[Federal Register Volume 80, Number 214 (Thursday, November 5, 2015)]
[Notices]
[Pages 68581-68583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28145]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76320; File No. SR-BATS-2015-92]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rules 
21.2, 21.6, and 21.7, as They Relate to Order Acceptance Time

October 30, 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 October 28, 2015, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend Rules 21.2, 21.6, and 21.7 
to change the time orders will be accepted on the Exchange's options 
platform (``BATS Options'') from 8:00 a.m. to 7:30 a.m.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend Rules 21.2, 21.6, and 21.7 to 
change the time orders will be accepted on BATS Options from 8:00 a.m. 
to 7:30 a.m. Currently, the Exchange begins accepting orders at 8:00 
a.m. Eastern Time. Orders would then be available for execution as of 
9:30 a.m. until 4:00 p.m. Eastern Time.\5\ The Exchange does not 
propose to amend how it handles orders accepted prior to the market 
open other than to begin accepting orders at 7:30 a.m. Eastern Time 
rather than 8:00 a.m. Eastern Time.
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    \5\ Option contracts on Fund Shares, as defined in Rule 19.3(i), 
option contracts on exchange-traded notes including Index-Linked 
Securities, as defined in Rule 19.3(l), and option contracts on 
broad-based indexes, as defined in Rule 29.1(j), close as of 4:15 
p.m. Eastern Time. See Exchange Rule 21.2(a).
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    First, the Exchange proposes to amend Rule 21.2(a) to expressly 
state that the Exchange will begin accepting orders at 7:30 a.m. 
Eastern Time, as described in Rule 21.7 and discussed below. The 
addition of this sentence to Rule 21.2(a) would align the text of the 
rule with EDGX Exchange, Inc. (``EDGX'') Rule 21.2(a).\6\
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    \6\ The Exchange understands that EDGX is to also file a 
proposed rule change with the Commission to amend its Rules 21.2, 
21.6, and 21.7 to change the time orders will be accepted from 8:00 
a.m. to 7:30 a.m.
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    Second, the Exchange proposes to amend Rule 21.6(c) to state that 
orders can be entered into the System starting at 7:30 a.m. Eastern 
Time. Currently, the Rule 21.6(c) states that orders can be entered 
into the System from 9:30 a.m. Eastern Time until the market close. 
While orders will be accepted by the System starting at 7:30 a.m. 
Eastern Time, they will not be eligible for execution until 9:30 a.m. 
Eastern Time. The Exchange also proposes to amend Rule 21.6(c) to state 
that orders received prior to completion of the Exchange's Opening 
Process will be handled in accordance with Rule 21.7 discussed below. 
As with the proposed change to Rule 21.2(a) discussed above, the 
addition of this sentence to Rule 21.6(c) would align the text of the 
rule with EDGX Rule 21.6(c).\7\
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    \7\ Id.
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    Lastly, as amended, Rule 21.7 would state that the Exchange will 
accept market and limit orders and quotes for inclusion in the opening 
process beginning at 7:30 a.m. Eastern Time, rather than 8:00 a.m. as 
is currently the case and will continue to accept market and limit 
orders and quotes until such time as the Opening Process is initiated 
in that option series (the ``Order Entry Period''), other than index 
options.\8\ The Exchange will continue to not accept IOC,\9\ FOK \10\ 
or WAIT \11\ orders for queuing prior to the completion of the Opening 
Process. The Exchange will also continue to convert all Intermarket

[[Page 68582]]

Sweep Orders (``ISOs'') \12\ entered for queuing prior to the 
completion of the Opening Process into non-ISOs.
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    \8\ Rule 21.7 also discusses order acceptance when the primary 
listing market for the applicable underlying security declares a 
regulatory trading halt, suspension, or pause with respect to such 
security (``Regulatory Halt''). The Exchange does not propose to 
amend the treatment of orders during a Regulatory Halt under Rule 
21.7.
    \9\ See Exchange Rule 21.1(f)(2).
    \10\ See Exchange Rule 21.1(f)(5).
    \11\ See Exchange Rule 21.1(f)(4).
    \12\ See Exchange Rule 21.1(d)(11).
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2. Statutory Basis
    The Exchange believes that its proposal to begin accepting orders 
at 7:30 a.m. is consistent with the requirements of the Act and the 
rules and regulations thereunder that are applicable to a national 
securities exchange, and, in particular, with the requirements of 
Section 6(b) of the Act.\13\ In particular, the proposal is consistent 
with Section 6(b)(5) of the Act \14\ because it is designed to promote 
just and equitable principles of trade and to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system. The Exchange believes that accepting orders at 7:30 a.m. will 
benefit investors, the national market system, Members, and the 
Exchange market by increasing competition for order flow and 
executions, and thereby spurring product enhancements and lowering 
prices. The Exchange also notes that other options exchanges currently 
accept orders prior to 8:00 a.m. Eastern Time \15\ and the proposal 
would enable the Exchange to directly compete with these exchanges for 
order flow.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ See Nasdaq OMX Systems Hours of Operation, available at 
http://nasdaqtrader.com/content/TechnicalSupport/nasdaq_sys_hours.pdf (stating that system hours begin at 7:00 a.m. 
for Nasdaq OMX BX (``BX'') and 7:30 a.m. for Nasdaq OMX PHLX 
(``PHLX''), and BX Chapter VI, Section 2(a) (stating the System 
operates and shall be available to accept bids and offers and orders 
from the time prior to market open specified by the Exchange on its 
Web site to market close on each business day). See also Hours of 
Operation of the MIAX Options Exchange (``MIAX'') available at 
http://www.miaxoptions.com/hours-operation-miax-options-exchange 
(stating that firms can connect and conduct pre-market activity 
starting at 7:30 a.m.).
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    Lastly, the Exchange believes the proposed additions to Rules 
21.2(a) and 21.6(c) are consistent with Section 6(b)(5) of the Act \16\ 
because it is designed to provide consistent rules across the Exchange 
and EDGX, thereby removing impediments to and perfecting the mechanism 
of a free and open market and a national market system. The proposed 
rule changes would provide greater harmonization between rules of 
similar purpose on the Exchange and EDGX, resulting in greater 
uniformity and less burdensome and more efficient regulatory compliance 
and understanding of Exchange Rules. 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.
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    \16\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. To the contrary, the 
proposed rule change is a competitive change that is designed to 
attract additional order flow to the Exchange.\17\ The proposed rule 
change would, therefore, increase competition by enabling the Exchange 
to accept orders starting at 7:30 a.m. Eastern Time like its 
competitors. For all the reasons stated above, the Exchange does not 
believe that the proposed rule changes will impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act, and believes the proposed change will enhance competition. 
Lastly, the proposed changes to Rules 21.2(a) and 21.6(c) are not 
designed to address any competitive issues but rather to provide 
greater harmonization among Exchange and EDGX rules of similar purpose.
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    \17\ See supra note 15.
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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. The Exchange has not received any written 
comments from members or other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) by 
its terms, 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 \18\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\19\ the Exchange has 
designated this rule filing as non-controversial. The Exchange has 
given the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change at least five business days prior to the date of filing of 
the proposed rule change, or such shorter time as designated by the 
Commission.
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (1) 
Necessary or appropriate in the public interest; (2) for the protection 
of investors; or (3) 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-BATS-2015-92 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-BATS-2015-92. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such

[[Page 68583]]

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-BATS-2015-92, and should be submitted on or before November 
27, 2015.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-28145 Filed 11-4-15; 8:45 am]
BILLING CODE 8011-01-P