[Federal Register Volume 80, Number 10 (Thursday, January 15, 2015)]
[Notices]
[Pages 2163-2179]
[FR Doc No: 2015-00525]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74023; File No. SR-EDGX-2015-03]

Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Certain Rules To Adopt or Align System Functionality With That
Currently Offered by BATS Exchange, Inc. and BATS Y-Exchange, Inc.

January 9, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on January 8, 2015, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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.
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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 filed a proposal to amend certain rules to adopt or
align system functionality with that currently offered by BATS
Exchange, Inc. (``BZX'') and BATS Y-Exchange, Inc. (``BYX'',
collectively with BZX, ``BATS'') in order to provide a consistent
technology offering amongst the Exchange and its affiliates. These
changes are described in detail below and include amending: (i) Rule
11.1 regarding the Exchange's trading sessions and
    Order Types; (v) Rule 11.9, Priority of Orders; (vi) Rule 11.10,
Order Execution; (vii) Rule 11.11, Routing to Away Trading Centers; and
(viii) Rule 11.21, Retail Orders.
    The proposed rule change does not propose to implement new or
unique functionality that has not been previously filed with the
Commission or is not available on BATS. The Exchange notes that the
proposed rule text is based on the rules and is different only to the
extent necessary to conform to the Exchange's current rules.
    The Exchange does not believe that the proposed rule change will
have any direct or significant indirect effect on any other Exchange
rule in effect at the time of this filing.
    The text of the proposed rule change is available at the Exchange's
Web site at http://www.directedge.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 the
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
    Earlier this year, the Exchange and its affiliate, EDGA Exchange,
Inc. (``EDGA'') received approval to effect a merger (the ``Merger'')
of the Exchange's parent company, Direct Edge Holdings LLC, with BATS
Global Markets, Inc., the parent of BATS (together with BATS, EDGA and
EDGX, the ``BGM Affiliated Exchanges'').\5\ In the context of the
Merger, the BGM Affiliated Exchanges are working to migrate EDGX and
EDGA onto the BATS technology platform, and align certain system
functionality, retaining only intended differences between the BGM
Affiliated Exchanges. As a result of these efforts, the Exchange
proposes to amend: (i) Rule 11.1 regarding the Exchange's trading
sessions and hours of operation; (ii) Rule 11.6, Definitions; (iii)
Rule 11.7, Opening Process; (iv) Rule 11.8, Order Types; (v) Rule 11.9,
Priority of Orders; (vi) Rule 11.10, Order Execution; (vii) Rule 11.11,
Routing to Away Trading Centers; and (vi) Rule 11.21, Retail Orders.
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    \5\ See Securities Exchange Act Release No. 71449 (January 30,
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
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    The proposed amendments are intended to align certain system
functionality with that currently offered by BATS in order to provide a
consistent technology offering for Users \6\ of the BGM Affiliated
Exchanges. The Exchange notes that the proposed rule text is based on
the BATS Rule and is different only to the extent necessary to conform
to the Exchange's current rules.\7\ The proposed amendments do not
propose to implement new or unique functionality that has not been
previously filed with the Commission or is not available on BATS or
BYX.
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    \6\ The term ``User'' is defined as ``any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
    \7\ To the extent a proposed rule change is based on an existing
BATS Rule, the language of the BATS and Exchange Rules may differ to
extent necessary to conform with existing Exchange rule text or to
account for details or descriptions included in the Exchange Rules
but not currently included in BATS rules based on the current
structure of such rules.
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Rule 11.1, Hours of Trading and Trading Days
    Current Functionality. Rule 11.1 sets forth when orders may be
entered into the System \8\ and outlines a User's ability to select the
trading sessions for which an order may be eligible for execution.
Proposed Rule 11.1(a)(1), Session Indicator, describes each of the
Exchange's existing trading sessions. A User may select the particular
trading sessions for which their order(s) may be eligible for
execution. Specifically,

orders designated as: ``Pre-Opening Session'' are eligible for
execution between 8:00 a.m. Eastern Time and 4:00 p.m. Eastern Time;
``Regular Session'' are eligible for execution between the completion
of the Opening Process or a Contingent Open as defined in proposed Rule
11.7 (described below), whichever occurs first, and 4:00 p.m. Eastern
Time, unless otherwise noted; \9\ ``Post-Closing Session'' are eligible
for execution between the start of the Regular Session and 8:00 p.m.
Eastern Time; and ``All Sessions'' are eligible for execution between
8:00 a.m. and 8:00 p.m. Eastern Time.
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    \8\ Exchange Rule 1.5(cc) defines ``System'' as ``the electronic
communications and trading facility designated by the Board through
which securities orders of Users are consolidated for ranking,
execution and, when applicable, routing away.''
    \9\ Beginning at 9:30:00 a.m. Eastern Time, the System will
accept: (i) Incoming orders designated as Intermarket Sweep Orders
(``ISOs''), and (ii) orders with a time-in-force instruction other
than Regular Hours Only. This is to assist Members' compliance with
Rule 611 of Regulation NMS.
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    Under Rule 11.1(a)(1), orders may be entered into the System from
6:00 a.m. until 8:00 p.m. Eastern Time, but orders entered between 6:00
a.m. and 8:00 a.m. Eastern Time are not eligible for execution until
the start of the session selected by the User. All orders are eligible
for execution during the Regular Session. A User may designate that
their order to be eligible for the Pre-Opening and/or Post-Closing
Sessions. If the User does not select a particular session or sessions,
the order will default to the Regular Session only.
    Proposed Functionality. To align with BATS functionality, the
Exchange proposes to amend Rule 11.1(a)(1) to allow Users to designate
when their order is eligible for execution by selecting the desired
Time-In-Force (``TIF'') instruction under Exchange Rule 11.6(q) \10\
and not by selecting a particular trading session, as is currently
required. Therefore, the Exchange proposes to delete references to the
Pre-Opening Session, Regular Session, Post-Closing Session, and All
Sessions indicators set forth under Rule 11.1(a)(1)(A)-(D). These
session indicators will no longer be available upon completion of the
technology integration and Users will designate the session(s) during
which their order is eligible for execution by selecting the desired
TIF instruction under Exchange Rule 11.6(q). The Exchange also proposes
to no longer default orders to the Regular Session where another
session indicator is not selected by the User. Thus, Users will be
required to select a TIF instruction. Pre-Opening Session \11\ and
Post-Closing Session \12\ will continue to be defined under Exchange
Rule 1.5. The Exchange also proposes to retain but relocate the
definition of Regular Session to Rule 1.5 as new paragraph (hh).
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    \10\ The Exchange also proposes to and its TIF instructions
under Rule 11.6(q) to align with BATS Rule 11.9(b). The changes are
described in more detail below.
    \11\ Pre-Opening Session is defined as ``the time between 8:00
a.m. and 9:30 a.m. Eastern Time.'' See Exchange Rule 1.5(s).
    \12\ Post-Closing Session is defined as ``the time between 4:00
p.m. and 8:00 p.m. Eastern Time.'' See Exchange Rule 1.5(r).
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    The Exchange also proposes to amend Rule 11.1(a)(1) to align with
recent rule changes filed with the Commission by BATS.\13\ As proposed,
orders entered between 6:00 a.m. and 8:00 a.m. Eastern Time are not
eligible for execution until the start of the Pre-Opening Session or
Regular Trading Hours, depending on the time-in-force selected by the
User. The Exchange proposes to further amend Rule 11.1(a)(1) to state
that the following orders will not be accepted prior to 8:00 a.m.
Eastern Time: Orders with a Post Only instruction, ISOs, Market Orders
with a TIF instruction other than Regular Hours Only (``RHO''), orders
with a Minimum Execution Quantity instruction that also include a TIF
instruction of RHO, and all orders with a TIF instruction of Immediate
or Cancel (``IOC'') or Fill Or Kill (``FOK''). At the commencement of
the Pre-Opening Session, orders entered between 6:00 a.m. and 8:00 a.m.
Eastern Time orders will be handled in time sequence, beginning with
the order with the oldest time stamp, and will be placed on the EDGX
Book, routed, cancelled, or executed in accordance with the terms of
the order.
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    \13\ See Securities Exchange Act Release Nos. 73745 (December 4,
2014), 79 FR 73359 (December 10, 2014) (SR-BATS-2014-062); 73744
(December 4, 2014), 79 FR 73369 (December 10, 2014) (SR-BYX-2014-
036).
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Rule 11.6, Definitions
    Rule 11.6, Definitions, sets forth in one rule current defined
terms and order instructions that are utilized in Chapter XI. Rule 11.6
also includes additional defined terms and instructions to aid in
describing System functionality and the operation of the Exchange's
order types. The Exchange proposes to amend Rule 11.6 to align certain
sections with BATS functionality and rules as part of the technology
integration. These changes are described below and include: (i)
Amending subparagraph (a) regarding Attribution; (ii) amending
paragraph (d) regarding Discretionary Range; (iii) amending paragraph
(h) regarding Minimum Execution Quantity; (iv) amending subparagraph
(j) regarding the Pegged order instruction; (v) amending subparagraph
(k) regarding the definition of Permitted Price; (vi) amending
subparagraph (l)(1)(A) regarding the Price Adjust Re-Pricing
instruction to allow for multiple re-pricing; (vii) deleting
subparagraph (l)(1)(B)(i) to decommission the Routed and Returned Re-
Pricing instruction; (viii) amending subparagraph (l)(2) to
decommission Short Sale Price Adjust and Short Sale Price Sliding, and
adopt the BATS short sale re-pricing process; (ix) amending
subparagraph (l)(3) to include re-pricing of orders of Odd Lot size;
\14\ (x) amending subparagraph (m)(1) regarding Replenishment Amounts;
(xi) amending subparagraph (m)(2) regarding the Super Aggressive order
instruction; and (xii) amending subparagraph (q) regarding TIF
instructions. As stated above, the proposed amendments to Rule 11.6 do
not propose to implement new or unique functionality that has not been
previously filed with the Commission or is not available on BZX or
BYX.\15\ Each of these amendments are described in more detail below.
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    \14\ An ``Odd Lot' is defined as ``any amount less than a Round
Lot. See Exchange Rule 11.8(s)(2).
    \15\ See supra note 7.
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Attribution (Rule 11.6(a))
    Pursuant to Rule 11.6(a), where a User includes an Attributable
instruction with an order, the User's Market Participant Identifier
(``MPID'') is visible via the Exchange's Book Feed.\16\ Conversely, if
an order is to be Non-Attributable,\17\ the User's MPID is not visible
via the Exchange's Book Feed. Under Exchange Rule 11.6(a)(1), unless
the User elects otherwise, all orders are automatically defaulted by
the System to Non-Attributable. Further, under Rule 11.6(a)(2), a User
may elect an order to be Attributable on an order-by-order basis or
instruct the Exchange to default all of its orders as Attributable on a
port-by-port basis. However, pursuant to Rule 11.6(a), if a User
instructs the Exchange to default all its orders as Attributable on a
particular port, such User would not be able to designate any order
from that port as Non-Attributable.
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    \16\ See EDGX Rule 11.6(a). The EDGX Book Feed is a data feed
that contains all displayed orders for listed securities trading on
EDGX, order executions, order cancellations, order modifications,
order identification numbers, and administrative messages. See
Exchange Rule 13.8(a).
    \17\ See Exchange Rule 11.6(a)(1).
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    The Exchange proposes to amend Rule 11.6(a)(2) to provide Users
with additional flexibility when designating all of its orders as
Attributable on a particular port consistent with BATS functionality.
As amended, Rule 11.6(a)(2) would provide a User that

