[Federal Register Volume 79, Number 114 (Friday, June 13, 2014)]
[Notices]
[Pages 33982-33989]
[FR Doc No: 2014-13818]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72346; File No. SR-BATS-2014-022]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of a
Proposed Rule Change to Amend the Competitive Liquidity Provider
Program

June 9, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 3, 2014, BATS Exchange, Inc. (``Exchange'' or ``BATS'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange is proposing to add an Interpretation and Policy .03
to Rule 11.8 entitled ``Supplemental Competitive Liquidity Provider
Program for Exchange Traded Products'' to incentivize competitive and
aggressive quoting by market makers registered with the Exchange
(``Market Makers'') \3\ in Exchange-listed ETPs.\4\ The Exchange is
also proposing to make a corresponding amendment to Interpretation and
Policy .02 to Rule 11.8, entitled ``Competitive Liquidity Provider
Program'' in order to reflect the sunset of ETPs listed on the Exchange
from the existing Competitive Liquidity Provider Program. The Exchange
will implement the proposed rule change on a date that will be
circulated in a notice from the BATS Trade Desk.
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    \3\ As defined in BATS Rules, the term ``Market Maker'' means a
Member that acts a as a market maker pursuant to Chapter XI of BATS
Rules.
    \4\ As proposed in Interpretation and Policy .03 (b)(4) to Rule
11.8, the term ``ETP'' includes Portfolio Depository Receipts, Index
Fund Shares, Trust Issued Receipts, and Managed Fund Shares, which
are defined in Rule 14.11(b), 14.11(c), 14.11(f), and 14.11(i),
respectively, which the Exchange may propose to expand in the future
as it adds products which may be listed on the Exchange. Any such
expansion would require the Exchange to file a proposal with the
Commission under Rule 19b-4 of the Act.
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    As proposed, the Supplemental Competitive Liquidity Provider
Program for Exchange Traded Products (the ``Program'') set forth in
Interpretation and Policy .03 to Rule 11.8 will operate for a one year
pilot period beginning from the date of implementation of the program.
During the pilot, the Exchange will periodically provide information to
the Commission about market quality with respect to the Program.
    The text of the proposed rule change is available at the Exchange's
Web site at http://www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
Background
    On August 30, 2011, the Exchange received approval of rules
applicable to the qualification, listing and delisting of securities of
issuers on the Exchange.\5\ More recently, the Exchange received
approval to operate a program that is designed to incentivize certain
Market Makers registered with the Exchange as Competitive Liquidity
Providers to enhance liquidity on the Exchange in all Exchange-listed
securities (the ``CLP Program'').\6\ The Exchange subsequently adopted
financial incentives for the CLP Program \7\ and thereafter amended
certain components of the CLP Program, including financial incentives
and quoting requirements for Competitive Liquidity Providers in the CLP
Program.\8\ On April 17, 2014, the Exchange filed a proposal to create
a new lead market maker (``LMM'') program (the ``LMM Program) in order
to incentivize LMMs to provide liquidity in BATS-listed securities
through the payment of enhanced rebates and/or reduced fees in the
security for which they are an LMM, which it implemented on June 2,
2014.\9\
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    \5\ See Securities Exchange Act Release No. 65225 (August 30,
2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018).
    \6\ See Securities Exchange Act Release No. 66307 (February 2,
2012), 77 FR 6608 (February 8, 2012) (SR-BATS-2011-051).
    \7\ See Securities Exchange Act Release No. 66427 (February 21,
2012), 77 FR 11608 (February 27, 2012) (SR-BATS-2012-011).
    \8\ See Securities Exchange Act Release Nos. 67854 (September
13, 2012), 77 FR 58198 (September 19, 2012) (SR-BATS-2012-036);
69190 (March 20, 2013), 78 FR 18384 (March 26, 2013) (SR-BATS-2013-
005); 69857 (June 25, 2013), 78 FR 39392 (July 1, 2013) (SR-BATS-
2013-037); 70865 (November 13, 2013), 78 FR 69509 (November 19,
2013) (SR-BATS-2013-057); and 71284 (January 10, 2014), 79 FR 2921
(January 16, 2014) (SR-BATS-2014-002).
    \9\ See Securities Exchange Act Release No. 72020 (April 25,
2014), 79 FR 24807 (May 1, 2014) (SR-BATS-2014-015).
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    The purpose of this filing is to propose new Interpretation and
Policy .03 to Rule 11.8, which is based substantially on the CLP
Program, that seeks to incentivize certain market makers registered
with the Exchange as Competitive Liquidity Providers (``ETP CLPs'' or
``CLPs'') \10\ to enhance liquidity on the Exchange in certain ETPs
listed on the Exchange and thereby qualify to receive part of a daily
rebate pursuant to the Program (a ``CLP Rebate''). The Exchange plans
to implement the Program and the corresponding amendments to existing
Interpretation and Policy .02 to Rule 11.8 on a date that will be
circulated in a notice from the BATS Trade Desk. The Exchange proposes
to maintain existing Interpretation and Policy .02 in its current form
until such implementation. The Exchange will notify all interested
parties of the implementation date of these changes through a notice
distributed to all Members of the Exchange. The Exchange is proposing
to provide notice of the implementation date through a notice rather
than implementing the changes to the rule immediately upon approval by
the Commission in order to provide the Exchange with the flexibility
necessary to ensure an uninterrupted transition from the CLP Program to
the Program.
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    \10\ As defined in proposed Interpretation and Policy .03 (b)(1)
to Rule 11.8, the term ``ETP CLP'' means a Member that
electronically enters proprietary orders into the systems and
facilities of the Exchange and is obligated to maintain a bid or an
offer at the NBBO in each assigned CLP Security in round lots
consistent with paragraph (i) of Interpretation and Policy .03 to
Rule 11.8.
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    The Exchange proposes that the Commission approve the Program for a
pilot period of one year from the date of implementation, which shall
occur no later than 90 days after Commission approval of this proposal,
the date of which will be circulated in a notice from BATS Trade Desk.
During the pilot, the Exchange will submit monthly reports to the
Commission about market quality with respect to the Program. The
monthly reports will endeavor to

