[Federal Register Volume 80, Number 10 (Thursday, January 15, 2015)]
[Notices]
[Pages 2125-2142]
[FR Doc No: 2015-00531]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74028; File No. SR-EDGA-2015-03]

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

January 9, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on January 9, 2015, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange has
designated this proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A) of the

Act \3\ and Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange filed a proposal to amend certain rules to adopt or
align system functionality with that currently offered by BATS
Exchange, Inc. (``BZX'') and BATS Y-Exchange, Inc. (``BYX'',
collectively with BZX, ``BATS'') in order to provide a consistent
technology offering amongst the Exchange and its affiliates. These
changes are described in detail below and include amending: (i) Rule
11.1 regarding the Exchange's trading sessions and hours of operation;
(ii) Rule 11.6, Definitions; (iii) Rule 11.7, Opening Process; (iv)
Rule 11.8, Order Types; (v) Rule 11.9, Priority of Orders; (vi) Rule
11.10, Order Execution; and (vii) Rule 11.11, Routing to Away Trading
Centers.
    The proposed rule change does not propose to implement new or
unique functionality that has not been previously filed with the
Commission or is not available on BATS. The Exchange notes that the
proposed rule text is based on the rules and is different only to the
extent necessary to conform to the Exchange's current rules.
    The Exchange does not believe that the proposed rule change will
have any direct or significant indirect effect on any other Exchange
rule in effect at the time of this filing.
    The text of the proposed rule change is available at the Exchange's
Web site at http://www.directedge.com/, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    Earlier this year, the Exchange and its affiliate, EDGX Exchange,
Inc. (``EDGX'') received approval to effect a merger (the ``Merger'')
of the Exchange's parent company, Direct Edge Holdings LLC, with BATS
Global Markets, Inc., the parent of BATS (together with BATS, EDGA and
EDGX, the ``BGM Affiliated Exchanges'').\5\ In the context of the
Merger, the BGM Affiliated Exchanges are working to migrate EDGX and
EDGA onto the BATS technology platform, and align certain system
functionality, retaining only intended differences between the BGM
Affiliated Exchanges. As a result of these efforts, the Exchange
proposes to amend: (i) Rule 11.1 regarding the Exchange's trading
sessions and hours of operation; (ii) Rule 11.6, Definitions; (iii)
Rule 11.7, Opening Process; (iv) Rule 11.8, Order Types; (v) Rule 11.9,
Priority of Orders; (vi) Rule 11.10, Order Execution; and (vii) Rule
11.11, Routing to Away Trading Centers.
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    \5\ See Securities Exchange Act Release No. 71449 (January 30,
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
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    The proposed amendments are intended to align certain system
functionality with that currently offered by BATS in order to provide a
consistent technology offering for Users \6\ of the BGM Affiliated
Exchanges. The Exchange notes that the proposed rule text is based on
the BATS Rule and is different only to the extent necessary to conform
to the Exchange's current rules.\7\ The proposed amendments do not
propose to implement new or unique functionality that has not been
previously filed with the Commission or is not available on BZX or BYX.
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    \6\ The term ``User'' is defined as ``any Member or Sponsored
Participant who is authorized to obtain access to the System
pursuant to Rule 11.3.'' See Exchange Rule 1.5(ee).
    \7\ To the extent a proposed rule change is based on an existing
BATS Rule, the language of the BATS and Exchange Rules may differ to
extent necessary to conform with existing Exchange rule text or to
account for details or descriptions included in the Exchange Rules
but not currently included in BATS rules based on the current
structure of such rules.
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Rule 11.1, Hours of Trading and Trading Days
    Current Functionality. Rule 11.1 sets forth when orders may be
entered into the System \8\ and outlines a User's ability to select the
trading sessions for which an order may be eligible for execution.
Proposed Rule 11.1(a)(1), Session Indicator, describes each of the
Exchange's existing trading sessions. A User may select the particular
trading sessions for which their order(s) may be eligible for
execution. Specifically, orders designated as: ``Pre-Opening Session''
are eligible for execution between 8:00 a.m. Eastern Time and 4:00 p.m.
