Figure 3 4. Variation in RTO total capital investment with flow.

The direct installation costs such as foundation and support, handling and erection, electrical, piping, insulation for ductwork, and painting were included in the PEC provided by the WESP vendor. It was assumed that no building would be necessary for the WESP and that there would be no additional site preparation costs. Several indirect costs were also included in the equipment cost supplied by the WESP vendor, including engineering, construction and field expense, start up, and contingencies. Because WESP's are already widely used at OSB plants, it was assumed that no model study would be necessary for the WESP although the EPA Air Pollution Control Cost Manual mentions model study costs for ESP's. 3 29 The cost of a performance test was included in the WESP cost model. According to the EPA Air Pollution Control Cost Manual, the performance test is typically 1 percent of the PEC. Thus, 1 percent of the model PEC ( minus the direct and indirect installation costs included in the PEC) was used as the cost of the performance test. The direct and indirect costs were summed to arrive at the WESP TCI.

WESP Total Annualized Cost The direct annualized costs include operating and maintenance labor and materials, utilities, and waste disposal. The operating labor cost was based on 1,146 hr/ yr ( provided by the WESP vendor) at $ 19.50/ hr ( the labor rate used in the RTO cost algorithm). The annual cost of operating materials, including caustic and defoamer, was provided by the WESP vendor. The maintenance labor rate was estimated as 110 percent of the operating labor rate. The maintenance hours per year were estimated based on information supplied WESP vendor. The cost of maintenance materials ( including replacement of one pump seal per year, and one voltage controller every 4 years, and miscellaneous materials) was supplied by the WESP vendor.

The electricity necessary to power the WESP components ( approximately 2,076,000 kWh/ yr for all WESP components) was based on information provided by the WESP vendor. An electricity cost of $ 0.045/ kWh was used ( the same as used in the RTO cost algorithm). A $ 0.20/ gal cost for makeup water was used based on the EPA Air Pollution Control Cost Manual. The WESP water recirculation rate, makeup water addition rate, and blowdown generation rates were provided by the WESP vendor. The EPA Air Pollution Control Cost Manual indicated that wastewater treatment costs may range from $ 1.30 to $ 2.15 / 1,000 gallons. Methods of WESP wastewater treatment and disposal could include evaporation from settling ponds, discharge to a municipal water treatment facility, or spray irrigation. The wastewater treatment and disposal cost for the blowdown was assumed to be $ 2.15 per gallon. The wastewater percent solids of 7.6 percent was based on the average from the MACT survey responses. 11 It was assumed that the solids would ultimately be disposed in a landfill ( although they could be burned onsite or used for soil amendment). The trucking cost for hauling sludge to landfill was estimated to be $ 0.20 yd3 mi. 22 The landfill was assumed to be 20 miles away, and a $ 20/ ton landfill tipping fee was used. 22 The density of the solids was assumed to be 0.5 ton/ yd3 for wet wood particulate ( given that the density of water is 0.84 ton/ yd3 and the density of wood is from 30 to 50 percent of the density of water).

The indirect operating costs were estimated based on the methodology described in the EPA Air Pollution Control Cost Manual. The capital recovery cost was estimated assuming a WESP equipment life of 20 years ( based on the EPA Air Pollution Control Cost Manual and WESP vendor information) and a 7 percent interest rate. The TAC was calculated by summing the direct and indirect annual operating costs.

<IP_ADDRESS> Permanent Total Enclosure ( PTE) Costs The capital costs associated with installation of a PTE were based on available information in the project files on the capital cost of PTE's for particleboard, MDF, and OSB presses. 24 These costs included the following elements:

$ installed cost of the PTE ( including fan system)

$ ductwork $ instrumentation and wiring 3 30 $ fire suppression ( in some cases)

$ site supervision $ start up and testing Based on the available cost information, the following algorithm was developed to estimate the PTE costs for various exhaust flowrates: TCIPTE = 1.2031 x Qdscfm + 425,760 where: TCIPTE = the total capital cost of the permanent total enclosure, $ Qdscfm = design exhaust flow rate from PTE, dry standard cubic feet per minute Available information on actual exhaust flow rates from PTE's installed around reconstituted wood product presses was used to develop model flow rates for the various press applications. 25 Information on press vent flow rates from unenclosed presses was available, but not used, because unenclosed press flow rates are altered when a PTE is installed around a press. 26 The cost algorithm was then applied to the model flow rates to estimate the capital costs of the model PTE's as shown in Exhibit 3 10. The costs were rounded to the nearest $ 1,000. In the case of the particleboard press PTE, the cost was set at $ 485,000 ( instead of $ 481,000, which is the value derived from the cost algorithm) because the PTE model flow rate was similar to those for the MDF and hardboard presses, and applying the same cost to all three types of press PTE's simplified the costing analyses. Annualized costs were not developed for PTE's because the annualized cost of the fans is already accounted for in the estimated costs of the RTO's.

Exhibit 3 10. PRESS ENCLOSURE EXHAUST FLOW RATES AND CAPITAL COSTS Equipment type Flow rate, dscfm PTE capital cost Particleboard press 45,524 $ 485,000 OSB press 97,509 $ 543,000 MDF or dry/ dry hardboard press 49,413 $ 485,000 Wet/ dry or wet/ wet hardboard press 49,209 $ 485,000 3.3.2 Plant by Plant Costing Approach The control costs associated with the PCWP standards were estimated for each plant and were summed to arrive at a nationwide estimate of control costs. The PCWP standards apply only to major sources of HAP emissions. Therefore, cost estimates were developed for only those plants that were assumed to be major sources. 15 The information used to estimate the plant by plant control costs is described below. 3 31 <IP_ADDRESS> Application of Control Costs to Process Units The cost models discussed in Section 3.3.1 were applied to each plant that would likely need to install air pollution controls in order to meet the PCWP standards. Plant specific information on process units ( e. g., dryers, presses) and controls was taken from the MACT survey responses. 10,11,12 In addition, information about the presence of PTE's on presses was taken from the MACT survey responses. 10 If information about press enclosures was not provided in the MACT survey responses, or was claimed confidential, the press was assumed to be unenclosed if it was uncontrolled or enclosed if it was controlled for purposes of costing.

Some plants have begun operation and other plants have added equipment or controls since EPA conducted the MACT survey. Such changes were accounted for in the nationwide cost estimates. A separate memorandum summarizes the changes to plants that have occurred following the EPA's MACT survey. 13 The process units and controls present at each plant were reviewed to determine which of the assumed what control equipment ( i. e., RTO, WESP, or PTE) the plant would need to install to meet the PCWP standards based on the MACT floor control levels. The MACT floor control levels are based on the information presented in the BID for this rule. 6 Exhibit 3 2 summarizes the process units for which control equipment would be required to meet the MACT floor and the control equipment costed for these process units. At each plant, the exhaust gas flow rates from the applicable uncontrolled process units listed in Exhibit 3 11 were summed to yield a plant wide uncontrolled exhaust gas flow rate. Process units already equipped with controls to meet the MACT floor were not included in the plant wide uncontrolled gas flow rate estimates. The procedures for estimating the uncontrolled gas flow rates from process units and the application of the cost algorithms is discussed in the following section. 3 32 Exhibit 3 11. CONTROL EQUIPMENT COSTED FOR PROCESS UNITS WITH CONTROLLED MACT FLOOR Existing process units with control requirements Control equipment costed Notes Tube dryers ( primary and secondary) RTO Tube dryers are located at particleboard, MDF, and hardboard plants Rotary strand dryers WESP and RTO Rotary strand dryers are located at OSB and LSL plants. Assumed that the WESP is not needed for plants that already have an RTO without a WESP. Assumed that plants that currently operate an EFB or multiclone alone ( i. e., with no RTO) would install a WESP with the RTO.

Conveyor type strand dryers RTO Conveyor strand dryers are located at OSB and LSL plants.

Rotary green particle dryers RTO Rotary green particle dryers are located at particleboard, MDF, or hardboard plants and process furnish with > 30% ( dry basis) inlet moisture content at dryer inlet temperature of > 600

F Hardboard ovens RTO Includes bake and tempering ovens Softwood veneer dryers RTO Softwood veneer dryers are located at softwood plywood, hardwood plywood, LVL, and PSL plants and dry  50% ( by volume, annually) softwood veneer Pressurized refiners None The exhaust from pressurized refiners typically passes through a tube dryer and exits through the tube dryer control device. Therefore, it was not necessary to cost separate control equipment for pressurized refiners. Pressurized refiners are located at MDF and hardboard plants.

Reconstituted wood products presses PTE and RTO Reconstituted wood products presses are located at hardboard, MDF, OSB, and particleboard plants Exhaust Flow Rate to Be Controlled If provided in the non confidential MACT survey responses, process unit specific exhaust flow rate, temperature, and percent moisture were used to determine the dry standard flow rate for each process unit. If sufficient information was not provided in the MACT survey response to determine dry standard flow rates ( or the information was claimed confidential), then default values were used for the flow rate. The default values were based on the average value for other similar process units at plants that provided enough non confidential information to calculate the dry standard flow rate. Exhibit 3 12 summarizes the 3 33 default flow rates used in the costing analyses. The average flow rates from press enclosures are described in Section 3.3.1 and were used for all presses.

