchange believes this will increase 
the understanding of the Exchange's operations for all Members of the 
Exchange.
    Re-Pricing (Rule 11.6(l)). The Exchange believes that the proposed 
changes to Rule 11.6(l) are consistent with Section 6(b)(5) of the 
Act,\56\ as well as Rule 610 of Regulation NMS \57\ and Rule 201 of 
Regulation SHO.\58\ Rule 610(d) requires exchanges to establish, 
maintain, and enforce rules that require members reasonably to avoid 
``[d]isplaying quotations that lock or cross any protected quotation in 
an NMS stock.'' \59\ Such rules must be ``reasonably designed to assure 
the reconciliation of locked or crossed quotations in an NMS stock,'' 
and must ``prohibit . . . members from engaging in a pattern or 
practice of displaying quotations that lock or cross any quotation in 
an NMS stock.'' \60\ Thus, the amendments to the Price Adjust 
instruction proposed by the Exchange will assist Users by displaying 
orders at permissible prices. Similarly, Rule 201 of Regulation SHO 
\61\ requires trading centers to establish, maintain, and enforce 
written policies and procedures reasonably designed to prevent the 
execution or display of a short sale order at a price at or below the 
current NBB under certain circumstances.
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78f(b)(5).
    \57\ 17 CFR 242.610.
    \58\ 17 CFR 242.201.
    \59\ 17 CFR 242.610(d).
    \60\ Id.
    \61\ 17 CFR 242.201.
---------------------------------------------------------------------------

    The Exchange believes that the proposed optional multiple re-
pricing for Price Adjust and Displayed Price Sliding are consistent 
with Section 6(b)(5) of the Act,\62\ as well as Rule 610 of Regulation 
NMS.\63\ The Exchange is not modifying the overall functionality of 
Price Adjust or Displayed Price Sliding, which, to avoid locking or 
crossing quotations of other market centers, displays orders at 
permissible prices while retaining a price at which the User is willing 
to buy or sell, in the event display at such price or an execution at 
such price becomes possible. Instead, the Exchange is making changes to 
adopt an optional multiple re-pricing under Price Adjust and Displayed 
Price Sliding as well as to align with other similar re-pricing 
instructions under BATS Rules 11.9(g)(1) and (2).\64\ The Exchange also 
believes decommissioning the Routed and Returned Re-Pricing option is 
consistent with the Act because those Users who would wish to engage in 
multiple re-pricing upon return to the Exchange may select the option 
multiple re-pricing for Price Adjust or Displayed Price Sliding as 
discussed above. Lastly, the Exchange also believes renaming Hide Not 
Slide as Displayed Price Sliding is consistent with the Act because it 
would avoid investor confusion with a similarly named re-pricing 
instruction on EDGX.\65\
---------------------------------------------------------------------------

    \62\ 15 U.S.C. 78f(b)(5).
    \63\ 17 CFR 242.610.
    \64\ See supra note 29.
    \65\ See EDGX Rule 11.6(l)(1)(B).
---------------------------------------------------------------------------

    The Exchange also believes that cancelling ISOs with a TIF 
instruction of GTD, GTX, or Day and not subjecting them to the re-
pricing instructions to comply with Rule 610 of Regulation NMS or Rule 
201 of Regulation SHO is consistent with Section 6(b)(5) of the 
Act,\66\ as well as Rule 610 of Regulation NMS \67\ and Rule 201 of 
Regulation SHO.\68\ As amended, an ISO that includes a TIF instruction 
of GTD, GTX, or Day will be cancelled if the System is displaying 
orders at the Locking Price at the time of entry. Such orders that also 
include a Short Sale instruction that cannot be executed or displayed 
at their limit price at the time of entry because of the existence of a 
Short Sale Circuit Breaker will also be cancelled. Such orders are 
cancelled in order to avoid a potential violation of Rule 610(d) of 
Regulation NMS or Rule 201

[[Page 2140]]

of Regulation SHO and is, therefore, consistent with the Act.
---------------------------------------------------------------------------

