
[Federal Register Volume 78, Number 117 (Tuesday, June 18, 2013)]
[Notices]
[Pages 36621-36625]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14450]



[[Page 36621]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69748; File No. SR-BATS-2013-032]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 2.11, Entitled ``BATS Trading, Inc. as Outbound Router''

June 12, 2013.
    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 3, 2013, 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.
---------------------------------------------------------------------------

    \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 filed a proposal to amend Rule 2.11, entitled ``BATS 
Trading, Inc. as Outbound Router'', and Rule 21.9, entitled ``Order 
Routing'', with respect to the authority of the Exchange or BATS 
Trading, Inc. (``BATS Trading'') to cancel orders on the Exchange's 
equity securities platform (``BATS Equities'') and equity options 
platform (``BATS Options'') when a technical or system issue occurs, as 
well as to describe the operation of an error account for BATS Trading.
    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 Exchange filed a proposal The Exchange proposes to amend Rule 
2.11(a) by amending subparagraph (4) and adding new subparagraphs (6) 
and (7) that address the authority of the Exchange or BATS Trading to 
cancel orders when a technical or systems issue occurs and to describe 
the operation of an error account for BATS Trading as it relates to 
BATS Equities.\5\ The Exchange also proposes to amend Rule 21.9 by 
adding subparagraphs (g) and (h) that address the authority of the 
Exchange or BATS Trading to cancel options orders when a technical or 
systems issue occurs and to describe the operation of an error account 
for BATS Trading as it relates to BATS Options.
---------------------------------------------------------------------------

    \5\ BATS Trading is a facility of the Exchange. Accordingly, 
under Rule 2.11, the Exchange is responsible for filing with the 
Commission rule changes and fees relating to the functions of BATS 
Trading. In addition, the Exchange is using the phrase ``BATS 
Trading or the Exchange'' in this rule filing to reflect the fact 
that a decision to take action with respect to orders affected by a 
technical or systems issue may be made in the capacity of BATS 
Trading or the Exchange depending on the circumstances of the issue.
     From time to time, the Exchange also uses non-affiliate third-
party broker-dealers to provide outbound routing services (i.e., 
third-party Routing Brokers). In those cases, orders are submitted 
to the third-party Routing Broker through BATS Trading, the third-
party Routing Broker routes the orders to the Routing Destination in 
its name, and any executions are submitted for clearance and 
settlement in the name of BATS Trading so that any resulting 
positions are delivered to BATS Trading upon settlement. As 
described above, BATS Trading normally arranges for any resulting 
securities positions to be delivered to the Member that submitted 
the corresponding order to the Exchange. If error positions (as 
defined in proposed Rule 2.11(a)(7)) result in connection with the 
Exchange's use of a third-party Routing Broker for outbound routing, 
and those positions are delivered to BATS Trading through the 
clearance and settlement process, BATS Trading would be permitted to 
resolve those positions in accordance with proposed Rule 
2.11(a)(7)(B)-(E). If the third-party Routing Broker received error 
positions in connection with its role as a routing broker for the 
Exchange, and the error positions were not delivered to BATS Trading 
through the clearance and settlement process, then the third-party 
Routing Broker would resolve the error positions itself and BATS 
Trading would not be permitted to accept the error positions, as set 
forth in proposed Rule 2.11(a)(7)(B).
---------------------------------------------------------------------------

    BATS Trading is the approved routing broker of the Exchange for 
both BATS Equities and BATS Options, subject to the conditions listed 
in Rule 2.11, 2.12, and 21.9. The Exchange relies on BATS Trading to 
provide outbound routing services from itself to routing destinations 
of BATS Trading (``Routing Destinations''). Additionally, BATS Equities 
relies on BATS Trading to provide inbound routing services for BATS Y-
Exchange, Inc. (``BYX'').\6\ When BATS Trading routes orders to a 
Routing Destination, it does so by sending a corresponding order in its 
own name to the Routing Destination. In the normal course, routed 
orders that are executed at Routing Destinations are submitted for 
clearance and settlement in the name of BATS Trading, and BATS Trading 
arranges for any resulting securities positions to be delivered to the 
Member that submitted the corresponding order to the Exchange.
---------------------------------------------------------------------------