Exhibit 3 12. DEFAULT FLOW RATES Process line Equipment type Flow rate ( dscfm)

Particleboard Rotary green particle dryer 35,731 Tube dryer 14,955 OSB Rotary strand dryer 32,478 Conveyor type strand dryer 37,810 MDF Primary tube dryer ( single stage or first stage of staged dryer) 79,173 Secondary tube dryer ( second stage of staged dryer) 18,195 Plywood Softwood veneer dryer 12,062 Hardboard Bake oven 4,742 Tempering oven 4,055 Primary tube dryer ( single stage or first stage of staged dryer) 37,436 Secondary tube dryer ( second stage of staged dryer) 31,728 Several plants have multiple process units requiring controls. The flow rates for these process units were summed and divided across control equipment as necessary. In most cases, the total dryer flow was assumed to be routed to one or more RTO's dedicated to controlling dryer exhaust and the total press flow was assumed to be routed to one or more RTO's dedicated to controlling press exhaust. Because RTO fuel costs increase exponentially with gas flow rate, RTO sizes were assumed to remain less than about 150,000 dscfm. ( The largest RTO in mentioned in the MACT survey responses was around 150,000 dscfm.)

In some cases, dryers and presses were assumed to be routed to the same RTO, provided that the total dryer and press flow remained under 150,000 dscfm. For example, two RTO's ( 103,500 dscfm each) would be costed for a MDF plant with 2 dryers ( 79,000 each) and 1 press ( 49,000) assuming that the flow 3 34 for both dryers and the press could be combined and split equally across the two RTO's. This approach seems reasonable given that several MDF plants currently route dryer and press exhaust to the same RTO.

Calculation of Nationwide Control Costs The total plant by plant control cost was calculated by summing the control cost associated with each RTO, WESP, and PTE costed for each plant. The number of control devices at each plant depended on the number of process units and the exhaust flow to be controlled at the plant. In some cases, only one control device was costed, while in other cases, multiple control devices were costed for a plant.

Some plants claimed all relevant portions of their MACT survey responses confidential. In addition, a MACT survey response was not available for a few plants likely to be impacted by the PCWP standards. Without a non confidential MACT survey response, information was not available to develop plant specific cost estimates. Therefore, the average cost for all other plants manufacturing the same product was used to approximate the costs for plants for which there was no non confidential plant specific information.

The nationwide capital and annualized control costs were determined by summing the total plantspecific costs.

3.3.3 Summary of Nationwide Control Costs Exhibit 3 13 summarizes the nationwide control costs for different product types. The nationwide total capital cost for control equipment is estimated to be $ 473 million and the nationwide total annual cost for control equipment is estimated as $ 136 million ( 1999 dollars). Exhibit 3 14 presents the dollars of total annualized costs per ton of HAP and THC reduced.

3.4 Testing, Monitoring, Reporting, And Recordkeeping Costs Compliance with the PCWP standards must be demonstrated through performance testing, ongoing monitoring of process or control device operating parameters or emissions, periodic reporting to the government agency that implements the PCWP rule, and recordkeeping. There are capital and annualized costs associated with these testing, monitoring, reporting, and recordkeeping activities. These costs, which are estimated and documented in the supporting statement for the Paperwork Reduction Act submission, and are summarized in this section. 27 3 35 Exhibit 3 13. ESTIMATED NATIONWIDE CONTROL COSTS FOR THE PCWP INDUSTRY Product type No. of plantsa No. of plants impacteda, b Process units impacted Control equipment Total capital costs, $ MM Total annual costs, $ MM Softwood plywood/ veneer 105 66 softwood veneer dryers RTO $ 87.1 $ 28.4 Hardwood plywood/ veneer 166 0 N/ A no control $ 0.0 $ 0.0 Medium density fiberboard 24 18 dryers, presses RTO for dryers and PTE/ RTO for presses $ 71.3 $ 21.5 Oriented Strandboard 37 23 dryers, presses WESP/ RTO for dryers and PTE/ RTO for presses $ 94.6 $ 25.5 Particleboard ( conventional and molded) 51 38 green rotary particle dryers, presses RTO for dryers and PTE/ RTO for presses $ 125.2 $ 34.2 Particleboard ( agriboard) 5 0 N/ A no control $ 0.0 $ 0.0 Hardboard 18 18 tube dryers, presses,

ovens RTO for dryers and PTE/ RTO for presses $ 84.4 $ 23.5 Fiberboard 7 0 N/ A no control $ 0.0 $ 0.0 Engineered wood products 41 3 softwood veneer dryers,

strand dryers RTO for veneer dryers and WESP/ RTO for strand dryers $ 10.3 $ 3.2 TOTAL: 454 166 $ 473 $ 136 a Some plants manufacture more than one product type. These plants are listed once for each product type manufactured.

b The number of plants impacted may be different from the number of plants nationwide for one of the following reasons: ( 1) some plants are not major sources; ( 2) some plants already have all of the necessary control equipment; or ( 3) a few plants are major sources but do not operate any process units for which there are control requirements ( e. g., glu lam plants). 3 36 Exhibit 3 14. DOLLARS ( IN TOTAL ANNUALIZED COSTS) PER TON OF HAP AND THC REDUCED Product type HAP, $/ ton THC, $/ ton Softwood plywood/ veneer $ 43,000 $ 2,900 Hardwood plywood/ veneer NA NA Medium density fiberboard $ 10,000 $ 5,100 Oriented Strandboard $ 9,200 $ 7,100 Particleboard ( all types) $ 13,000 $ 5,800 Hardboard $ 9,300 $ 7,000 Fiberboard NA NA Engineered wood products $ 47,000 $ 18,000 Overall industry $ 13,000 $ 5,000 The annual costs associated with testing, monitoring, reporting, and recordkeeping activities include reporting and recordkeeping labor; annualized capital for monitoring equipment, file cabinets, and performance tests; and the operation and maintenance costs associated with monitoring equipment. The capital costs include capital for monitoring equipment, file cabinets and performance tests. Performance tests are considered to be capital costs because plants will typically hire a testing contractor to conduct the performance tests.

The total nationwide capital cost associated with testing, monitoring, reporting, and recordkeeping is estimated to be $ 5.8 million and the total nationwide annualized cost is estimated to be $ 5.6 million ( 1999 dollars). These costs were developed based on the information presented in the Paperwork Reduction Act submission for the first 3 years following the effective date of the PCWP rule. The costs apply for the 223 PCWP plants that are expected to be major sources. There are 57 facilities that incur monitoring, recordkeeping, and reporting costs but do not incur control costs from compliance with this proposed rule. 3 37 3.5 REFERENCES 1. United States Congress. Clean Air Act, as amended October 1990. 42 U. S. C. 7401 et seq. Washington, DC. U. S. Government Printing Office.

2. U. S. Environmental Protection Agency. National Emission Standards for Hazardous Air Pollutants for Source Category: Organic Hazardous Air Pollutants from the Synthetic Organic Chemical Manufacturing Industry and Other Processes Subject to the Negotiated Regulation for Equipment Leaks; Determination of MACT " Floor." 59 FR 29196. Washington, DC. U. S. Government Printing Office. June 6, 1994.

3. Memorandum from K. Hanks and B. Nicholson, MRI, to P. Lassiter, EPA/ ESD. April 16, 1998 ( Finalized 5/ 28/ 98). Trip report for February 12, 1998 site visit to Timber Products Company particleboard and hardwood plywood plant in Medford, Oregon.

4. R. Nicholson, MRI, to D. Word, NCASI. February 17, 2000 ( Confirmed via Email on 9/ 7/ 00). Contact report to ( 1) find out if oxygen measurement data were available from the NCASI MACT emissions test program, and ( 2) to get some information on typical oxygen concentrations in dryer and press exhaust at plywood and composite wood products plants.

5. Memorandum from R. Nicholson, MRI, to M. Kissell, EPA/ ESD. May 26, 2000. Control Device Efficiency Data for Add on Control Devices at PCWP Plants.

6. Memorandum from K. Hanks and B. Nicholson, MRI, to M. Kissell, EPA/ ESD. July 13, 2000. Determination of MACT floors and MACT for the Plywood and Composite Wood Products Industry.

7. National Council of the Paper Industry for Air and Stream Improvement ( NCASI) Method IM/ CAN/ WP 99.01, Impinger/ Canister Source Sampling Method for Speciated HAPs at Wood Products Facilities. 1999.

8. Reference 6.

9. Memorandum from K. Hanks and D. Bullock, MRI, to M. Kissell, EPA/ ESD. June 9, 2000. Baseline Emission Estimates for the Plywood and Composite Wood Products Industry.

10. Memorandum from D. Bullock, K. Hanks, and B. Nicholson, MRI to M. Kissell, EPA/ ESD. April 28, 2000. Summary of Responses to the 1998 EPA Information Collection Request ( MACT Survey)  General Survey. 3 38 11. K. Hanks, B. Threatt, and B. Nicholson, MRI to M. Kissell, EPA/ ESD. May 19, 1999. Summary of Responses to the 1998 EPA Information Collection Request ( MACT Survey)  Hardwood Plywood and Veneer.

12. K. Hanks, B. Threatt, and B. Nicholson, MRI to M. Kissell, EPA/ ESD. January 20, 2000. Summary of Responses to the 1998 EPA Information Collection Request ( MACT Survey)  Engineered Wood Products.