instructs the Exchange to default all of its orders as Attributable on
a particular port the ability to override that setting and designate an
individual order from that port as Non-Attributable. This proposed rule
change is representative of additional detail with regard to the
operation of orders with an Attributable instruction in the Exchange's
rules. While the proposed rule change is not directly based on an
existing BATS Rule, as BATS rules do not currently address port level
settings with respect to attribution, the Exchange believes that
amending its current rule text to accurately describe how a Member may
designate their orders as Attributable or Non-Attributable will provide
them with increased transparency regarding how the System operates.
    Amendments to Retail Attribution (Rule 11.21(e)).The Exchange
proposes to make similar amendments to the attribution of Retail
Orders.\18\ Under Rule 11.21(e), a User may designate a Retail Order to
be identified as Retail on the EDGX Book Feed on an order-by-order
basis. A User may also instruct the Exchange to identify all of its
Retail Orders as Retail on a port-by-port basis where that port is also
designated as a Retail Order Port. However, if a User instructs the
Exchange to identify all of its Retail Orders as Retail on a Retail
Order Port, it will not be able to designate any Retail Order from that
port as Attributable or as Non-Attributable. The Exchange proposes to
amend Rule 11.21(e) to provide Users additional flexibility when
designating all of its Retail Order be identified as Retail on a
particular port consistent with BATS functionality.\19\ As amended,
Rule 11.6(a)(2) would provide a User that instructs the Exchange
identify all of its Retail Orders as Retail on a particular port the
ability to override that setting and designate an individual Retail
Order from that port as Attributable or Non-Attributable.
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    \18\ A Retail Order is defined as (i) an agency order or
riskless principal order that meets the criteria of FINRA Rule
5320.03 that originates from a natural person; (ii) is submitted to
EDGX by a Member, provided that no change is made to the terms of
the order; and (iii) the order does not originate from a trading
algorithm or any other computerized methodology. See Footnote 4 of
the Exchange's Fee Schedule available at http://www.directedge.com/Trading/EDGXFeeSchedule.aspx; Securities Exchange Act Release No.
68310 (November 28, 2012), 77 FR 71860 (December 4, 2012) (SR-EDGX-
2012-47) (Notice of Filing and Immediate Effectiveness); Securities
Exchange Act Release No. 69378 (April 15, 2013), 78 FR 23617 (April
19, 2013) (SR-EDGX-2013-13) (Notice of Filing and Immediate
Effectiveness).
    \19\ See Securities Exchange Act Release Nos. 73237 (September
26, 2014), 79 FR 59537 (October 2, 2014) (SR-BATS-2014-043) (Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change to
Adopt Rule 11.24 to Permit Members to Designate Their Retail Orders
To Be Identified as Retail on the Exchange's Proprietary Data
Feeds); 73236 (September 26, 2014), 79 FR 59541 (October 2, 2014)
(SR-BYX-2014-024) (Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Adopt Rule 11.24 to Permit Members to
Designate Their Retail Orders To Be Identified as Retail on the
Exchange's Proprietary Data Feeds).
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Cancel Back (Rule 11.6(b))
    Cancel Back is an instruction a User may attach to an order
instructing the System to cancel an order, when, if displayed by the
System on the EDGX Book \20\ at the time of entry, the order would
create a violation of Rule 610(d) of Regulation NMS, Rule 201 of
Regulation SHO, or the order cannot otherwise be executed or posted by
the System to the EDGX Book at its limit price.
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    \20\ The term ``EDGX Book'' is defined as ``the System's
electronic file of orders.'' See EDGX Rule 1.5(d).
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    The Exchange proposes to amend the definition of Cancel Back to
remove the requirement that the order only be cancelled where it
creates a violation of Rule 610(d) of Regulation NMS, Rule 201 of
Regulation SHO, or cannot otherwise be executed or posted by the System
to the EDGX Book at its limit price upon entry. Removal of the phrase
``upon entry'' from Rule 11.6(b) would enable an order with a Cancel
Back instruction that is posted to the EDGX Book to be cancelled if it
subsequently creates a violation of Rule 610(d) of Regulation NMS, Rule
201 of Regulation SHO, or the cannot otherwise be executed or continue
to be posted by the System to the EDGX Book at its limit price. The
proposed amendment would align the operation of the Exchange's Cancel
Back instruction with current BATS Rule 11.13.\21\
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    \21\ Under BATS Rule 11.13, ``an order will be cancelled back to
the User if, based on market conditions, User instructions,
applicable Exchange Rules and/or the Act and the rules and
regulations thereunder, such order is not executable, cannot be
routed to another Trading Center pursuant to Rule 11.13(a)(2) below
and cannot be posted to the BATS Book.'' The cancelling back of an
order under Rule 11.13 is not limited to cancellation upon entry.
See also BATS Rule 11.9(g)(1)(D).
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Discretionary Range (Rule 11.6(d))
    Discretionary Range is an instruction the User may attach to an
order to buy (sell) a stated amount of a security at a specified,
displayed price with discretion to execute up (down) to a specified,
non-displayed price. The Exchange proposes to remove the prohibition
that the Discretionary Range of an order to buy (sell) cannot be more
than $0.99 higher (lower) than the order's displayed price because,
upon migration of the Exchange onto BATS technology, the Discretionary
Range of an order will not be limited to $0.99. This proposed rule
change is representative of additional detail with regard to the
operation of orders with Discretionary Range in the Exchange's rules.
In addition, no such limitation is included in BATS or BYX Rules
11.9(c)(10) regarding Discretionary Orders and the BATS systems
effectively do not incorporate such a limitation.
Minimum Execution Quantity (Rule 11.6(h))
    Minimum Execution Quantity is an instruction a User may attach to
an order with a Non-Displayed \22\ instruction requiring the System to
execute the order only to the extent that a minimum quantity can be
satisfied by execution against a single order or multiple aggregated
orders simultaneously. Unless the User elects otherwise, any shares
remaining after a partial execution will be executed at a size that is
equal to or exceeds the Minimum Execution Quantity. Thus, under current
Exchange Rules and functionality a User can elect that a Minimum
Execution Quantity only apply to an initial execution but not any
remaining shares after such execution. The Exchange proposes to amend
Minimum Execution Quantity to reflect that, upon migration of the
Exchange onto BATS technology, any shares remaining after a partial
execution will continue to be executed at a size that is equal to or
exceeds the Minimum Execution Quantity, regardless of the Users
instructions. A User who wishes otherwise may cancel and resubmit their
order without a Minimum Execution Quantity. In addition, currently the
Minimum Execution Quantity instruction will not apply where the number
of shares remaining after a partial execution are less than the
quantity provided in the instruction. As amended, in such case, the
Minimum Execution Quantity will equal the number of remaining shares,
which is similar to current Exchange functionality. Like above, a User
who wishes otherwise may cancel and resubmit their order with a new
Minimum Execution Quantity. As amended, the Minimum Execution Quantity
instruction will operate similarly to the BATS Minimum Quantity Order
under BATS Rule 11.9(c)(5).\23\
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    \22\ The term ``Non-Displayed'' is defined as ``[a]n instruction
the User may attach to an order stating that the order is not to be
displayed by the System on the EDGX Book.'' See Exchange Rule
1.5(e)(2).
    \23\ See Securities Exchange Act Release Nos. 72646 (July 21,
2014), 79 FR 43516 (July 25, 2014) (SR-BATS-2014-027) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Rules 11.9, 11.12, 11.18, 21.1 and 21.7 of BATS Exchange, Inc.);
72647 (July 21, 2014), 79 FR 43522 (July 25, 2014) (SR-BYX-2014-010)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change to Rules 11.9, 11.12, and 11.18 of BATS Y-Exchange, Inc.). As
amended, Exchange Rule 11.6(h) only differs from BATS Rule
11.9(c)(5) to extent necessary to conform with existing rule text or
to account for details or descriptions currently included in the
Exchange's Rule that are not included in BATS Rule 11.9(c)(5).

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Pegged (Rule 11.6(j))
    Current Functionality. An order with a Pegged instruction enables a
User to specify that the order's price will peg to a price a certain
amount away from the NBB or NBO (offset). If an order with a Pegged
instruction displayed on the Exchange would lock the market, the price
of the order will be automatically adjusted by the System to one
Minimum Price Variation below the current NBO (for bids) or to one
Minimum Price Variation above the current NBB (for offers). A new time
stamp is created for the order each time it is automatically adjusted
and orders with a Pegged instruction are not eligible for routing
pursuant to Rule 11.11. For purposes of the Pegged instruction, the
System's calculation of the NBBO does not take into account any orders
with Pegged instructions that are resting on the EDGX Book. An order
with a Pegged instruction is cancelled if an NBB or NBO, as applicable,
is no longer available.
    An order with a Pegged instruction may be a Market Peg or Primary
Peg. An order that includes a Primary Peg instruction will have its
price pegged by the System to the NBB, for a buy order, or the NBO for
a sell order. A User may, but is not required to, select an offset
equal to or greater than one Minimum Price Variation \24\ above or
below the NBB or NBO that the order is pegged to. An order with a
Primary Peg instruction is currently eligible to join the Exchange's
Best Bid or Offer (``Exchange BBO'') when the EDGX Book has been locked
or crossed by another market. If an order with a Primary Peg
instruction creates a Locking Quotation \25\ or Crossing Quotation,\26\
the price of the order is automatically adjusted by the System to one
Minimum Price Variation below the current NBO (for bids) or to one
Minimum Price Variation above the current NBB (for offers).
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    \24\ The term ``Minimum Price Variation'' is defined as
``[b]ids, offers, or orders in securities traded on the Exchange
shall not be made in an increment smaller than: (i) $0.01 if those
bids, offers, or orders are priced equal to or greater than $1.00
per share; or (ii) $0.0001 if those bids, offers, or orders are
priced less than $1.00 per share; or (iii) any other increment
established by the Commission for any security which has been
granted an exemption from the minimum price increments requirements
of SEC Rule 612(a) or 612(b) of Regulation NMS.'' See Exchange Rule
11.6(i).
    \25\ The term ``Locking Quotation'' is defined as ``[t]he
display of a bid for an NMS stock at a price that equals the price
of an offer for such NMS stock previously disseminated pursuant to
an effective national market system plan, or the display of an offer
for an NMS stock at a price that equals the price of a bid for such
NMS stock previously disseminated pursuant to an effective national
market system plan in violation of Rule 610(d) of Regulation NMS.''
See Exchange Rule 11.6(g).
    \26\ The term ``Crossing Quotation'' is defined as ``[t]he
display of a bid (offer) for an NMS stock at a price that is higher
(lower) than the price of an offer (bid) for such NMS stock
previously disseminated pursuant to an effective national market
system plan in violation of Rule 610(d) of Regulation NMS.'' See
Exchange Rule 11.6(c).
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    An order that includes a Market Peg instruction will have its price
pegged by the System to the NBB, for a sell order, or the NBO, for a
buy order. An order with a Market Peg instruction that is to be
displayed by the System on the EDGX Book must include an offset for an
order to buy (sell) that is equal to or greater than one Minimum Price
Variation below (above) the NBO (NBB) that the order is pegged to. If a
User does not select an offset, the System will automatically include
an offset on an order to buy (sell) that is equal to one Minimum Price
Variation below (above) the NBO (NBB) that the order is pegged to. For
an order with a Non-Displayed instruction, a User may, but is not
required to, select an offset for an order to buy (sell) that is equal
to or greater than one Minimum Price Variation below (above) the NBO
(NBB) that the order is pegged to.
    Proposed Functionality. The Exchange proposes to amend the Pegged
instruction under Rule 11.6(j) to align with BATS Rule 11.9(c)(8).\27\
First, the Exchange proposes to no longer cancel an order with a Pegged
instruction where the NBB or NBO, as applicable, is no longer
available. In such case, instead of being cancelled, the order will not
be eligible for execution. The order will receive a new time stamp and
be eligible for execution where the NBB or NBO it is pegged to becomes
available.
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    \27\ See Securities Exchange Act Release Nos. 73188 (September
23, 2014), 79 FR 58004 (September 26, 2014) (SR-BATS-2014-041)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change to Rule 11.9 of BATS Exchange, Inc.); 73190 (September 23,
2014), 79 FR 58019 (September 26, 2014) (SR-BYX-2014-022) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule
11.9 of BATS Y-Exchange, Inc.). As amended, Exchange Rule 11.6(j)
only differs from BATS Rule 11.9(c)(8) to extent necessary to
conform with existing rule text or to account for details or
descriptions currently included in the Exchange's Rule that are not
included in BATS Rule 11.9(c)(8).
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    Second, the Exchange proposes to amend the Market Peg instruction
under Rule 11.6(j)(1) to state that such orders are not eligible for
display on the EDGX Book. As a result, the Exchange also proposes to
delete the requirement that an order with a Market Peg instruction that
is to be displayed on the EDGX Book must include an offset for an order
to buy (sell) that is equal to or greater than one Minimum Price
Variation below (above) the NBO (NBB) that the order is pegged to.
    Third, the Exchange proposed to amend the Primary Peg instruction
under Rule 11.6(j)(2) to define an offset equal to or greater than one
Minimum Price Variation above or below the NBB or NBO that the order is
pegged to as the ``Primary Offset Amount''. The Exchange also proposes
to specify that the Primary Offset Amount for an order with a Primary
Peg instruction that is to be displayed on the EDGX Book must result in
the price of such order being inferior to or equal to the inside quote
on the same side of the market.
    Fourth, the Exchange proposes to amend the provisions governing the
operation of an order with a Primary Peg instruction during a locked or
crossed market. As proposed, an order with a Primary Peg instruction
will no longer be able to join the Exchange BBO when the EDGX Book is
locked or crossed by another market. When the EDGX Book is crossed by
another market, the Exchange proposes to automatically adjust an order
with a Primary Peg instruction to the current NBO (for bids) or the
current NBB (for offers). For example, assume the NBBO is $10.08 x
$10.09. An order with a Primary Peg instruction to buy with a limit
price of $10.10 is entered and displayed by the System at $10.08, the
current NBB. Assume the NBO updates to $10.07, resulting in a crossed
market. The order with a Primary Peg instruction to buy would then be
pegged and displayed at $10.07, the updated NBO.
    Rule 11.6(j)(2) will continue to require that an order with a
Primary Peg instruction that would otherwise be a Locking Quotation or
Crossing Quotation be automatically adjusted by the System to one
Minimum Price Variation below the current NBO (for bids) or to one
Minimum Price Variation above the current NBB (for offers). For
example, assume the NBBO is $10.09 x $10.08, resulting in a crossed
market. An order with a Primary Peg instruction to buy with a limit
price of $10.10 is entered and displayed by the System at $10.07, one
Minimum Price Variation below the current NBB. Assume the NBBO is
updated to $10.08 x $10.09, the order with a Primary Peg instruction to
buy would then be pegged and displayed at $10.08, the updated NBB now
that the market is no longer