    \6\ The Exchange has authority to receive inbound routes of 
equities orders by BATS Trading from BYX. See Securities Exchange 
Act Release No. 66808 (April 13, 2012), 77 FR 23294 (April 18, 2012) 
(SR-BATS-2012-013).
---------------------------------------------------------------------------

Examples of Situations That May Lead to Cancelled Orders
    A technical or systems issue may arise at BATS Trading, a Routing 
Destination, or the Exchange that may cause the Exchange or BATS 
Trading to take steps to cancel orders if the Exchange or BATS Trading 
determines that such action is necessary to maintain a fair and orderly 
market. The examples set forth below describe some of the situations in 
which the Exchange or BATS Trading may decide to cancel orders.\7\
---------------------------------------------------------------------------

    \7\ The examples described in this filing are not intended to be 
comprehensive or exclusive. Rule 2.11 and 21.9, as proposed, would 
provide general authority for the Exchange or BATS Trading to cancel 
orders in order to maintain fair and orderly markets when technical 
and systems issues occur and would also set forth the manner in 
which error positions may be handled by the Exchange or BATS 
Trading. The proposed rule change is not limited to addressing order 
cancellation or error positions resulting only from the specific 
examples described in this filing.

    Example 1.  If BATS Trading or a Routing Destination experiences 
a technical or systems issue that results in BATS Trading not 
receiving responses to immediate or cancel (``IOC'') orders that it 
sent to the Routing Destination and that issue is not resolved in a 
timely manner, BATS Trading or the Exchange would seek to cancel the 
routed orders affected by the issue.\8\ For

[[Page 36622]]

instance, if BATS Trading experiences a connectivity issue affecting 
the manner in which it sends or receives order messages to or from 
Routing Destinations, it may be unable to receive timely execution 
or cancellation reports from the Routing Destinations, and BATS 
Trading or the Exchange may consequently seek to cancel the affected 
routed orders. Once the decision is made to cancel those routed 
orders, any cancellation that a Member submitted to the Exchange on 
its initial order during such a situation would be honored.\9\
---------------------------------------------------------------------------

    \8\ In a normal situation (i.e., one in which a technical or 
systems issue does not occur), BATS Trading should receive an 
immediate response to an IOC order from a Routing Destination and 
would pass the resulting fill or cancellation on to the Member. 
After submitting an order that is routed to a Routing Destination, 
if a Member sends an instruction to cancel that order, the 
cancellation is held by the Exchange until a response is received 
from the Routing Destination. For instance, if the Routing 
Destination executes that order, the execution would be passed on to 
the Member and the cancellation instruction would be disregarded.
    \9\ If a Member did not submit a cancellation to the Exchange, 
however, that initial order would remain ``live'' and thus be 
eligible for execution or posting on the Exchange, and neither the 
Exchange nor BATS Trading would treat any execution of that initial 
order or any subsequent routed order related to that initial order 
as an error.
---------------------------------------------------------------------------

    Example 2.  If the Exchange experiences a systems issue, the 
Exchange may take steps to cancel all outstanding orders affected by 
that issue and notify affected Members of the cancellations. In 
those cases, the Exchange would seek to cancel any routed orders 
related to the Members' initial orders.

Examples of Situations That May Lead to Error Positions
    In some instances, the technical or systems issue at BATS Trading, 
a Routing Destination, the Exchange, or a non-affiliate third party 
Routing Broker may also result in BATS Trading acquiring an error 
position that it must resolve. The examples set forth below describe 
some of the circumstances in which error positions may arise.