compare, to the extent practicable, securities before and after they
are in the Program, including those securities that ``graduate'' from
the Program or, where no securities have ``graduated'' from the
Program, securities that have ``graduated'' from comparable programs at
other exchanges to the extent that such securities exist, and will
include information regarding the Program which will enable the
Exchange and the Commission to better analyze the effectiveness of the
Program, such as: (1) Rule 605 metrics; \11\ (2) volume metrics; (3)
number of CLPs in target securities; (4) spread size; and (5)
availability of shares at the NBBO. The Exchange will endeavor to
provide similar data to the Commission about comparable ETPs that are
listed on the Exchange that are not in the Program; and any other
Program related data requested by the Commission for the purpose of
evaluating the efficacy of the Program. The Exchange will post the
monthly reports on its Web site. The first report will be submitted
within sixty days after the Program becomes operative.
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    \11\ 17 CFR 242.605.
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Supplemental Competitive Liquidity Provider Program for Exchange Traded
Products
    The Exchange is proposing to adopt a new rule titled ``Supplemental
Competitive Liquidity Provider Program for Exchange Traded Products''
as Interpretation and Policy .03 to Rule 11.8. The Program is designed
to promote market quality in CLP Securities \12\ by allowing a CLP
Company \13\ to list an eligible CLP Security \14\ on the Exchange and,
in addition to paying the standard (non-CLP) listing fee as set forth
in the fee schedule, a Sponsor \15\ may pay a fee (a ``CLP Fee'') in
order for the CLP Company, on behalf of a CLP Security, to participate
in the Program, which will be credited to the BATS General Fund. The
Exchange will then pay the CLP Rebate out of the BATS General Fund in
order to incentivize CLPs in the CLP Security to quote aggressively in
the CLP Security by providing a CLP Rebate to one or more CLPs that
make a quality market in the CLP Security pursuant to the Program.\16\
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    \12\ The Exchange notes that CLP Securities do not encompass
derivatives on such securities.
    \13\ As defined in proposed Interpretation and Policy .03 (b)(2)
to Rule 11.8, the term ``CLP Company'' means the trust or company
housing the ETP or, if the ETP is not a series of a trust or
company, then the ETP itself.
    \14\ As defined in proposed Interpretation and Policy .03 (b)(3)
to Rule 11.8, the term ``CLP Security'' means an issue of or series
of ETP securities issued by a CLP Company that meets all of the
requirements to be listed on the Exchange pursuant to Rule 14.11.
    \15\ As defined in proposed Interpretation and Policy .03 (b)(5)
to Rule 11.8, Sponsor means the registered investment adviser that
provides investment management services to a CLP Company or any of
such adviser's parents or subsidiaries.
    \16\ The enhanced market quality (e.g., liquidity) would, as
discussed below, be identical to the existing CLP Quoting
Requirements in Interpretation and Policy .02 (g) to Rule 11.8.
These standards include, for example, posting at least five round
lots in a CLP Security at the NBB or NBO at the time of a SET in
order to have a Winning Bid SET or Winning Offer SET, respectively,
as well as requiring that a CLP is quoting at least a round lot at a
price at or within 1.2% of the CLP's bid (offer) at the time of the
SET in order to have a Winning Bid (Offer) Set. Proposed
Interpretation and Policy .03 (i) to Rule 11.8.
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    The Exchange believes that the Program will be beneficial to the
financial markets, to market participants including traders and
investors, and to the economy in general. First, the Program will
encourage narrow spreads and liquid markets in securities that
generally have not been, or may not be, conducive to naturally having
such narrow spreads and liquidity. These securities may include less
actively traded or less well known ETPs that are made up of securities
of less well known or start-up companies as components.\17\ Second, in
rewarding market makers that are willing to help to develop liquid
markets for CLP Securities subject to the Program,\18\ the Program
would benefit traders and investors by encouraging more quote
competition, narrower spreads, and greater liquidity. Third, the
Program will lower transaction costs and enhance liquidity in both ETPs
and their components, making those securities more attractive to a
broader range of investors. In so doing, the Program will help
companies access capital to invest and grow.
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    \17\ These small companies and their securities (whether
components of listed products like ETPs or direct listings) have
been widely recognized as essential to job growth and creation and,
by extension, the health of the economy. Being included in a
successful ETP can provide the stocks of these companies with
enhanced liquidity and exposure, enabling them to attract investors
and access capital markets to fund investment and growth.
    \18\ By imposing quality quoting requirements to enhance the
quality of the market for CLP Securities, the Program will directly
impact one of the ways that market makers manage risk in lower tier
or less liquid securities (e.g. the width of bid and offer pricing).
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Securities Eligible for the Program
    The Exchange is proposing that any CLP Company, on behalf of a CLP
Security, shall be eligible for the Program, as long as: (i) The
Exchange has accepted the Program application of the CLP Company with
respect to the CLP Security and the Exchange has accepted the Program
application of at least one CLP in the CLP Security; (ii) the CLP
Security meets all requirements to be listed on the Exchange as an ETP;
(iii) the CLP Security meets all Exchange requirements for continued
listing at all times the CLP Security participates in the Program; (iv)
while the CLP Security is participating in the Program, on a product-
specific Web site, the CLP Company is indicating that the product is in
the Program and provides a link to the Exchange's Program Web site; and
(v) the security has a consolidated average daily volume (``CADV'') of
less than 1 million shares for at least one of the past three calendar
months, however any CLP Security initially listed on the Exchange shall
be eligible for the Program for the first six months that it is listed
on the Exchange, regardless of the ETP's CADV. Notwithstanding the
foregoing, the Exchange is proposing that an ETP participating in the
Competitive Liquidity Provider Program under Exchange Rule 11.8
Interpretation and Policy .02 (the ``.02 Program'') shall not be
eligible for participation in the Program until and unless such ETP is
no longer participating in the .02 Program.\19\
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    \19\ Proposed Interpretation and Policy .03 (d)(1) and (d)(3) to
Rule 11.8.
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Application
    The Exchange is proposing that any entity that wishes to
participate in the Program must submit an application in the form
prescribed by the Exchange, which includes both CLP Companies on behalf
of a CLP Security and CLPs.\20\
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    \20\ Proposed Interpretation and Policy .03 (c)(1) to Rule 11.8.
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CLPs
    To become a CLP, a Member must submit a CLP application form with
all supporting documentation to the Exchange. As is currently the case
for membership applications to join the Exchange and applications to
register as market makers on the Exchange, Exchange personnel in the
Exchange's membership department will process such applications.
Exchange personnel will determine whether an applicant is qualified to
become a CLP based on the qualifications described below. After an
applicant submits a CLP application to the Exchange, with supporting
documentation, the Exchange shall notify the applicant Member of its
decision. If an applicant is approved by the Exchange to receive CLP
status, such applicant must establish connectivity with relevant
Exchange systems before such applicant will be permitted to trade as a
CLP on the Exchange. In the

event an applicant is disapproved by the Exchange, such applicant may
seek review under Chapter X of the Exchange's Rules governing adverse
action and/or reapply for CLP status at least three (3) calendar months
following the month in which the applicant received the disapproval
notice from the Exchange. Chapter X of the Exchange's Rules provides
any persons who are or are about to be aggrieved by an adverse action
taken by the Exchange with a process to apply for an opportunity to be
heard and to have the complained of action reviewed.\21\
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    \21\ Proposed Interpretation and Policy .03 (g) to Rule 11.8.
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    To qualify as a CLP, a Member will be required to be a registered
Market Maker in good standing with the Exchange consistent with Rules
11.5 through 11.8. Further, the Exchange will require each Member
seeking to qualify as a CLP to have and maintain: (1) Adequate
technology to support electronic trading through the systems and
facilities of the Exchange; (2) one or more unique identifiers that
identify to the Exchange CLP trading activity in assigned CLP
Securities; \22\ (3) adequate trading infrastructure to support CLP
trading activity, which includes support staff to maintain operational
efficiencies in the Program and adequate administrative staff to manage
the Member's participation in the Program; (4) quoting and volume
performance that demonstrates an ability to meet the CLP quoting
requirement in each assigned CLP Security on a daily and monthly basis;
and (5) a disciplinary history that is consistent with just and
equitable business practices.\23\ These requirements are identical to
those of the existing CLP Program.\24\
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    \22\ As proposed, a Member may not use such unique identifiers
for trading activity at the Exchange in assigned CLP securities that
is not CLP trading activity, but may use the same unique identifiers
for trading activity in securities not assigned to a CLP. If a
Member does not identify to the Exchange the unique identifier to be
used for CLP trading activity, the Member will not receive credit
for such CLP trading.
    \23\ Proposed Interpretation and Policy .03 (f) to Rule 11.8.
    \24\ See Interpretation and Policy .02 (c) and (e) to Rule 11.8.
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Withdrawal and Renewal
    The Exchange is proposing that any entity that wishes to withdraw
from the Program must provide written notice to the Exchange, however,
the requirements for CLPs and CLP Companies on behalf of CLP Securities
are different, as further explained below.
CLPs
    A CLP may withdraw from the status of a CLP by providing written
notice to the Exchange. Such withdrawal shall become effective when
those CLP Securities assigned to the withdrawing CLP are reassigned to
another CLP. After the Exchange receives the notice of withdrawal from
the withdrawing CLP, the Exchange will reassign such CLP Securities as
soon as practicable but no later than thirty (30) days after the date
said notice is received by the Exchange. In the event the reassignment
of CLP Securities takes longer than the 30-day period, the withdrawing
CLP will have no obligations under this Interpretation and Policy .03
and will not be held responsible for any matters concerning its
previously assigned CLP Securities upon termination of this 30-day
period.\25\
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    \25\ Proposed Interpretation and Policy .03 (h) to Rule 11.8.
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CLP Securities
    A CLP Company may, on behalf of a CLP Security, after being in the
Program for not less than two consecutive quarters, but less than one
year, voluntarily withdraw from the Program on a quarterly basis. The
CLP Company must notify the Exchange in writing, not less than one
month prior to withdrawing from the Program. The Exchange, however,
does retain discretion to allow a CLP Company to withdraw from the
Program earlier than required above. In making such decision, the
Exchange may take into account the volume and price movements in the
CLP Security; the liquidity, size quoted, and quality of the market in
the CLP Security; and any other relevant factors. After a CLP Security
is in the Program for one year or more, the CLP Company may voluntarily
withdraw from the Program on a monthly basis, so long as the CLP
Company notifies the Exchange in writing not less than one month prior
to withdrawing from the Program.\26\
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    \26\ Proposed Interpretation and Policy .03 (c)(2) to Rule 11.8.
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    After a CLP Company, on behalf of a CLP Security, is in the Program
for one year, the Program and all obligations and requirements of the
Program will automatically continue on an annual basis unless: (1) The
Exchange terminates the Program by providing not less than one month
prior notice of intent to terminate or the pilot Program is not
extended or made permanent pursuant to a proposed rule change subject
to filing with or approval by the Commission; (2) the CLP Company
withdraws from the Program pursuant to the withdrawal rules described
above; or (3) the CLP Company is terminated from the Program pursuant
to subsection (n) of the proposal.\27\
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    \27\ Interpretation and Policy .03 (n) to Rule 11.8 states that
the Program will terminate with respect to a CLP Security under the
following circumstances: (A) A CLP Security sustains a CADV of one
million shares or more for three consecutive months, however, any
CLP Security initially listed on the Exchange shall be eligible for
the Program for the first six months that it is listed on the
Exchange, regardless of the ETP's CADV; (B) A CLP Company, on behalf
of a CLP Security, withdraws from the Program, is no longer eligible
to be in the Program pursuant to this rule, or its Sponsor ceases to
make CLP Fee payments to the Exchange; (C) A CLP Security is
delisted or is no longer eligible for the Program; or (D) A CLP
Security does not, for two consecutive quarters, have at least one
CLP that is eligible for CLP Rebate. It should be noted, however,
that termination of a CLP Company, CLP Security, or CLP does not
preclude the Exchange from allowing re-entry into the Program where
the Exchange deems such re-entry as proper.
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CLP Company Fees
    A CLP Company seeking to participate in the Program shall incur an
annual basic CLP Fee of $10,000 per CLP Security. The basic CLP Fee
must be paid to the Exchange prospectively on a quarterly basis.\28\
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    \28\ Proposed Interpretation and Policy .03 (d)(2)(A) to Rule
11.8.
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    A CLP Company may also incur an annual supplemental CLP Fee per CLP
Security. The basic CLP Fee and supplemental CLP Fee, when combined,
may not exceed $100,000 per year. The supplemental CLP Fee is a fee
selected by a CLP Company on an annual basis, if at all. The
supplemental CLP Fee must be paid to the Exchange prospectively on a
quarterly basis. The amount of the supplemental CLP Fee, if any, will
be determined by the CLP Company initially per CLP Security and will
remain the same for the period of a year. The Exchange will provide
notification on its Web site regarding the amount, if any, of any
supplemental CLP Fee determined by a CLP Company per CLP Security.\29\
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    \29\ Proposed Interpretation and Policy .03 (d)(2)(B) to Rule
11.8.
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    The CLP Fee is in addition to the standard (non-CLP) Exchange
listing fee applicable to the CLP Security and does not offset such
standard listing fee.\30\ For a CLP Security housed by a CLP Company
that has a Sponsor or Sponsors, the CLP Fee with respect to the CLP
Security shall be paid by the Sponsor or Sponsors of such CLP Security.
The Exchange will prospectively bill each CLP Company for the quarterly
CLP Fee for each CLP Security.\31\ CLP Fees (both basic and

