[Federal Register Volume 80, Number 242 (Thursday, December 17, 2015)]
[Notices]
[Pages 78804-78806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31684]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76625; File No. SR-BYX-2015-49]


Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
11.13(b)(4)(A), Amending Aggressive Re-Route Instruction

December 11, 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 December 2, 2015, BATS Y-Exchange, Inc. (the ``Exchange'' or 
``BYX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 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) 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).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange is proposing to amend the Aggressive Re-Route 
instruction under Exchange Rule 11.13(b)(4)(A) to route such orders 
where that order has been locked or crossed by other Trading Centers.
    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

[[Page 78805]]

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 currently allows Users to submit various types of 
limit orders to the Exchange that are processed pursuant to Exchange 
Rules 11.13(a) and 11.13(b), as set forth below. Rule 11.13(a) 
describes the process by which an incoming order would execute against 
the BATS Book. To the extent an order has not been executed in its 
entirety against the BATS Book, Rule 11.13(b) then describes the 
process of routing marketable limit orders to one or more Trading 
Centers, including a description of how the Exchange treats any 
unfilled balance that returns to the Exchange following the first 
attempt to fill the order through the routing process. If not filled 
through routing, and based on the order instructions, the unfilled 
balance of the order may be posted to the BATS Book.
    Under previous Exchange rules,\5\ to the extent the unfilled 
balance of an order had been posted to the BATS Book, should the order 
subsequently be locked or crossed by another accessible Trading Center, 
the System \6\ would route the order to the locking or crossing Trading 
Center if instructed to do so by the User (the ``RECYCLE Option''). The 
Exchange then filed a proposed rule change with the Commission for 
immediate effectiveness to modify the RECYCLE Option and rename it as 
the Aggressive and Super-Aggressive Re-Route instruction.\7\
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    \5\ See Securities Exchange Act Release No63097 (October 13, 
2010), 75 FR 64767 (October 20, 2010) (SR-BATS-2010-002 [sic]) 
(naming the designation of an order as eligible for re-routing after 
being posted to the BATS Book if another Trading Center has locked 
or crossed the posted order as the RECYCLE routing option).
    \6\ As defined in Rule 1.5(aa), the System is 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.
    \7\ See Securities Exchange Act Release No. 73295 (October 3, 
2014), 79 FR 61117 (October 9, 2014) (SR-BYX-2014-026) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Amend Rules 11.13) (adopting the Aggressive Re-Route instruction). 
In SR-BYX-2014-026, the RECYCLE Option was renamed Super Aggressive 
Re-Route instruction, under which a routable order posted to the 
BATS Book routes to away Trading Centers to remove liquidity from 
such Trading Centers any time such order is locked or crossed. The 
Exchange subsequently expanded the Super Aggressive Re-Route 
instruction to provide that when any order with a Super Aggressive 
Re-Route instruction is locked by an incoming BATS Post Only Order 
or Partial Post Only at Limit Order that does not remove liquidity 
pursuant to Rule 11.9(c)(6) or Rule 11.9(c)(7), respectively, the 
Re-Route order is converted to an executable order when displayed 
shares become available on the opposite side of the market and will 
remove liquidity against such shares (``liquidity swap 
functionality''). See Securities Exchange Act Release No. 74739 
(April 16, 2015), 80 FR 22567 (April 22, 2015) (SR-BYX-2015-07). 
Once amended, the only difference between the Aggressive and Super 
Aggressive Re-Route instructions would be that the liquidity swap 
functionality described above would be available to an order subject 
to the Super Aggressive Re-Route instruction and not available to an 
order subject to the Aggressive Re-Route instruction.
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    The Aggressive Re-Route instruction subjects an order to the 
routing process after being posted to the BATS Book only if the order 
is subsequently crossed by another Trading Center (rather than if the 
order is locked or crossed). Further, a routable non-displayed limit 
order posted to the BATS Book that is crossed by another accessible 
Trading Center will be automatically routed to the crossing Trading 
Center. The Exchange proposes to modify the Aggressive Re-Route 
instruction to also provide that, where the order is locked by another 
accessible Trading Center, it would be automatically routed to the 
locking Trading Center. The proposed amendment would also apply to non-
displayed orders with the Aggressive Re-Route instruction.\8\
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    \8\ In April 2015, the Aggressive Re-Route instruction was 
expanded to apply to non-displayed orders. See Securities Exchange 
Act Release No. 74739 (April 16, 2015), 80 FR 22567 (April 22, 2015) 
(SR-BYX-2015-07).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \9\ and furthers the objectives of Section 
6(b)(5) of the Act \10\ because it is 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. Specifically, the proposed changes 
are designed to provide Users with additional control over their orders 
in the context of a national market system where quotations may lock or 
cross orders posted to the BATS Book and to facilitate executions on 
the Exchange consistent with User instructions. Thus, the proposals are 
directly targeted at removing impediments to and perfecting the 
mechanism of a free and open market and national market system. The 
proposed rule change also is designed to support the principles of 
Section 11A(a)(1) \11\ of the Act in that it seeks to assure fair 
competition among brokers and dealers and among exchange markets. 
Lastly, the Exchange notes that the proposed amendments to the 
Aggressive Re-Route instruction previously existed on the Exchange as 
the RECYCLE routing option.\12\
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78k-1(a)(1).
    \12\ See supra notes 5 and 7.
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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. The Exchange 
believes that proposed amendment to the Aggressive Re-Route 
functionality encourages competition by increasing the likelihood of 
executions of orders that have been posted to the Exchange. The 
increased likelihood of an execution where the order is locked by a 
quotation on a Trading Center should attract additional order flow to 
the Exchange.

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 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 \13\ and Rule 19b-4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the 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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the

[[Page 78806]]

Act \15\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
stated that waiver of the operative delay will allow the Exchange to 
immediately provide Users with additional control over their orders in 
the context of a national market system where quotations may lock or 
cross orders posted to the BATS Book and to facilitate executions on 
the Exchange consistent with User instructions.\17\ The Commission 
believes the waiver of the operative delay is consistent with the 
protection of investors and the public interest. Therefore, the 
Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\18\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ The Exchange further stated that it will provide Members 
with reasonable advance notice of the proposed rule change's 
implementation date.
    \18\ 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 change 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 Number SR-BYX-2015-49 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 Number SR-BYX-2015-49. 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 Number SR-BYX-2015-49, and should be 
submitted on or before January 7, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31684 Filed 12-16-15; 8:45 am]
BILLING CODE 8011-01-P