    Example A.  Error positions may result from routed orders that 
the Exchange or BATS Trading attempts to cancel but that are 
executed before the Routing Destination receives the cancellation 
message or that are executed because the Routing Destination is 
unable to process the cancellation message. Using the situation 
described in Example 1 above, assume that the Exchange seeks to 
cancel orders routed to a Routing Destination because it is not 
receiving timely execution or cancellation reports from the Routing 
Destination. In such a situation, BATS Trading may still receive 
executions from the Routing Destination after connectivity is 
restored, which it would not then allocate to Members because of the 
earlier decision to cancel the affected routed orders. Instead, BATS 
Trading would post those positions into its error account and 
resolve the positions in the manner described below.
    Example B.  Error positions may result from an order processing 
issue at a Routing Destination. For instance, if a Routing 
Destination experienced a systems problem that affects its order 
processing, it may transmit back a message purporting to cancel a 
routed order, but then subsequently submit an execution of that same 
order (i.e., a locked-in trade) to The Depository Trust & Clearing 
Corporation (``DTCC'') for clearance and settlement. In such a 
situation, the Exchange would not then allocate the execution to the 
Member because of the earlier cancellation message from the Routing 
Destination. Instead, BATS Trading would post those positions into 
its error account and resolve the positions in the manner described 
below.
    Example C.  Error positions may result if BATS Trading receives 
an execution report from a Routing Destination but does not receive 
clearing instructions for the execution from the Routing 
Destination. For instance, assume that a Member sends the Exchange 
an order to buy 100 shares of ABC stock, which causes BATS Trading 
to send an order to a Routing Destination that is subsequently 
executed, cleared, and closed out by that Routing Destination, and 
the execution is ultimately communicated back to that Member. On the 
next trading day (T+1), if the Routing Destination does not provide 
clearing instructions for that execution, BATS Trading would still 
be responsible for settling that Member's purchase, but would be 
left with a short position in its error account.\10\ BATS Trading 
would resolve the position in the manner described below.
---------------------------------------------------------------------------

    \10\ To the extent that BATS Trading incurred a loss in covering 
its positions, short or long, it would submit reimbursement claim to 
that Routing Destination.
---------------------------------------------------------------------------

    Example D.  Error positions may result from a technical or 
systems issue that causes orders to be executed in the name of BATS 
Trading that are not related to BATS Trading's function as the 
Exchange's routing broker and are not related to any corresponding 
orders of Members. As a result, BATS Trading would not be able to 
assign any positions resulting from such an issue to Members. 
Instead, BATS Trading would post those positions into its error 
account and resolve the positions in the manner described below.
    Example E.  Error positions may result from a technical or 
systems issue at the Exchange through which the Exchange does not 
receive sufficient notice that a Member that has executed trades on 
the Exchange has lost the ability to clear trades through DTCC, as 
well as where the Exchange received notice of such Member's loss of 
ability to clear trades through DTCC, but, because of a technical or 
systems issue at the Exchange, the Exchange was unable to react to 
such notice in a timely manner. In such a situation, the Exchange 
would not have valid clearing information, which would prevent the 
trade from being automatically processed for clearance and 
settlement on a locked-in basis. Accordingly, BATS Trading would 
assume that Member's side of the trades so that the counterparties 
can settle the trades. BATS Trading would post those positions into 
its error account and resolve the positions in the manner described 
below.
    Example F.  Error positions may result from a technical or 
systems issue at the Exchange that does not involve routing of 
orders through BATS Trading. For example, a situation may arise in 
which a posted order was validly cancelled, but the system 
erroneously matched that order with an order that was seeking to 
access it. In such a situation, BATS Trading would have to assume 
the side of the trade opposite the order seeking to access the 
cancelled order. BATS Trading would post the position in its error 
account and resolve the position in the manner described below.

    In each of the circumstances described above, it is possible that 
neither the Exchange nor BATS Trading may learn about an error position 
until T+1, either: (1) During the clearing process when a Routing 
Destination has submitted to DTCC a transaction for clearance and 
settlement for which BATS Trading never received an execution 
confirmation; or (2) when a Routing Destination does not recognize a 
transaction submitted by BATS Trading to DTCC for clearance and 
settlement. Moreover, the affected Members' trades may not be nullified 
absent express authority under BATS rules.\11\
---------------------------------------------------------------------------

    \11\ See, e.g., Rule 11.17 (regarding clearly erroneous 
executions).
---------------------------------------------------------------------------