supplemental) will be credited to the BATS General Fund.
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    \30\ Proposed Interpretation and Policy .03 (d)(2)(C) to Rule
11.8. The CLP Fee with respect to an ETP shall be paid by the
Sponsor(s) of such ETP.
    \31\ Proposed Interpretation and Policy .03 (d)(2)(D) to Rule
11.8.
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CLP Quoting Requirements
    CLPs will be subject to both a daily quoting requirement in order
to be eligible to receive financial incentives and a monthly quoting
requirement in order to remain qualified as a CLP. These quoting
requirements are identical to the quoting requirements of the
Exchange's existing CLP Program.\32\ Any CLP that meets the daily
quoting requirement set forth below will be eligible to receive a
portion of the CLP Rebate for each day's quoting activity. A CLP that
does not meet the CLP monthly quoting requirement is subject to the
non-regulatory penalties described below.
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    \32\ See Interpretation and Policy .02 (g) to Rule 11.8.
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    The Exchange will continue to measure the performance of a CLP in
CLP Securities by calculating Size Event Tests (``SETs'') between 9:25
a.m. and 4:05 p.m. on every day on which the Exchange is open for
business. The Exchange will measure each CLP's quoted size, excluding
odd lots, at the NBB and NBO at least once per second to determine
SETs. The three CLPs with the greatest aggregate size at the NBB and
the three CLPs with the greatest aggregate size at the NBO at the time
of each SET will be considered to have a Winning Bid SET \33\ and a
Winning Offer SET \34\ (collectively, ``Winning SETs''), respectively.
Where there is a tie, all CLPs with the same aggregate size at the NBB
(NBO) will be considered to have a Winning Bid (Offer) SET if there are
two or less CLPs that have greater aggregate size at the NBB (NBO).
Additionally, all CLPs with a Winning SET will be awarded SET Credits
based on the following: all CLPs with the greatest aggregate size at
the NBB or NBO will receive three SET Credits; all CLPs with the second
greatest aggregate size at the NBB or NBO will receive two SET Credits;
and all CLPs with the third greatest aggregate size at the NBB will
receive one SET Credit.
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    \33\ As defined in proposed Interpretation and Policy .03 (i)(1)
to BATS Rule 11.8.
    \34\ Id.
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    For example:

------------------------------------------------------------------------
                                                              Shares at
                            CLP                                  NBB
------------------------------------------------------------------------
CLP1.......................................................        1,000
CLP2.......................................................          900
CLP3.......................................................          800
CLP4.......................................................          800
------------------------------------------------------------------------

Here, all four CLPs will have a Winning Bid SET because CLP1 and CLP2
are both two of the top three CLPs with the greatest aggregate size at
the NBB, while CLP3 and CLP4 are tied at 800 shares and there are only
two CLPs that have greater aggregate size at the NBB than 800 shares.
CLP1 would receive three Bid SET Credits, CLP2 would receive two Bid
SET Credits, and CLP3 and CLP4 would each receive one Bid SET Credit.
    However, if CLP3 had 900 shares at the NBB and all other CLPs
remained the same, only CLP1, CLP2, and CLP3 would have a Winning SET
because CLP2 and CLP3 would be tied and there is only one CLP that has
greater aggregate size than 900 shares (CLP1). CLP4 would have the
fourth greatest aggregate size at the NBB among CLPs and thus would not
qualify for a Winning SET. In this instance, CLP1 would receive three
Bid SET Credits, CLP2 and CLP3 would each receive two Bid SET Credits,
and CLP4 would not receive any Bid SET Credits.
    Finally, if CLP1, CLP2, CLP3, and CLP4 all had 1,000 shares at the
NBB, the four CLPs would each receive three Bid SET Credits. In this
scenario, if another CLP (``CLP5'') had 900 shares at the NBB, CLP5
would not qualify for a Winning SET and would not receive any Bid SET
Credits because more than two CLPs have greater aggregate size at the
NBB than the 900 shares posted by CLP5. The above examples would
operate in an identical fashion for the NBO.).[sic] \35\
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    \35\ Proposed Interpretation and Policy .03 (i)(1) to Rule 11.8.
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    In order to meet the daily quoting requirement, a CLP must have
Winning Bid SETs or Winning Offer SETs equal to at least 10% of the
total Bid SETs or total Offer SETs, respectively, on any trading day in
order to be eligible for any CLP Rebate (each such CLP, an ``Eligible
CLP'') for a CLP Security, as is also required under the existing CLP
Program.\36\ Eligible CLPs will be ranked according to the number of
Bid SET Credits and Offer SET Credits each trading day, and only the
Eligible CLP or Eligible CLPs ranked number one and the Eligible CLP or
Eligible CLPs ranked number two in each of the Bid SET Credits and
Offer SET Credits will receive the CLP Rebate.\37\
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    \36\ See Interpretation and Policy .02 (g)(1)(A) to Rule 11.8.
    \37\ Proposed Interpretation and Policy .03 (i)(1)(A) to Rule
11.8.
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    In order to meet the monthly quoting requirements, a CLP must be
quoting at the NBB or the NBO 10% of the time that the Exchange
calculates SETs.\38\
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    \38\ Proposed Interpretation and Policy .03 (i)(1)(B) to Rule
11.8.
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    As is also required under the Exchange's existing CLP Program, a
CLP must be quoting, at a minimum, five round lots (usually 500
shares), excluding odd lots, of the CLP Security, at the NBB or NBO,
respectively, at the time of a SET in order to have a Winning Bid SET
or a Winning Offer SET. Such quoting requirements will be measured by
utilizing the unique identifiers that the Member has identified for CLP
trading activity.\39\ In addition, during Regular Trading Hours \40\ a
CLP must also be quoting at least a displayed round lot offer,
excluding odd lots, at a price at or within 1.2% of the CLP's bid at
the time of the SET in order to have a Winning Bid SET.\41\ Similarly,
during Regular Trading Hours, a CLP must be quoting at least a
displayed round lot offer, excluding odd lots, at a price at or within
1.2% of the CLP's offer at the time of the SET in order to have a
Winning Offer Set.\42\
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    \39\ Proposed Interpretation and Policy .03 (i)(4) to Rule 11.8.
    \40\ As defined in BATS Rule 1.5(w), the term ``Regular Trading
Hours'' means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
    \41\ Proposed Interpretation and Policy .03 (i)(5) to Rule 11.8.
    \42\ Id.
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    For purposes of calculating whether a CLP is in compliance with its
CLP quoting requirements, the CLP must post displayed liquidity in
round lots in its assigned CLP Securities at the NBB or the NBO.\43\ A
CLP may post non-displayed liquidity; however, such liquidity will not
be counted as credit towards the CLP quoting requirements. The CLP
shall not be subject to any minimum or maximum quoting size requirement
in assigned CLP Securities apart from the requirement that an order be
for at least one round lot. The CLP quoting requirements will be
measured by utilizing the unique identifiers that the Member has
identified for CLP trading activity.
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    \43\ Proposed Interpretation and Policy .03 (i)(2) to Rule 11.8.
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CLP Rebate
    As described above, pursuant to the Program, the Exchange will
measure the performance of CLPs in CLP Securities by calculating SETs
between 9:25 a.m. and 4:05 p.m. on every day on which the Exchange is
open for business. Each day, one quarter of the total annual CLP Fees
(basic and supplemental combined) for the CLP Security divided by the
number of trading days in the current quarter will constitute the total