    \66\ 15 U.S.C. 78f(b)(5).
    \67\ 17 CFR 242.610.
    \68\ 17 CFR 242.201.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to its Re-Pricing 
Instructions to Comply with Rule 201 of Regulation SHO are consistent 
with Section 6(b)(5) of the Act,\69\ as well as Rule 201 of Regulation 
SHO.\70\ The Exchange proposes to streamline and simplify its available 
re-pricing instructions by deleting Short Sale Price Adjust and Short 
Sale Price Sliding and adopting a new, streamlined rule to align with 
BATS Rule 11.9(g)(5), with the following differences. Rule 11.6(l)(2) 
states that an order to sell with a Short Sale instruction and a Price 
Adjust instruction that is re-priced will be ranked at the Permitted 
Price and that an order to sell with a Short Sale instruction and a 
Hide Not Slide instruction that is re-priced pursuant to this paragraph 
will be ranked at the Permitted Price. The Exchange's short sale price 
sliding will operate the same for Users of Price Adjust on BATS while 
Users who select Displayed Price Sliding will be ranked at the 
Permitted Price. The proposed rule change would provide greater 
harmonization between the rules of the BGM Affiliated Exchanges, 
resulting in greater uniformity and less burdensome and more efficient 
regulatory compliance. As such, the proposed rule change would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and would remove impediments to and perfect 
the mechanism of a free and open market and a national market system.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 78f(b)(5).
    \70\ 17 CFR 242.201.
---------------------------------------------------------------------------

    Opening Process (Rule 11.7). The amended description of the Opening 
Process in Rule 11.7 is designed to promote just and equitable 
principles of trade and remove impediments to, and perfect the 
mechanism of, a free and open market system because it would align with 
BZX Rule 11.24 and BYX Rule 11.23 as it relates to: \71\ (i) Which 
orders may participate in the process; (ii) how the price of the 
Opening Transaction is determined; and (iii) the process for late 
openings and re-openings. The Opening Process and their related rules 
would be identical across the BGM Affiliated Exchanges, and will 
therefore, contribute to the protection of investors and the public 
interest by avoiding investor confusion and providing consistent 
functionality across the BGM Affiliated Exchanges. Lastly, and as 
stated above, the amendment to Rule 11.7 is based on BATS Rule 11.24 
and BYX Rule 11.23, both of which were recently approved by the 
Commission.\72\
---------------------------------------------------------------------------

    \71\ See supra note 40.
    \72\ Id.
---------------------------------------------------------------------------

    Order Types (Rule 11.8). The Exchange believes that the proposed 
changes to its order types under Rule 11.8 in order to align their 
functionality with BATS rules are consistent with Section 6(b)(5) of 
the Act,\73\ because these changes are designed to provide Members with 
additional specificity as to how their orders will be handled upon 
migration of the Exchange onto BATS technologies, thereby fostering 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and removing impediments to and perfecting 
the mechanism of a free and open market and a national market system. 
Each order type was amended to update the TIF instructions that would 
be available upon migration of the Exchange onto BATS technology. In 
addition, the proposed amendments are designed to align their operation 
with like order types on BATS and do not propose any additional 
functionality. For example, Market Orders under Rule 11.8(a) is to be 
amended to reflect the execution parameters under BATS Rule 11.9(a)(2). 
The amendments to Limit Orders under Rule 11.8(b) and ISOs under Rule 
11.8(c) are designed to update TIF instruction available to each order 
type. In addition, the changes are designed to update the Re-Pricing 
options available to Limit Order and ISOs to reflect the 
decommissioning of Routed and Returned as well as the streamlining of 
the Re-Pricing Options to Comply with Regulations SHO to align with 
BATS rules. In sum, the amendments to MidPoint Peg Orders under Rule 
11.8(d), MidPoint Discretionary Orders under Rule 11.8(e), and 
Supplemental Peg Orders under rule 11.8(g) simply clarify their 
operation during a locked or crossed market as well as expand their 
eligibility for execution from the Regular Session or Regular Trading 
Hours to also include the Pre-Opening Session and Post-Closing Session. 
The proposed changes to Rule 11.8(d) regarding MidPoint Peg Orders are 
based on BATS Rule 11.9(c)(9). Lastly, the proposed changes to Rule 
11.8(f) regarding Market Maker Peg Orders are based on BATS Rule 
11.9(c)(17). The proposed changes to Rule 11.8(g) regarding Route Peg 
Orders are based on BATS Rule 11.9(c)(19).
---------------------------------------------------------------------------

