[Federal Register Volume 80, Number 225 (Monday, November 23, 2015)]
[Notices]
[Pages 73024-73025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29727]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76459; File No. SR-BATS-2015-97)


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

November 17, 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 November 9, 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 Rule 11.13, Order Execution 
and Routing, to adopt a new routing option to be known as ALLB.
    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 proposes to amend Rule 11.13, Order Execution and 
Routing, to adopt a new routing option to be known as ALLB. As 
proposed, ALLB would be a routing option under which the order checks 
the System \5\ for available shares and is then sent to the EDGX 
Exchange, Inc. (``EDGX''), BATS Y-Exchange, Inc. (``BYX''), and the 
EDGA Exchange, Inc. (``EDGA'' collectively with the Exchange, EDGX, and 
BYX, the ``BGM Affiliated Exchanges''). Specifically, an order subject 
to the ALLB routing option would execute first against contra-side 
displayed and non-displayed liquidity on the BATS Book \6\ at the 
National Best Bid or Offer (``NBBO'') or better. Any remainder would 
then be routed to EDGX, BYX, and/or EDGA in accordance with the System 
routing table.\7\ If shares remain unexecuted after routing, they are 
posted to the BATS Book, unless otherwise instructed by the User.\8\ In 
such case, the User may instruct the Exchange to cancel the remaining 
shares. ALLB is designed to comply with Rule 611 and all other 
provisions of Regulation NMS.\9\
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    \5\ The term ``System'' is defined 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.'' See Exchange Rule 
1.5(aa).
    \6\ The term ``BATS Book'' is defined as ``the System's 
electronic file of orders.'' See Exchange Rule 1.5(e).
    \7\ The term ``System routing table'' refers to the proprietary 
process for determining the specific trading venues to which the 
System routes orders and the order in which it routes them. See 
Exchange Rule 11.13(b)(3).
    \8\ 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(cc).
    \9\ 17 CFR 242.611.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) of the Act \10\ in general, and furthers the objectives of section 
6(b)(5) of the Act \11\ in particular, in that it is designed to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest. The proposed rule change 
promotes just and equitable principles of trade because it would 
provide Users with greater flexibility in routing orders consistent 
with Regulation NMS without developing complicated order routing 
strategies on their own. The Exchange believes that the proposed 
routing option will also accomplish those ends by providing market 
participants with an additional voluntary routing option that will 
enable them to easily access liquidity available on all of the national 
securities exchanges operated by BGM Affiliated Exchanges. The Exchange 
expects the routing strategy will benefit firms that do not employ 
routing or trading strategies under which the firm itself would rapidly 
access liquidity provided on the multiple venues. ALLB would not 
provide any advantage to Users when routing to the EDGA, EDGX, or BYX 
as compared to other methods of routing or connectivity available to 
Users by the Exchange.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    Lastly, the Exchange also notes that routing options enabling the 
routing of orders between affiliated exchanges is not unique and that 
the ALLB routing option is similar to routing options offered by other 
exchange groups that permit routing between affiliates. Specifically, 
the Nasdaq Stock Market LLC (``Nasdaq''), the Nasdaq OMX BX (``BX''), 
Nasdaq OMX PSX (``PSX'') offer routing options that enable an order, 
whether sent to Nasdaq, BX, or PSX, to check the Nasdaq, BX, and PSX 
books for liquidity before optionally posting to the Nasdaq, BX, or PSX 
book.\12\ In addition, the Exchange previously offered a variation of a 
Destination Specific Order \13\ which routed to and executed by its 
affiliate, BYX, known as the B2B routing.\14\ Therefore, the

[[Page 73025]]

Exchange believes the proposal removes impediments to and perfects the 
mechanism of a free and open market and a national market system, and, 
in general, protects investors and the public interest.
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    \12\ See Securities Exchange Act Release Nos. 63900 (February 
14, 2011), 76 FR 9397 (February 17, 2011) (SR-Nasdaq-2011-026); 
65470 (October 3, 2011), 76 FR 62489 (October 7, 2011) (SR-BX-2011-
048); and 65469 (October 3, 2011), 76 FR 62486 (October 7, 2011) 
(SR-Phlx-2011-108) (Notices of Filing and Immediate Effectiveness to 
adopt the CART, BCRT, and PCRT routing options on Nasdaq, BX, and 
PSX respectively). See also Nasdaq Rule 4758(a)(1)(A)(xi); BX Rule 
4758(a)(1)(A)(vii); and PSX Rule 3315(a)(1)(A)(vii).
    \13\ See Exchange Rule 11.13(b)(3)(E).
    \14\ See Securities Exchange Act Release No. 63146 (October 21, 
2010), 75 FR 66170 (October 27, 2010) (SR-BATS-2010-030). The 
Exchange notes that BYX offered similar routing capabilities to the 
Exchange. See Securities Exchange Act Release No. 63299 (November 
10, 2010), 75 FR 70325 (November 17, 2010) (SR-BYX-2010-005).
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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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
Exchange provides routing services in a highly competitive market in 
which participants may avail themselves of a wide variety of routing 
options offered by self-regulatory organizations, alternative trading 
systems, other broker-dealers, market participants' own proprietary 
routing systems, and service bureaus. In such an environment, system 
enhancements such as the changes proposed in this rule filing do not 
burden competition, because they can succeed in attracting order flow 
to the Exchange only if they offer investors higher quality and better 
value than services offered by others. Encouraging competitors to 
provide higher quality and better value is the essence of a well-
functioning competitive marketplace.
    Lastly, ALLB would not provide any advantage to Users when routing 
to the EDGA, EDGX, or BYX as compared to other methods of routing or 
connectivity available to Users by the Exchange. Therefore, the 
Exchange does not believe the proposed rule change will result in any 
burden on intermarket competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants, or Others

    No comments were solicited or received on the proposed rule change.

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

    Because the proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act \15\ and paragraph (f)(6) of 
Rule 19b-4 thereunder.\16\ 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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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4.
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    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 states that having this additional voluntary 
routing option will give market participants greater flexibility in 
routing orders and allow them to more easily access liquidity on BGM 
Affiliated exchanges. In addition, the Exchange states that the 
proposed rule change is similar to a routing option offered by other 
exchanges and does not propose any new or unique functionality. Based 
on the foregoing, the Commission believes that the waiver of the 
operative delay is consistent with the protection of investors and the 
public interest.\17\ Therefore, the Commission hereby waives the 
operative delay and designates the proposal operative upon filing.
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    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors; or 
otherwise in furtherance of the purposes of the Act. 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-2015-97 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-2015-97. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BATS-2015-97, and should be 
submitted on or before December 14, 2015.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29727 Filed 11-20-15; 8:45 am]
 BILLING CODE 8011-01-P