crossed. This proposed rule change is representative of additional
detail with regard to the operation of orders with a Pegged instruction
during locked or crossed markets that is currently included in Rule
11.6(j) and is consistent with Exchange's current re-pricing options
under Rule 11.6(l), as well as Exchange Rule 11.10(f) and BATS Rule
11.20(a)(3), which outline the prohibition against displaying locking
and crossing quotations under Rule 610 of Regulation NMS.
Permitted Price (Rule 11.6(k))
    Permitted Price is currently defined as the price at which a sell
order will be priced, ranked and displayed at one Minimum Price
Variation above the NBB. As amended, the definition of Permitted Price
will only state that it is the price that the order is displayed at one
Minimum Price Variation above the NBBO.\28\ This is to update the
definition of Permitted Price to reflect the decommissioning of the
Short Sale Price Adjust and Short Sale Price Sliding instructions and
the proposed amendment that an order with both a Short Sale instruction
and Hide Not Slide instruction will be ranked at the mid-point of the
NBBO, but displayed at the Permitted Price discussed below. While the
amended definition of Permitted Price is not identical to the
definition of Permitted Price under BATS Rules, any differences are
necessary to conform the proposed rule text with the other proposed
rule changes described above.
---------------------------------------------------------------------------

    \28\ The proposed definition of Permitted Price is also similar
to that of other exchange. See e.g., Nasdaq Rule 4763(e); NYSE MKT
Rule 440B(e); Rule 7016(f)(v)(C).
---------------------------------------------------------------------------

Re-Pricing (Rule 11.6(l))
    The Exchange currently offers re-pricing instructions which, in all
cases, result in the ranking and/or display of an order at a price
other than the order's limit price in order to comply with applicable
securities laws and Exchange Rules. Specifically, the Exchange's re-
pricing instructions are designed to permit Users to comply with Rule
610(d) of Regulation NMS or Rule 201 of Regulation SHO. Rule 11.6(l)
sets forth the re-pricing instructions currently available to Users
with regard to Regulation NMS compliance--Price Adjust, Hide Not Slide,
and Routed and Returned Re-Pricing, and with regard to Regulation SHO
compliance--Short Sale Price Adjust and Short Sale Price Sliding. The
Exchange now proposes to amend its re-pricing instructions to
streamline the re-pricing options available to Users in order to align
Exchange functionality with that of BATS.
Re-Pricing Instructions To Comply With Rule 610(d) of Regulation NMS
    The Exchange proposes to amend its re-pricing instructions to
comply with Rule 610(d) of Regulation NMS as follows: (i) Amend the
Price Adjust instruction to enable Users to elect that their order be
adjusted multiple times in response to changes in the NBBO; and (ii)
delete Routed and Returned Re-Pricing.
    Routed and Returned Re-Pricing (Rule 11.6(l)(1)(B)(i)). The
Exchange proposes to delete the Routed and Returned Re-Pricing
instruction under Rule 11.6(l)(1)(B)(i). Pursuant to current Exchange
Rules and Functionality, under the Routed and Returned Re-Pricing
instruction, a Limit Order that is returned to the EDGX Book after
being routed to an away Trading Center with a limit price that would
cause the order to be a Locking Quotation or Crossing Quotation will be
displayed by the System on the EDGX Book at a price that is one Minimum
Price Variation lower (higher) than the Locking Price \29\ for orders
to buy (sell), will be ranked at the midpoint of the NBBO with
discretion to execute at the Locking Price. Each time the NBBO is
updated, a buy (sell) order subject to the Routed and Returned Re-
Pricing instruction will be further adjusted so that it continues to be
displayed by the System on the EDGX Book at one Minimum Price Variation
below (above) the NBO (NBB) and will be ranked at the updated midpoint
of the NBBO with discretion to execute at the Locking Price until the
price of such order reaches its limit price, at which point it will
remain displayed by the System on the EDGX Book at that price and cease
to be further adjusted pursuant to the Routed and Returned Re-Pricing
instruction. The order will receive a new time stamp when it is
returned to the EDGX Book and each time it is subsequently re-ranked.
---------------------------------------------------------------------------

    \29\ The term ``Locking Price'' is defined as ``the price at
which an order to buy (sell), that if displayed by the System on the
EDGX Book, either upon entry into the System, or upon return to the
System after being routed away, would be a Locking Quotation.'' See
Exchange Rule 11.6(i).
---------------------------------------------------------------------------

    Upon completion of the migration of the Exchange to BATS
technology, Limit Orders that are returned to the EDGX Book after being
routed to an away Trading Center with a limit price that would cause
the order to be a Locking Quotation or Crossing Quotation will be
subject to the Exchange's standard re-pricing instructions; i.e.,
automatically defaulted by the System to the Price Adjust Re-Pricing
instruction, unless the User affirmatively elects the Cancel Back
instruction or the Hide Not Slide instruction. The Exchange also
proposes to remove a reference to the Routed and Returned Re-Pricing
instruction from Rule 11.6(l)(1)(B).
    Price Adjust Re-Pricing (Rule 11.6(l)(1)(A)). Under the Price
Adjust instruction, where a buy (sell) order would be a Locking
Quotation or Crossing Quotation if displayed by the System on the EDGX
Book at the time of entry, the order will be displayed and ranked \30\
at a price that is one Minimum Price Variation lower (higher) than the
Locking Price. The order will be displayed and ranked by the System on
the EDGX Book at the Locking Price if: (i) The NBBO changes such that
the order, if displayed at the Locking Price, would not be a Locking
Quotation or Crossing Quotation, including where an ISO with a TIF
instruction of Day is entered into the System and displayed on the EDGX
Book on the same side of the market as the order at a price that is
equal to or more aggressive than the Locking Price.\31\ An order re-
priced as set forth above would not be subject to further re-ranking
and will be displayed by the System on the EDGX Book at the Locking
Price until executed or cancelled by the User. The order will receive a
new time stamp at the time it is re-ranked.
---------------------------------------------------------------------------

    \30\ For purposes of the description of the re-pricing
instructions under proposed Rule 11.6(l), the terms ``ranked'' and
``priced'' are synonymous and used interchangeably.
    \31\ See Division of Trading and Markets: Response to Frequently
Asked Questions Concerning Rule 611 and Rule 610 of Regulation NMS,
Question 5.02, available at http://www.sec.gov/divisions/marketreg/nmsfaq610-11.htm (last visited March 6, 2014).
---------------------------------------------------------------------------

    The Exchange proposes to amend the Price Adjust instruction to
provide Users with additional flexibility by enabling them to elect
that their order be adjusted multiple times in response to changes in
the NBBO. The ranked and displayed prices of an order subject to the
Price Adjust instruction will only be adjusted once, unless the User
elects that the order be adjusted multiple times in response to changes
to the prevailing NBBO. Unless a User has elected the multiple re-
pricing option, the order would not be subject to further re-ranking
and will be displayed on the EDGX Book at the Locking Price until
executed or cancelled by the User. An order subject to the multiple re-
pricing option will be further re-ranked and re-displayed to the extent
it can permissibly be ranked and displayed at a more aggressive price
based on changes to the prevailing NBBO.

Multiple re-pricing pursuant to Price Adjust would be optional and
would have to be explicitly selected by a User before it will be
applied. Orders subject to multiple re-pricing for Price Adjust will be
permitted to move all the way back to their most aggressive price,
whereas orders subject to Price Adjust may not be adjusted to their
most aggressive price, depending upon market conditions and the limit
price of the order upon entry. The Exchange notes that this
functionality is identical to the operation of BATS Rule
11.9(g)(2).\32\ The Exchange does not propose to amend any other aspect
of the Price Adjust instruction.
---------------------------------------------------------------------------

    \32\ See Securities Exchange Act Release Nos. 73359 (October 15,
2014), 79 FR 63003 (October 21, 2014) (SR-BATS-2014-038) (Order
Granting Approval of Proposed Rule Change to Rule 11.9 of the BATS
Exchange, Inc. to Add Price Adjust Functionality); and 73366
(October 15, 2014), 79 FR 62993 (October 21, 2014) (SR-BYX-2014-019)
(Order Granting Approval of Proposed Rule Change to Rule 11.9 of the
BATS Y-Exchange, Inc. to Add Price Adjust Functionality).
---------------------------------------------------------------------------

    As an example of multiple re-pricing for Price Adjust assume the
Exchange has a posted and displayed bid to buy 100 shares of a security
priced at $10.10 per share and a posted and displayed offer to sell 100
shares at $10.14 per share. Assume the NBBO is $10.10 by $10.12. If the
Exchange receives a non-routable bid to buy 100 shares at $10.13 per
share, the Exchange would rank and display the order to buy at $10.11
because displaying the bid at $10.13 would cross an external market's
Protected Offer to sell for $10.12. If the NBO then moved to $10.13,
the Exchange would un-slide the bid to buy and rank and display it at
$10.12. Under existing Price Adjust functionality, the Exchange does
not further adjust the ranked or displayed price following this un-
slide. However, under multiple re-pricing for Price Adjust if the NBO
then moved to $10.14, the Exchange would un-slide the bid to buy and
rank and display it at its full limit price of $10.13.
Re-Pricing Instructions To Comply With Rule 201 of Regulation SHO
    The Exchange proposes to amend its Re-Pricing instructions to
comply with Rule 201 of Regulation SHO by deleting Short Sale Price
Adjust and Short Sale Price Sliding and adopting a new, streamlined
rule to align with BATS Rule 11.9(g)(5).
    Current Functionality. The Exchange currently offers two re-pricing
instructions to comply with Rule 201 of Regulation SHO--Short Sale
Price Adjust and Short Sale Price Sliding. Under the Short Sale Price
Adjust instruction, an order to sell with a Short Sale instruction will
be ranked and displayed by the System on the EDGX Book at the Permitted
Price. Following the initial ranking, the order will, to the extent the
NBB declines, continue to be re-ranked and displayed by the System on
the EDGX Book at the Permitted Price down to the order's limit price.
The Short Sale Price Sliding instruction operates similarly to the
Short Sale Price Adjust instruction; except that after its initial
ranking, the order will, to the extent the NBB declines, be re-ranked
and displayed by the System on the EDGX Book one additional time at a
price that is equal to the NBB at the time the order was received by
the System. In both cases, the order to sell with a Short Sale
instruction will receive a new time stamp each time it is re-ranked.
    Proposed Functionality. The Exchange proposes to delete the Short
Sale Price Adjust and Short Sale Price Sliding and adopt a new,
streamlined rule to align with BATS Rule 11.9(g)(5). Under the amended
Rule 11.6(l)(2), an order to sell with a Short Sale instruction that,
at the time of entry, could not be executed or displayed in compliance
with Rule 201 of Regulation SHO will be re-priced by the System at the
Permitted Price. BATS Rule 11.9(g)(5) states that the default short
sale re-pricing process will only re-price an order upon entry, while
amended Rule 11.6(l)(2) will also permit it be re-priced one additional
time to reflect a decline in the NBB. This is similar to the Exchange's
Short Sale Price Sliding under Rule 11.6(l)(2)(B) which states that an
order may be re-priced one additional time to reflect a decline in the
NBB.
    As proposed, depending upon the instructions of a User, to reflect
declines in the NBB the System will continue to re-price and re-display
a short sale order at the Permitted Price down to the order's limit
price. In the event the NBB changes such that the price of an order
with a Non-Displayed instruction subject to Rule 201 of Regulation SHO
would be a Locking Quotation or Crossing Quotation, the order will
receive a new time stamp, and will be re-priced by the System to the
mid-point of the NBBO. Like the Short Sale Price Adjust process that is
to be decommissioned, an order to sell with a Short Sale instruction
and a Price Adjust instruction that is re-priced will be ranked at the
Permitted Price. In addition, like the Short Sale Price Sliding process
that the Exchange proposes to decommission, an order to sell with a
Short Sale instruction and a Hide Not Slide instruction that is re-
priced will be ranked at the mid-point of the NBBO.
    Like BATS Rule 11.9(g)(5), amended Rule 11.6(l)(2) would state
that: (i) When a Short Sale Circuit Breaker is in effect, the System
will execute a sell order with a Displayed and Short Sale instruction
at the price of the NBB if, at the time of initial display of the sell
order with a Short Sale instruction, the order was at a price above the
then current NBB; (ii) orders with a Short Exempt instruction will not
be subject to re-pricing under amended Rule 11.6(l)(2); and (iii) the
re-pricing instructions to comply with Rule 610(d) of Regulation NMS
will be continue to be ignored for an order to sell with a Short Sale
instruction when a Short Sale Circuit Breaker is in effect and the re-
pricing instructions to comply with Rule 201 of Regulation SHO under
this Rule will apply.
Re-Pricing of Orders With a Non-Displayed Instruction and Odd Lot
Orders (Rule 11.6(l)(3))
    Rule 11.6(l)(3) currently sets forth the re-pricing process for
orders with a Non-Displayed instruction priced better than the midpoint
of the NBBO. The Exchange proposes to expand this rule to include the
re-pricing of Odd Lot Orders priced better than the midpoint of the
NBBO. As amended, both an order with a Non-Displayed instruction or an
order with an Odd Lot size that is priced better than the midpoint of
the NBBO will be ranked at the midpoint of the NBBO with discretion to
execute to its limit price. For securities priced equal to or greater
than $1.00 where the midpoint of the NBBO is in an increment smaller
than $0.01, an order buy (sell) with an Odd Lot size and a Displayed
instruction priced better than the midpoint of the NBBO will be
displayed at the next full penny increment below (above) the midpoint
of the NBBO. The price of the order is automatically re-ranked by the
System in response to changes in the NBBO until it reaches its limit
price. A new time stamp is created for the order each time the midpoint
of the NBBO changes. Pursuant to Rule 11.9, all orders with a Non-
Displayed instruction and orders with an Odd Lot size that are re-
ranked to the midpoint of the NBBO will retain their priority as
compared to other orders with a Non-Displayed instruction and orders
with an Odd Lot size, respectively, based upon the time such orders
were ranked at the midpoint of the NBBO. For example, assume the NBBO
is $10.00 x $10.03. If an incoming order with an Odd Lot size and a
Non-Display instruction is entered into the System to buy at $10.02, it
will be ranked by the System at $10.015 with discretion to $10.02, its
limit price. If an