CLP Rebate for the CLP Security. For instance, where the total CLP Fees
for a CLP Security is $64,000 and there are 64 trading days in the
current quarter, the total CLP Rebate for the CLP Security would be
$250 [($64,000/4)/64].\44\
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    \44\ Proposed Interpretation and Policy .03 (m)(1) to Rule 11.8.
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    Accordingly, the two Eligible CLPs with the most Bid SET Credits
will split half of the daily CLP Rebate for the CLP Security (``Bid
Rebate''), with the Eligible CLP with the most Bid SET Credits
receiving 60% of the daily Bid Rebate and the Eligible CLP with the
second most Bid SET Credits receiving 40% of the daily Bid Rebate.\45\
Similarly, the two Eligible CLPs with the most Offer SET Credits will
split half of the daily CLP Rebate for the CLP Security (``Offer
Rebate''), with the Eligible CLP with the most Offer SET Credits
receiving 60% of the daily Offer Rebate and the Eligible CLP with the
second most Offer SET Credits receiving 40% of the daily Offer
Rebate.\46\ In the event that there is only one Eligible CLP for the
Bid (Offer) Rebate for a CLP Security, such Eligible CLP will receive
100% of the Bid (Offer) Rebate. In the event that multiple Eligible
CLPs have an equal number of Bid (Offer) SET Credits, the Eligible CLP
with the highest executed volume in the CLP Security will be awarded
the greater portion of the Bid (Offer) Rebate. Specifically, this means
that if the tie is for the most Bid (Offer) SET Credits, the Eligible
CLP with the highest executed volume in the CLP Security will receive
60% and the Eligible CLP with the second highest executed volume in the
CLP Security will receive 40% and no other Eligible CLPs will receive
any portion of the Bid (Offer) Rebate. Similarly, where the tie is for
the second most Bid (Offer) SET Credits, the Eligible CLP with the
highest executed volume in the CLP Security will receive 40% of the Bid
(Offer) Rebate and no other Eligible CLPs with equal or less Bid
(Offer) SET Credits will receive any portion of the Bid (Offer) Rebate.
Where no CLPs are eligible for the Bid (Offer) Rebate, no Bid (Offer)
Rebate will be awarded to any CLP and no refund will be provided.\47\
---------------------------------------------------------------------------

    \45\ Id.
    \46\ Id.
    \47\ Id.
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Assignment of CLP Securities
    The Exchange, in its discretion, will assign to the CLP one or more
CLP Securities for CLP trading purposes. The Exchange shall determine
the number of CLP Securities assigned to each CLP. The Exchange, in its
discretion, will assign one (1) or more CLPs to each CLP Security
subject to the Program, depending upon the trading activity of the CLP
Security.\48\ CLPs may only enter orders electronically directly into
Exchange systems and facilities designated for this purpose. All CLP
orders must only be for the proprietary account of the CLP Member.
---------------------------------------------------------------------------

    \48\ Proposed Interpretation and Policy .03 (j)(1) to Rule 11.8.
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Non-Regulatory Penalties
    If a CLP fails to meet the CLP quoting requirements, the Exchange
may impose certain non-regulatory penalties. First, if, between 9:25
a.m. and 4:05 p.m. on any day on which the Exchange is open for
business, a CLP fails to meet its daily quoting requirement by failing
to have at least 10% of the Winning SETs for that trading day, the CLP
will not be eligible to receive the CLP Rebate for that day's quoting
activity in that particular assigned CLP Security. Second, if a CLP
fails to meet its monthly quoting requirement for three (3) consecutive
months in any assigned CLP Security, the CLP will be at risk of losing
its CLP status. Thus, the Exchange may, in its discretion, take the
following non-regulatory actions: (i) Revoke the assignment of the
affected CLP Security(ies) and/or one or more additional unaffected CLP
Securities; or (ii) disqualify a Member's status as a CLP.\49\
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    \49\ Proposed Interpretation and Policy .03 (l)(1) to Rule 11.8.
---------------------------------------------------------------------------

    The Exchange shall determine if and when a Member is disqualified
from its status as a CLP. One (1) calendar month prior to any such
determination, the Exchange will notify the CLP of such impending
disqualification in writing. If the CLP fails to meet the monthly
quoting requirements as described above for a third consecutive month
in a particular CLP Security, the CLP may be disqualified from CLP
status. When disqualification determinations are made, the Exchange
will provide a disqualification notice to the Member informing such
Member that it has been disqualified as a CLP.\50\ In the event a
Member is disqualified from its status as a CLP, such Member may re-
apply for CLP status. Such application process shall occur at least
three (3) calendar months following the month in which such Member
received its disapproval or disqualification notice. Further, in the
event a Member is determined to be ineligible for the CLP Rebate for
failure to meet its daily quoting obligation or is disqualified from
its status as a CLP, such Member may seek review under Chapter X of the
Exchange's Rules governing adverse action.\51\ As noted above, Chapter
X of the Exchange's Rules provides any persons who are or are about to
be aggrieved by an adverse action taken by the Exchange with a process
to apply for an opportunity to be heard and to have the complained of
action reviewed.
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    \50\ Proposed Interpretation and Policy .03 (l)(2) to Rule 11.8.
    \51\ Proposed Interpretation and Policy .03 (l)(3) to Rule 11.8.
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Web site Disclosures
    In order to provide transparency into the Program, including CLPs,
CLP Companies, and the CLP Securities that are listed on the Exchange,
the Exchange proposes to provide notification on its Web site regarding
the following: (i) Acceptance of a CLP Company, on behalf of a CLP
Security, and a CLP into the Program; (ii) the total number of CLP
Securities that any one CLP Company may have in the Program; (iii) the
names of CLP Securities and the CLP(s) in each CLP Security, the dates
that a CLP Company, on behalf of a CLP Security, commences
participation in and withdraws or is terminated from the Program, and
the name of each CLP Company and its associated CLP Security or
Securities; (iv) a statement about the Program that sets forth a
general description of the Program as implemented on a pilot basis and
a fair and balanced summation of the potentially positive aspects of
the Program as well as the potentially negative aspects and risks of
the Program, and indicates how interested parties can get additional
information about products in the Program; and (v) the intent of a CLP
Company, on behalf of a CLP Security, or CLP to withdraw from the
Program, and the date of actual withdrawal or termination from the
Program.\52\
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    \52\ Proposed Interpretation and Policy .03 (o) to Rule 11.8.
---------------------------------------------------------------------------

    In addition, a CLP Company that, on behalf of a CLP Security, is
approved to participate in the Program shall issue a press release to
the public when the CLP Company, on behalf of a CLP Security, commences
or ceases participation in the Program. The press release shall be in a
form and manner prescribed by the Exchange, and, if practicable, shall
be issued at least two days before commencing or ceasing participation
in the Program. The CLP Company shall dedicate space on its Web site,
or, if it does not have a Web site, on the Web site of the Sponsor of
the CLP Security, that (i) includes any such press releases, and (ii)
provides a hyperlink to the dedicated page on the Exchange's Web site
that describes the Program.