BATS Equities--Proposed Amendments to Rule 2.11
    The Exchange proposes to amend Rule 2.11(a) to add new paragraphs 
(6) and (7) and to add certain language to Rule 2.11(a)(4). 
Specifically, the Exchange proposes to amend Rule 2.11(a)(4) to state 
that BATS Trading may employ an error account in compliance with 
proposed paragraph (a)(7). Under paragraph (6) of the proposed rule, 
the Exchange or BATS Trading would be expressly authorized to cancel 
orders as may be necessary to maintain fair and orderly markets if a 
technical or systems issue occurred at the Exchange, BATS Trading, or a 
Routing Destination.\12\ The Exchange or BATS Trading would be required 
to provide notice of the cancellation to affected Members as soon as is 
practicable.
---------------------------------------------------------------------------

    \12\ Such a situation may not cause the Exchange to declare 
self-help against the routing destination pursuant to Rule 611 of 
Regulation NMS. If the Exchange or BATS Trading determines to cancel 
orders routed to a routing destination under proposed Rule 
2.11(a)(7), but does not declare self-help against that routing 
destination, the Exchange would continue to be subject to the trade-
through requirements in Rule 611 with respect to that routing 
destination.
---------------------------------------------------------------------------

    Paragraph (a)(7)(A) of the proposed rule would permit BATS Trading 
to maintain an error account for the purpose of addressing positions 
that are the result of an execution or executions that are not clearly 
erroneous \13\ under

[[Page 36623]]

Rule 11.17 and result from a technical or systems issue at BATS 
Trading, the Exchange, a Routing Destination, or a non-affiliate third-
party Routing Broker that affects one or more orders (``Error 
Positions''). By definition, an Error Position would not include any 
position that results from an order submitted by a Member to the 
Exchange that is executed on the Exchange and automatically processed 
for clearance and settlement on a locked-in basis. Under paragraph 
(a)(7)(B) of the proposed rule, BATS Trading also would not be 
permitted to accept any positions in its error account from an account 
of a Member and could not permit any Member to transfer any positions 
from the Member's account to BATS Trading's error account under the 
proposed rule.\14\ However, under paragraph (a)(7)(C) of the proposed 
rule, if a technical or systems issue results in the Exchange not 
having valid clearing instructions for a Member to a trade, BATS 
Trading may assume that Member's side of the trade so that the trade 
can be processed for clearing and settlement on a locked-in basis.\15\
---------------------------------------------------------------------------

    \13\ As defined in Rule 11.17(a), a transaction executed on the 
Exchange is ``clearly erroneous'' when there is an obvious error in 
any term, such as price, number of shares or other unit of trading, 
or identification of the security.
    \14\ The purpose of this provision is to clarify that BATS 
Trading may address error positions under the proposed rule that are 
caused by a technical or systems issue, but that BATS Trading may 
not accept from a Member positions that are delivered to the Member 
through the clearance and settlement process, even if those 
positions may have been related to a technical or systems issue at 
BATS Trading, the Exchange, a Routing Destination of BATS Trading, 
or a non-affiliate third-party Routing Broker. This provision would 
not apply, however, to situations like the one described in Example 
C in which BATS Trading incurred a short position to settle a 
Member's purchase, as the Member did not yet have a position in its 
account as a result of the purchase at the time of BATS Trading's 
action (i.e., BATS Trading's action was necessary for the purchase 
to settle into the Member's account). Similarly, the provision would 
not apply to situations like the one described in Example F, where a 
system issue caused one Member to receive an execution for which 
there was not an available contra-party, in which case action by 
BATS Trading would be necessary for the position to settle into that 
Member's account. Moreover, to the extent a Member receives locked-
in positions in connection with a technical or systems issue, that 
Member may seek to rely on BATS Rule 11.16 if it experiences a loss. 
That rule provides Members with the ability to file claims against 
the Exchange for ``losses resulting directly from the malfunction of 
the Exchange's physical equipment, devices and/or programming or the 
negligent acts or omissions of its employees.''
    \15\ See Example E above.
---------------------------------------------------------------------------