13. Memorandum from K. Hanks, MRI, to Project Files. April 18, 2000. Changes in the population of existing plywood and composite wood products plants and equipment following the information collection request.

14. Memorandum from D. Bullock and K. Hanks, MRI, to M. Kissell, EPA/ ESD. April 27, 2000. Documentation of Emission Factor Development for the Plywood and Composite Wood Products Manufacturing NESHAP.

15. Background Infomation Document for the Proposed Plywood and Composite Wood Products NESHAP. U. S. EPA/ OAQPS, September 2000.

16. Suchsland, O., and G. Woodson, Fiberboard Manufacturing Practices in the United States, John Wiley & Sons, New York, 1991, pp. 151 153.

17. K. Corrigan, North Dakota Department of Health, Division of Environmental Engineering. February 11, 1997. Performance Test Report Review: Primeboard, Inc.

18. Facsimile from J. Seiwert, Smith Environmental Corporation, to L. Kesari, EPA/ OECA. October 31, 1997. Revised emissions abatement systems RTO pricing ( Smith Proposal BO7 95 156 1, Trinity Consultants)

19. EPA Air Pollution Control Cost Manual ( Sixth Edition), U. S. Environmental Protection Agency, April 26, 2002. EPA  452/ B 02 001. Found on the Internet at www. epa. gov/ ttn/ catc/ products. html# cccinfo.

20. Vatavuk Air Pollution Control Cost Indexes ( VAPCCI), Chemical Engineering, March 2000, p. 150.

21. Energy Information Administration, Form EIA 826, " Monthly Electric Utility Sales and Revenue Report with State Distributions."

22. Energy Information Administration, Natural Gas Monthly, February 2000, p. 60. 3 39 23. Letter and attachments from S. Jaasund, Geoenergy International Corporation, to B. Nicholson, MRI. March 28, 2000. Geoenergy WESP Capital and Operating Costs.

24. Memorandum from B. Nicholson, MRI, to Plywood and Composite Wood Products Project File. July 31, 2000. Cost of Permanent Total Enclosures. ( Confidential Business Information)

25. Memorandum from B. Nicholson, MRI, to Plywood and Composite Wood Products Project File. July 31, 2000. Exhaust Gas Flowrate Information for Enclosed Presses. ( Confidential Business Information)

26. Memorandum from D. Bullock and K. Hanks, MRI, to P. Lassiter, EPA/ ESD. October 27, 1998. Trip report for visit to Temple Inland Forest Products plant in Diboll, Texas.

27. Paperwork Reduction Act Submission, Supporting Statement, Plywood and Composite Wood Products, 2000.


[Federal Register Volume 78, Number 14 (Tuesday, January 22, 2013)]
[Notices]
[Pages 4494-4502]
[FR Doc No: 2013-01110]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68643; File No. SR-BATS-2012-039]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing of Amendment Nos. 2 and 3, and Order Granting Accelerated
Approval of Proposed Rule Change, as Modified by Amendment Nos. 1, 2
and 3, To Amend the Listing Rules for Compensation Committees To Comply
With Securities Exchange Act Rule 10C-1 and Make Other Related Changes

January 11, 2013.

I. Introduction

    On September 25, 2012, BATS Exchange, Inc. (``Exchange'' or
``BATS'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to modify the Exchange's rules for compensation
committees of listed issuers to comply with Rule 10C-1 under the Act
and make other related changes. On October 9, 2012, BATS filed
Amendment No. 1 to the proposed rule change.\3\ The proposed rule
change, as modified by Amendment No. 1, was published for comment in
the Federal Register on October 15, 2012.\4\ The Commission
subsequently extended the time period in which to either approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change, to January 13, 2013.\5\ The Commission received no comment
letters on the proposed rule change.\6\ On January 10, 2013, the
Exchange filed Amendment No. 2 to the proposed rule change.\7\ On

January 11, 2013, the Exchange filed Amendment No. 3 to the proposed
rule change.\8\ This order approves the proposed rule change, as
modified by Amendment Nos. 1, 2, and 3 thereto, on an accelerated
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced the proposed rule change in full.
    \4\ See Securities Exchange Act Release No. 68022 (October 9,
2012), 77 FR 62572 (``Notice'').
    \5\ See Securities Exchange Act Release No. 68313 (November 28,
2012), 77 FR 71853 (December 4, 2012).
    \6\ The Commission notes that comments were received on
substantially similar proposals filed by New York Stock Exchange,
LLC and Nasdaq Stock Market LLC. For a synopsis of these comments
see Securities Exchange Act Release Nos. 68011 (October 9, 2012)
(``NYSE Notice) (File No. SR-NYSE-2012-49); 68013 (October 9, 2012)
(``Nasdaq Notice'') (File No. SR-NASDAQ-2012-109); 68639 (January
11, 2013), (``NYSE Approval Order''); 68640 (January 11, 2013),
(``Nasdaq Approval Order'').
    \7\ In Amendment No. 2 to SR-BATS-2012-039, BATS proposes to:
(1) Add additional language to further outline the responsibilities
of the compensation committee, as well as to make certain clarifying
changes to the compensation committee's responsibilities and
authority; (2) increase the cure period for meeting compensation
committee requirements where the annual shareholders meeting occurs
no later than 180 days following the event that cause the failure to
comply, as well as make several clarifying changes to the cure
period rule; (3) amend language from the proposal in order to create
full exemptions from Rule 14.10(c)(4) for limited partnerships,
management investment companies, and companies in bankruptcy
proceedings; (4) move the effective date of the proposal from June
1, 2013 to July 1, 2013; and (5) make several non-substantive
clarifying changes, as well as correcting certain rule references
within the proposal.
    \8\ In Amendment No. 3 to SR-BATS-2012-039, BATS added language
to make clear that for Smaller Reporting Companies the current
standards for independent oversight of executive compensation are
not changing, as BATS is only exempting Smaller Reporting Companies
from the newly proposed enhanced independence standards as well as
the new compensation adviser standards. Therefore, the Exchange
amended its exemption for Smaller Reporting Companies to state that
executive compensation must be determined either by a compensation
committee comprised of Independent Directors meeting the definition
of independent in Rule 14.10(c)(1)(B), or by a majority of the
Board's Independent Directors in a vote in which only Independent
Directors meeting the definition of Independent Director in Rule
14.10(c)(1)(B) participate.
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II. Description of the Proposed Rule Change

A. Background: Rule 10C-1 Under the Act

    On March 30, 2011, to implement Section 10C of the Act, as added by
Section 952 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (``Dodd-Frank Act''),\9\ the Commission proposed
Rule 10C-1 under the Act,\10\ which directs each national securities
exchange (hereinafter, ``exchange'') to prohibit the listing of any
equity security of any issuer, with certain exceptions, that does not
comply with the rule's requirements regarding compensation committees
of listed issuers and related requirements regarding compensation
advisers. On June 20, 2012, the Commission adopted Rule 10C-1.\11\
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    \9\ Public Law 111-203, 124 Stat. 1900 (2010).
    \10\ See Securities Act Release No. 9199, Securities Exchange
Act Release No. 64149 (March 30, 2011), 76 FR 18966 (April 6, 2011)
(``Rule 10C-1 Proposing Release'').
    \11\ See Securities Act Release No. 9330, Securities Exchange
Act Release No. 67220 (June 20, 2012), 77 FR 38422 (June 27, 2012)
(``Rule 10C-1 Adopting Release'').
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    Rule 10C-1 requires, among other things, each exchange to adopt
rules providing that each member of the compensation committee \12\ of
a listed issuer must be a member of the board of directors of the
issuer, and must otherwise be independent.\13\ In determining the
independence standards for members of compensation committees of listed
issuers, Rule 10C-1 requires the exchanges to consider relevant
factors, including, but not limited to: (a) The source of compensation
of the director, including any consulting, advisory or other
compensatory fee paid by the issuer to the director (hereinafter, the
``Fees Factor''); and (b) whether the director is affiliated with the
issuer, a subsidiary of the issuer or an affiliate of a subsidiary of
the issuer (hereinafter, the ``Affiliation Factor'').\14\
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    \12\ For a definition of the term ``compensation committee'' for
purposes of Rule 10C-1, see Rule 10C-1(c)(2)(i)-(iii).
    \13\ See Rule 10C-1(a) and (b)(1).
    \14\ See Rule 10C-1(b)(1)(ii). See also Rule 10C-
1(b)(1)(iii)(A), which sets forth exemptions from the independence
requirements for certain categories of issuers. In addition, an
exchange may exempt a particular relationship with respect to
compensation committee from these requirements as it deems
appropriate, taking into consideration the size of an issuer and any
other relevant factors. See Rule 10C-1(b)(1)(iii)(B).
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    In addition, Rule 10C-1 requires the listing rules of exchanges to
mandate that compensation committees be given the authority to retain
or obtain the advice of a compensation adviser, and have direct
responsibility for the appointment, compensation and oversight of the
work of any compensation adviser they retain.\15\ The exchange rules
must also provide that each listed issuer provide for appropriate
funding for the payment of reasonable compensation, as determined by
the compensation committee, to any compensation adviser retained by the
compensation committee.\16\ Finally, among other things, Rule 10C-1
requires each exchange to provide in its rules that the compensation
committee of each listed issuer may select a compensation consultant,
legal counsel or other adviser to the compensation committee only after
taking into consideration six factors specified in Rule 10C-1,\17\ as
well as any other factors identified by the relevant exchange in its
listing standards.\18\
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    \15\ See Rule 10C-1(b)(2).
    \16\ See Rule 10C-1(b)(3).
    \17\ See Rule 10C-1(b)(4). The six factors, which BATS proposes
to set forth explicitly in its rules, are specified in the text
accompanying note 34, infra.
    \18\ Other provisions in Rule 10C-1 relate to exemptions from
the rule and a requirement that each exchange provide for
appropriate procedures for a listed issuer to have a reasonable
opportunity to cure any defects that would be the basis for the
exchange, under Rule 10C-1, to prohibit the issuer's listing.
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B. BATS Proposed Rule Change, as Amended

