
[Federal Register Volume 77, Number 128 (Tuesday, July 3, 2012)]
[Notices]
[Pages 39538-39543]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16215]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67275; File No. SR-BATS-2012-024]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
Rule 11.13 Entitled ``Order Execution,'' Rule 21.9 Entitled ``Order 
Routing'' and Rule 27.2 Entitled ``Order Protection''

June 27, 2012.
    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 June 15,

[[Page 39539]]

2012, 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 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposal to amend Rule 
11.13 entitled ``Order Execution'', Rule 21.9 entitled ``Order 
Routing'' and Rule 27.2 entitled ``Order Protection'', to modify 
Exchange system functionality when the consolidated market is crossed 
and to modify the handling of orders that have been rejected after 
routing away through the Exchange's affiliated broker-dealer. The 
proposal applies to both the BATS equity securities trading platform 
(``BATS Equities'') and the BATS equity options trading platform 
(``BATS Options'').
    The text of the proposed rule change is available at the Exchange's 
Web site at http://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 purpose of this rule filing is to modify Exchange system 
functionality when the consolidated market is crossed and to modify the 
handling of orders that have been rejected after routing away through 
the Exchange's affiliated broker-dealer. The proposal applies to both 
BATS Equities and BATS Options, as described below.
BATS Equities
    The Exchange is proposing changes to its system functionality for 
BATS Equities to implement a price constraint in the event the Exchange 
receives a non-routable order and a Protected Bid \3\ and a Protected 
Offer \4\ are crossed (a ``Crossed Market''). The Exchange is also 
proposing to provide its Users with the option to avoid any execution 
when there is a Crossed Market. Finally, the Exchange is proposing a 
change to the way that it responds to rejections of orders that were 
routed to a Protected Quotation.\5\
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    \3\ As defined in BATS Rule 1.5(t), Protected Bid means a bid in 
a stock that is displayed by an automated trading center, 
disseminated pursuant to an effective national market system plan, 
and an automated quotation that is the best bid of a national 
securities exchange or association.
    \4\ As defined in BATS Rule 1.5(t), Protected Offer means an 
offer in a stock that is displayed by an automated trading center, 
disseminated pursuant to an effective national market system plan, 
and an automated quotation that is the best offer of a national 
securities exchange or association.
    \5\ As defined in BATS Rule 1.5(t), Protected Quotation means a 
quotation that is a Protected Bid or Protected Offer.
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    Under current BATS Rules, for any execution to occur on BATS 
Equities during Regular Trading Hours,\6\ the price must be equal to or 
better than the Protected NBBO,\7\ 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 \8\ or the After Hours Trading Session,\9\ the price 
must be equal to or better than the highest Protected Bid or lowest 
Protected Offer. As noted below, the Exchange also currently allows 
executions of orders outside of Regular Trading Hours when an order is 
marked ISO and there is a Crossed Market.
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    \6\ As defined in BATS Rule 1.5(w), Regular Trading Hours means 
the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
    \7\ As defined in BATS Rule 1.5(s), Protected NBBO means the 
national best bid or offer that is a Protected Quotation.
    \8\ As defined in BATS Rule 1.5(r), the Pre-Opening Session 
means the time between 8:00 a.m. and 9:30 a.m. Eastern Time.
    \9\ As defined in BATS Rule 1.5(c), the After Hours Trading 
Session means the time between 4:00 p.m. and 5:00 p.m. Eastern Time.
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    The restrictions on executions described above reflect the 
Exchange's implementation of the trade-through rule of Regulation NMS, 
Rule 611, which only applies during Regular Trading Hours; however the 
Exchange has also implemented trade-through protection outside of 
Regular Trading Hours in order to promote the handling of orders in a 
consistent and orderly fashion. Pursuant to the exception of Rule 
611(b)(4) during Regular Trading Hours, as well as during the Pre-
Opening Session and the After Hours Trading Session, the Exchange does 
not currently impose trade-through protections when there is a Crossed 
Market. In order to constrain the price of executions when there is a 
Crossed Market, 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, BATS Equities 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 is not marked ISO that would execute at a price more than 
the greater of 5 cents or 0.5 percent lower than the highest Protected 
Bid. In order to provide an additional option for Users \10\ that do 
not want any orders to execute when there is a Crossed Market, upon 
instruction from a User, BATS Equities will not execute any incoming 
order from such User in the event a Protected Bid is crossing a 
Protected Offer. The Exchange believes that the thresholds proposed in 
this rule filing will help avoid executions of orders at prices that 
are significantly worse than the NBBO.\11\
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    \10\ As defined in BATS Rule 1.5(cc), a User is any Member or 
Sponsored Participant who is authorized to access the Exchange's 
system pursuant to Exchange Rules.
    \11\ As defined in BATS Rule 1.5(o), NBBO shall mean the 
national best bid or offer.
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    The following example demonstrates how the Exchange's Crossed 
Market threshold would operate for BATS Equities:
     The NBBO in security ABC is $5.00 (bid) by $4.98 (offer), 
and thus, there is a Crossed Market;
     A User submits a non-routable market order (e.g., 
designated as a ``BATS Only'' order) to buy 1,000 shares of ABC;
     The Exchange has liquidity in ABC as follows: 100 shares 
to sell for $4.98, 100 shares to sell for $5.00, 200 shares to sell for 
$5.03, and 300 shares to sell for $5.05.
    Under the circumstances described above, the incoming market order 
to buy would be executed as follows:
     100 shares executed on the Exchange at the $4.98 price 
level;
     100 shares executed on the Exchange at the $5.00 price 
level;
     200 shares executed on the Exchange at the $5.03 price 
level;
     600 shares cancelled back to the User.
    As proposed, with a Crossed Market of $5.00 by $4.98, the Exchange 
will execute any incoming buy orders up to and including $5.03 and any 
incoming sell orders down to and including $4.95