Eastern Time; ``Regular Session'' are eligible for execution between
the completion of the Opening Process or a Contingent Open as defined
in proposed Rule 11.7 (described below), whichever occurs first, and
4:00 p.m. Eastern Time, unless otherwise noted; \9\ ``Post-Closing
Session'' are eligible for execution between the start of the Regular
Session and 8:00 p.m. Eastern Time; and ``All Sessions'' are eligible
for execution between 8:00 a.m. and 8:00 p.m. Eastern Time.
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    \8\ Exchange Rule 1.5(cc) defines ``System'' as ``the electronic
communications and trading facility designated by the Board through
which securities orders of Users are consolidated for ranking,
execution and, when applicable, routing away.''
    \9\ Beginning at 9:30:00 a.m. Eastern Time, the System will
accept: (i) Incoming orders designated as Intermarket Sweep Orders
(``ISOs''), and (ii) orders with a time-in-force instruction other
than Regular Hours Only. This is to assist Members' compliance with
Rule 611 of Regulation NMS.
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    Under Rule 11.1(a)(1), orders may be entered into the System from
6:00 a.m. until 8:00 p.m. Eastern Time, but orders entered between 6:00
a.m. and 8:00 a.m. Eastern Time are not eligible for execution until
the start of the session selected by the User. All orders are eligible
for execution during the Regular Session. A User may designate that
their order to be eligible for the Pre-Opening and/or Post-Closing
Sessions. If the User does not select a particular session or sessions,
the order will default to the Regular Session only.
    Proposed Functionality. To align with BATS functionality, the
Exchange proposes to amend Rule 11.1(a)(1) to allow Users to designate
when their order is eligible for execution by selecting the desired
Time-In-Force (``TIF'') instruction under Exchange Rule 11.6(q) \10\
and not by selecting a particular trading session, as is currently
required. Therefore, the Exchange proposes to delete references to the
Pre-Opening Session, Regular Session, Post-Closing Session, and All
Sessions indicators set forth under Rule 11.1(a)(1)(A)-(D). These
session indicators will no longer be available upon completion of the
technology integration and Users will designate the session(s) during
which their order is eligible for execution by selecting the

desired TIF instruction under Exchange Rule 11.6(q). The Exchange also
proposes to no longer default orders to the Regular Session where
another session indicator is not selected by the User. Thus, Users will
be required to select a TIF instruction. Pre-Opening Session \11\ and
Post-Closing Session \12\ will continue to be defined under Exchange
Rule 1.5. The Exchange also proposes to retain but relocate the
definition of Regular Session to Rule 1.5 as new paragraph (hh).
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    \10\ The Exchange also proposes to and its TIF instructions
under Rule 11.6(q) to align with BATS Rule 11.9(b). The changes are
described in more detail below.
    \11\ Pre-Opening Session is defined as ``the time between 8:00
a.m. and 9:30 a.m. Eastern Time.'' See Exchange Rule 1.5(s).
    \12\ Post-Closing Session is defined as ``the time between 4:00
p.m. and 8:00 p.m. Eastern Time.'' See Exchange Rule 1.5(r).
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    The Exchange also proposes to amend Rule 11.1(a)(1) to align with
recent rule changes filed with the Commission by BATS.\13\ As proposed,
orders entered between 6:00 a.m. and 8:00 a.m. Eastern Time are not
eligible for execution until the start of the Pre-Opening Session or
Regular Trading Hours, depending on the time-in-force selected by the
User. The Exchange proposes to further amend Rule 11.1(a)(1) to state
that the following orders will not be accepted prior to 8:00 a.m.
Eastern Time: orders with a Post Only instruction, ISOs, Market Orders
with a TIF instruction other than Regular Hours Only (``RHO''), orders
with a Minimum Execution Quantity instruction that also include a TIF
instruction of RHO, and all orders with a TIF instruction of Immediate
or Cancel (``IOC'') or Fill Or Kill (``FOK''). At the commencement of
the Pre-Opening Session, orders entered between 6:00 a.m. and 8:00 a.m.