    To comply with Rule 10C-1, BATS proposes to amend several
provisions of Exchange BATS Rule 14.10, ``Corporate Governance
Requirements.'' Specifically, BATS proposes to amend BATS Rule
14.10(c)(4), ``Independent Director Oversight of Executive Officer
Compensation,'' and BATS Rule 14.10(e), ``Exemptions from Certain
Corporate Governance Requirements.''
1. Compensation Committee Composition and Independence Standards
    Current BATS Rule 14.10(c)(4) provides that compensation of the
executive officers of a listed company must be determined, or
recommended to the company's board for determination, either by a
compensation committee comprised solely of ``Independent Directors,''
as defined in the Exchange's rules,\19\ or, as an alternative, by a
vote of such Independent Directors constituting a majority of the
board's Independent Directors in a vote in which only Independent
Directors participate (``Alternative Option'').\20\
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    \19\ ``Independent Directors,'' as defined in BATS Rule
14.10(c)(1)(B) and used herein, includes a two-part test for
independence. The definition sets forth seven specific categories of
directors who cannot be considered independent because of certain
discrete relationships (``the bright-line tests''). In addition, an
Independent Director may not have a relationship which, in the
opinion of the company's board of directors, would interfere with
the exercise of independent judgment in carrying out the
responsibilities. The board must make an affirmative determination
that an individual serving as an Independent Director does not have
a relationship with the company that would impair the individual's
independence. See Interpretation and Policy .01 to BATS Rule
14.10(c)(1)(B).
    \20\ Current BATS Rule 14.10(c)(4)(A) sets forth the two
alternatives (formal committee or majority of Independent Directors)
with respect to determining compensation of the chief executive
officer (``CEO'') of the company, and provides that the CEO may not
be present during voting or deliberations regarding the CEO's own
compensation. Current BATS Rule 14.10(c)(4)(B) sets forth the same
two alternatives with respect to determining compensation of all
other executive officers. Under the proposed rule change, these
provisions will be renumbered. See infra note 21.
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    BATS is retaining the requirement that executive compensation be
determined by individuals who qualify as Independent Directors, but, in
compliance with Rule 10C-1, is proposing to require the board to
consider two additional factors in evaluating the independence of these
individuals. Specifically, the Exchange proposes to amend BATS Rule
14.10(c)(4) to require the board to consider: (i) The source of
compensation of the director, including any consulting, advisory or
other compensatory fee paid by the company

to such director; and (ii) whether the director is affiliated with the
company, a subsidiary of the company, or an affiliate of a subsidiary
of the company.\21\
---------------------------------------------------------------------------

    \21\ See Notice, supra note 4. Under the proposal, the new
requirement to consider the additional independence factors will be
set forth as BATS Rule 14.10(c)(4)(A), and current BATS Rule
14.10(c)(4)(A) and (B) will be renumbered as BATS Rule
14.10(c)(B)(i) and (ii), respectively.
---------------------------------------------------------------------------

    In discussing the proposed rule change, BATS stated that the
adoption of this new requirement, along with its existing bright-line
tests for director independence, will bring the Exchange into
compliance with Rule 10C-1(b)(1).\22\ The Exchange stated that, after
reviewing its current and proposed listing rules, it concluded that
these rules are sufficient to ensure the independence of a company's
directors who determine or recommend to the board for determination
executive compensation. The Exchange believes that its existing bright-
line standards are ``sufficiently broad to encompass the types of
relationships which would generally be material to a director's
independence'' for these purposes, and therefore determined not to
propose independence requirements in addition to the specific ones it
is proposing.\23\ After considering the factors set forth in Rule 10C-
1(b)(1)(ii) and evaluating how the factors could impact the ability of
a director to act independently in determining executive compensation,
the Exchange further stated, it believes that it can best comply with
Rule 10C-1 by adopting those factors in its rules.\24\
---------------------------------------------------------------------------

    \22\ See Notice, supra note 4 and supra note 12 and accompanying
text.
    \23\ See BATS Rule 14.10(c)(1)(b) specifying the bright line
tests: The following persons shall not be considered independent:
(i) A director who is, or at any time during the past three years
was, employed by the Company; (ii) a director who accepted or who
has a Family Member who accepted any compensation from the Company
in excess of $120,000 during any period of twelve consecutive months
within the three years preceding the determination of independence,
other than the following: (a) Compensation for board or board
committee service; (b) compensation paid to a Family Member who is
an employee (other than an Executive Officer) of the Company; or (c)
benefits under a tax-qualified retirement plan, or non-discretionary
compensation. Provided, however, that in addition to the
requirements contained in this paragraph (ii), audit committee
members are also subject to additional, more stringent requirements
under Rule 14.10(c)(3)(B). (iii) a director who is a Family Member
of an individual who is, or at any time during the past three years
was, employed by the company as an Executive Officer; (iv) a
director who is, or has a Family Member who is, a partner in, or a
controlling Shareholder or an Executive Officer of, any organization
to which the Company made, or from which the Company received,
payments for property or services in the current or any of the past
three fiscal years that exceed 5% of the recipient's consolidated
gross revenues for that year, or $200,000, whichever is more, other
than the following: (a) Payments arising solely from investments in
the Company's securities; or (b) payments under non-discretionary
charitable contribution matching programs; (v) a director of the
Company who is, or has a Family Member who is, employed as an
Executive Officer of another entity where at any time during the
past three years any of the Executive Officers of the Company serve
on the compensation committee of such other entity; or (vi) a
director who is, or has a Family Member who is, a current partner of
the Company's outside auditor, or was a partner or employee of the
Company's outside auditor who worked on the Company's audit at any
time during any of the past three years. (vii) in the case of an
investment company, in lieu of paragraphs (i)-(vi), a director who
is an ``interested person'' of the Company as defined in Section
2(a)(19) of the Investment Company Act of 1940, other than in his or
her capacity as a member of the board of directors or any board
committee.
    \24\ See id.
---------------------------------------------------------------------------

    The Exchange is also proposing to delete existing BATS Rule
14.10(c)(4)(C). Current BATS Rule 14.10(c)(4)(C) provides that,
notwithstanding the Exchanges independence requirements for
compensation committees, if such a committee is comprised of at least
three members, one director who is not independent and is not a current
officer or employee or a family member of an officer or employee may be
appointed to the committee if the board, under exceptional and limited
circumstances, determines that such individual's membership is required
by the best interest of the company and its shareholders.\25\ The
Exchange notes that no such exception exists under Rule 10C-1, and
states that, after considering the factors relevant to compensation
committee independence under Rule 10C-1, it believes that the deletion
of the exception under its rules would comply with Rule 10C-1.
---------------------------------------------------------------------------

    \25\ See current BATS Rule 14.10(c)(4)(C).
---------------------------------------------------------------------------

    BATS further proposes to add a cure period provision for a failure
of a listed company to meet its compensation committee composition
requirements.\26\ Under the provision, a company that fails to comply
with the compensation committee independence requirements due to one
committee member ceasing to be independent due to circumstances beyond
the member's reasonable control, the company must regain compliance by
the earlier of its next annual shareholders meeting or one year from
the occurrence of the event that caused the failure to comply.\27\
However, if the annual shareholders meeting occurs no later than 180
days following the event that caused the failure to comply, the company
will be allowed 180 days from the event to regain compliance.\28\ A
company relying on this provision must provide notice to the Exchange
immediately upon learning of the event or circumstances that caused the
noncompliance. BATS's proposal expressly limits the availability of
this cure period to companies with formal compensation committees.\29\
---------------------------------------------------------------------------

    \26\ See proposed BATS Rule 14.10(c)(4)(D).
    \27\ See Proposed BATS Rule 14.10(c)(4)(D). If the annual
shareholders meeting occurs no later than 180 days following the
event that caused the failure to comply with this requirement, the
company shall instead have 180 days from such event to regain
compliance. Id.
    \28\ See Amendment No. 2 to the proposed rule change.
    \29\ BATS does not otherwise propose any new procedures for an
issuer to have an opportunity to cure defects with respect to its
proposed requirements, but BATS does have existing delisting
procedures that provide issuers with notice, opportunity for a
hearing, opportunity for appeals, and an opportunity to cure defects
before an issuer's securities are delisted. See Rules of BATS
Exchange, Rule 14.12 Failure to Meet Listing Standards. For example,
Rule 14.12(c) provides procedures for providing deficient companies
with notice, Rule 14.12(h) provides procedures for an issuer to
request the review of a hearing panel, and Rule 14.12(i) provides
procedures for issuers to appeal to BATS' Listing Council.
---------------------------------------------------------------------------