incoming order with an Odd Lot size and a Display instruction is
entered into the System to buy at $10.02, it will be displayed by the
System at $10.01 and ranked by the System at $10.015 with discretion to
$10.02, its limit price.
    While a User may affirmatively elect that a buy (sell) order with a
Non-Displayed instruction Cancel Back when the order's limit price is
greater (less) than the NBO (NBB), they will be unable to do so for an
order with an Odd Lot size. In such case, the User may cancel the
order.
    Currently, orders of Odd Lot size are not displayed on the EDGX
Book and, therefore, are covered by the Rule 11.6(l)(3)'s current re-
pricing process for orders with a Non-Displayed instruction. BATS rules
do not restrict orders of Odd-Lot size from being displayed on the BATS
system. Upon migration of the Exchange onto BATS technology, orders of
Odd Lot size may be displayed on the EDGX Book but will continue to be
re-priced as described above in order to maintain the Exchange's
current handling of orders of an Odd Lot size. In addition, the
Exchange believes displaying orders of Odd Lot size in securities
priced greater than or equal to $1.00 where the midpoint of the NBBO is
in an increment smaller than $0.01, as described above, is reasonable
as it is designed to ensure the Exchange does not display an order at
an impermissible sub-penny increment in violation of Rule 612 of
Regulation NMS. Therefore, the Exchange proposes to specify that orders
of Odd Lot size will be subject to re-pricing Exchange's re-pricing
process under Rule 11.6(l)(3).
Reserve Quantity and Replenishment Amounts (Rule 11.6(m))
    Current Functionality. If the portion of the order with a Displayed
instruction is reduced to less than a Round Lot, the System will, in
accordance with the User's instruction, replenish the displayed
quantity from the Reserve Quantity by at least a single Round-Lot using
either the Random or Fixed Replenishment instructions. A new time stamp
is created for the displayed quantity of the order each time it is
replenished from the Reserve Quantity, while the Reserve Quantity
retains the time stamp of its original entry. Where the combined amount
of the displayed quantity and Reserve Quantity of an order are reduced
to less than one Round Lot, the order converts to an order with a
Displayed instruction and be treated as Displayed for purposes of
execution priority under Rule 11.9.
    Proposed Functionality. The Exchange proposes to amend Rule 11.6(m)
to align with BATS Rule 11.9(c)(1).\33\ First, the Exchange proposes to
no longer require that the displayed quantity from the Reserve Quantity
be replenished by at least a single Round-Lot. Instead, the displayed
quantity will be replenished in accordance with the replenishment
instruction the User selects. Specifically, like on BATS, Users will be
required to designate the original display quantity of an order, which
is also the amount to which an order is replenished (unless the
remainder of an order is smaller than the original displayed quantity)
under the current replenishment functionality. The Exchange refers to
this quantity as ``max floor'' in its specifications. The Exchange
proposes to add a defined term of ``Max Floor'' to Rule 11.6(m), which
would be a mandatory value entered by a User that will determine the
quantity of the order to be initially displayed by the System and will
also be used to determine the replenishment amount under both
replenishment options described below. If the remainder of an order is
less than the replenishment amount, the Exchange will replenish and
display the entire remainder of the order.
---------------------------------------------------------------------------

    \33\ See supra note 23.
---------------------------------------------------------------------------

    Second, the Exchange proposes to amend the time stamp functionality
of an order with a Reserve Quantity. Currently, when an order is
replenished from Reserve Quantity, the displayed quantity receives a
new time stamp while the Reserve Quantity retains the time stamp of its
original entry. As amended, a new time stamp will be created for the
displayed quantity and Reserve Quantity of the order each time it is
replenished from the Reserve Quantity. This is functionality is
identical to functionality set forth in BATS Rule 11.12(a)(5).\34\
---------------------------------------------------------------------------

    \34\ Id.
---------------------------------------------------------------------------

    Random Replenishment is an instruction that a User may attach to an
order with Reserve Quantity where replenishment quantities for the
order are randomly determined by the System within a replenishment
range established by the User. The Exchange proposes to minor
amendments to the operation of Random Replenishment to align with BATS
Rule 11.9(c)(1).\35\ Currently, both the actual quantity of the order
that will be initially displayed by the System on the EDGX Book and
subsequent displayed replenishment quantities are randomly determined
by the System within a replenishment range established by the User. As
amended, only the replenishment quantities for the order will be
randomly determined by the System within a replenishment range
established by the User. A User will be required to select a
replenishment value and Max Floor. The Max Floor will be the initial
quantity to be displayed. The displayed replenishment quantities will
then be determined by the System by randomly selecting a number of
shares within a replenishment range that is between: (i) The Max Floor
minus the replenishment value; and (ii) the Max Floor plus the
replenishment value. The displayed replenishment quantities randomly
determined by the System will no longer be limited to Round Lots. Nor
will the replenishment quantity be within a replenishment range that is
between the quantity around which the replenishment range is
established plus or minus the replenishment value. In addition, the
Exchange will no longer prohibit the displayed replenishment quantity
from: (i) Exceeding the remaining Reserve Quantity of the order; (ii)
from being less than a single Round Lot or greater than the remaining
unexecuted shares in the order.
---------------------------------------------------------------------------

    \35\ Id.
---------------------------------------------------------------------------

    In addition to the changes set forth above, the Exchange proposes
to modify Rule 11.10(e)(3) to state that the Max Floor set for an order
can be modified through the use of a replace message rather than
requiring a User to cancel and re-enter an order. The Exchange also
proposes to modify Rule 11.9(a)(4) to align with BATS Rule 11.12(a)(3)
\36\ to make clear that a modification to the Max Floor of an order
with a Reserve Quantity will not cause such order to lose priority.
When a replenishment occurs (based on the new Max Floor), the order
will receive a new timestamp, and thus, will have a new priority.
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    Under Fixed Replenishment, the displayed quantity of an order is
replenished for a Fixed Replenishment quantity designated by the User.
The Fixed Replenishment quantity for the order equals the initial
displayed quantity designated by the User. The Exchange proposes to
amend Rule 11.6(m) to specify that the Fixed Replenishment quantity
will be the Max Floor designated by the User. In addition, Rule 11.6(m)
will also specify that Fixed Replenishment will apply to any order for
which Random Replenishment has not been selected. Lastly, like proposed
for Random Replenishment discussed above, the Exchange will no longer
prohibit the displayed replenishment quantity from being less than a
single Round Lot or greater than the remaining unexecuted shares in the
order. As amended, Fixed

Replenishment will be identical to BATS Rule 11.9(c)(1)(B).\37\
---------------------------------------------------------------------------

    \37\ See supra note 23.
---------------------------------------------------------------------------

Super Aggressive (Rule 11.6(n)(2))
    Super Aggressive is an order instruction that directs the System to
route the order if an away Trading Center locks or crosses the limit
price of the order resting on the EDGX Book. Like BATS Rule
11.13(a)(4)(B), the Exchange proposes to also permit a User to
designate an order as Super Aggressive solely to routable orders posted
to the EDGX Book with remaining size of an Odd Lot.\38\ To the extent
the amended text of Exchange Rule 11.6(n)(2) differs from BATS Rule
11.13(a)(4)(B), such differences are necessary to conform the rule with
existing rule text, and in this case, to account for details or
descriptions currently included in BATS Rule 11.13(a)(4)(B)that are not
necessary under the structure of the Exchange's Rules.
---------------------------------------------------------------------------

    \38\ See Securities Exchange Act Release Nos. 73295 (October 3,
2014), 79 FR 61117 (October 9, 2014) (SR-BATS-2014-044) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Rules
11.13 and 21.9 of the BATS Exchange, Inc.); and 73296 (October 3,
2014), 79 FR 61121 (October 9, 2014) (SR-BYX-2014-026) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Rule
11.13 of the BATS Y-Exchange, Inc.). As amended, Exchange Rule
11.6(n)(2) only differs from BATS Rule 11.13(a)(4)(B) to extent
necessary to conform the rule with existing Exchange rule text or to
account for details or descriptions currently included in the
Exchange's Rule but not included in BATS Rule 11.13(a)(4)(B).
---------------------------------------------------------------------------

Time-In-Force (Rule 11.6(q))
    The Exchange proposes to amend its TIF instructions to align with
BATS Rule 11.9(b). To the extent the amended text of Exchange Rule
11.6(q) differs from BATS Rule 11.9(b), such differences are necessary
to conform the rule with existing Exchange rule text or to account for
details or descriptions currently included in the Exchange's Rule but
not included in BATS Rule 11.9(b). Where necessary, the Exchange has
proposed rule changes consistent with the Exchange's operation on BATS
technology, which the Exchange also believes are consistent with User
expectations of how the System operates.
    First, the Exchange proposes minor modifications to align the
definition of IOC with BATS Rule 11.9(b)(1), the most notable of which
is to specify that an order with a TIF instruction of IOC is eligible
for routing. BATS rules do not restrict an order with an IOC
instruction from being eligible for routing. In addition, permitting
orders with an IOC instruction to be eligible for routing is consistent
with BATS technology as well as with Users' expectations to use orders
with an IOC instruction in combination with available routing
functionality and strategies. As amended, an IOC would be an
instruction the User may attach to an order stating the order is to be
executed in whole or in part as soon as such order is received. The
portion not executed immediately on the Exchange or another trading
center is treated as cancelled and is not posted to the EDGX Book.
    Second, the Exchange proposes to amend the definition of the Day
TIF instruction to state that an order with a TIF instruction of Day,
if not executed, expires at the end of Regular Trading Hours and not at
the end of the specified trading session. In addition, orders with a
Day TIF instruction will be eligible for execution as soon as received
by the Exchange. Therefore, the Exchange proposes to no longer require
that any order with a Day instruction entered into the System before
the start of the specified trading session will be placed by the System
in a pending state and activated for potential execution upon the start
of that trading session. Lastly, any Day Order entered into the System
before the opening for business on the Exchange as determined pursuant
to Rule 11.1 (which is currently 6:00 a.m.), or after the closing of
Regular Trading Hours, will be rejected.
    Third, Good-`til Time will be renamed as Good-`til Day (``GTD'').
GTD will continue to be defined as an instruction the User may attach
to an order specifying the time of day at which the order expires. Any
unexecuted portion of an order with a TIF instruction of GTD will be
continue to be cancelled at the expiration of the User's specified
time, which can be no later than the close of the Post-Market Session.
A User will no longer be able to designate that an order with a GTD
instruction be cancelled at the end of a specified trading session(s).
    Lastly, the Exchange proposes to adopt two new TIF instructions
which are currently available on BATS: \39\ Good `til Extended Day
(``GTX'') and RHO. GTX will be defined as an instruction the User may
attach to an order to buy or sell which, if not executed, will be
cancelled by the close of the Post-Market Session. RHO will be defined
as an instruction a User may attach to an order designating it for
execution only during Regular Trading Hours, which includes the Opening
Process and Re-Opening Process following a halt suspension or pause.
The proposed definition of RHO under Exchange Rule 11.6(q)(6) is
substantially similar to BYX Rule 11.9(b)(7) and any differences are
necessary to conform the rule with existing Exchange rule text or to
account for details or descriptions currently included in the
Exchange's rules but not in BYX Rule 11.9(b)(7). The Exchange notes
that the proposed definition of RHO is also similar to BZX Rule
11.9(b)(7) but such rule includes additional detail not necessary in
the proposed rule because the Exchange does not have any listed
securities or a separate process for handling such listed securities
whereas BZX does.
---------------------------------------------------------------------------