[[Page 39540]]

per share. Accordingly, under this example, 400 shares of the incoming 
buy order would be executed, including 200 shares at the Crossed Market 
threshold of $5.03. The remaining 600 shares of the market order would 
be cancelled back to the User because the liquidity on the Exchange at 
the $5.05 price level exceeds the thresholds set forth in proposed Rule 
11.13. The Exchange notes that in the event the order was designated as 
eligible for routing, the Exchange's normal routing strategies would 
apply, and, to the extent that other market centers have better prices 
than are available on the BATS Book,\12\ the Exchange would route the 
order away to such other market centers rather than executing solely on 
the Exchange. Accordingly, the Exchange proposes to add language to 
Rule 11.13 to make clear that to the extent an incoming order is 
executable because a Protected Bid is crossing a Protected Offer but 
such incoming order is eligible for routing and there is a Protected 
Bid or Protected Offer available at another Trading Center \13\ that is 
better priced than the bid or offer against which the order would 
execute on the Exchange, the Exchange will first seek to route the 
order to such better priced quotation pursuant to Rule 11.13(a)(2).
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    \12\ As defined in BATS Rule 1.5(e), BATS Book means the 
System's electronic file of orders.
    \13\ As defined in BATS Rule 2.11, a Trading Center is another 
securities exchange, facility of a securities exchange, automated 
trading system, electronic communication network or other broker or 
dealer.
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    The Exchange has proposed to exclude ISOs from the proposed pricing 
threshold because a User is subject to certain specific obligations 
when pricing and submitting an order as an ISO.\14\ The Exchange 
believes that rejecting an ISO upon receipt due to a Crossed Market is 
inconsistent with the general notion of an ISO, which allows a User to 
designate a price at which the Exchange can execute the order without 
regard to the Exchange's view of the NBBO.
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    \14\ See 17 CFR 240.600(b)(30) and 611(c); see also BATS Rule 
11.9(d)(1), which states that ``[t]he Exchange relies on the marking 
of an order as an ISO order when handling such order, and thus, it 
is the entering Member's responsibility, not the Exchange's 
responsibility, to comply with the requirements of Regulation NMS 
relating to Intermarket Sweep Orders.'' The Exchange notes that as a 
self-regulatory organization it conducts regulatory oversight of 
each Exchange Member's use of Intermarket Sweep Orders on the 
Exchange.
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    In addition to the implementation of Crossed Market price 
constraints and the ability to designate orders as ineligible for 
execution during a Crossed Market, the Exchange is proposing to modify 
the way that it handles rejections received from other Trading Centers. 
Currently the Exchange routes all orders through its affiliated broker-
dealer, BATS Trading, Inc. (``BATS Trading''). In certain instances, 
BATS Trading, in turn, routes to certain third party broker-dealers in 
order to ensure that the Exchange has effective and redundant 
connections to all other Trading Centers with Protected Quotations. 
BATS Trading occasionally receives ``rejections'' of orders either from 
the Trading Centers to which it routes directly or through the third 
party broker-dealers through which it routes. Such rejections can be 
for various reasons, including a technical problem with the order, 
market access thresholds implemented pursuant to SEC Rule 15c3-5, or 
other operational thresholds. The Exchange currently handles orders on 
which it receives rejections by either cancelling the order back to the 
User or, if the order submitted by the User instructs the Exchange to 
do so, by posting the order to the Exchange's order book after 
subjecting such order to its price sliding process pursuant to Rule 
11.9(g) in order to avoid locking any Protected Quotation that it 
cannot access. Rather than posting an order to its book, the Exchange 