Consistency With Regulation M.
    Rule 102 of Regulation M prohibits an issuer from directly or
indirectly attempting ``to induce any person to bid for or purchase, a
covered security during the applicable restricted period'' unless an
exemption is available.\53\ For the reasons discussed below, the
Exchange believes that exemptive relief from Rule 102 should be granted
for the Program.
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    \53\ Rule 102 provides that ``[i]n connection with a
distribution of securities effected by or on behalf of an issuer or
selling security holder, it shall be unlawful for such person, or
any affiliated purchaser of such person, directly or indirectly, to
bid for, purchase, or attempt to induce any person to bid for or
purchase, a covered security during the applicable restricted
period'' unless an exception is available. See 17 CFR 242.102.
---------------------------------------------------------------------------

    First, the Exchange notes that the Commission and its staff have
previously granted relief from Rule 102 to a number of exchange traded
products (``Existing Relief'') in order to permit the ordinary
operation of such exchange traded products.\54\ In granting the
Existing Relief, the Commission has relied in part on the exclusion
from the provisions of Rule 102 provided by paragraph (d)(4) of Rule
102 for securities issued by an open-end management investment company
or unit investment trust. In granting the Existing Relief from Rule 102
to other types of exchange traded products, for which the (d)(4)
exception is not available, the staff has relied on (i) representations
that the fund in question would continuously redeem exchange traded
product shares in basket-size aggregations at their NAV and that there
should be little disparity between the market price of an exchange
traded product share and the NAV per share and (ii) a finding that
``[t]he creation, redemption, and secondary market transactions in
[shares] do not appear to result in the abuses that Rules 101 and 102
of Regulation M were designed to prevent.'' \55\ The crux of the
Commission's findings in granting the Existing Relief rests on the
premise that the prices of exchange traded product shares closely track
their per-share NAVs. Given that the Program neither alters the
derivative pricing nature of ETPs nor impacts the arbitrage
opportunities inherent therein, the conclusion on which the Existing
Relief is based remains unaffected by the Incentive Program. In this
regard, most ETPs that would be eligible to participate in the Program
would have previously been granted relief from Rule 102.
---------------------------------------------------------------------------

    \54\ See, e.g., Letter from James A. Brigagliano, Acting
Associate Director, Division of Market Regulation, to Stuart M.
Strauss, Esq., Clifford Chance US LLP (October 24, 2006) (regarding
class relief for exchange traded index funds).
    \55\ See Rydex Specialized Products LLC, SEC No-Action Letter
(June 21, 2006).
---------------------------------------------------------------------------

    Second, the Program requires, among other things, that a CLP make
two-sided quotes during Regular Trading Hours in order to have a
Winning SET. The Program is not intended to raise ETP prices, but
rather to improve market quality. In light of the derivative nature of
ETPs, the Exchange does not expect that CLPs will quote outside of the
normal quoting ranges for these products as a result of the CLP Rebate,
but rather would quote within their normal ranges as determined by
market factors. Indeed, the Program would not create any incentive for
a CLP to quote outside such ranges.
    Finally, the staff of the Exchange, which is a self-regulatory
organization, would be interposed between the issuer and the CLP,
administering a rules-based program with numerous structural safeguards
described in the previous sections. Specifically, both CLPs and CLP
Companies would be required to apply to participate in the Program and
to meet certain standards. CLP Companies could not cause any fee to be
paid to a CLP under the Program. The Exchange would collect the CLP
Fees and credit them to the Exchange's General Fund. A CLP would be
eligible to receive a CLP Rebate, again, from the Exchange's General
Fund, only after it qualified for the CLP Rebate, as described above.
Such qualification standards are set and monitored by the Exchange.
Application to, continuation in, and withdrawal from the Program would
be governed by published Exchange rules and policies, and there would
be extensive public notice regarding the Program and payments
thereunder on both the Exchange's and the CLP Company's Web sites.
Given these structural safeguards, the Exchange believes that payments
under the Program are appropriate for exemptive relief from Rule 102.
    In summary, the Exchange believes that exemptive relief from Rule
102 should be granted for the Program because, for example: (1) The
Program would not create any incentive for a CLP to quote outside of
the normal quoting ranges for the ETPs included therein; (2) the
Program has numerous structural safeguards, such as the application
process for CLP Companies and CLPs, the interpositioning of the
Exchange between CLP Companies and CLPs, and significant public
disclosure surrounding the Program; and (3) the Program does not alter
the basis on which Existing Relief is based and, furthermore, most ETPs
that would be eligible to participate in the Program would have
previously been granted relief from Rule 102.\56\
---------------------------------------------------------------------------

    \56\ The Exchange notes that the Commission granted a limited
exemption from Rule 102 of Regulation M to the NASDAQ Stock Market
LLC (``Nasdaq'') for a program similar to the Exchange's proposed
Program. See Securities Exchange Act Release No. 69196 (March 20,
2013), 78 FR 18410 (March 26, 2013) (Order Granting a Limited
Exemption From Rule 102 of Regulation M Concerning the NASDAQ Market
Quality Program Pilot Pursuant to Regulation M Rule 102(A)) (the
``Nasdaq Exemption''). The Nasdaq Exemption includes certain
conditions related to, among other things, notices to the public and
disclosures with respect to Nasdaq's program. The Exchange notes
that if the Commission were to provide exemptive relief from Rule
102 of Regulation M for the Program, it may include similar
conditions.
---------------------------------------------------------------------------

Surveillance
    The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of all securities trading on the
Exchange, including ETPs participating in the Program, during all
trading sessions, and to detect and deter violations of Exchange rules
and applicable federal securities laws. The Exchange may obtain
information via the Intermarket Surveillance Group (``ISG'') from other
exchanges who are members or affiliates of the ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement,\57\ and from listed CLP Companies and public and non-public
data sources such as, for example, Bloomberg.
---------------------------------------------------------------------------

    \57\ For a list of the current members and affiliate member of
ISG, see www.isgportal.com.
---------------------------------------------------------------------------

Changes to Interpretation and Policy .02 to Rule 11.8
    The Exchange is also proposing to make certain changes to paragraph
(d)(2) of Interpretation and Policy .02 to Rule 11.8 that correspond
with the addition of Interpretation and Policy .03. These changes are
designed to create a sunset period for any ETPs that are participating
in the CLP Program pursuant to Interpretation and Policy .02 to Rule
11.8. Specifically, the Exchange is proposing to allow any ETP
participating in the CLP Program prior to the implementation of the LMM
Program \58\ to continue to participate in the CLP Program until the
first of: (1) Such security has had a CADV of equal to or greater than
2 million shares for two consecutive calendar months during the first
three years the security is subject to the CLP Program, provided,
however, that any ETP initially listed on the Exchange shall be
eligible for the CLP Program for the first six months that it is listed
on the Exchange, regardless of the ETP's CADV; (2) such security has
been subject to the CLP

Program for three (3) years; or (3) December 31, 2014.
---------------------------------------------------------------------------