    \39\ See supra note 23.
---------------------------------------------------------------------------

Rule 11.7, Opening Process
    The Exchange proposes to amend Rule 11.7 regarding the Opening
Process to align with BATS Rule 11.24 and BYX Rule 11.23.\40\ The
Exchange proposes to modify paragraph (a) to specify that buy or sell
orders that wish to participate in the Opening Process are to include a
TIF instruction of RHO and that any order that does not include a TIF
instruction of RHO will not be eligible for participation in the
Opening Process. Paragraph (a)(1) would be amended to make clear that
only orders without a TIF instruction of RHO and ISOs designated RHO
may execute against eligible Pre-Opening Session contra-side interest
resting in the EDGX Book in the time period between the start of 9:30
a.m. Eastern Time and the Exchange's Opening Process or a Contingent
Open, as described in paragraph (b) and (d).\41\ Orders with a TIF
instruction of IOC or FOK will continue to be eligible for execution
during this time period as they would be considered orders without a
TIF instruction of RHO. Paragraph (a)(1) would also state that any
unexecuted portion of an ISO that is designated RHO will be converted
into a non-ISO and be queued for participation in the Opening Process.
---------------------------------------------------------------------------

    \40\ See Securities Exchange Act Release Nos. 73473 (October 30,
2014), 79 FR 65744 (November 5, 2014) (SR-BATS-2014-037) (Order
Granting Approval of Proposed Rule Change to Establish an Opening
Process for Non-BATS-Listed Securities); and 73472 (November 5,
2014), 79 FR 65735 (October 9, 2014) (SR-BYX-2014-018) (Order
Granting Approval of Proposed Rule Change to Establish an Opening
Process). As amended, Exchange Rule 11.7 only differs from BZX Rule
11.24 and BYX Rule 11.23 to extent necessary to conform the rule
with existing Exchange rule text or to account for details or
descriptions currently included in the Exchange's Rule but not
contained in BZX or BYX rules.
    \41\ See supra note 9.
---------------------------------------------------------------------------

    Paragraph (a)(2) would be amended to state that all orders that
include a TIF instruction of RHO may participate in the Opening Process
except: Limit Orders with a Post Only instruction, the Discretionary
Range of Limit Orders, and ISOs not modified by Rule

11.7(a)(1), and orders with a Minimum Execution Quantity instruction.
Limit Orders with a Discretionary Range may participate up to their
ranked limit price for buy orders or down to their ranked limit price
for sell orders, rather than up or down to their discretionary price,
as is currently allowed. Orders with a TIF instruction of IOC or FOK
will continue to be ineligible for execution in the Opening Process as
they would not be able to also include a TIF instruction of RHO. Orders
with a Stop Price or Stop Limit Price instruction will be eligible to
participate in the Opening Process where their stop prices have been
trigged.
    Paragraph (b) defines the process by which the System will attempt
to match buy and sell orders that are executable at the midpoint of the
NBBO. The Exchange does not propose to alter this process other than to
define it as the Opening Match. In addition, the Exchange propose to
include in paragraph (b) that all ERSTP modifiers, as defined in Rule
11.10(d), will be ignored as it relates to executions occurring during
the Opening Match.
    Paragraph (d) sets forth the Exchange's Contingent Open process
that occurs when the conditions to establish the price of the Opening
Process set forth under Rule 11.7(c) do not occur by 9:45:00 a.m.
Eastern Time. In such case, orders will be placed on the EDGX Book,
routed, cancelled, or executed in accordance with the terms of the
order. The Exchange proposes to state under paragraph (d) that the
orders will be handled in time sequence, beginning with the order with
the oldest time stamp. The Exchange also proposes to remove the
prohibition from paragraph (b) that MidPoint Match (``MPM'') Orders, as
defined in Rule 11.8(d), will not be eligible for execution until the
conditions set forth under Rule 11.7(c) above for determining the price
of the Opening Process have been met. MPM Orders are currently only
eligible for execution during the Regular Session. As discussed in more
detail below, the Exchange proposes to enable MPM Orders to be also
eligible for execution during the Pre-Opening Session and Post Closing
Session. Therefore, the Exchange proposes to remove this remove this
restriction on MPM Orders from Rule 11.7(d).
    Paragraph (e) or Exchange Rule 11.7 states that re-openings after a
halt, suspension or pause will occur at the midpoint of the: (i) First
NBBO subsequent to the first reported trade on the listing exchange
following the resumption of trading after a halt, suspension, or pause;
or (ii) then prevailing NBBO when the first two-sided quotation
published by the listing exchange following the resumption of trading
after a halt, suspension, or pause if no first trade is reported by the
listing exchange within one second of publication of the first two-
sided quotation by the listing exchange. The Exchange proposes to add
additional language to paragraph (e) to align with BATS Rule 11.24 and
BYX Rule 11.23. First, the Exchange proposes to specify that while a
security is subject to a halt, suspension, or pause in trading, the
Exchange will accept orders eligible pursuant to paragraph (a)(2)
described above for queuing prior to the resumption of trading in the
security for participation in the Re-Opening Process. In addition,
proposed paragraph (e)(2) would specify that the Re-Opening Process
will occur in the same manner described in paragraphs (a)(2) and (b) of
Rule 11.7, with the following exceptions: (1) Orders without a TIF
instruction of RHO will be eligible for participation in the Re-Opening
Process, but orders that include a TIF instruction of IOC or FOK, a
Post Only instruction or Minimum Execution Quantity instruction will be
cancelled or rejected, as applicable, and any ISO that does not include
a TIF instruction of IOC or FOK will be converted into a non-ISO and be
queued for participation in the Re-Opening Process. Proposed paragraph
(e)(2) would state that where neither of the conditions required to
establish the price of the Re-Opening Process in paragraph (1) above
have occurred, the security may be opened for trading at the discretion
of the Exchange. Where the security is opened by the Exchange subject
to this discretion, orders will be handled in the same manner described
in paragraph (d) regarding a Contingent Open. Proposed paragraphs
(e)(1)-(2) would be substantially similar to the functionality set
forth in BATS Rule 11.24(e)(1)-(2) and BYX Rule 11.23(e)(1)-(2).
Rule 11.8, Order Types
    The Exchange proposes to amend the order types set forth under Rule
11.8 to align their operation with existing BATS Rule and
functionality.
    Market Orders (Rule 11.8(a)). The Exchange proposes to amend
paragraph (a)(2) to state that Market Orders may also include a TIF
instruction of RHO and any portion of a Market Order with a TIF
instruction of RHO will be cancelled immediately following the Opening
or Re-Opening Process in which it is not executed, unless it is
eligible to be displayed on the EDGX Book pursuant to Rule 11.8(a)(4).
A Market Order being canceled immediately following the Opening or Re-
Opening Process if not executed is a natural extension of the Opening
Process. Exchange Rule 11.7(b) states that upon conclusion of the
Opening Process, any remaining orders will be placed on the EDGX Book,
cancelled, executed, or routed to an away in accordance with Rule
11.11. As a result, the Market Order will be cancelled unless it is
eligible to be displayed on the EDGX Book pursuant to Rule 11.8(a)(4).
    Under current Rule 11.10(a)(3)(A), where a non-routable buy (sell)
Market Order is entered into the System and the NBO (NBB) is greater
(less) than the Upper (Lower) Price Band, such order will be posted by
the System to the EDGX Book and priced at the Upper (Lower) Price Band,
unless (i) the order includes a TIF instruction of IOC or FOK, in which
case it will be cancelled if not executed, or (ii) the User entered a
Cancel Back instruction. The Exchange proposes to specify, consistent
with BATS Rule 11.9(a)(2),\42\ that a Market Order to buy (sell) that
is posted by the System to the EDGX Book and displayed at the Upper
(Lower) Price Band will be re-priced and displayed at the Upper (Lower)
Price Band if Price Bands move such that the price of the resting
Market Order to buy (sell) would be above (below) the Upper (Lower)
Price Band or if the Price Bands move such that the order is no longer
posted and displayed at the most aggressive permissible price. The
System shall re-price such displayed interest to the most aggressive
permissible price until the order is executed in its entirety or
cancelled. In addition, the amended rule would state that a Market
Order that includes both a TIF instruction of RHO and a Short Sale
instruction that cannot be executed because of the existence of a Short
Sale Circuit Breaker will be posted and displayed by the System to the
EDGX Book and priced in accordance with the Short Sale Re-Price
instruction described in Rule 11.6(l)(2).
---------------------------------------------------------------------------

    \42\ See Securities Exchange Act Release Nos. 73875 (December
18, 2014) (SR-BATS-2014-068) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Rules 11.0(a)(2) and
11.18(e) of the BATS Exchange, Inc.); and 73874 (December 18, 2014)
(SR-BYX-2014-039) (Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change to Rules 11.0(a)(2) and 11.18(e) of the BATS Y-
Exchange, Inc.).
---------------------------------------------------------------------------

    Currently, with the exception of a Market Order with a Destination-
on-Open instruction, any portion of a Market Order that would execute
at a price more than the greater of $0.50 or 5 percent worse than the
consolidated last sale as published by the responsible

single plan processor at the time the order is entered into the System
will be cancelled. As amended, such order will be cancelled where they
would execute at a price more than $0.50 or 5 percent worse than the
NBBO at the time the order initially reaches the Exchange, whichever is
greater. This is identical to BATS Rule 11.9(a)(2).
    Limit Orders (Rule 11.8(b)). The Exchange proposes to state that a
Limit Order may also include a TIF instruction of RHO or GTX, in
addition to IOC, FOK, Day or GTD. In addition, Limit Orders with a TIF
instruction of IOC that do not include a Book Only \43\ instruction and
will be eligible for routing away pursuant to Rule 11.11, while Limit
Orders with a TIF instruction of FOK will not. This is designed to
provide additional detail regarding the operation of Limit Order and is
consistent with BATS Rule 11.13(a)(2), which states, in sum, that
``[w]ith respect to an order that is eligible for routing, the System
will designate orders as IOCs and will cause such orders to be routed
to one or more Trading Centers.''
---------------------------------------------------------------------------

    \43\ Book Only is an order instruction stating that an order
will be matched against an order on the EDGX Book or posted to the
EDGX Book, but will not route to an away Trading Center. See EDGX
Rule 11.6(n)(3).
---------------------------------------------------------------------------