2. Authority of Committees To Retain Compensation Advisers; Funding;
and Independence of Compensation Advisers
    In its proposed rule change, BATS proposes to fulfill the
requirements imposed by Rule 10C-1(b)(2)-(4) under the Act--regarding
the authority of compensation committees to retain compensation
advisers, the funding of such advisers, and assessment of their
independence--by setting forth those requirements in its own rules.
Thus, proposed BATS Rule 14.10(c)(4)(C), as amended by Amendment Nos.
1, 2 and 3, sets forth the following requirements relating to
compensation committees of listed companies, which, for these purposes,
includes Independent Directors overseeing compensation pursuant to the
Alternative Option:
     The committee may, in its sole discretion, retain or
obtain the advice of a compensation consultant, legal counsel,\30\ or
other adviser; \31\
---------------------------------------------------------------------------

    \30\ Rule 10C-1(b)(4) does not include the word ``independent''
before ``legal counsel'' and requires an independence assessment for
any legal counsel to a compensation committee, other than in-house
counsel. In setting forth the requirements of Rule 10C-1(b)(2) and
(3), BATS has deleted the word ``independent'' prior to ``legal
counsel'' so as to avoid confusion.
    \31\ See proposed BATS Rule 14.10(c)(4)(C)(i).
---------------------------------------------------------------------------

     The committee shall be directly responsible for the
appointment, compensation and oversight of the work of any retained
compensation consultant, legal counsel, or other adviser retained by
the compensation committee; \32\ and
---------------------------------------------------------------------------

    \32\ See proposed BATS Rule 14.10(c)(4)(C)(ii).
---------------------------------------------------------------------------

     The company must provide for appropriate funding, as
determined by

the compensation committee, for payment of reasonable compensation to a
compensation consultant, legal counsel, or any other adviser retained
by the compensation committee.\33\
---------------------------------------------------------------------------

    \33\ See proposed BATS Rule 14.10(c)(4)(C)(iii).
---------------------------------------------------------------------------

    The committee may select, or receive advice from, a compensation
consultant, legal counsel or other adviser to the compensation
committee, other than in-house legal counsel, only after taking into
consideration the six factors set forth in Rule 10C-1(b)(4) regarding
independence assessments of compensation advisers.\34\ The six factors,
which are set forth in full in the proposed rule, are: (i) The
provision of other services to the issuer by the person that employs
the compensation consultant, legal counsel or other adviser; (ii) the
amount of fees received from the issuer by the person that employs the
compensation consultant, legal counsel or other adviser, as a
percentage of the total revenue of the person that employs the
compensation consultant, legal counsel or other adviser; (iii) the
policies and procedures of the person that employs the compensation
consultant, legal counsel or other adviser that are designed to prevent
conflicts of interest; (iv) any business or personal relationship of
the compensation consultant, legal counsel or other adviser with a
member of the compensation committee; (v) any stock of the issuer owned
by the compensation consultant, legal counsel or other adviser; and
(vi) any business or personal relationship of the compensation
consultant, legal counsel, other adviser or the person employing the
adviser with an executive officer of the issuer. The Exchange stated
that it believes this list of factors is comprehensive. Therefore, the
Exchange did not include any specific additional factors for
consideration by compensation committees in making the required
independence assessment.
---------------------------------------------------------------------------

    \34\ See proposed BATS Rule 14.10(c)(4)(C)(iv), setting forth
the factors listed in Rule 10C-1(b)(4)(i)-(vi) under the Act.
---------------------------------------------------------------------------

    The amended proposed rule change also states that nothing in the
rule shall be construed to require the compensation committee to
implement or act consistently with the advice or recommendations of the
retained compensation adviser or to affect the ability or obligation of
the committee to exercise its own judgment in fulfilling its
duties.\35\ In Amendment No. 2, the Exchange modified the proposed rule
change to state that the committee is required to conduct the
independence assessment outlined in the rule with respect to any
compensation consultant, legal counsel or other adviser that provides
advice to the committee, other than in-house counsel.\36\ Amendment No.
2 also provides that a compensation committee is not required to
conduct the independence assessment with respect to any compensation
consultant, legal counsel or other adviser whose role is limited to the
following activities for which no disclosure would be required under
Item 407(e)(3)(iii) of Regulation S-K, including: consulting on any
broad-based plan that does not discriminate in scope, terms, or
operation, in favor of executive officers or directors of the listed
company, and that is available generally to all salaried employees; or
providing information that either is not customized for a particular
company or that is customized based on parameters that are not
developed by the compensation consultant, and about which the
compensation consultant does not provide advice.\37\
---------------------------------------------------------------------------

    \35\ See id, based on Rule 10C-1(b)(2)(iii).
    \36\ See id, based on Instruction to paragraph (b)(4) of Rule
10C-1.
    \37\ See proposed BATS Rule 14.10(c)(4)(C)(iv) and Amendment
Nos. 2 and 3, supra notes 7 and 8, respectively.
---------------------------------------------------------------------------

    Proposed BATS Rule 14.10(c)(4)(C)(iv), as amended, also clarifies
that nothing in the rule requires a compensation consultant, legal
counsel or other compensation adviser to be independent, only that the
compensation committee consider the enumerated independence factors
before selecting or receiving advice from a compensation adviser.\38\
It further clarifies that compensation committees may select or receive
advice from any compensation adviser they prefer, including ones that
are not independent, after considering the six independence factors set
forth above.\39\
---------------------------------------------------------------------------

    \38\ See id.
    \39\ See id.
---------------------------------------------------------------------------

3. Application to Smaller Reporting Companies
    Rule 10C-1 includes an exemption for smaller reporting companies
from all the requirements included within the rule.\40\ Consistent with
this Rule 10C-1 provision, BATS proposes that a smaller reporting
company, as defined in Rule 12b-2 under the Act (hereinafter, a
``Smaller Reporting Company''), be exempt from the compensation-related
rules added by the proposed rule change. Thus, Smaller Reporting
Companies will not be required to comply with the enhanced independence
standards for members of compensation committees relating to
compensatory fees and affiliation and the requirements relating to
compensation advisers.\41\
---------------------------------------------------------------------------

    \40\ See supra Section II.A; see also Rule 10C-1(b)(5)(ii).
    \41\ See proposed BATS Rule 14.10(e)(1)(F), as amended by
Amendment No. 3 which makes clear that for Smaller Reporting
Companies the current standards for independent oversight of
executive compensation are not changing. Therefore, the Exchange
amended its exemption for Smaller Reporting Companies to state that
executive compensation must be determined either by a compensation
committee comprised of Independent Directors meeting the definition
of independent in Rule 14.10(c)(1)(B), or by a majority of the
Board's Independent Directors in a vote in which only Independent
Directors meeting the definition of Independent Director in Rule
14.10(c)(1)(B) participate.
---------------------------------------------------------------------------

4. Exemptions
    Rule 10C-1 permits the national securities exchanges to exempt from
the listing rules adopted pursuant to Rule 10C-1 certain categories of
issuers, as the national securities exchange determines is appropriate,
taking into consideration, among other relevant factors, the potential
impact of the listing rules on smaller reporting issuers.\42\ As
modified by Amendment No. 2, the proposed rule change would leave the
existing exemptions from the compensation-related listing standards in
the Exchange's current rules generally unchanged. These include
exemptions for asset-backed issuers and other passive issuers,\43\
cooperatives,\44\ limited partnerships,\45\ and management investment
companies.\46\ For the same

reasons that these categories of companies have traditionally been
exempt from the Exchange's compensation-related listing rules, the
Exchange proposes that they continue to be exempt from its revised
listing rules relating to compensation committees.
---------------------------------------------------------------------------

    \42\ See 17 CFR 240.10C-1(b)(5).
    \43\ See BATS Rule 14.10(e)(1)(A). Asset-backed issuers and
other passive issuers have traditionally been exempt from the
Exchange's compensation-related listing rules because these issuers
do not have a board of directors or persons acting in a similar
capacity and their activities are limited to passively owning or
holding (as well as administering and distributing amounts in
respect of) securities, rights, collateral, or other assets on
behalf of or for the benefit of the holders of the listed
securities.
    \44\ See BATS Rule 14.10(e)(1)(B). Certain member-owned
cooperatives that list their preferred stock are required to have
their common stock owned by their members. As BATS stated in its
proposal, these entities have traditionally been exempt from the
Exchange's compensation-related listing rules because of their
unique structure and the fact that they do not have a publicly
traded class of common stock.
    \45\ See BATS Rule 14.10(e)(1)(D). The Exchange's compensation-
related listing rules historically have not been applied to limited
partnerships because, according to the Exchange, the structure of
these entities requires that public investors have limited rights
and that the general partners make all significant decisions about
the operation of the limited partnership. As such, BATS notes that
limited partners do not expect to have a voice in the operations of
the partnership.
    \46\ See BATS Rule 14.10(e)(1)(E). According to BATS, management
investment companies registered under the Investment Company Act of
1940 are already subject to a pervasive system of federal regulation
in certain areas of corporate governance, and, as a result, these
entities have traditionally been exempt from the Exchange's
compensation-related listing rules.
---------------------------------------------------------------------------