proposes to cancel all orders for which it has received a rejection due 
to an inability to access another Trading Center, providing a User with 
the opportunity to submit a new order or seek another path to the 
applicable Protected Quotation. The Exchange has also proposed to make 
clear that such a cancellation will not apply to Protected Quotations 
published by a Trading Center against which the Exchange has declared 
self-help pursuant to Exchange Rule 11.13(d). Although a Protected 
Quotation may be inaccessible to the Exchange, once the Exchange has 
declared self-help pursuant to Rule 11.13(d), the Exchange disregards, 
and will continue to execute transactions and route orders without 
regard to, such Protected Quotations. Notwithstanding the foregoing, 
however, even after the Exchange has received a rejection from a 
Trading Center, if there are multiple Trading Centers included in the 
routing option selected by the User that have Protected Quotations at 
the NBBO, the System \15\ will continue to route the order to the 
Protected Quotations at other such other Trading Centers at that price 
level.
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    \15\ As defined in BATS Rule 1.5(aa), System means the 
electronic communications and trading facility designate [sic] by 
the Board through which securities orders of Users are consolidated 
for ranking, execution and, when applicable, routing away.
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BATS Options
    The Exchange proposes to make each of the proposed changes 
described above to the functionality applicable to trading on and 
routing away from, BATS Options. The Exchange notes that there are no 
substantive differences to the proposed functionality; rather, the only 
differences between the proposal for BATS Equities and BATS Options are 
the references to applicable rules and terms.
    The Exchange is proposing changes to its system functionality for 
BATS Options to implement a price constraint in the event the Exchange 
receives a non-routable order and a Protected Bid is higher than a 
Protected Offer \16\ in a series of an Eligible Class (a ``Crossed 
Market'').\17\ The Exchange is also proposing to provide its Users with 
the option to avoid any execution when there is a Crossed Market. 
Finally, the Exchange is proposing a change to the way that it responds 
to rejections of orders that were routed to a Protected Quotation.\18\
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    \16\ As defined in BATS 27.1(18), ``Protected Bid'' or 
``Protected Offer'' means a Bid or Offer in an options series, 
respectively, that: (A) Is disseminated pursuant to the OPRA Plan; 
and (B) Is the Best Bid or Best Offer, respectively, displayed by an 
Eligible Exchange. An ``Eligible Exchange'' is a national securities 
exchange registered with the SEC in accordance with Section 6(a) of 
the Exchange Act that: (a) Is a Participant Exchange in OCC (as that 
term is defined in Section VII of the OCC by-laws); (b) is a party 
to the OPRA Plan (as that term is described in Section I of the OPRA 
Plan); and (c) if the national securities exchange chooses not to 
become a party to this Plan, is a participant in another plan 
approved by the Commission providing for comparable Trade-Through 
and Locked and Crossed Market protection.
    \17\ This definition for Crossed Market is consistent with the 
definition contained in BATS Rule 27.1(5).
    \18\ As defined in BATS Rule 27.1(19), Protected Quotation means 
a Protected Bid or Protected Offer.
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    Under current BATS Rules, Members are prohibited from effecting 
Trade-Throughs \19\ on BATS Options unless the execution falls within 
another exception set forth in BATS Rule 27.2(b), which includes an 
exception for any order that is marked ISO. Pursuant to the exception 
of Rule 27.2(b)(3), the Exchange does not prohibit Trade-Throughs when 
there is a Crossed Market. In order to constrain the price of 
executions when there is a Crossed Market, in the event that a 
Protected Bid is crossing a Protected Offer, unless an order is marked 
ISO, BATS Options 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

[[Page 39541]]