    Rule 11.8(b)(11) describes the application of the re-pricing
instruction to comply with Regulation SHO to Limit Orders. The Exchange
proposes to amend this paragraph to reflect the decommissioning of
Short Sale Price Adjust and Short Sale Price Sliding in order to align
and streamline its short sale pricing functionality with BATS Rule
11.9(g)(5) with no substantive differences from existing BATS Rules or
functionality. The Exchange also proposes to delete Rule 11.8(b)(12)
regarding the re-pricing of Routed and Returned orders as this
functionality will not be available upon the Exchange being migrated to
BATS technology as discussed above. Lastly, the Exchange proposes to
renumber Rule 11.8(b)(13) regarding the re-pricing of non-displayed
orders as 11.8(b)(12) and rename it ``Re-Pricing of Non-Displayed Limit
Orders and Limit Orders of Odd Lot Size'' and to make minor amendments
to correspond to the re-pricing of orders of Odd Lot size discussed
above.
    ISOs (Rule 11.8(c)). The Exchange proposes to state that an ISO may
also include a TIF instruction of RHO or GTX, in addition to IOC, Day
or GTD. The Exchange also proposes to amend Rule 11.8(c) to reflect the
ISO with a Post Only and TIF instruction of GTD, GTX, or Day will no
longer be eligible for the Re-Pricing Instructions to Comply with Rule
610 of Regulation NMS or Rule 201 of Regulation SHO. Also, as amended,
an ISO that includes a Post Only instruction and a TIF instruction of
GTD, GTX, or Day will be cancelled if the System is displaying orders
at the Locking Price at the time of entry unless such order removes
liquidity pursuant to current Rule 11.6(n)(4), which governs the
execution of orders with a Post Only instruction against resting
liquidity on the EDGX Book. Such orders that also include a Short Sale
instruction that cannot be executed or displayed at their limit price
at the time of entry because of the existence of a Short Sale Circuit
Breaker will also be cancelled. This proposed rule change is
representative of additional detail with regard to the re-pricing of
ISOs that, if displayed on the EDGX Book, would be a Locking or
Crossing Quotation in the Exchange's rules. Cancelling ISOs in the
above situations is reasonable because ISOs would no longer be eligible
for the Re-Pricing Instructions to comply with Rule 610 of Regulation
NMS or 201 of Regulation SHO, thereby ensuring the Exchange does not
post an order that would lock or cross the market or violate Rule 201
[sic] Regulation SHO consistent with BATS functionality. The Exchange
notes, however, that absent a Short Sale Circuit Breaker being in
effect, an ISO that includes a Post Only instruction and TIF
instruction of GTD, GTX, or Day will remove liquidity when the System
is displaying an order at the Locking price if the value of such
execution equals or exceeds the value of such execution if the order
instead posted to the EDGX Book and provided liquidity, including
applicable fees and rebates, under current Rule 11.6(n)(4).
    MPM Orders (Rule 11.8(d)). The Exchange proposes amend Rule 11.8(d)
to reflect the operation of MPM orders once the Exchange is migrated
onto BATS technology. As amended, the rule would specify that an MPM
Order will not be eligible for execution when an NBBO is not available.
In such case, an MPM Order would rest on the EDGX Book and would not be
eligible for execution in the System until an NBBO is available. The
Exchange believes MPM Orders being ineligible for execution when no
NBBO exists is reasonable and consistent with a User's intent and the
purpose of the order type. A User entering an MPM Order is doing so to
receive an execution at the mid-point of the NBBO and a mid-point does
not exist in the absence of an NBBO. The MPM order will receive a new
time stamp when an NBBO becomes available and a new midpoint of the
NBBO is established. In such case, all MPM orders that are ranked at
the midpoint of the NBBO will retain their priority as compared to each
other based upon the time such orders were initially received by the
System.
    The Exchange proposes to state that an MPM Order may also include a
TIF instruction of RHO or GTX, in addition to IOC, FOK, Day or GTD. In
addition, Users will be able to enter MPM Orders as an Odd Lot, in
addition to a Round Lot or Mixed Lot. Currently, MPM Orders may only be
executed during the Regular Session. Upon migration of the Exchange
onto BATS technology, MPM Order will also be eligible for execution
during the Pre-Opening Session and Post Closing Session. While MPM
Orders may be submitted to be executed during the Opening Process
described in Rule 11.7(c), any Minimum Execution Quantity instruction
on an MPM Order will not be applied during the Opening Process. Lastly,
MPM Orders will be eligible for execution during the Regular Session in
the event of a Contingent Open as described in Rule 11.7(d), regardless
of whether the conditions set forth under Rule 11.7(c) for determining
the price of the Opening Process have been met. Lastly, the Exchange
proposes to specify that MPM Orders may include a Book Only
instruction.
    NBBO Offset Peg Order (Rule 11.8(e)). The Exchange proposes to
change the name of the NBBO Offset Peg Order to the Market Maker Peg
Order, which is the equivalent order type on BATS.\44\ A Market Maker
Peg Order is a Limit Order that, upon entry or at the beginning of
Regular Trading Hours, as applicable, will be automatically priced by
the System at the Designated Percentage \45\ away from the last
reported sale, rather than then current NBO (in the case of an order to
buy) or NBB (in the case of an order to sell), as is currently the
case. A Market Maker Peg order may also include a TIF instruction of
RHO or GTD, in addition to Day. Market Maker Peg Orders may also be
entered as Odd Lots, in addition to Round Lots and Mixed Lots.
---------------------------------------------------------------------------

    \44\ See BATS Rule 11.9(c)(16).
    \45\ The term Designated Percentage is defined in Exchange Rule
11.20(d)(2)(D) and (E).
---------------------------------------------------------------------------

    The Exchange also proposes to add definitions for Designated
Percentage and Defined Limit under Rule 11.8(e) to account for
securities priced below $1. For purposes of Market Maker Peg Order
pricing, the Designated Percentage shall be the same as set forth in
Rules 11.20(d)(2)(D) and 11.20(d)(2)(E), except that the Designated
Percentage for securities priced below $1 as set forth in

Rule 11.20(d)(2)(E) shall be 28%. For purposes of Market Maker Peg
Order pricing, the Defined Limit shall be the same as set forth in
Rules 11.20(d)(2)(F) and 11.20(d)(2)(G), except that the Defined Limit
for securities priced below $1 as set forth in Rule 11.20(d)(2)(G)
shall be 29.5%. The proposed changes to Rule 11.8(e) are similar to the
functionality set forth in BATS Rule 11.9(c)(16).
    Route Peg Order (Rule 11.8(f)). The Exchange proposes to change the
name of the Route Peg Order to the Supplemental Peg Order, which is the
equivalent order type on BATS.\46\ The Exchange also proposes to
specify that a Supplemental Peg Order to buy (sell) will not be
eligible for execution when an NBB (NBO) is not available. In such
case, a Supplemental Peg Order to buy (sell) would rest on the EDGX
Book and would not be eligible for execution in the System until an NBB
(NBO) exists. This functionality is similar to that proposed for the
MPM Order described above, and is based upon BATS Rule 11.9(c)(19). The
Exchange believes Supplemental Peg Orders being ineligible for
execution when an NBB or NBO is not available is reasonable and
consistent with a User's intent and the purpose of the order type. A
User entering a Supplemental Peg Order is doing so to receive an
execution at the NBBO against an order that is in the process of being
routed away. If no NBBO exists, there is no price at which to execute
the Supplemental Peg Order.
---------------------------------------------------------------------------

    \46\ See BATS Rule 11.9(c)(19).
---------------------------------------------------------------------------

    A Supplemental Peg Order may include a TIF instruction of GTX or
RHO, in addition to GTD or Day. Supplemental Peg Orders may also be
entered as Odd Lots, in addition to Round Lots and Mixed Lots. As
amended, a Supplemental Peg Order will be eligible for execution during
the Pre-Opening Session, Regular Session, and Post-Closing Session.
Therefore, the Exchange proposes to remove the restriction that
Supplemental Peg Orders: (i) May only be entered, cancelled, and
cancelled/replaced prior to and during the Regular Session; (ii) are
only eligible for execution during the Regular Session, but not until
such time that orders in that security during the Regular Session can
be posted by the System to the EDGX Book. Any remaining unexecuted
Supplemental Peg Orders are cancelled at the conclusion of the Regular
Session. Supplemental Peg Orders will continue to be ineligible for
execution in the Opening Process. The proposed changes to Rule 11.8(f)
regarding Route Peg Orders are similar to BATS Rule 11.9(c)(19).
Rule 11.9, Priority of Orders
    The Exchange proposes to amend Rule 11.9 to align with BATS
functionality and BATS Rule 11.12 regarding how orders with certain
instructions are to be ranked by the System: (i) At a price other than
the midpoint of the NBBO; (ii) at the midpoint of the NBBO; and (iii)
where buy (sell) orders utilize instructions that cause them to be
ranked by the System upon clearance of a Locking Quotation.\47\ The
proposed amendment to Rules 11.9(a)(4) and (6) are described under the
amendments to Reserve Quantity discussed above.
---------------------------------------------------------------------------

    \47\ For purposes of priority under proposed Rule 11.9(a)(2)(A),
(B) and (C), the Exchange notes that orders of Odd Lot, Round Lot,
or Mixed Lot size are treated equally.
---------------------------------------------------------------------------

    Prices Other than the Midpoint of the NBBO. Rule 11.9(a)(2)(A)
currently states that the System will execute equally priced trading
interest within the System at prices other than at the midpoint of the
NBBO or where orders are re-ranked at the Locking Price after a Locking
Quotation clears in time priority in the following order: (i) The
portion of a Limit order with a Displayed instruction; (ii) Limit
Orders with a Non-Displayed instruction and the Reserve Quantity of
Limit Orders; (iii) Limit Orders executed within their Discretionary
Range; and (iv) Route Peg Orders. As amended, the System will rank
equally priced trading interest in such circumstances in the following
order: (i) The portion of a Limit Order with a Displayed instruction;
(ii) Limit Orders with a Non-Displayed instruction; (iii) Orders with a
Pegged and Non-Displayed instruction; (iv) Reserve Quantity of Limit
Orders; (v) Limit Orders executed within their Discretionary Range; and
(vi) Supplemental Peg Orders. Orders will be substantially ranked in
same order except that, as amended, orders with a Pegged and Non-
Displayed instruction will be distinguished from and placed behind
Limit Orders with a Non-Displayed Instruction. In turn, the Reserve
Quantity of Limit Orders will be separated from and placed behind Limit
Orders with a Non-Displayed instruction and orders with a Pegged and
Non-Displayed instruction. The Exchange believes it is reasonable to
rank orders with a Pegged and Non-Displayed instruction behind Limit
Orders with a Displayed instruction and Limit Orders with a Non-
Displayed instruction because this priority sequence incentivizes the
use of displayed liquidity on the EDGX Book as well as orders that
provide liquidity at a specific limit price. These proposed changes are
substantially similar to BATS functionality and Rules 11.12(a)(2). The
Exchange notes that BATS Rule 11.12(a)(2) does not currently specify
that BATS Pegged Orders referenced in the priority rule are limited to
Pegged Orders that are not displayed on BATS, however, the Exchange
represents that BATS technology does treat Pegged Orders displayed on
BATS as displayed orders and that only Pegged Orders that are not
displayed on BATS are afforded later priority than displayed orders and
other non-displayed orders. Thus, the Exchange's proposal (which would
limit the later priority treatment to orders with a Pegged instruction
and a Non-Displayed instruction) is consistent with BATS technology.
    At the Midpoint of the NBBO. Rule 11.9(a)(2)(B) currently states
that the System will execute trading interest priced at the midpoint of
the NBBO within the System in time priority in the following order: (i)
Limit Orders to which the Hide Not Slide or Routed And Returned Re-
Pricing instruction has been applied; (ii) MidPoint Match Orders; (iii)
Limit Orders with a Non-Displayed instruction; and (iv) Limit Orders
executed within their Discretionary Range. As amended, the System will
rank equally priced trading interest in such circumstances in the
following order: (i) Limit Orders to which the Hide Not Slide
instruction has been applied; (ii) MidPoint Match Orders; (iii) Limit
Orders with a Non-Displayed instruction; (iv) Orders with a Pegged
instruction; (v) Reserve Quantity of Limit Orders; and (vi) Limit
Orders executed within their Discretionary Range. Thus, orders will be
substantially ranked in same order except that, as amended, orders with
a Pegged instruction will be distinguished from and placed behind Limit
Orders with a Non-Displayed instruction. In turn, the Reserve Quantity
of Limit Orders will be separated from and placed behind Limit Orders
with a Non-Displayed instruction and orders with a Pegged instruction.
In addition, the Exchange proposes to remove a reference to the Routed
and Returned Re-Pricing instruction because, as described above, it
will be decommissioned upon migration of the Exchange onto BATS
technology.
    Orders Re-Ranked upon Clearance of a Locking Quotation. The
Exchange does not propose to make any changes to the ranking of orders
that are re-ranked upon clearance of a Locking Quotation other than to
remove a

reference to the Routed and Returned Re-Pricing instruction because, as
described above, it will be decommissioned upon migration of the
Exchange onto BATS technology.
Rule 11.10, Order Execution
    Rule 11.10(a)(2) summarizes the Exchange compliance with Regulation
NMS. The rule states that for any execution to occur during Regular
Trading Hours, the price must be equal to or better than the Protected
NBBO, 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 or the Post-
Closing Session, the price must be equal to or better than the highest
bid or lowest offer in the EDGX Book or disseminated by the responsible
single plan processor, unless the order is marked ISO. To align Rule
11.10(a)(2) with BATS Rule 11.13, the Exchange proposed to further
state that such executions may occur during the Pre-Opening Session or
the Post-Closing Session where a Protected Bid is crossing a Protected
Offer. A User may, in such circumstance, instruct the Exchange to
cancel any incoming order from such User in the event a Protected Bid
is crossing a Protected Offer.
    To further align Exchange Rule 11.10(a)(2) with BATS Rule 11.13,
Rule 11.10(a)(2) will state that notwithstanding the above, 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, the Exchange 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 would execute at a
price more than the greater of 5 cents or 0.5 percent lower than the
highest Protected Bid.
    The Exchange also proposes to amend Rule 11.12(e)(3) to mirror BATS
Rule 11.9(e)(3). Rule 11.12 currently states that only the price and
quantity terms of the order may be changed by a Replace Message
(including changing a Limit Order to a Market Order). As amended, Rule
11.12 would also allow the Stop Price, the sell long indicator, Short
Sale instruction, and Max Floor to be changed by a Replace Message.
Rule 11.11, Routing to Away Trading Centers
    The Exchange proposes to amend Rule 11.11, which describe the
Exchange's routing options align with BATS Rule 11.13.\48\ In doing so,
the Exchange proposes to eliminate obsolete routing options, modify
certain routing options, and add to Rule 11.11 to offer many of the
same routing options offered by BATS. The Exchange notes that the
proposed rule text is based on the Rule 11.13 of BATS and is different
only to the extent necessary to conform to the Exchange's current
rules. The Exchange believes that it is appropriate to amend its
routing options as described below to ensure consistency with BATS Rule
upon migration of the Exchange onto BATS technology.
---------------------------------------------------------------------------

