[Federal Register Volume 81, Number 37 (Thursday, February 25, 2016)]
[Notices]
[Pages 9568-9570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03948]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77188; File No. SR-BATS-2016-18]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
11.13(b)(3)(H), Order Execution and Routing, To Amend the Operation of 
Non-Displayed Orders and Reserve Orders

February 19, 2016.
    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 February 10, 2016, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') 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 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 is proposing to amend the operation of Non-Displayed 
Orders \5\ and Reserve Orders \6\ when they are to be routed away from 
the Exchange pursuant to the Post to Away routing option set forth in 
Rule 11.13(b)(3)(H).
---------------------------------------------------------------------------

    \5\ See Exchange Rule 11.9(c)(11).
    \6\ See Exchange Rule 11.9(c)(1).
---------------------------------------------------------------------------

    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
    A Non-Displayed Order is an order that is not displayed on the 
Exchange.\7\ A Reserve Order is a limit order with a portion of the 
quantity displayed (``Display Quantity'') and with a reserve portion of 
the quantity (``Reserve Quantity'') that is not displayed.\8\ Both the 
Display Quantity and the Reserve

[[Page 9569]]

Quantity are available for execution against incoming orders. Under the 
Post to Away routing option, the remainder of an order that was 
previously routed away and returned to the Exchange may be re-routed to 
and post on the order book of a destination on the System routing table 
\9\ as specified by the User.\10\
---------------------------------------------------------------------------

    \7\ See Exchange Rule 11.9(c)(11).
    \8\ See Exchange Rule 11.9(c)(1).
    \9\ 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).
    \10\ See Exchange Rule 11.13(b)(3)(H). The Post to Away routing 
option can be combined with the following routing options: ROUT, 
ROUX, ROUZ, INET, RDOT, and RDOX. Id. An order subject to the ROUT, 
ROUX, ROUZ, INET, RDOT, and RDOX routing options will not be posted 
to the order book of the Trading Center to which it is routed. The 
User may elect that the order be cancelled or post to the BATS Book 
upon its initial return to the Exchange. Id. Alternatively, if the 
User had selected the Post to Away routing option, the order would 
be currently routed to the away Trading Center as a Displayed Order.
---------------------------------------------------------------------------

    Currently, Non-Displayed Orders and Reserve Orders that are routed 
to an away Trading Center pursuant to the Post to Away routing option 
are routed as fully displayed orders. The Exchange proposes to identify 
Non-Displayed Orders and Reserve Orders as such when routed to an away 
Trading Center. The Exchange believes doing so is consistent with the 
original intent of the order, to be not displayed or to include a 
Reserve Quantity.\11\
---------------------------------------------------------------------------

    \11\ Routable Non-Displayed and Reserve Orders would be handled 
in accordance with the rules of the Trading Center to which they are 
routed.
---------------------------------------------------------------------------

    The Exchange, therefore, proposes to amend the definition of Non-
Displayed Orders under Exchange Rule 11.9(c)(11) to state that a Non-
Displayed Order that is to be re-routed pursuant to the Post to Away 
routing option set forth in Rule 11.13(b)(3)(H) will be identified as a 
Non-Displayed Order when routed to an away Trading Center. Similarly, 
the Exchange proposes to amend the definition of a Reserve Order under 
Exchange Rule 11.9(c)(1) to state that a Reserve Order that is to be 
re-routed pursuant to the Post to Away routing option set forth in Rule 
11.13(b)(3)(H) will be identified as a Reserve Order when routed to an 
away Trading Center.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
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 proposal promotes just and equitable 
principles of trade by enabling Members to continue to identify their 
order as a Non-Displayed Order or Reserve Order when they are re-routed 
to an away Trading Center. The proposal also removes impediments to and 
perfects the mechanism of a free and open market and a national market 
system by providing Users the flexibility with regard to the handling 
of their orders by ensuring that the order is not altered and retains 
its original instructions from order entry when it is routed to an away 
Trading Center. Doing so ensures that such orders that are routed 
pursuant to the Post to Away routing option may be posted to the away 
Trading Center's order book consistent with the order's original 
instructions.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its proposed rule change would not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes the 
proposal would enhance competition by attracting additional order flow 
to the Exchange because it allows Users to ensure that their order is 
not altered and retains its original instructions from order entry when 
it is routed to an away Trading Center.

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

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any unsolicited 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) 
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 \14\ and paragraph 
(f)(6) of Rule 19b-4 thereunder.\15\ 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    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 proposal is 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BATS-2016-18 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 Number SR-BATS-2016-18. 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

[[Page 9570]]

10:00 a.m. and 3:00 p.m. Copies of such filing will also 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-2016-18 and should be 
submitted on or before March 17, 2016.
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Brent J. Fields,
Secretary.
[FR Doc. 2016-03948 Filed 2-24-16; 8:45 am]
BILLING CODE 8011-01-P