offer that is not marked ISO that would execute at a price more than 
the greater of 5 cents or 0.5 percent lower than the highest Protected 
Bid. In order to provide an additional option for Users \20\ that do 
not want any orders to execute when there is a Crossed Market, upon 
instruction from a User, BATS Options will not execute any incoming 
order from such User in the event a Protected Bid is crossing a 
Protected Offer. The Exchange believes that the thresholds proposed in 
this rule filing will help avoid executions of orders at prices that 
are significantly worse than the NBBO.\21\
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    \19\ As defined in BATS Rule 27.1(22), a Trade-Through is a 
transaction in an options series at a price that is lower than a 
Protected Bid or higher than a Protected Offer.
    \20\ As defined in BATS Rule 16.1(a)(63), a User is any Options 
Member or Sponsored Participant who is authorized to access the 
Exchange's system pursuant to Exchange Rules.
    \21\ As defined in BATS Rule 27.1(11), NBBO shall mean the 
national best bid and offer in an option series as calculated by an 
Eligible Exchange.
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    The following example demonstrates how the Exchange's Crossed 
Market threshold would operate for BATS Options:
     The NBBO in options series XYZ is $2.00 (bid) by $1.98 
(offer), and thus, there is a Crossed Market;
     A User submits a non-routable market order (e.g., 
designated as a ``BATS Only'' order) to buy 100 contracts of XYZ;
     The Exchange has liquidity in XYZ as follows: 10 contracts 
to sell for $1.98, 10 contracts to sell for $2.00, 20 contracts to sell 
for $2.03, and 30 contracts to sell for $2.05.
    Under the circumstances described above, the incoming market order 
to buy would be executed as follows:
     10 contracts executed on the Exchange at the $1.98 price 
level;
     10 contracts executed on the Exchange at the $2.00 price 
level;
     20 contracts executed on the Exchange at the $2.03 price 
level;
     60 contracts cancelled back to the User.
As proposed, with a Crossed Market of $2.00 by $1.98, the Exchange will 
execute any incoming buy orders up to and including $2.03 and any 
incoming sell orders down to and including $1.95 per share. 
Accordingly, under this example, 40 contracts of the incoming buy order 
would be executed, including 20 contracts at the Crossed Market 
threshold of $2.03. The remaining 60 contracts of the market order 
would be cancelled back to the User because the liquidity on the 
Exchange at the $2.05 price level exceeds the thresholds set forth in 
proposed Interpretation and Policy .01 to Rule 27.2. The Exchange notes 
that in the event the order was designated as eligible for routing, the 
Exchange's normal routing strategies would apply, and, to the extent 
that other market centers have better prices than are available on the 
BATS Options Book,\22\ the Exchange would route the order away to such 
other market centers rather than executing solely on the Exchange. 
Accordingly, the Exchange proposes to add Interpretation and Policy .02 
to Rule 27.2 to make clear that to the extent an incoming order is 
executable because a Protected Bid is crossing a Protected Offer but 
such incoming order is eligible for routing and there is a Protected 
Bid or Protected Offer available at another options exchange that is 
better priced than the bid or offer against which the order would 
execute on the Exchange, the Exchange will first seek to route the 
order to such better priced quotation pursuant to Rule 21.9.
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    \22\ As defined in BATS Rule 16.1(a)(9), BATS Options Book means 
the means the electronic book of options orders maintained by the 
System.
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    As described for BATS Equities, the Exchange has proposed to 
exclude ISOs from the proposed pricing threshold for BATS Options 
because a User is subject to certain specific obligations when pricing 
and submitting an order as an ISO. The Exchange believes that rejecting 
an ISO upon receipt due to a Crossed Market is inconsistent with the 
general notion of an ISO, which allows a User to designate a price at 
which the Exchange can execute the order without regard to the 
Exchange's view of the NBBO.
    In addition to the implementation of Crossed Market price 
constraints and the ability to designate orders as ineligible for 
execution during a Crossed Market, the Exchange is proposing to modify 
the way that it handles rejections received from other options 
exchanges. Currently the Exchange routes all orders through its 
affiliated broker-dealer, BATS Trading, Inc. (``BATS Trading''). In 
certain instances, BATS Trading, in turn, routes to certain third party 
broker-dealers in order to ensure that the Exchange has effective and 
redundant connections to all other options exchanges with Protected 
Quotations. BATS Trading occasionally receives ``rejections'' of orders 
either from the options exchanges to which it routes directly or 
through the third party broker-dealers through which it routes. Such 
rejections can be for various reasons, including a technical problem 
with the order, market access thresholds implemented pursuant to SEC 
Rule 15c3-5, or other operational thresholds. The Exchange currently 
handles orders on which it receives rejections by either cancelling the 
order back to the User or, if the order submitted by the User instructs 
the Exchange to do so, by posting the order to the Exchange's order 
book after subjecting such order to its price sliding process pursuant 
to Rule 21.1 in order to avoid locking any Protected Quotation that it 
cannot access. Rather than posting an order to its book, the Exchange 
proposes to cancel all orders for which it has received a rejection due 
to an inability to access another options exchange, providing a User 
with the opportunity to submit a new order or seek another path to the 
applicable Protected Quotation. The Exchange has also proposed to make 
clear that such a cancellation will not apply to Protected Quotations 
published by an options exchange against which the Exchange has 
declared self-help pursuant to Exchange Rule 27.2(b)(1). Although a 
Protected Quotation may be inaccessible to the Exchange, once the 
Exchange has declared self-help pursuant to Rule 27.2(b)(1), the 
Exchange disregards, and will continue to execute transactions and 
route orders without regard to, such Protected Quotations. 
Notwithstanding the foregoing, however, even after the Exchange has 
received a rejection from an options exchange, if there are multiple 
options exchanges included in the routing option selected by the User 
that have Protected Quotations at the NBBO, the System \23\ will 
continue to route the order to the Protected Quotations at other such 
other options exchanges at that price level.
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    \23\ As defined in BATS Rule 16.1(a)(59), System means the 
automated trading system used by BATS Options for the trading of 
options contracts.
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2. Statutory Basis
    The Exchange believes that its proposal 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.\24\ In particular, 
the proposal is consistent with Section 6(b)(5) of the Act,\25\ because 
it would promote 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 helping to avoid executions of orders 
on the Exchange at prices that are significantly worse than the 
national best bid or national best offer at the time an order is 
initially received by the Exchange, even if executions are permissible 
pursuant to Regulation NMS or under the Exchange's analogous rules for 
BATS Options. The Exchange believes