    \48\ The Exchange notes that BATS recently amended its Rule
11.13 to harmonize certain of its routing options with the Exchange.
See supra note 38.
---------------------------------------------------------------------------

    Deletions. The Exchange also proposes to delete from Rule 11.11 the
following routing options that will be decommissioned upon migration of
the Exchange onto BATS technology: ROBA, ROBX, ROBY, ROPA, IOCX, IOCT,
and SWPC. Each of these routing options are described below.
     ROBA. The Exchange proposes to delete the ROBA routing
option under which an order checks the System for available shares and
then is sent, with a Time-in-Force instruction of IOC, to BATS. If
shares remain unexecuted after routing, they are posted on the EDGX
Book, unless otherwise instructed by the User.
     ROBX. The Exchange proposes to delete the ROBX routing
option under which an order checks the System for available shares and
then is sent, with a Time-in-Force instruction of IOC, to Nasdaq BX
Exchange. If shares remain unexecuted after routing, they are posted on
the EDGX Book, unless otherwise instructed by the User.
     ROBY. The Exchange proposes to delete the ROBY routing
option under which an order checks the System for available shares and
then is sent, with a Time-in-Force instruction of IOC, to BYX. If
shares remain unexecuted after routing, they are posted on the EDGX
Book, unless otherwise instructed by the User.
     ROPA. The Exchange proposes to delete the ROPA routing
option under which an order checks the System for available shares and
then is sent, with a Time-in-Force instruction of IOC, to NYSE Arca. If
shares remain unexecuted after routing, they are posted on the EDGX
Book, unless otherwise instructed by the User.
     IOCX. The Exchange proposes to delete the IOCX routing
option under which an order checks the System for available shares and
then is sent, with a Time-in-Force instruction of IOC, to EDGA. If
shares remain unexecuted after routing, they are posted on the EDGX
Book, unless otherwise instructed by the User.
     IOCT. The Exchange proposes to delete the IOCT routing
option under which an order checks the System for available shares and
then is sent to destinations on the System routing table. If shares
remain unexecuted after routing, they are sent, with a Time-in-Force
instruction of IOC, to EDGA. If shares remain unexecuted after routing,
they are posted on the EDGX Book, unless otherwise instructed by the
User.
     SWPC. The Exchange proposes to delete the SWPC routing
option under which an order checks the System for available shares and
then is sent to only Protected Quotations and only for displayed size.
To the extent that any portion of the order is unexecuted, the
remainder is posted on the EDGX Book at the order's limit price. The
entire SWPC order will not be cancelled back to the User immediately if
at the time of entry there is an insufficient share quantity in the
SWPC order to fulfill the displayed size of all Protected Quotations.
The Exchange also proposes to delete a reference to SWPC in Rule
11.11(d).
    The Exchange believes that it is appropriate to eliminate the above
routing options because they will be decommissioned upon migration of
the Exchange onto BATS technology and are unlikely to be offered by the
Exchange in the near future.
    Additions. The Exchange proposes to add a Destination Specific
routing option, which is currently offered by BATS.\49\ Destination
Specific is a routing option under which an order checks the System for
available shares and then is sent to an away trading center or centers
specified by the User. The Destination Specific routing option is also
similar to the Exchange's current Destination Specified order
instruction in Rule 11.6(n)(5), in that both allow the User to select
the destination the order shall be routed to. The only differences are
that under the Destination Specific order instruction, the order is
first exposed to the EDGX Book before routing and if the order is not
executed in full after routing away will be processed by the Exchange
as described in Exchange Rule 11.10(a)(4), unless the User has provided
instructions that the order reside on the book of the relevant away
Trading Center.
---------------------------------------------------------------------------

    \49\ See BATS Rule 11.13(a)(3)(E).
---------------------------------------------------------------------------

    The Exchange also proposes to add a Post to Away routing option,
which is currently offered by BATS.\50\ Post to

Away is a routing option under which the System will route the
remainder of a routed order to and posts such order on the order book
of a destination on the System routing table as specified by the User.
The Post to Away routing option is an alternative to either cancelling
a routed order back to a User or posting such order to the BATS Book to
the extent an order is not completely filled through the routing
process. The Post to Away routing option can be combined with the
following routing options: ROUT, ROUX, and ROUE.\51\ As a result of
adding the Post to Away routing option, the Exchange proposes to amend
Rule 11.11(g)(3) to remove now redundant language that a User may
instruct that any remainder of the order may be posted to the EDGX Book
or another destination on the System routing table.
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    \50\ See BATS Rule 11.13(a)(3)(H).
    \51\ The Exchange notes that Post to Away under BATS Rule
11.13(a)(3)(H) may be combined with more routing options than are
proposed above. This is because BATS rules include additional
routing options that are eligible to be posted to an away
destination that are not currently available on the Exchange or that
are eligible to be combined with the Post to Away routing strategy.
---------------------------------------------------------------------------

    Lastly, the Exchange also proposes to specify for ROOC, ROUE, ROUT
and ROUX that the entering User may select either Route To Improve
(``RTI'') or Route To Fill (``RTF''). RTI may route to multiple
destinations at a single price level simultaneously while RTF may route
to multiple destinations and at multiple price levels simultaneously.
RTI is similar to the RTI routing option available under BYX Rule
11.13(a)(3)(G).
    Modifications. First, the Exchange proposes to modify Rule 11.11(a)
regarding Regulation SHO to reflect the elimination of Short Sale Price
Adjust and Short Sale Price Sliding discussed above, as well as to
replace the phrase replace the phrase ``the short sale price
restriction'' with the defined term ``Short Sale Circuit Breaker.'' The
later change does not change the meaning of Rule 11.11(a) and simply
ensures a consistent use of defined terms throughout the Exchange's
Rules.
    Second, the Exchange proposes to modify the following routing
options to ensure consistency with BATS Rule: ROUC, INET, ROLF, ROOC,
SWPA, and SWPB. Each of these modifications are described below.
     ROUC. ROUC is a routing option under which an order checks
the System for available shares and then is sent to destinations on the
System routing table, Nasdaq OMX BX, and NYSE. If shares remain
unexecuted after routing, they are posted on the EDGX Book. The
Exchange proposes to amend the ROUC routing option to state that any
remaining shares will not be posted to EDGX Book where the User
instructs the Exchange otherwise.
     INET. INET is a routing option under which an order will
check the System for available shares and then will be sent to Nasdaq.
If shares remain unexecuted after routing through the INET routing
option, they will be posted on the Nasdaq book. The Exchange proposes
to amend the INET routing option to state that any remaining shares
will not be posted to Nasdaq where the User instructs the Exchange
otherwise.
     ROLF. ROLF is a routing option under which an order will
check the System for available shares and then will be sent to LavaFlow
ECN. The Exchange proposes to amend the ROLF routing option to states
that any remaining shares will be cancelled unless the User instructs
otherwise.
     ROOC. ROOC is a routing option for orders that the
entering firm wishes to designate for participation in the opening, re-
opening (following a halt, suspension, or pause), or closing process of
a primary listing market (BATS, NYSE, Nasdaq, NYSE MKT, or NYSE Arca)
if received before the opening/re-opening/closing time of such market.
The Exchange proposes to amend the ROOC routing option to add BATS to
the list of primary listing markets and to specify that, due to current
system limitations, orders in BATS listed securities designated for
participation in the re-opening process on BATS following a halt,
suspension, or pause will remain on the EDGX Book and be eligible for
execution once the halt, suspension, or pause has been lifted. Lastly,
to ensure consistency with the ROOC routing option available on BATS,
the Exchange proposes to states that any remaining shares will either
be posted to the EDGX Book, executed, or routed to destinations on the
System routing table, rather than like a ROUT routing option under Rule
11.11(g)(3). The proposed modifications to the ROOC routing option is
similar to the ROOC routing option available under BYX Rule
11.13(a)(3)(N).
     SWPA. SWPA is a routing option under which an order checks
the System for available shares and then is sent to only Protected
Quotations and only for displayed size. The entire SWPA order will not
be cancelled back to the User immediately if at the time of entry there
is an insufficient share quantity in the SWPA order to fulfill the
displayed size of all Protected Quotations. The Exchange proposes to
amend the SWPA routing option to state that, rather than cancelling any
remaining unexecuted shares, those shares will be posted to the EDGX
Book at the order's limit price, unless otherwise instructed by the
User. This is consistent with BATS Rule 11.13(a)(2)(A), which states
that any unfilled balance of a Limit Order will be posted to the BATS
book.
     SWPB. SWPB is a routing option under which an order checks
the System for available shares and then is sent to only Protected
Quotations and only for displayed size. The entire SWPB order will be
cancelled back to the User immediately if at the time of entry there is
an insufficient share quantity in the SWPB order to fulfill the
displayed size of all Protected Quotations. Like as proposes for SWPA
above, the Exchange proposes to amend the SWPB routing option to state
that, rather than cancelling any remaining unexecuted shares, those
shares will be posted to the EDGX Book at the order's limit price,
unless otherwise instructed by the User. This is consistent with BATS
Rule 11.13(a)(2)(A), which states that any unfilled balance of a Limit
Order will be posted to the BATS book.
Implementation Date
    The Exchange intends to implement the proposed rule change on or
about January 12, 2015, which is the anticipated date upon which the
migration of the Exchange to the BATS technology platform will be
complete.\52\
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    \52\ Implementation of the proposed rule change on or about
January 12, 2015 is contingent upon the Commission granting a waiver
of the 30-day operative delay. 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

 2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act \53\ and further the objectives of Section
6(b)(5) of the Act \54\ because they are designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, to
foster cooperation and coordination with persons engaged in
facilitating transactions in securities, and, in general, to protect
investors and the public interest. The proposed rule change also is
designed to support the principles of Section 11A(a)(1) \55\ of the Act
in that it seeks to assure fair competition among brokers and dealers
and among exchange markets.
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 78f(b).
    \54\ 15 U.S.C. 78f(b)(5).
    \55\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

    The proposed rule changes are generally intended to add or align
certain system functionality currently offered by BATS in order to
provide a consistent technology offering for the

BGM Affiliated Exchanges. A consistent technology offering, in turn,
will simplify the technology implementation, changes and maintenance by
Users of the Exchange that are also participants on BATS. The proposed
rule changes would also provide Users with access to functionality that
is generally available on markets other than the BGM Affiliated
Exchanges and may result in the efficient execution of such orders and
will provide additional flexibility as well as increased functionality
to the Exchange's System and its Users. The proposed rule change does
not propose to implement new or unique functionality that has not been
previously filed with the Commission or is not available on BATS. The
Exchange notes that the proposed rule text is based on the BATS Rule
and is different only to the extent necessary to conform to the
Exchange's current rules. To the extent a proposed rule change is based
on an existing BATS Rule, the language of the BATS and Exchange Rules
may differ to extent necessary to conform with existing Exchange rule
text or to account for details or descriptions included in the
Exchange's Rules but not in the applicable BATS rule. Where possible,
the Exchange has mirrored BATS rules, because consistent rules will
simplify the regulatory requirements and increase the understanding of
the Exchange's operations for Members of the Exchange that are also
participants on BATS. The proposed rule change would provide greater
harmonization between the rules of the BGM Affiliated Exchanges,
resulting in greater uniformity and less burdensome and more efficient
regulatory compliance. As such, the proposed rule change would foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and would remove impediments to and perfect
the mechanism of a free and open market and a national market system.
The Exchange also believes that the proposed amendments will contribute
to the protection of investors and the public interest by making the
Exchange's rules easier to understand. Where necessary, the Exchange
has proposed language consistent with the Exchange's operations on BATS
technology, even if there are specific details not contained in the
current structure of BATS rules. The Exchange believes it is consistent
with the Act to maintain its current structure and such detail, rather
than removing such details simply to conform to the structure or format
of BATS rules, again because the Exchange believes this will increase
the understanding of the Exchange's operations for all Members of the
Exchange.
    Re-Pricing (Rule 11.6(l)). The Exchange believes that the proposed
changes to Rule 11.6(l) are consistent with Section 6(b)(5) of the
Act,\56\ as well as Rule 610 of Regulation NMS \57\ and Rule 201 of
Regulation SHO.\58\ Rule 610(d) requires exchanges to establish,
maintain, and enforce rules that require members reasonably to avoid
``[d]isplaying quotations that lock or cross any protected quotation in
an NMS stock.'' \59\ Such rules must be ``reasonably designed to assure
the reconciliation of locked or crossed quotations in an NMS stock,''
and must ``prohibit . . . members from engaging in a pattern or
practice of displaying quotations that lock or cross any quotation in
an NMS stock.'' \60\ Thus, the amendments to the Price Adjust
instruction proposed by the Exchange will assist Users by displaying
orders at permissible prices. Similarly, Rule 201 of Regulation SHO
\61\ requires trading centers to establish, maintain, and enforce
written policies and procedures reasonably designed to prevent the
execution or display of a short sale order at a price at or below the
current NBB under certain circumstances.
---------------------------------------------------------------------------