    In addition, the Exchange's current listing rules provide that a
foreign private issuer may follow its home country practice in lieu of
the Exchange's compensation-related listing rules if the foreign
private issuer discloses in its annual reports filed with the
Commission each requirement that it does not follow and describes the
home country practice followed by the company in lieu of such
requirements.\47\ Under the proposed rule change as modified by
Amendment No. 2, this allowance will continue to apply generally to the
Exchange's compensation committee rules as revised, on the same
condition, namely that the issuer discloses each requirement it does
not follow and describes the home country practice it follows in lieu
of such requirement. However, with respect, specifically, to the
enhanced standards of independence for compensation committees
(concerning the Fees and Affiliation Factors), if a listed company
follows its home country practice, it will be required additionally
disclose in its annual report filed with the Commission the reasons why
it does not have an independent compensation committee as set forth in
these standards.\48\
---------------------------------------------------------------------------

    \47\ See BATS Rule 14.10(e)(1)(C). Alternatively, a foreign
private issuer that is not required to file its annual report with
the Commission on Form 20-F may make this disclosure only on its Web
site. Id. The Exchange's listing rules have traditionally provided
qualified exemptions for Foreign Private Issuers so that such
issuers are not required to do any act that is contrary to a law,
rule, or regulation of any public authority exercising jurisdiction
over such issuer or that is contrary to generally accepted business
practices in the issuer's country of domicile.
    \48\ As explained by the Exchange, Amendment No. 2 adopts the
requirements of Rule 10C-1(b)(1)(iii)(A)(4), which provides an
exemption from the independence requirements of Rule 10C-1 for
foreign private issuers.
---------------------------------------------------------------------------

    Lastly, in Amendment No. 2, the Exchange proposes to leave the
requirements relating to compensation committee composition for
companies in bankruptcy proceeding generally unchanged. Because
companies in bankruptcy proceedings are not currently required to have
a compensation committee, the Exchange is proposing to continue to rely
on the existing schedule to phase in compliance with the compensation
committee composition requirement for companies emerging from
bankruptcy.\49\
---------------------------------------------------------------------------

    \49\ See BATS Rule 14.10(e)(2)(C).
---------------------------------------------------------------------------

5. Transition to the New Rules for Companies Listed as of the Effective
Date
    The proposed rule change, as amended, provides that certain of the
new requirements for companies listed prior to July 1, 2013. A company
listed on the Exchange prior to July 1, 2013 will be permitted,
commencing on July 1, to phase-in compliance with the Independent
Director Oversight of Executive Officer Compensation requirements on
the same schedule as Companies listing in conjunction with their
initial public offering.\50\ The phase-in period for companies listing
in conjunction with the initial public offering is discussed in section
II.B.6 below.
---------------------------------------------------------------------------

    \50\ See BATS Rule 14.10(e)(2)(D).
---------------------------------------------------------------------------

6. Phase-In Schedules: IPOs; Companies that Lose their Exemptions;
Companies Transferring from Other Markets
    BATS proposes to amend BATS Rule 14.10(e)(2)(A) to allow a company
listing in connection with its initial public offering to phase-in the
compensation committee independence rules, as revised, as follows: (1)
One independent member at the time of listing; (2) a majority of
independent members within 90 days of listing; and (3) all independent
members within one year of listing.\51\ Since companies listing in
connection with an initial public offering may not have previously had
an independent compensation committee, the Exchange believes that
allowing such companies to phase in compliance with these requirements
will reasonably provide these companies with a window identical to the
phase-in schedule for the Exchange's rules regarding Independent
Director Oversight of Director Nominations under BATS Rule 14.10(c)(4)
and the independent audit committee requirements of Rule 10A-
3(b)(1)(iv)(A) under the Act. The Exchange states that, as noted above,
the proposed rule would require that the company have at least one
independent member at the time of listing, meaning that even though it
is described as a ``phase-in period,'' the company would never actually
be without at least one independent member.
---------------------------------------------------------------------------

    \51\ See Proposed BATS Rule 14.10(e)(2)(A); Exhibit 5 to
Amendment No. 2, supra note 6.
---------------------------------------------------------------------------

7. Conforming Changes and Correction of Typographical Errors
    The Exchange is also proposing to amend BATS Rule 14.10(c)(4)(B) to
add a title to and adjust the numbering of the Rule. The changes are
being proposed in order to remain consistent with existing rule
structure and to ensure that the rules are well-organized and
understandable.

III. Discussion

    After careful review, the Commission finds that the BATS proposal,
as amended, is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange.\52\ In
particular, the Commission finds that the amended proposed rule change
is consistent with the requirements of Section 6(b) of the Act,\53\ as
well as with Section 10C of the Act \54\ and Rule 10C-1 thereunder.\55\
Specifically, the Commission finds that the proposed rule change, as
amended, is consistent with Section 6(b)(5) of the Act,\56\ which
requires that the rules of a national securities exchange be designed,
among other things, to prevent fraudulent and manipulative acts and
practices; 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, and, in general, to protect investors and the
public interest; and not be designed to permit, among other things,
unfair discrimination between issuers.
---------------------------------------------------------------------------

    \52\ In approving the BATS proposed rule change, as amended, the
Commission has considered its impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
    \53\ 15 U.S.C. 78f(b).
    \54\ 15 U.S.C. 78j-3.
    \55\ 17 CFR 240.10C-1.
    \56\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The development and enforcement of meaningful listing standards for
a national securities exchange is of substantial importance to
financial markets and the investing public. Meaningful listing
standards are especially important given investor expectations
regarding the nature of companies that have achieved an exchange
listing for their securities. The corporate governance standards
embodied in the listing rules of national securities exchanges, in
particular, play an important role in assuring that companies listed
for trading on the exchanges' markets observe good governance
practices, including a reasoned, fair, and impartial approach for
determining the compensation of corporate executives. The Commission
believes that the BATS proposal will foster greater transparency,
accountability, and objectivity in the oversight of compensation
practices of listed issuers and in the decision-

making processes of their compensation committees.
    In enacting Section 10C of the Act as one of the reforms of the
Dodd-Frank Act,\57\ Congress resolved to require that ``board
committees that set compensation policy will consist only of directors
who are independent.'' \58\ In June 2012, as required by this
legislation, the Commission adopted Rule 10C-1 under the Act, which
directs the national securities exchanges to prohibit, by rule, the
initial or continued listing of any equity security of an issuer (with
certain exceptions) that is not in compliance with the rule's
requirements regarding issuer compensation committees and compensation
advisers.
---------------------------------------------------------------------------

    \57\ See supra note 9.
    \58\ See H.R. Rep. No. 111-517, Joint Explanatory Statement of
the Committee of Conference, Title IX, Subtitle E ``Accountability
and Executive Compensation,'' at 872-873 (Conf. Rep.) (June 29,
2010).
---------------------------------------------------------------------------

    In response, BATS submitted the proposed rule change, which
includes rules intended to comply with the requirements of Rule 10C-1
and additional provisions designed to strengthen the Exchange's listing
standards relating to compensation committees. The Commission believes
that the proposed rule change satisfies the mandate of Rule 10C-1 and
otherwise will promote effective oversight of its listed issuers'
executive compensation practices.
    The Commission believes that the proposed rule change, as modified
by Amendment Nos. 1, 2, and 3, appropriately revises BATS's rules for
compensation committees of listed companies, for the following reasons:

A. Compensation Committee Composition

    As discussed above, under Rule 10C-1, the exchanges must adopt
listing standards that require each member of a compensation committee
to be independent, and to develop a definition of independence after
considering, among other relevant factors, the source of compensation
of a director, including any consulting advisory or other compensatory
fee paid by the issuer to the director as well as whether the director
is affiliated with the issuer or any of its subsidiaries or their
affiliates.
    The Commission notes that Rule 10C-1 leaves it to each exchange to
formulate a final definition of independence for these purposes,
subject to review and final Commission approval pursuant to Section
19(b) of the Act. This discretion comports with the Act, which gives
the exchanges the authority, as self-regulatory organizations, to
propose the standards they wish to set for companies that seek to be
listed on their markets consistent with the Act and the rules and
regulations thereunder, and, in particular, Section 6(b)(5) of the Act.
As the Commission stated in the Rule 10C-1 Adopting Release, ``given
the wide variety of issuers that are listed on exchanges, we believe
that the exchanges should be provided with flexibility to develop
independence requirements appropriate for the issuers listed on each
exchange and consistent with the requirements of the independence
standards set forth in Rule 10C-1(b)(1).'' \59\
---------------------------------------------------------------------------

    \59\ As explained further in the Rule 10C-1 Adopting Release,
prior to final approval, the Commission will consider whether the
exchanges' proposed rule changes are consistent with the
requirements of Section 6(b) and Section 10C of the Exchange Act.
---------------------------------------------------------------------------