Eastern Time orders will be handled in time sequence, beginning with
the order with the oldest time stamp, and will be placed on the EDGA
Book, routed, cancelled, or executed in accordance with the terms of
the order.
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    \13\ See Securities Exchange Act Release Nos. 73745 (December 4,
2014), 79 FR 73359 (December 10, 2014) (SR-BATS-2014-062); 73744
(December 4, 2014), 79 FR 73369 (December 10, 2014) (SR-BYX-2014-
036).
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Rule 11.6, Definitions
    Rule 11.6, Definitions, sets forth in one rule current defined
terms and order instructions that are utilized in Chapter XI. Rule 11.6
also includes additional defined terms and instructions to aid in
describing System functionality and the operation of the Exchange's
order types. The Exchange proposes to amend Rule 11.6 to align certain
sections with BATS functionality and rules as part of the technology
integration. These changes are described below and include: (i)
Amending subparagraph (a) regarding Attribution; (ii) amending
paragraph (d) regarding Discretionary Range; (iii) amending paragraph
(h) regarding Minimum Execution Quantity; (iv) amending subparagraph
(j) regarding the Pegged order instruction; (v) amending subparagraph
(k) regarding the definition of Permitted Price; (vi) amending
subparagraph (l)(1)(A) regarding the Price Adjust Re-Pricing
instruction to allow for multiple re-pricing; (vii) renaming the Hide
Not Slide re-pricing instruction under Rule 11.8(l)(1)(B) as Displayed
Price Sliding and amending the rule to allow for multiple re-pricing;
(viii) deleting subparagraph (l)(1)(B)(i) to decommission the Routed
and Returned Re-Pricing instruction; (ix) amending subparagraph (l)(2)
to decommission Short Sale Price Adjust and Short Sale Price Sliding,
and adopt the BATS short sale re-pricing process; (x) amending
subparagraph (l)(3) regarding the re-pricing of Non-Displayed Orders;
(xi) amending subparagraph (m)(1) regarding Replenishment Amounts;
(xii) amending subparagraph (m)(2) regarding the Super Aggressive order
instruction; and (xiii) amending subparagraph (q) regarding TIF
instructions. As stated above, the proposed amendments to Rule 11.6 do
not propose to implement new or unique functionality that has not been
previously filed with the Commission or is not available on BZX or
BYX.\14\ Each of these amendments are described in more detail below.
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    \14\ See supra note 7.
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Attribution (Rule 11.6(a))
    Pursuant to Rule 11.6(a), where a User includes an Attributable
instruction with an order, the User's Market Participant Identifier
(``MPID'') is visible via the Exchange's Book Feed.\15\ Conversely, if
an order is to be Non-Attributable,\16\ the User's MPID is not visible
via the Exchange's Book Feed. Under Exchange Rule 11.6(a)(1), unless
the User elects otherwise, all orders are automatically defaulted by
the System to Non-Attributable. Further, under Rule 11.6(a)(2), a User
may elect an order to be Attributable on an order-by-order basis or
instruct the Exchange to default all of its orders as Attributable on a
port-by-port basis. However, pursuant to Rule 11.6(a), if a User
instructs the Exchange to default all its orders as Attributable on a
particular port, such User would not be able to designate any order
from that port as Non-Attributable.
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    \15\ See EDGA Rule 11.6(a). The EDGA Book Feed is a data feed
that contains all displayed orders for listed securities trading on
EDGA, order executions, order cancellations, order modifications,
order identification numbers, and administrative messages. See
Exchange Rule 13.8(a).
    \16\ See Exchange Rule 11.6(a)(1).
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    The Exchange proposes to amend Rule 11.6(a)(2) to provide Users
with additional flexibility when designating all of its orders as
Attributable on a particular port consistent with BATS functionality.
As amended, Rule 11.6(a)(2) would provide a User that instructs the
Exchange to default all of its orders as Attributable on a particular
port the ability to override that setting and designate an individual
order from that port as Non-Attributable. This proposed rule change is
representative of additional detail with regard to the operation of
orders with an Attributable instruction in the Exchange's rules. While
the proposed rule change is not directly based on an existing BATS
Rule, as BATS rules do not currently address port level settings with
respect to attribution, the Exchange believes that amending its current
rule text to accurately describe how a Member may designate their
orders as Attributable or Non-Attributable will provide them with
increased transparency regarding how the System operates.