    Under paragraph (a)(7)(D), in connection with a particular 
technical or systems issue, BATS Trading or the Exchange would be 
permitted to either (i) assign all resulting Error Positions to 
Members; or (ii) have all resulting Error Positions liquidated, as 
described below. Any determination to assign or liquidate Error 
Positions, as well as any resulting assignments, would be required to 
be made in a nondiscriminatory fashion.
    BATS Trading or the Exchange would be required to assign all Error 
Positions resulting from a particular technical or systems issue to the 
applicable Members affected by that technical or systems issue if BATS 
Trading or the Exchange: (i) Determines that it has accurate and 
sufficient information (including valid clearing information) to assign 
the positions to all of the applicable Members affected by that 
technical or systems issue; (ii) determines that it has sufficient time 
pursuant to normal clearance and settlement deadlines to evaluate the 
information necessary to assign the positions to all of the applicable 
Members affected by that technical or systems issue; and (iii) does not 
determine to cancel all orders affected by that technical or systems 
issue.
    For example, a technical or systems issue of limited scope or 
duration may occur at a Routing Destination and the resulting trades 
may be submitted for clearance and settlement by such Routing 
Destination to DTCC. If there were a small number of trades, there may 
be sufficient time to match positions with Member orders and avoid 
using the error account.
    There may be scenarios, however, where BATS Trading determines that 
it is unable to assign all Error Positions resulting from a particular 
technical or systems issue to all of the affected Members, or 
determines to cancel all affected routed orders. For example, in some 
cases, the volume of questionable executions and positions resulting 
from a technical or systems issue might be such that the research 
necessary to determine which Members to assign those executions to 
could be expected to extend past the normal settlement cycle for such 
executions. Furthermore, if a Routing Destination experiences a 
technical or systems issue after BATS Trading has transmitted IOC 
orders to it that prevents BATS Trading from receiving responses to 
those orders, BATS Trading or the Exchange may determine to cancel all 
routed orders affected by that issue. In such a situation, BATS Trading 
or the Exchange would not pass on to the Members any executions on the 
routed orders received from the Routing Destination.
    Proposed Rule 2.11(a)(7)(D) would require BATS Trading to liquidate 
Error Positions as soon as practicable.\16\ In liquidating Error 
Positions, BATS Trading would be required to provide complete time and 
price discretion for the trading to liquidate the Error Positions to a 
third-party broker-dealer and could not attempt to exercise any 
influence or control over the timing or methods of trading to liquidate 
the Error Positions.\17\ BATS Trading also would be required to 
establish and enforce policies and procedures reasonably designed to 
restrict the flow of confidential and proprietary information between 
the third-party broker-dealer and BATS Trading/the Exchange associated 
with the liquidation of the Error Positions.
---------------------------------------------------------------------------

    \16\ If BATS Trading determines in connection with a particular 
technical or systems issue that some error positions can be assigned 
to some affected Members, but other error positions cannot be 
assigned, BATS Trading would be required under the proposed rule to 
liquidate all such error positions (including those positions that 
could be assigned to the affected Members).
    \17\ This provision is not intended to preclude BATS Trading 
from providing the third-party broker with standing instructions 
with respect to the manner in which it should handle all error 
account transactions. For example, BATS Trading might instruct the 
broker to treat all orders as ``not held'' and to attempt to 
minimize any market impact on the price of the stock being traded.
---------------------------------------------------------------------------

    Under proposed paragraph (a)(7)(E), BATS Trading and the Exchange 
would be required to make and keep records to document all 
determinations to treat positions as Error Positions and all 
determinations for the assignment of Error Positions to Members or the 
liquidation of Error Positions, as well as records associated with the 
liquidation of Error Positions through the third-party broker-dealer.
BATS Options--Proposed Amendments to Rule 21.9
    In order to maintain consistency between analogous services offered 
by BATS Equities and BATS Options, the Exchange proposes to modify the 
rules of BATS Options to conform with the changes described above 
related to the cancellation of orders and the management of the BATS 
Trading error account as it relates to BATS Equities. Accordingly, the 
exchange proposes to add paragraphs (g) to Rule 21.9.
    As proposed, Rule 21.9(g)(1) and (2) are identical to the 
description set forth in proposed Rule 2.11(a)(6) and (7) and described 
above with the exception of minor references necessary due to the 
difference between rules applicable to BATS Equities and BATS Options.
2. Statutory Basis
    The Exchange believes that the proposed rule change 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