    As noted above, in addition to retaining its existing independence
standards that currently apply to board and compensation committee
members, which include certain bright-line tests, BATS has enhanced its
listing requirements regarding compensation committees. Under BATS's
current rules, each member of a listed issuer's compensation
committee--or each individual participating under the Alternative
Option--must be a member of the board and independent. The enhanced
listing requirements proposed by BATS specifically require that when
evaluating the independence of a director responsible for determining
executive compensation, a company's board of directors consider the
following factors: (i) The source of compensation of the director,
including consulting, advisory or other compensatory fee paid by the
company to the director; and (ii) whether the director is affiliated
with the company, a subsidiary of the company, or an affiliate of a
subsidiary of the company, in accordance with the requirements of Rule
10C-1(b)(1).
    The Commission believes that by incorporating these independence
standards, the Exchange has complied with the independence requirements
of Rule 10C-1(b)(1), and that the proposed independence requirements,
which are designed to protect investors and the public interest, are
consistent with the requirements of Section 6(b)(5) of the Act. The
Commission believes that the enhanced standards, in conjunction with
the Exchange's existing ``bright line'' independence standards set
forth in BATS Rule 14.10(c)(1)(B), are sufficiently broad to encompass
the types of relationships which would generally be material to a
director's independence for determining executive compensation.
    As to whether BATS should adopt any additional relevant
independence factors, the Exchange stated that it reviewed its rules in
the light of Rule 10C-1, and concluded that its existing rules together
with its proposed rules are sufficient to ensure committee member
independence.\60\ Further, BATS stated it believes it can best comply
with Rule 10C-1 by adopting in its Rules the factors set forth in Rule
10C-1(b)(1)(ii).\61\ The Commission believes that, through this review,
the Exchange has complied with the requirement that it consider
relevant factors, including, but not limited to the fees and
affiliation factors in determining its definition of independence for
compensation committee members. The Commission notes that Rule 10C-1
requires each exchange to consider relevant factors, but does not
require the exchange's proposal to reflect any such additional factors.
---------------------------------------------------------------------------

    \60\ See Notice, supra note 4.
    \61\ See id.
---------------------------------------------------------------------------

B. Authority of Committees To Retain Compensation Advisers; Funding;
and Independence of Compensation Advisers

    As discussed above, BATS proposes to set forth explicitly in its
rules the requirements of Rule 10C-1 regarding a compensation
committee's authority to retain compensation advisers, its
responsibilities with respect to such advisers, and the listed
company's obligation to provide appropriate funding for payment of
reasonable compensation to a compensation adviser retained by the
committee. As such, the Commission believes these provisions meet the
mandate of Rule 10C-1 and are consistent with the Act.
    In approving this aspect of the proposal, the Commission notes that
compliance with the rule requires an independence assessment of any
compensation consultant, legal counsel, or other adviser that provides
advice to the compensation committee, and is not limited to advice
concerning executive compensation. However, BATS has proposed, in
Amendment No. 2, to add language to the provision regarding the
independence assessment of compensation advisers \62\ to state that the
compensation committee is not required to conduct an independence
assessment for a compensation adviser that acts in a role limited to
the following activities for which no disclosure is required under Item

407(e)(3)(iii) of Regulation S-K: (a) consulting on any broad-based
plan that does not discriminate in scope, terms, or operation, in favor
of executive officers or directors of the company, and that is
available generally to all salaried employees; and/or (b) providing
information that either is not customized for a particular issuer or
that is customized based on parameters that are not developed by the
adviser, and about which the adviser does not provide advice. BATS
states that this exception is based on Item 407(e)(3)(iii) of
Regulation S-K, which provides a limited exception to the Commission's
requirement for a registrant to disclose any role of compensation
consultants in determining or recommending the amount and form of a
registrant's executive and director compensation.\63\
---------------------------------------------------------------------------

    \62\ See proposed Rule 14.10(c)(4)(C)(iv), as amended by
Amendment No. 2.
    \63\ See 17 CFR 229.407(e)(3)(iii).
---------------------------------------------------------------------------

    The Commission views BATS' proposed exception as reasonable, as the
Commission determined, when adopting the compensation consultant
disclosure requirements in Item 407(e)(3)(iii), that the two excepted
categories of advice do not raise conflict of interest concerns.\64\
The Commission also made similar findings when it noted it was
continuing such exceptions in the Rule 10C-1 Adopting Release,
including excepting such roles from the new conflict of interest
disclosure rule required to implement Section 10C(c)(2). The Commission
also believes that the exception should allay some of the concerns
raised by the commenters to other filings regarding the scope of the
independence assessment requirement.\65\ Based on the above, the
Commission believes these limited exceptions are consistent with the
investor protection provisions of Section 6(b)(5) of the Act.
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    \64\ See Proxy Disclosure Enhancements, Release No. 33-9089
(Dec. 19, 2009), 74 FR 68334 (Dec. 23, 2009), at 68348 (``We are
persuaded by commenters who noted that surveys that provide general
information regarding the form and amount of compensation typically
paid to executive officers and directors within a particular
industry generally do not raise the potential conflicts of interest
that the amendments are intended to address.'').
    \65\ See NYSE Approval Order and Nasdaq Approval Order, supra
note 6.
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C. Compensation Adviser Independence Factors

    As noted above, the compensation committee may select, or receive
advice from, a compensation consultant, legal counsel, or other adviser
to the compensation committee, other than in-house legal counsel, only
after taking into consideration the six factors set forth in Rule 10C-1
\66\ regarding independence assessments of compensation advisers, which
will be set forth in BATS Rule 14.10(c)(4)(C)(ii). Codifying the
comprehensive list of factors, as set forth in Rule 10C-1, into its own
Rules will ensure that issuers adequately assess the independence of
potential compensation advisers.
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    \66\ See Rule 10C-1(b)(4).
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    BATS Rules require an independence assessment to be performed on
every potential compensation adviser, other than in-house counsel.\67\
The Commission notes that Rule 10C-1 includes an instruction that
specifically requires a compensation committee to conduct the
independence assessment with respect to ``any compensation consultant,
legal counsel or other adviser that provides advice to the compensation
committee, other than in-house counsel.'' To avoid any confusion, BATS,
in Amendment No. 2, added rule text that reflects this instruction in
its own rules.\68\
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    \67\ See BATS Rule 14.10(c)(4)(C)(iv).
    \68\ See supra note 38 and accompanying text.
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    In approving this aspect of the proposal, the Commission notes that
compliance with the rule requires an independence assessment of any
compensation consultant, legal counsel, or other adviser that provides
advice to the compensation committee, and is not limited to advice
concerning executive compensation. Finally, one commenter on the New
York Stock Exchange's proposal requested guidance ``on how often the
required independence assessment should occur.'' \69\ This commenter
observed that it ``will be extremely burdensome and disruptive if prior
to each compensation committee meeting, the committee had to conduct a
new assessment.'' The Commission anticipates that compensation
committees will conduct such an independent assessment at least
annually.\70\
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    \69\ See Comment to NYSE Notice by Robert B. Lamm, Chair,
Securities Law Committee, The Society of Corporate Secretaries &
Governance Professionals, dated December 7, 2012 (``Corporate
Secretaries Letter'').
    \70\ See NYSE Approval Order and Nasdaq Approval Order, supra
note 6, for a discussion of comments.
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D. Application to Smaller Reporting Companies

    The Commission believes that the requirement for Smaller Reporting
Companies, like all other BATS-listed companies, to have a compensation
committee, composed solely of independent directors or compensation
determined by a majority of the independent directors, is reasonable
and consistent with the protection of investors. The Commission notes
that BATS' rules for compensation committees have not made a
distinction for Smaller Reporting Companies in the past. However,
consistent with the exemption of Smaller Reporting Companies from Rule
10C-1, the Exchange has decided not to require Smaller Reporting
Companies to meet its proposed new independence requirements as to
compensatory fees and affiliation as well as the requirements
concerning compensation advisers.\71\
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    \71\ See Amendment No. 3, supra note 8, regarding proposed BATS
Rule 14.10(e)(i).
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    The Commission believes that these provisions are consistent with
the Act and do not unfairly discriminate between issuers. The
Commission believes that, for similar reasons to those for which
Smaller Reporting Companies are exempted from the Rule 10C-1
requirements, it makes sense for BATS to provide some flexibility to
Smaller Reporting Companies. Further, in view of the potential
additional costs, it is reasonable not to require a Smaller Reporting
Company to comply with these additional compensation adviser
requirements.\72\
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    \72\ As discussed supra notes 40-41 and accompanying text, under
BATS' proposal, Smaller Reporting Companies are exempted from all of
the compensation adviser requirements, including the requirement
that specified independence factors be considered before selecting
such advisers.
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E. Opportunity To Cure Defects

    The Commission notes that the cure period that BATS proposes for
companies that fail to comply with the enhanced independence
requirements designed to comply with Rule 10C-1 is not exactly the same
as the cure period suggested under Rule 10C-1.\73\ The BATS proposal
adds the proviso that, if the annual shareholders meeting occurs no
later than 180 days following the event that caused the noncompliance,
the company instead has 180 days from the event to regain compliance.
The Commission believes that, although the cure period proposed by BATS
gives a company more leeway in certain circumstances than the cure
period suggested under Rule 10C-1, the accommodation is fair and
reasonable. As a general matter, it allows all companies at least 180
days to cure

noncompliance. To give a specific example, the proposal would afford a
company additional time to comply, than the Rule 10C-1 option, where a
member of the compensation committee ceases to be independent two weeks
before the company's next annual meeting.
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    \73\ Rule 10C-1 allows a cure period of until the earlier of the
next annual shareholders meeting of the listed issuer or one year
from the occurrence of the event that caused the member to be no
longer independent. The BATS proposal adds that, if the annual
shareholders' meeting occurs no later than 180 days following the
event that caused the noncompliance, the company instead has 180
days from the event to regain compliance. As explained by BATS, this
provides a company at least 180 days to cure noncompliance and would
typically allow a company to regain compliance in connection with
its next annual meeting. See supra notes 28-29 and accompanying
text.
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    The Commission believes that it is reasonable for BATS not to
provide this cure period when the listed company has no formal
compensation committee and executive compensation is determined under
the Alternative Option. The Commission notes that under this option,
only a majority--not all--of the board's Independent Directors who also
meet the enhanced requirements are required for determining, or
recommending to the board for determination, executive compensation. In
addition, as the Exchange notes, its general rules include delisting
procedures that provide issuers with notice, opportunity for a hearing,
opportunity for appeals, and an opportunity to cure defects before an
issuer's securities are delisted.
    The Commission believes that these general procedures for companies
out of compliance with listing requirements, in addition to the
particular cure provisions for compensation committees failing to meet
the new independence standards, adequately meet the mandate of Rule
10C-1 and also are consistent with investor protection and the public
interest since they give a company a reasonable time period to cure
non-compliance with these important requirements before they will be
delisted.