[[Page 39542]]

that permitting Users to avoid any execution of an incoming order in a 
Crossed Market is an additional functionality that is consistent with 
the protection of investors and the public interest. Although the 
Exchange does not believe that any other self-regulatory organization 
has exactly the same Crossed Market threshold in place, the Exchange as 
well as other market centers have implemented a variety of pricing 
thresholds to constrain executions and protect market participants.\26\ 
Also, this proposal is consistent with existing Exchange rules that 
allow for the breaking of trades deemed clearly erroneous \27\ or in 
obvious error \28\ by reference to objective thresholds worse than the 
NBBO. The Exchange believes that the proposed pricing thresholds are 
reasonable because they are significantly narrower than thresholds in 
place on BATS Equities for market orders received by the Exchange \29\ 
and also narrower than applicable clearly erroneous thresholds for BATS 
Equities. A narrow threshold will protect market participants and their 
customers from potentially executing at prices away from the NBBO when 
there is a Crossed Market, which can be an indication of a pricing 
anomaly in a security or a potential systems issue at another Trading 
Center or options exchange. Further, the proposed threshold is 
consistent with the protection of investors and the public interest 
because it will help to avoid clearly erroneous executions or obvious 
error transactions from occurring in the first place, rather than 
allowing an execution to occur and breaking the trade based on Exchange 
rules.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
    \26\ See, e.g., BATS Rule 11.9(a)(2), which constrains the 
executions of a market order on BATS to $0.50 or 5 percent away from 
the NBBO at the time the order initially reaches the Exchange; see 
also NYSE Arca Rule 7.31(a); NASDAQ Rule 4751(f)(13).
    \27\ See BATS Rule 11.17.
    \28\ See BATS Rule 20.6.
    \29\ See supra note 26.
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    Finally, the Exchange believes that the cancellation of all orders 
that have been rejected by other market centers or third party routers, 
rather than posting such orders to the Exchange's book will provide 
Users with more immediate certainty regarding their orders, and will 
provide Users the ability to modify and re-submit or send their orders 
via a different path to attempt to access the applicable Protected 
Quotation. Accordingly, the modifications to BATS Rules 11.13 and 20.9 
[sic] promote just and equitable principles of trade, remove 
impediments to, and perfect the mechanism of, a free and open market 
and a national market system.

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

    The Exchange does not believe that the proposed rule change imposes 
any burden on competition.

(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 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 \30\ and Rule 19b-4(f)(6) 
thereunder.\31\
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    \30\ 15 U.S.C. 78s(b)(3)(A).
    \31\ 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 
Act \32\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6) \33\ 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, noting that doing 
so would allow investors and market participants to benefit immediately 
from additional protection against certain executions in Crossed Market 
conditions and from the ability to re-route or re-submit orders that 
are unable to access, and therefore rejected by, other market centers 
with Protected Quotations at the NBBO. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest.\34\ Therefore, the Commission 
designates the proposal operative upon filing.
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    \32\ 17 CFR 240.19b-4(f)(6).
    \33\ 17 CFR 240.19b-4(f)(6).
    \34\ 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).
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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.

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 Exchange 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 rule-comments@sec.gov. Please include 
File Number SR-BATS-2012-024 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BATS-2012-024. 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

[[Page 39543]]

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-BATS-2012-024 and should be submitted on or before July 
24, 2012.
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    \35\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-16215 Filed 7-2-12; 8:45 am]
BILLING CODE 8011-01-P