    \58\ See supra note 9.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\59\ In particular,
the proposal is consistent with Section 6(b)(4) and 6(b)(5) of the
Act,\60\ because it would provide for the equitable allocation of
reasonable dues, fees, and other charges among Members and issuers and
other persons using any facility or system which the Exchange operates
or controls, and it is designed to promote just and equitable
principles of trade, remove impediments to, and perfect the mechanism
of, a free and open market and a national market system, and in
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \59\ 15 U.S.C. 78f(b).
    \60\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The goal of the Program is to incentivize Members to make high-
quality, liquid markets, which supports the primary goal of the Act to
promote the development of a resilient and efficient national market
system. The Program will enhance quote competition, improve liquidity
on the Exchange, support the quality of price discovery, promote market
transparency, and increase competition for listings and trade
executions, while reducing spreads and transaction costs. Maintaining
and increasing liquidity in Exchange-listed securities will help raise
investors' confidence in the fairness of the market and their
transactions.
    Each aspect of the Program adheres to and supports the Act. First,
the Program promotes the equitable allocation of fees and dues among
issuers. The Program is completely voluntary in that it will provide an
additional means by which issuers may relate to the Exchange, while not
eliminating the ability to list ETPs without participation in the
Program. Issuers can supplement the standard listing fees with those of
the Program, which the Exchange believes to be consistent with the Act.
While the Program will result in higher fees for issuers that choose to
participate, the issuers receive significant benefits for
participating, including greater liquidity, tighter spreads, and lower
transaction costs for their investors. Additionally, issuers will have
the ability to withdraw from the Program after an initial commitment if
they determine that participation is not beneficial. In that case, the
withdrawing issuers will automatically revert to the basic listing fee
for ETPs.
    The Program also represents an equitable allocation of fees and
dues among Market Makers. Again, the Program is completely voluntary
with respect to Market Maker participation in that it will provide an
additional means by which members may qualify for a CLP Rebate in a
manner nearly identical to the existing CLP Program, without
eliminating any of the existing means of qualifying for incentives on
the Exchange. Currently, the Exchange employs multiple fee
arrangements, including the CLP Program, to incentivize Market Makers
to maintain high quality markets or to improve the quality of
executions. Market Makers that choose to undertake increased burdens
under the Program will be rewarded with increased rebates, while those
that do not undertake such burdens will receive no added benefit. Where
a CLP determines that the burdens imposed by the Program outweigh the
benefits provided, the CLP may provide the Exchange with notice of
withdrawal and will be withdrawn from the program in no longer than
thirty days.
    Additionally, the Program establishes an equitable allocation of
CLP Rebates among Market Makers that choose to participate and fulfill
the obligations imposed by the rule. If one Market Maker is an Eligible
CLP, the Bid (Offer) Rebate will be distributed to that CLP; if
multiple Market Makers are Eligible CLPs, the Bid (Offer) Rebate will
be distributed among the two CLPs with the most Bid (Offer) SET
Credits, as described above. In other words, all of the benefit of the
CLP Rebate will flow to the highest-performing Market Makers, provided
that at least one Market Maker fulfills the obligations under the
proposed rule.
    The Program is designed to avoid unfair discrimination among Market
Makers and issuers. The proposed rule contains objective, measurable
standards that the Exchange will apply with care. These standards will
be applied equally to ensure that similarly situated parties are
treated similarly. This is equally true for inclusion of issuers and
Market Makers, withdrawal of issuers and Market Makers, and termination
of eligibility for the Program. The standards are carefully constructed
to protect the rights of all parties wishing to participate in the
Program by providing notice of requirements and a description of the
process. The Exchange will apply these standards with the same care and
experience with which it applies the many similar rules and standards
in the Exchange's rules.
    In contrast to the extensive benefits of the Program, the
participation of a CLP Company in the Program is substantially limited,
by design. In this regard, a CLP Company is limited to making only the
following determinations regarding the Program: Whether to participate
in the Program; what CLP Security should be in the Program; what firms
will participate in developing and funding the CLP Security; when the
CLP Security should exit the Program; and the level of Supplemental
Fees, if any, that should be applied. The CLP can never influence how,
when, or the specific amount that a CLP receives as credit for making a
market in a CLP Security. These functions are performed solely by the
Exchange according to standards set forth in the Program.
    The Exchange notes that it operates in a highly competitive market
in which market participants can readily favor competing venues if they
deem fee levels at a particular venue to be excessive, or rebate
opportunities available at other venues to be more favorable.
Accordingly, the listing fees and rebates are constrained by the active
competition for listings in ETPs and for market making. If a particular
exchange charges excessive fees for listing, ETPs will choose to list
elsewhere. Similarly, if an exchange fails to incent market makers to
provide sufficient liquidity, participants will likely shift their
order flow to other venues. Accordingly, the exchange charging
excessive listing fees or providing insufficient rebates for market
maker would likely not accomplish the goals of the Program. As such,
the Exchange believes that this competitive dynamic imposes powerful
restraints on the ability of any exchange to charge unreasonable fees
for listing or provide insufficient rebates for market making activity.
    The Exchange also notes that the Program, as proposed, is
substantially similar to the existing functionality provided under the
CLP Program. The Exchange believes that the CLP Program has been very
beneficial to market participants, including investors, issuers, and
Market Makers, by providing increased market quality in the form of
tighter spreads and deeper liquidity. The Exchange believes that the
proposed Program will enjoy similarly positive results to the benefit
of issuers, investors in CLP Securities, and the financial markets as a
whole.

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

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. To
the contrary, the Exchange believes that the proposal will increase
competition in both the listings market and in competition for market
makers. The Program will promote competition in the listings market by
providing issuers with a vehicle for paying the Exchange additional
fees in exchange for incentivizing tighter spreads and deeper liquidity
in listed securities. While the Program closely resembles the existing
CLP Program, the proposed modifications are a response to the
competition from other markets that either have or are developing
similar programs, including Nasdaq \61\ and NYSE Arca Equities,
Inc.\62\
---------------------------------------------------------------------------

    \61\ See Securities Exchange Act Release No. 69195 (March 20,
2013), 78 FR 18393 (March 26, 2013) (SR-NASDAQ-2012-137).
    \62\ See Securities Exchange Act Release No. 69335 (April 5,
2013), SR-NYSEARCA-2013-34 (March 21, 2013).
---------------------------------------------------------------------------

    The Exchange also believes that the proposed changes will enhance
competition among participants by creating incentives for market makers
to compete to make better quality markets. By requiring both that
market makers meet the quoting requirements and also to compete for the
CLP Rebate, the quality of quotes on the Exchange will improve. This,
in turn, will attract more liquidity to the Exchange and further
improve the quality of trading in CLP Securities, which will also act
to bolster the Exchange's listing business. As mentioned above, this
proposal is in response to similar programs at or in development at
other markets.

(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml ); or
     Send an email to<EMAIL_ADDRESS>Please include
File No. SR-BATS-2014-022 on the subject line.

Paper Comments

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

All submissions should refer to File No. SR-BATS-2014-022. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549-1090, 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 the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File No. SR-BATS-2014-022 and should be
submitted on or before July 7, 2014.
---------------------------------------------------------------------------

    \63\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
---------------------------------------------------------------------------
pursuant to delegated authority.\63\

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-13818 Filed 6-12-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 52 (Monday, March 18, 2019)]
[Proposed Rules]
[Pages 9735-9737]
[FR Doc No: 2019-04975]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 174 and 180

[EPA-HQ-OPP-2019-0041; FRL-9989-90]

Receipt of Several Pesticide Petitions Filed for Residues of
Pesticide Chemicals in or on Various Commodities

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of filing of petitions and request for comment.

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

SUMMARY: This document announces the Agency's receipt of several
initial filings of pesticide petitions requesting the establishment or
modification of regulations for residues of pesticide chemicals in or
on various commodities.

DATES: Comments must be received on or before April 17, 2019.

ADDRESSES: Submit your comments, identified by the docket
identification (ID) number and the pesticide petition number (PP) of
interest as shown in the body of this document, by one of the following
methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.html.
    Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Michael Goodis, Registration Division
(7505P), main telephone number:<PHONE_NUMBER>, email address:
<EMAIL_ADDRESS>or Robert McNally, Biopesticides and Pollution
Prevention Division (7511P), main telephone number:<PHONE_NUMBER>,
email address<EMAIL_ADDRESS>The mailing address for each
contact person is: Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-
0001. As part of the mailing address, include the contact person's
name, division, and mail code. The division to contact is listed at the
end of each pesticide petition summary.

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
The following list of North American Industrial Classification System
(NAICS) codes is not intended to be exhaustive, but rather provides a
guide to help readers determine whether this document applies to them.
Potentially affected entities may include:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).
    If you have any questions regarding the applicability of this
action to a particular entity, consult the person listed under FOR
FURTHER INFORMATION CONTACT for the division listed at the end of the
pesticide petition summary of interest.

B. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through
regulations.gov or email. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as
CBI and then identify electronically within the disk or CD-ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    2. Tips for preparing your comments. When preparing and submitting
your comments, see the commenting tips at http://www.epa.gov/dockets/comments.html.
    3. Environmental justice. EPA seeks to achieve environmental
justice, the fair treatment and meaningful involvement of any group,
including minority and/or low-income populations, in the development,
implementation, and enforcement of environmental laws, regulations, and
policies. To help address potential environmental justice

issues, the Agency seeks information on any groups or segments of the
population who, as a result of their location, cultural practices, or
other factors, may have atypical or disproportionately high and adverse
human health impacts or environmental effects from exposure to the
pesticides discussed in this document, compared to the general
population.

II. What action is the Agency taking?

    EPA is announcing its receipt of several pesticide petitions filed
under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA),
21 U.S.C. 346a, requesting the establishment or modification of
regulations in 40 CFR part 174 or part 180 for residues of pesticide
chemicals in or on various food commodities. The Agency is taking
public comment on the requests before responding to the petitioners.
EPA is not proposing any particular action at this time. EPA has
determined that the pesticide petitions described in this document
contain the data or information prescribed in FFDCA section 408(d)(2),
21 U.S.C. 346a(d)(2); however, EPA has not fully evaluated the
sufficiency of the submitted data at this time or whether the data
support granting of the pesticide petitions. After considering the
public comments, EPA intends to evaluate whether and what action may be
warranted. Additional data may be needed before EPA can make a final
determination on these pesticide petitions.
    Pursuant to 40 CFR 180.7(f), a summary of each of the petitions
that are the subject of this document, prepared by the petitioner, is
included in a docket EPA has created for each rulemaking. The docket
for each of the petitions is available at http://www.regulations.gov.
    As specified in FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), EPA
is publishing notice of the petitions so that the public has an
opportunity to comment on these requests for the establishment or
modification of regulations for residues of pesticides in or on food
commodities. Further information on the petitions may be obtained
through the petition summaries referenced in this unit.

A. Amended Tolerances for Non-Inerts

    PP 8F8659. (EPA-HQ-OPP-2018-0260). Monsanto Company, 1300 I St. NW,
Suite 450 East, Washington, DC 20052, requests to amend the tolerance
in 40 CFR part 180 for residues of the herbicide dicamba in or on corn,
grain at 0.1 parts per million (ppm); corn, stover at 20 ppm; and corn,
forage at 6 ppm. The gas chromatography/electron capture detector (GC/
ECD) is used to measure and evaluate the chemical dicamba. Contact: RD.

B. New Tolerance Exemptions From Inerts (Except PIPS)

    PP IN-11260. (EPA-HQ-OPP-2018-0845). BASF Corporation, 26 Davis
Drive, Research Triangle Park, NC 27709, requests to establish an
exemption from the requirement of a tolerance in 40 CFR part 180.960
for residues of formaldehyde, reaction products with melamine (CAS Reg.
No. 94645-56-4); 1,3,5-Triazine-2,4,6-triamine, polymer with
formaldehyde (CAS Reg. No. 9003-08-1); Formaldehyde, reaction products
with melamine and methanol (CAS Reg. No. 94645-53-1); and 1,3,5-
Triazine-2,4,6-triamine, polymer with formaldehyde, methylated (CAS
Reg. No. 68002-20-0) collectively identified as ``Melamine Formaldehyde
Polycondensate Resin'' when used as a pesticide inert ingredient in
pesticide formulations. The petitioner believes no analytical method is
needed because it is not required for an exemption from the requirement
of a tolerance. Contact: RD.

C. Notice of Filing--New Tolerance Exemptions for PIPS

    PP IN-11257. (EPA-HQ-OPP-2018-0403). Hangzhou Ruifeng Biosciences
Co., Ltd., 1500 Wenyi Rd., Building 1, Room 103, Hangzhou, China (c/o
GA Bannon Consulting LLC, 13 Blue Flag Court, Dardenne Prairie, MO
63368), requests to establish an exemption from the requirement of a
tolerance in 40 CFR part 174 for residues of the plant-incorporated
protectant (PIP) inert ingredient Deinococcus radiodurans 5-
enolpyruvylshikimate-3-phosphate synthase (EPSPS) protein in or on food
and feed commodities of all plants. The petitioner believes no
analytical method is needed because an exemption from the requirement
of a tolerance is being sought. Contact: BPPD.

D. Notice of Filing--New Tolerances for Non-Inerts

    1. PP 8E8671. EPA-HQ-OPP-2018-0206. Bayer CropScience LP2, T.W.
Alexander Dr., Research Triangle Park, NC 27709, requests to establish
a tolerance in 40 CFR part 180 for residues of the fungicide,
trifloxystrobin, in or on tea, dried at 5 ppm. The gas chromatography
method with nitrogen phosphorus detection (GC/NPD) is used to measure
and evaluate the chemical trifloxystrobin and the free form of its acid
metabolite CGA-321113. Contact: RD.
    2. PP 7F8612. EPA-HQ-OPP-2018-0002. BASF Corporation, 26 Davis
Drive, P.O. Box 13528, Research Triangle Park, North Carolina 27709-
3528, requests to establish tolerance in 40 CFR part 180 for residues
of the fungicide mefentrifluconazole (BAS 750 F); 2-[4-(4-
chlorophenoxy)-2-(trifluoromethyl)phenyl]-1-(1H-1,2,4-triazole-1-
yl)propan-2-ol] in or on the following raw agricultural commodities:
Almond, hulls at 4 ppm; barley, hay at 15 ppm; barley, straw at 30 ppm;
cattle, fat at 0.3 ppm; cattle, kidney at 0.2 ppm; cattle, liver at 0.5
ppm; cattle, meat at 0.09 ppm; cattle, muscle at 0.04 ppm; cereal
grains crop group 15, except wheat and corn at 3 ppm; cherry subgroup
12-12A at 4 ppm; citrus, oil at 30 ppm; corn, aspirated grain fractions
at 0.3 ppm; corn, field, grain at 0.01 ppm; corn, pop, grain at 0.01
ppm; corn, sweet, forage at 6 ppm; corn, sweet, grain at 0.02 ppm;
foliage of legume vegetables, except soybean, crop subgroup 7A at 20
ppm; forages of cereal grains, crop group 16 at 4 ppm; goat, fat at 0.3
ppm; goat, kidney at 0.2 ppm; goat, liver at 0.5 ppm; goat, meat at
0.09 ppm; goat, muscle at 0.04 ppm; grape, raisin at 4 ppm; grain,
cereal, forage, fodder, and straw, group 16, stover at 9 ppm;
grapefruit subgroup 10-10C at 1 ppm; horse, fat at 0.3 ppm; horse,
kidney at 0.2 ppm; horse, liver at 0.5 ppm; horse, meat at 0.09 ppm;
horse, muscle at 0.04 ppm; legume vegetables (succulent or dried) crop
group 6, except lentil at 0.1 ppm; lemon/lime subgroup 10-10B at 2 ppm;
lentil, dry at 2 ppm; milk at 0.03 ppm; orange subgroup 10-10A at 1
ppm; peach subgroup 12-12B at 2 ppm; peanut at 0.01 ppm; peanut, hay at
30 ppm; plum prune, fresh at 4 ppm; plum subgroup 12-12C at 2 ppm; pome
fruit crop group 11-10 at 1.5 ppm; poultry, eggs at 0.01 ppm; poultry,
fat at 0.01 ppm; poultry, liver at 0.01 ppm; poultry, meat at 0.01 ppm;
poultry, muscle at 0.01 ppm; poultry, skin at 0.01 ppm; rapeseed
subgroup 20A at 1 ppm; rice, straw at 9 ppm; sheep, fat at 0.3 ppm;
sheep, kidney at 0.2 ppm; sheep, liver at 0.5 ppm; sheep, meat at 0.09
ppm; sheep, muscle at 0.04 ppm; small fruit vine climbing, except fuzzy
kiwifruit subgroup 13-07F at 1.5 ppm; soybean, aspirated grain
fractions at 5 ppm; soybean, forage at 4 ppm; soybean, hay at 15 ppm;
soybean, seed at 0.3 ppm; sugar beet at 0.6 ppm; sugar beet, top at 9
ppm; swine, fat at 0.01 ppm; swine, liver at 0.01 ppm; swine, meat at
0.01 ppm; swine, skin at 0.01 ppm; tree nut crop group 14-12 at 0.06
ppm; tuberous and corm vegetables subgroup 1C at 0.02 ppm; wheat,
aspirated grain fractions at 20 ppm; wheat, grain at 0.4 ppm; wheat,
hay at 8 ppm; and wheat,