F. Exemptions

    As discussed above, asset-backed issuers and other passive issuers,
cooperatives, limited partnerships, registered management investment
companies, and controlled companies are exempt from BATS's existing
rules relating to compensation, and BATS proposes to extend the
exemptions for these entities to the new requirements of the proposed
rule change. The Commission notes that Rule 10C-1 allows exchanges to
exempt from the listing rules adopted pursuant to Rule 10C-1 certain
categories of issuers, as the national securities exchange determines
is appropriate.\74\ The Commission believes that, given the specific
characteristics of the aforementioned types of issuers,\75\ it is
reasonable and consistent with Section 6(b)(5) of the Act for the
Exchange to exempt them from the new requirements.
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    \74\ The Commission notes, moreover, that, in the case of
limited partnerships and open-end registered management investment
companies, Rule 10C-1 itself provides exemptions from the
independence requirements of the Rule. The Commission notes that
controlled companies are provided an automatic exemption from the
application of the entirety of Rule 10C-1 by Rule 10C-1(b)(5).
    \75\ See supra Section II.B.4.
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    The Commission notes that BATS proposes, however, to amend its
current rule for foreign private issuers, which allows such issuers to
follow their home country practice in lieu of the Exchange's standards
regarding a company's compensation decision-making process. The current
rule includes the proviso that the issuer must disclose its reliance on
the exemption. BATS proposes to conform its rules in this regard with
the provision of Rule 10C-1 permitting a foreign private issuer to
follow home country practice only when it meets the additional
condition that the issuer disclose the reasons why it does not have an
independent compensation committee.

G. Transition to the New Rules for Companies Listed as of the Effective
Date

    The Commission believes that the deadlines for compliance with the
proposal's various provisions are reasonable and should afford listed
companies adequate time to make the changes, if any, necessary to meet
the new standards. The Commission believes that the deadline proposed
is clear-cut and matches the NYSE deadline and the revised deadline set
forth by The NASDAQ Stock Market.\76\ Additionally, the Commission
believes that the BATS compliance dates and transition periods
associated with the new independence standards relating to the
compensation committee are consistent with Rule 10C-1 and provide for
ease of implementation. Accordingly, issuers will be expected to begin
complying with the new compensation committee independence standards
commencing on July 1, 2013, from which time issuers will be required to
have one independent compensation committee member at that time, a
majority of independent members within 90 days from July 1, 2013, and
all independent members within one year of July 1, 2013.
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    \76\ See NYSE Approval Order and Nasdaq Approval Order, supra
note 6.
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H. Phase-In Schedules: IPOs; Companies That Lose Their Exemptions;
Companies Transferring From Other Markets

    The Commission believes that it is reasonable for BATS to allow,
with respect to IPOs, companies listing in conjunction with a carve-out
or spin-off transaction, companies emerging from bankruptcy, companies
ceasing to be controlled companies, companies ceasing to qualify as a
foreign private issuer, and companies transferring from other markets,
the same phase-in schedule for compliance with the new requirements as
is permitted under its current compensation-related rules. In the
Commission's view, the implementation schedule offers such companies
clarity in determining when they will be subject to the heightened
requirements.

IV. Accelerated Approval of Amendment Nos. 2 and 3 to the Proposed Rule
Change

    The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\77\ for approving the proposed rule change, as modified by
Amendment Nos. 1, 2 and 3, prior to the 30th day after the date of
publication of notice in the Federal Register.
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    \77\ 15 U.S.C. 78s(b)(2).
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    The changes made to the proposal by Amendment No. 2 that clarified
the responsibilities and authority of Independent Directors responsible
for determining executive compensation and the requirement that listed
companies provide appropriate funding for compensation advisers merely
set forth in detail the relevant requirements of Rule 10C-1(b)(2)-(4)
explicitly in the Exchange's rules. Moreover, the changes improve the
proposal because they bring together the full set of the Exchange's
rules on compensation committees in one place, thereby easing
compliance for listed companies and benefiting investors seeking an
understanding of an issuer's obligations with regard to determining
executive compensation.
    The inclusion in Amendment No. 2 of language in BATS's rules that
requires a compensation committee to conduct the independence
assessment with respect to ``any compensation consultant, legal counsel
or other adviser that provides advice to the compensation committee,
other than in-house counsel'' merely reflects an instruction in Rule
10C-1 itself. The addition of further guidance by Amendment No. 2
merely clarifies that nothing in the Exchange's rules requires a
compensation adviser to be independent, only that the compensation
committee consider the independence factors before selecting or
receiving advice from a compensation adviser,\78\ and is not a
substantive

change. Regarding the provision added by Amendment No. 2 to exclude
advisers that provide certain types of services from the independence
assessment, as discussed above, the Commission has already determined
to exclude such advisers from the disclosure requirement regarding
compensation advisers in Regulation S-K because these types of services
do not raise conflict of interest concerns.
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    \78\ See supra note 38 and accompanying text.
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    The change made by Amendment No. 1 to require companies currently
listed on BATS to comply with certain of the new rules by July 1, 2013
brings BATS's effective date in line with that of other exchanges.\79\
The addition of exemptions that were not originally proposed for
specific types of entities, including limited partnerships,
cooperatives, foreign private issuers, management investment companies
registered under the Investment company Act of 1940 continue exemptions
available under the current rules and are appropriate exercises of
BATS's exemptive authority under Rule 10C-1. The revision in Amendment
No. 2 to adopt a cure period for companies to comply with the rule's
requirements in the event a director ceases to be independent for
reasons outside his or her control is suggested by Rule 10C-1 itself,
and the additional proviso to allow companies at least 180 days has
been approved by the Commission in other contexts.
---------------------------------------------------------------------------

    \79\ See NYSE Approval Order and Nasdaq Approval Order, supra
note 6.
---------------------------------------------------------------------------

    The change made by Amendment No. 3 regarding the exemption for
Smaller Reporting Companies merely clarifies that for Smaller Reporting
Companies the current standards for independent oversight of executive
compensation are not changing, as BATS is only exempting Smaller
Reporting Companies from the newly proposed enhanced independence
standards, not all the independence standards. Thus, Smaller reporting
Companies will continue to be required to comply with existing
oversight of executive compensation rules.
    For all the reasons discussed above, the Commission finds good
cause to accelerate approval of the proposed changes as made by
Amendment Nos. 2 and 3.

V. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing and whether Amendment Nos. 2 and 3
are consistent with the Act. Comments may be submitted by any of the
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BATS-2012-039 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BATS-2012-039. This file
number should be included on the subject line if email is used.
    To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for Web site
viewing and printing in the Commission's Public Reference Room on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of such filing also will be available for inspection and copying
at the principal office of BATS. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-BATS-2012-039, and should be submitted on or before
February 12, 2013.

VI. Conclusion

    In summary, and for the reasons discussed in more detail above, the
Commission believes that the rules being adopted by BATS, taken as
whole, should benefit investors by helping listed companies make
informed decisions regarding the amount and form of executive
compensation. BATS' new rules will help to meet Congress's intent that
compensation committees that are responsible for setting compensation
policy for executives of listed companies consist only of independent
directors.
    BATS' rules also, consistent with Rule 10C-1, require compensation
committees of listed companies to assess the independence of
compensation advisers, taking into consideration six specified factors.
This should help to assure that compensation committees of BATS-listed
companies are better informed about potential conflicts when selecting
and receiving advice from advisers. Similarly, the provisions of BATS'
standards that require compensation committees to be given the
authority to engage and oversee compensation advisers, and require the
listed company to provide for appropriate funding to compensate such
advisers, should help to support the compensation committee's role to
oversee executive compensation and help provide compensation committees
with the resources necessary to make better informed compensation
decisions.
    For the foregoing reasons, the Commission finds that the proposed
rule change, SR-BATS-2012-039, as modified by Amendment Nos. 1, 2 and
3, is consistent with the Exchange Act and the rules and regulations
thereunder applicable to a national securities exchange, and, in
particular, with Section 6(b)(5) of the Act.\80\
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    \80\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\81\ that the proposed rule change, SR-BATS-2012-039, as amended,
be, and it hereby is, approved.
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    \81\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\82\
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    \82\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-01110 Filed 1-18-13; 8:45 am]
BILLING CODE 8011-01-P