[Federal Register Volume 76, Number 43 (Friday, March 4, 2011)]
[Notices]
[Pages 12155-12157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-4886]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63969; File No. SR-BATS-2011-007]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change by BATS
Exchange, Inc. to Adopt BATS Rule 11.21, entitled ``Input of Accurate
Information''
February 25, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\
[[Page 12156]]
notice is hereby given that on February 18, 2011, BATS Exchange, Inc.
(``Exchange'' or ``BATS'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Exchange has designated this proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt new BATS Rule 11.21 to require
Members to identify each order accurately as a Principal, Agency, or
Riskless Principal Order.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to add new BATS Rule 11.21 for the purpose of
increasing transparency and to enhance the surveillance database and
audit trail of transaction data used by the Exchange in surveillance of
its market. The proposed rule change would require Members to identify
the capacity of each order accurately as a Principal, Agency, or
Riskless Principal Order. For purposes of surveillance, the Exchange
currently identifies the capacity of each order as Principal, Agency,
or Riskless Principal; however, several other capacities are accepted
upon order entry, including no response, which are thereafter mapped to
one of the above-listed order capacities. By limiting the order
capacity upon entry to Principal, Agency, or Riskless Principal and
requiring Members to accurately submit an order capacity for each
order, the Exchange will be able to more precisely identify the type of
order received and more effectively surveil for abusive trading.
BATS does not have a rule that makes an explicit statement
regarding a Member's obligation to input accurate information into the
System. Notwithstanding, BATS believes that disciplinary cases against
Members entering inaccurate or incomplete information may be brought
appropriately under BATS Rule 3.1, which requires Members to observe
high standards of commercial honor and just and equitable principles of
trade. Rule 3.1 protects the investing public and the securities
industry from dishonest practices that are unfair to investors or
hinder the functioning of a free and open market, even though those
practices may not be illegal or violate a specific rule or regulation.
Because of the regulatory importance of accurate information input in
the System, BATS believes a rule that directly addresses Members'
obligation to provide accurate information is warranted. The proposed
rule makes clear Members' obligation to input accurate information into
the System and that failure to do so would be considered a violation of
BATS Rules.
BATS notes that it already has a rule in place for its equity
options platform (``BATS Options'') that requires members of BATS
Options (``Options Members'') to ensure that accurate information is
input into the System, a requirement that includes, but is not limited
to, the capacity of the Options Member as it relates to the order.\5\
The Commission has also previously approved rules proposed by the
Nasdaq Stock Market LLC (``Nasdaq'') that apply to Nasdaq options and
equities platforms and require participants to ensure that accurate
information is entered into Nasdaq's system, including but not limited
to the capacity of the participant.\6\ Thus, the proposed rule change
would: (1) make BATS Rules regarding equity trading consistent with its
rules regarding options trading; and (2) bring BATS Rules in line with
those of other self-regulatory organizations.
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\5\ BATS Rule 18.2(a)(6).
\6\ See Securities Exchange Act Release 59547 (March 10, 2009),
74 FR 11386 (March 17, 2009).
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In order to allow Members sufficient time to review and complete
any systems changes necessitated by this filing, the Exchange has
proposed an operative date of April 4, 2011.
2. Statutory Basis
The rule change proposed in this submission 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.\7\ Specifically, for
the reasons described above, the proposed change is consistent with
Section 6(b)(5) of the Act,\8\ because 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 regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and to protect
investors and the public interest. Specifically, the changes proposed
herein will serve to promote the accuracy of information input into the
Exchange. Accurate information is necessary for the efficient and fair
operation of the Exchange, and will assist the Exchange in surveilling
the markets for fraudulent activity.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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(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 Changes and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder because
the proposal does not: (i) Significantly affect the protection of
investors or the public interest; (ii) impose any significant burden on
competition; and (iii) by its terms, 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
[[Page 12157]]
protection of investors and the public interest.\11\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to
give the Commission written notice of the Exchange's 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. The Exchange has satisfied this
requirement.
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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.\12\
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\12\ 15 U.S.C. 78s(b)(3)(C).
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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 e-mail to [email protected]. Please include
File Number SR-BATS-2011-007 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-2011-007. This file
number should be included on the subject line if e-mail 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 website 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
a.m. and 3 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-BATS-2011-007 and should be
submitted on or before March 25, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-4886 Filed 3-3-11; 8:45 am]
BILLING CODE 8011-01-P