straw at 30 ppm. The independently validated method (L0295/01, based on
the QuEChERS method) was used for analyzing residues of BAS 750 F with
appropriate sensitivity and selectivity in all crops and processed
commodities. Two independently validated methods (L0272/01 and L0309/
01) have been submitted for analyzing residues of BAS 750 F and its
metabolite M750F022 (and conjugates) in animal commodities with
appropriate sensitivity and selectivity, to measure and evaluate the
chemical mefentrifluconazole. Contact: RD.
    3. PP 7F8634. EPA-HQ-OPP-2018-0038. Valent U.S.A. LLC, 1600 Riviera
Avenue, Suite 200, Walnut Creek, CA 94596, requests to establish a
tolerance in 40 CFR part 180 for residues of the fungicide inpyrfluxam,
S-2399, in or on apple at 0.01 ppm; apple, wet pomace at 0.03 ppm;
beet, sugar, dried pulp at 0.05 ppm; beet, sugar, molasses at 0.03 ppm;
beet, sugar, roots at 0.01 ppm; corn, field, forage at 0.02 ppm; corn,
field, grain at 0.01 ppm; corn, field, stover at 0.02 ppm; corn, pop,
grain at 0.01 ppm; corn, pop, stover at 0.02 ppm; corn, sweet, kernel
plus cob with husks removed at 0.01 ppm; peanut at 0.01 ppm; peanut,
hay at 2.0 ppm, rice, grain at 0.01 ppm; rice, bran at 0.02 ppm; rice,
hulls at 0.05 ppm; soybean, seed at 0.01 ppm. The HPLC-MS/MS method is
used to measure and evaluate the chemical inpyrfluxam. Contact: RD.
    4. PP 7F8647. EPA-HQ-OPP-2018-0677. ISK Biosciences Corporation,
7470 Auburn Road, Suite A, Concord, Ohio 44077, requests to establish a
tolerance in 40 CFR part 180 for residues of the fungicide pyriofenone,
(5-chloro-2-methoxy-4-methyl-3-pyridinyl)(2,3,4-trimethoxy-6-
methylphenyl)methanone, in or on fruiting vegetable crop group 8-10 at
0.30 ppm. The liquid chromatography-MS/MS is used to measure and
evaluate the chemical pyriofenone. Contact: RD.
    5. PP 8F8682. EPA-HQ-OPP-2018-0579. McLaughlin Gormly King Company
(MGK), 8810 10th Ave. N Golden Valley, MN 55427, requests to establish
a tolerance in 40 CFR part 180 for residues of the insecticide,
pyrethrin, in or on the raw commodity of bananas at 6 ppm. The liquid
chromatography-mass spectrometry/mass spectrometry (LC/MS/MS) method is
used to measure and evaluate the chemical pyrethrins I (PY I) and
pyrethrins II (PYII) in various ratios. PY I and PY II consist of three
esters each: Pyrethrin I, jasmolin I and cinerin I in PY I; and
pyrethrin II, jasmolin II, and cinerin II in PY II. Contact: RD.

    Authority: 21 U.S.C. 346a.

    Dated: February 21, 2019.
Hamaad Syed,
Acting Director, Information Technology and Resources Management
Division, Office of Pesticide Programs.
[FR Doc. 2019-04975 Filed 3-15-19; 8:45 am]
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[Federal Register Volume 78, Number 224 (Wednesday, November 20, 2013)]
[Notices]
[Pages 69664-69665]
[FR Doc No: 2013-27830]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OW-2006-0394; FRL-9903-09-OW]

Proposed Information Collection Request; Comment Request;
Approval of State Coastal Nonpoint Pollution Control Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: The Environmental Protection Agency is planning to submit an
information collection request (ICR), ``Approval of State Coastal
Nonpoint Pollution Control Programs (CZARA Section 6217)'' (EPA ICR No.
1569.08, OMB Control No. 2040-0153) to the Office of Management and
Budget (OMB) for review and approval in accordance with the Paperwork
Reduction Act. Before doing so, EPA is soliciting public comments on
specific aspects of the proposed information collection as described
below. This is a proposed extension of the ICR, which is currently
approved through January 31, 2014. An Agency may not conduct or sponsor
and a person is not required to respond to a collection of information
unless it displays a currently valid OMB control number.

DATES: Comments must be submitted on or before January 21, 2014.

ADDRESSES: Submit your comments, referencing Docket ID No. EPA-HQ-OW-
2006-0394, online using www.regulations.gov (our preferred method), by
email to<EMAIL_ADDRESS>or by mail to: EPA Docket Center,
Environmental Protection Agency, Mail Code 28221T, 1200 Pennsylvania
Ave. NW., Washington, DC 20460.
    EPA's policy is that all comments received will be included in the
public docket without change including any personal information
provided, unless the comment includes profanity, threats, information
claimed to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute.

FOR FURTHER INFORMATION CONTACT: Don Waye, Assessment and Watershed
Protection Division, Office of Wetlands Oceans and Watersheds, Mail
Code 4503-T, Environmental Protection Agency, 1200 Pennsylvania Ave.
NW., Washington, DC 20460; telephone number:<PHONE_NUMBER>; fax
number:<PHONE_NUMBER>; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Supporting documents which explain in detail
the information that the EPA will be collecting are available in the
public docket for this ICR. The docket can be viewed online at
www.regulations.gov or in person at the EPA Docket Center, EPA West,
Room 3334, 1301 Constitution Ave. NW., Washington, DC. The telephone
number for the Docket Center is<PHONE_NUMBER>. For additional
information about EPA's public docket, visit http://www.epa.gov/dockets.
    Pursuant to section 3506(c)(2)(A) of the PRA, EPA is soliciting
comments and information to enable it to: (i) Evaluate whether the
proposed collection of information is necessary for the proper
performance of the functions of the Agency, including whether the
information will have practical utility; (ii) evaluate the accuracy of
the Agency's estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumptions
used; (iii) enhance the quality, utility, and clarity of the
information to be collected; and (iv) minimize the burden

of the collection of information on those who are to respond, including
through the use of appropriate automated electronic, mechanical, or
other technological collection techniques or other forms of information
technology, e.g., permitting electronic submission of responses. EPA
will consider the comments received and amend the ICR as appropriate.
The final ICR package will then be submitted to OMB for review and
approval. At that time, EPA will issue another Federal Register notice
to announce the submission of the ICR to OMB and the opportunity to
submit additional comments to OMB.
    Abstract: Under the provisions of national Program Development and
Approval Guidance implementing section 6217 of the Coastal Zone Act
Reauthorization Amendments of 1990 (CZARA) which was jointly developed
and published by EPA and the National Oceanic and Atmospheric
Administration (NOAA), 29 coastal States and 5 coastal Territories with
federally approved Coastal Zone Management Programs have developed and
submitted to EPA and NOAA Coastal Nonpoint Pollution Programs. Another
State (Illinois) is developing its program for submittal to EPA and
NOAA in early 2014. EPA and NOAA have fully approved 17 States and 5
Territories, and conditionally approved 11 States. Another State that
was conditionally approved (Alaska) ceased its participation in this
program in 2011.
    Form Numbers: None.
    Respondents/affected entities: Entities affected by this action are
11 coastal States with conditionally approved Coastal Nonpoint
Pollution Control Programs and 1 coastal State that will submit its
program for federal approval in 2014.
    Respondent's obligation to respond: Required to obtain or retain
benefits.
    Estimated number of respondents: 12 States (total).
    Frequency of response: On occasion.
    Total estimated burden: 1,500 hours (per year). Burden is defined
at 5 CFR 1320.3(b).
    Total estimated cost: $55,500 (per year), includes $0 annualized
capital or operation & maintenance costs.
    Changes in Estimates: There is a decrease of 125 hours (per year)
in the total estimated respondent burden compared with the ICR
currently approved by OMB. This decrease is the result of progress that
States which are not yet unconditionally approved have made that have
resulted in the reduction in the number of conditions imposed on them
by EPA and NOAA, offset by the addition of a new State coastal nonpoint
program (Illinois), as well as the sunsetting of one State program in
2011 (Alaska).

    Dated: November 6, 2013.
Benita Best-Wong,
Director, Office of Wetlands, Oceans, and Watersheds.
[FR Doc. 2013-27830 Filed 11-19-13; 8:45 am]
BILLING CODE 6560-50-P