[[Page 36624]]

requirements of Section 6 of the Act.\18\ Specifically, the Exchange 
believes that the proposed rule change is consistent with Section 
6(b)(5) of the Act,\19\ in that it is designed to prevent fraudulent 
and manipulative acts and practices, 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, and it is not designed to permit unfair discrimination 
among customers, brokers, or dealers. The Exchange believes that this 
proposal is in keeping with those principles since BATS Trading's or 
the Exchange's ability to cancel orders during a technical and systems 
issue and to maintain an error account facilitates the smooth and 
efficient operation of the market. Specifically, the Exchange believes 
that allowing BATS Trading or the Exchange to cancel orders during a 
technical or systems issue would allow the Exchange to maintain fair 
and orderly markets. Moreover, the Exchange believes that allowing BATS 
Trading to assume Error Positions in an error account and to liquidate 
those positions, subject to the conditions set forth in the proposed 
amendments to Rule 2.11 and 21.9, would be the least disruptive means 
to correct these errors, except in cases where BATS Trading can assign 
all such Error Positions to all affected Members of the Exchange. 
Overall, the proposed amendments are designed to ensure full trade 
certainty for market participants and to avoid disrupting the clearance 
and settlement process. The proposed amendments are also designed to 
provide a consistent methodology for handling Error Positions in a 
manner that does not discriminate among Members. The proposed 
amendments are also consistent with Section 6 of the Act insofar as 
they would require BATS Trading to establish controls to restrict the 
flow of any confidential information between the third-party broker and 
BATS Trading/the Exchange associated with the liquidation of Error 
Positions.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f.
    \19\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, the proposed 
amendment will align the Exchange's rules with other competing market 
centers. Specifically, the rule change proposed herein is substantially 
similar to the rules of other exchanges, including NASDAQ Stock Market 
LLC (``Nasdaq'') Rule 4758(d), Nasdaq Options Market (``NOM'') Chapter 
VI, Section 11(g), NYSE Arca Equities, Inc. (``Arca'') Rule 7.45(d)(2), 
and EDGX Exchange, Inc. (``EDGX'') Rule 2.11(a).

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 foregoing 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 after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6) 
\21\ thereunder.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative 
delay. The Commission believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
Such waiver would allow the Exchange, without delay, to implement the 
proposed rule change, which is designed to provide a consistent 
methodology for handling Error Positions in a manner that does not 
discriminate among Members. The Commission also notes that the proposed 
rule change is based on, and substantially similar to, rules of NYSE 
Arca, Inc.,\22\ EDGX Exchange, Inc,\23\ and NASDAQ Stock Market 
LLC,\24\ which the Commission previously approved. Accordingly, the 
Commission designates the proposal operative upon filing.\25\
---------------------------------------------------------------------------

    \22\ See Securities Exchange Act Release No. 66963 (May 10, 
2012), 77 FR 28919 (May 16, 2012) (SR-NYSEArca-2012-22).
    \23\ See Securities Exchange Act Release No. 67010 (May 17, 
2012), 77 FR 30564 (May 23, 2012) (SR-EDGX-2012-08).
    \24\ See Securities Exchange Act Release No. 67281 (June 27, 
2012), 77 FR 39543 (July 3, 2012) (SR-NASDAQ-2012-057).
    \25\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    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 rule-comments@sec.gov. Please include 
File Number SR-BATS-2013-032 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-2013-032. 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.,

[[Page 36625]]

Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the 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-2013-032 and should be 
submitted on or before July 9, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-14450 Filed 6-17-13; 8:45 am]
BILLING CODE 8011-01-P