    \73\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change does not propose to implement new or 
unique functionality that has not been previously filed with the 
Commission or is not available on BATS. Therefore, the proposed rule 
change would provide greater harmonization between the rules of the BGM 
Affiliated Exchanges, resulting in greater uniformity and less 
burdensome and more efficient regulatory compliance. As such, the 
proposed rule change would foster cooperation and coordination with 
persons engaged in facilitating transactions in securities and would 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
    Priority (Rule 11.9). The Exchange also believes its proposed 
amendments to Rule 11.9 to regarding the priority of orders promotes 
just and equitable principles of trade, remove impediments to, and 
perfect the mechanism of, a free and open market and a national market 
system by providing Members, Users, and the investing public with 
greater transparency regarding how the System operates. The Exchange 
proposes to amend Rule 11.9 to align with BATS functionality and BATS 
Rules 11.12 regarding how orders with certain instructions are to be 
ranked by the System generally and where orders utilize instructions 
that cause them to be ranked by the System upon clearance of a Locking 
Quotation providing valuable, clear information to Members, Users, and 
the investing public on how their orders would be executed. As amended, 
orders will be substantially ranked in same order as under current 
rules except that orders with a Pegged instruction and Non-Displayed 
instruction will be distinguished from and placed behind Limit Orders 
with a Non-Displayed Instruction. In turn, the Reserve Quantity of 
Limit Orders will be separated from and placed behind Limit Orders with 
a Non-Displayed instruction, orders with a Pegged and Non-Displayed 
instruction, and MidPoint Peg Orders. These changes are made to align 
Exchange Rule 11.9 with the functionality set forth in BATS Rule 11.12, 
as described above. The Exchange believes that the proposed rule 
changes regarding order priority will provide greater transparency and 
further clarity on how the various order types will be assigned 
priority under various scenarios, thereby assisting Members, Users and 
the investing public in understanding the manner in which the System 
may execute their orders.
    Routing (Rule 11.11). The Exchange believes that the proposed 
changes to Rule 11.11) [sic] are consistent with Section 6(b)(5) of the 
Act.\74\ As noted above, the proposed rule changes to add

[[Page 2141]]

functionality are intended to add certain system functionality 
currently offered by BATS in order to provide consistent routing 
options across the BGM Affiliated Exchanges. A consistent offering, in 
turn, will simplify the implementation, changes and maintenance by 
Users of the Exchange that are also participants on BATS. The proposed 
rule changes would also provide Users with access to functionality that 
may result in the efficient execution of such orders and will provide 
additional flexibility as well as increased functionality to the 
Exchange's System and its Users. As explained elsewhere in this 
proposal, all of the proposed routing options are similar to routing 
strategies on other market centers, including BATS. The proposed rule 
change would provide greater harmonization between the routing options 
available amongst the BGM Affiliated Exchanges, resulting in greater 
uniformity and less burdensome and more efficient regulatory 
compliance.
---------------------------------------------------------------------------

    \74\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
reiterates that the proposed rule change is being proposed in the 
context of the technology integration of the BGM Affiliated Exchanges. 
Thus, the Exchange believes this proposed rule change is necessary to 
permit fair competition among national securities exchanges. In 
addition, the Exchange believes the proposed rule change will benefit 
Exchange participants in that it is one of several changes necessary to 
achieve a consistent technology offering by the BGM Affiliated 
Exchanges.

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 \75\ and Rule 19b-
4(f)(6) thereunder.\76\
---------------------------------------------------------------------------

    \75\ 15 U.S.C. 78s(b)(3)(A).
    \76\ 17 CFR 240.19b-4(f)(6). 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 Exchange has 
satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \77\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\78\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
---------------------------------------------------------------------------

    \77\ 17 CFR 240.19b-4(f)(6).
    \78\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Exchange represents that since completion of the Merger, 
both Members and the BGM Affiliated Exchange have made numerous systems 
changes in preparation for the technology migration occurring on 
January 12, 2015. The Exchange has issued frequent updates to Members 
informing them the BGM Affiliated Exchange technology migration changes 
as well as its anticipated time line so that Members may make the 
requisite system changes. In addition, the Exchange has conducted 
multiple testing opportunities for Members to ensure both the Member's 
and Exchange system will operate in accordance with the proposed rule 
change on January 12, 2015. Based on these representations, the 
Commission believes that waiver of the operative delay is consistent 
with the protection of investors and the public interest. Therefore, 
the Commission designates the proposal operative upon filing.\79\
---------------------------------------------------------------------------

    \79\ 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-EDGA-2015-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-EDGA-2015-03. 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 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 No. SR-EDGA-2015-03 and should be 
submitted on or before February 5, 2015.


[[Page 2142]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\80\
---------------------------------------------------------------------------

    \80\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-00531 Filed 1-14-15; 8:45 am]
BILLING CODE 8011-01-P