    \56\ 15 U.S.C. 78f(b)(5).
    \57\ 17 CFR 242.610.
    \58\ 17 CFR 242.201.
    \59\ 17 CFR 242.610(d).
    \60\ Id.
    \61\ 17 CFR 242.201.
---------------------------------------------------------------------------

    The Exchange believes that the proposed optional multiple re-
pricing for Price Adjust is consistent with Section 6(b)(5) of the
Act,\62\ as well as Rule 610 of Regulation NMS.\63\ The Exchange is not
modifying the overall functionality of Price Adjust, which, to avoid
locking or crossing quotations of other market centers, displays orders
at permissible prices while retaining a price at which the User is
willing to buy or sell, in the event display at such price or an
execution at such price becomes possible. Instead, the Exchange is
making changes to adopt an optional multiple re-pricing under Price
Adjust and align with other similar re-pricing instructions under BATS
Rule 11.9(g)(2).\64\ The Exchange also believes decommissioning the
Routed and Returned Re-Pricing option is consistent with the Act
because those Users who would wish to engage in multiple re-pricing
upon return to the Exchange may select the option multiple re-pricing
for Price Adjust as discussed above.
---------------------------------------------------------------------------

    \62\ 15 U.S.C. 78f(b)(5).
    \63\ 17 CFR 242.610.
    \64\ See supra note 32.
---------------------------------------------------------------------------

    The Exchange also believes that cancelling ISOs with a TIF
instruction of GTD, GTX, or Day and not subjecting them to the re-
pricing instructions to comply with Rule 610 of Regulation NMS or Rule
201 of Regulation SHO is consistent with Section 6(b)(5) of the
Act,\65\ as well as Rule 610 of Regulation NMS \66\ and Rule 201 of
Regulation SHO.\67\ As amended, an ISO that includes a TIF instruction
of GTD, GTX, or Day will be cancelled if the System is displaying
orders at the Locking Price at the time of entry. Such orders that also
include a Short Sale instruction that cannot be executed or displayed
at their limit price at the time of entry because of the existence of a
Short Sale Circuit Breaker will also be cancelled. Such orders are
cancelled in order to avoid a potential violation of Rule 610(d) of
Regulation NMS or Rule 201 of Regulation SHO and is, therefore,
consistent with the Act.
---------------------------------------------------------------------------

    \65\ 15 U.S.C. 78f(b)(5).
    \66\ 17 CFR 242.610.
    \67\ 17 CFR 242.201.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to its Re-Pricing
Instructions to Comply with Rule 201 of Regulation SHO are consistent
with Section 6(b)(5) of the Act,\68\ as well as Rule 201 of Regulation
SHO.\69\ The Exchange proposes to streamline and simplify its available
re-pricing instructions by deleting Short Sale Price Adjust and Short
Sale Price Sliding and adopting a new, streamlined rule to align with
BATS Rule 11.9(g)(5), with the following differences. Rule 11.6(l)(2)
states that an order to sell with a Short Sale instruction and a Price
Adjust instruction that is re-priced will be ranked at the Permitted
Price and that an order to sell with a Short Sale instruction and a
Hide Not Slide instruction that is re-priced pursuant to this paragraph
will be ranked at the mid-point of the NBBO. BATS Rule 11.9(g)(5)
states that the default short sale re-pricing process will only re-
price an order upon entry, while amended Rule 11.6(l)(2) will also
permit it be re-priced one additional time to reflect a decline in the
NBB. The Exchange's short sale price sliding will operate the same for
Users of Price Adjust on BATS while Users who select Hide Not Slide
will be ranked at the mid-point of the NBBO, like was previously
available via Short Sale Price Sliding. The proposed rule change would
provide greater harmonization between the rules of the BGM Affiliated
Exchanges, resulting in

greater uniformity and less burdensome and more efficient regulatory
compliance. As such, the proposed rule change would foster cooperation
and coordination with persons engaged in facilitating transactions in
securities and would remove impediments to and perfect the mechanism of
a free and open market and a national market system.
---------------------------------------------------------------------------

    \68\ 15 U.S.C. 78f(b)(5).
    \69\ 17 CFR 242.201.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to its Re-Pricing
of Order with a Non-Displayed Instruction Priced Better that the mid-
point of the NBBO to also include Odd Lots is consistent with Section
6(b)(5) of the Act.\70\ Doing so would provide Members with additional
specificity as to how their orders of Odd Lot size are handled, thereby
fostering cooperation and coordination with persons engaged in
facilitating transactions in securities and removing impediments to and
perfecting the mechanism of a free and open market and a national
market system. In addition, ranking orders of Odd Lot size to the mid-
point of the NBBO in such cases would enable the System to avoid an
internal cross on the EDGX Book (e.g., an order to buy (sell) that is
priced higher (lower) than a Mid-Point Match order to sell (buy)). The
Exchange believes an internally crossed book is not indicative of a
fair and orderly market because a User may receive a worse price if its
order is executed during a crossed market rather than if the System
executed the trade while the EDGX Book was not internally crossed.
Therefore, the Exchange believes the proposed rule change will promote
just and equitable principles of trade, removes impediments to, and
perfects the mechanism of, a free and open market and a national market
system.
---------------------------------------------------------------------------

    \70\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Opening Process (Rule 11.7). The amended description of the Opening
Process in Rule 11.7 is designed to promote just and equitable
principles of trade and remove impediments to, and perfect the
mechanism of, a free and open market system because it would align with
BZX Rule 11.24 and BYX Rule 11.23 as it relates to: \71\ (i) Which
orders may participate in the process; (ii) how the price of the
Opening Transaction is determined; and (iii) the process for late
openings and re-openings. The Opening Process and their related rules
would be identical across the BGM Affiliated Exchanges, and will
therefore, contribute to the protection of investors and the public
interest by avoiding investor confusion and providing consistent
functionality across the BGM Affiliated Exchanges. Lastly, and as
stated above, the amendment to Rule 11.7 is based on BATS Rule 11.24
and BYX Rule 11.23, both of which were recently approved by the
Commission.\72\
---------------------------------------------------------------------------

    \71\ See supra note 40.
    \72\ Id.
---------------------------------------------------------------------------

    Order Types (Rule 11.8). The Exchange believes that the proposed
changes to its order types under Rule 11.8 in order to align their
functionality with BATS rules are consistent with Section 6(b)(5) of
the Act,\73\ because these changes are designed to provide Members with
additional specificity as to how their orders will be handled upon
migration of the Exchange onto BATS technologies, thereby fostering
cooperation and coordination with persons engaged in facilitating
transactions in securities and removing impediments to and perfecting
the mechanism of a free and open market and a national market system.
Each order type was amended to update the TIF instructions that would
be available upon migration of the Exchange onto BATS technology. In
addition, the proposed amendments are designed to align their operation
with like order types on BATS and do not propose any additional
functionality For example, Market Orders under Rule 11.8(a) is to be
amended to reflect the execution parameters under BATS Rule 11.9(a)(2).
The amendments to Limit Orders under Rule 11.8(b) and ISOs under Rule
11.8(c) are designed to update TIF instruction available to each order
type. In addition, the changes are designed to update the Re-Pricing
options available to Limit Order and ISOs to reflect the
decommissioning of Routed and Returned as well as the streamlining of
the Re-Pricing Options to Comply with Regulations SHO to align with
BATS rules. In sum, the amendments to MPM Orders under Rule 11.8(d) and
Supplemental Peg Orders under rule 11.8(f) simply clarify their
operation during a locked or crossed market as well as expand their
eligibility for execution from the Regular Session to also include the
Pre-Opening Session and Post-Closing Session. Lastly, the proposed
changes to Rule 11.8(e) regarding NBBO Offset Peg Orders are based on
BATS Rule 11.9(c)(17). The proposed changes to Rule 11.8(f) regarding
Route Peg Orders are based on BATS Rule 11.9(c)(19).
---------------------------------------------------------------------------

    \73\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change does not propose to implement new or
unique functionality that has not been previously filed with the
Commission or is not available on BATS. Therefore, the proposed rule
change would provide greater harmonization between the rules of the BGM
Affiliated Exchanges, resulting in greater uniformity and less
burdensome and more efficient regulatory compliance. As such, the
proposed rule change would foster cooperation and coordination with
persons engaged in facilitating transactions in securities and would
remove impediments to and perfect the mechanism of a free and open
market and a national market system.
    Priority (Rule 11.9). The Exchange also believes its proposed
amendments to Rule 11.9 to regarding the priority of orders promotes
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 providing Members, Users, and the investing public with
greater transparency regarding how the System operates. The Exchange
proposes to amend Rule 11.9 to align with BATS functionality and BATS
Rules 11.12 regarding how orders with certain instructions are to be
ranked by the System: (i) At a price other than the midpoint of the
NBBO; (ii) at the midpoint of the NBBO; and (iii) where orders utilize
instructions that cause them to be ranked by the System upon clearance
of a Locking Quotation providing valuable, clear information to
Members, Users, and the investing public on how their orders would be
executed. As amended, orders will be substantially ranked in same order
as under current rules except that orders with a Pegged instruction
will be distinguished from and placed behind Limit Orders with a Non-
Displayed Instruction. In turn, the Reserve Quantity of Limit Orders
will be separated from and placed behaving [sic] Limit Orders with a
Non-Displayed instruction and orders with a Pegged and Non-Displayed
instruction. These changes are made to align Exchange Rule 11.9 with
the functionality set forth in BATS Rule 11.12, as described above. The
Exchange believes that the proposed rule changes regarding order
priority will provide greater transparency and further clarity on how
the various order types will be assigned priority under various
scenarios, thereby assisting Members, Users and the investing public in
understanding the manner in which the System may execute their orders.
    Routing (Rule 11.11). The Exchange believes that the proposed
changes to Rule 11.11) [sic] are consistent with Section 6(b)(5) of the
Act.\74\ As noted

above, the proposed rule changes to add functionality are intended to
add certain system functionality currently offered by BATS in order to
provide consistent routing options across the BGM Affiliated Exchanges.
A consistent offering, in turn, will simplify the implementation,
changes and maintenance by Users of the Exchange that are also
participants on BATS. The proposed rule changes would also provide
Users with access to functionality that may result in the efficient
execution of such orders and will provide additional flexibility as
well as increased functionality to the Exchange's System and its Users.
As explained elsewhere in this proposal, all of the proposed routing
options are similar to routing strategies on other market centers,
including BATS. The proposed rule change would provide greater
harmonization between the routing options available amongst the BGM
Affiliated Exchanges, resulting in greater uniformity and less
burdensome and more efficient regulatory compliance.
---------------------------------------------------------------------------

    \74\ 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
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
reiterates that the proposed rule change is being proposed in the
context of the technology integration of the BGM Affiliated Exchanges.
Thus, the Exchange believes this proposed rule change is necessary to
permit fair competition among national securities exchanges. In
addition, the Exchange believes the proposed rule change will benefit
Exchange participants in that it is one of several changes necessary to
achieve a consistent technology offering by the BGM Affiliated
Exchanges.

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 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 \75\ and Rule 19b-
4(f)(6) thereunder.\76\
---------------------------------------------------------------------------

    \75\ 15 U.S.C. 78s(b)(3)(A).
    \76\ 17 CFR 240.19b-4(f)(6). 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \77\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\78\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
---------------------------------------------------------------------------

    \77\ 17 CFR 240.19b-4(f)(6).
    \78\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Exchange represents that since completion of the Merger,
both Members and the BGM Affiliated Exchange have made numerous systems
changes in preparation for the technology migration occurring on
January 12, 2015. The Exchange has issued frequent updates to Members
informing them the BGM Affiliated Exchange technology migration changes
as well as its anticipated time line so that Members may make the
requisite system changes. In addition, the Exchange has conducted
multiple testing opportunities for Members to ensure both the Member's
and Exchange system will operate in accordance with the proposed rule
change on January 12, 2015. Based on these representations, the
Commission believes that waiver of the operative delay is consistent
with the protection of investors and the public interest. Therefore,
the Commission designates the proposal operative upon filing.\79\
---------------------------------------------------------------------------

    \79\ 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).
---------------------------------------------------------------------------

    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