Cancel Back (Rule 11.6(b))
    Cancel Back is an instruction a User may attach to an order
instructing the System to cancel an order, when, if displayed by the
System on the EDGA Book \17\ at the time of entry, the order would
create a violation of Rule 610(d) of Regulation NMS, Rule 201 of
Regulation SHO, or the order cannot otherwise be executed or posted by
the System to the EDGA Book at its limit price.
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    \17\ The term ``EDGA Book'' is defined as ``the System's
electronic file of orders.'' See EDGA Rule 1.5(d).
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    The Exchange proposes to amend the definition of Cancel Back to
remove the requirement that the order only be cancelled where it
creates a violation of Rule 610(d) of Regulation NMS, Rule 201 of
Regulation SHO, or cannot otherwise be executed or posted by the System
to the EDGA Book at its limit price upon entry. Removal of the phrase
``upon entry'' from Rule 11.6(b) would enable an order with a Cancel
Back instruction that is posted to the EDGA Book to be cancelled if it
subsequently creates a violation of Rule 610(d) of Regulation NMS, Rule
201 of Regulation SHO, or the cannot otherwise be executed or continue
to be posted by the System to the EDGA Book at its limit price. The
proposed amendment would align the operation of the Exchange's

Cancel Back instruction with current BATS Rule 11.13.\18\
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    \18\ Under BATS Rule 11.13, ``an order will be cancelled back to
the User if, based on market conditions, User instructions,
applicable Exchange Rules and/or the Act and the rules and
regulations thereunder, such order is not executable, cannot be
routed to another Trading Center pursuant to Rule 11.13(a)(2) below
and cannot be posted to the BATS Book.'' The cancelling back of an
order under Rule 11.13 is not limited to cancellation upon entry.
See also BATS Rule 11.9(g)(1)(D).
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Discretionary Range (Rule 11.6(d))
    Discretionary Range is an instruction the User may attach to an
order to buy (sell) a stated amount of a security at a specified,
displayed price with discretion to execute up (down) to a specified,
non-displayed price. The Exchange proposes to remove the prohibition
that the Discretionary Range of an order to buy (sell) cannot be more
than $0.99 higher (lower) than the order's displayed price because,
upon migration of the Exchange onto BATS technology, the Discretionary
Range of an order will not be limited to $0.99. This proposed rule
change is representative of additional detail with regard to the
operation of orders with Discretionary Range in the Exchange's rules.
In addition, no such limitation is included in BATS or BYX Rules
11.9(c)(10) regarding Discretionary Orders and the BATS systems
effectively do not incorporate such a limitation.
Minimum Execution Quantity (Rule 11.6(h))
    Minimum Execution Quantity is an instruction a User may attach to
an order with a Non-Displayed \19\ instruction requiring the System to
execute the order only to the extent that a minimum quantity can be
satisfied by execution against a single order or multiple aggregated
orders simultaneously. Unless the User elects otherwise, any shares
remaining after a partial execution will be executed at a size that is
equal to or exceeds the Minimum Execution Quantity. Thus, under current
Exchange Rules and functionality a User can elect that a Minimum
Execution Quantity only apply to an initial execution but not any
remaining shares after such execution. The Exchange proposes to amend
Minimum Execution Quantity to reflect that, upon migration of the
Exchange onto BATS technology, any shares remaining after a partial
execution will continue to be executed at a size that is equal to or
exceeds the Minimum Execution Quantity, regardless of the Users
instructions. A User who wishes otherwise may cancel and resubmit their
order without a Minimum Execution Quantity. In addition, currently the
Minimum Execution Quantity instruction will not apply where the number
of shares remaining after a partial execution are less than the
quantity provided in the instruction. As amended, in such case, the
Minimum Execution Quantity will equal the number of remaining shares,
which is similar to current Exchange functionality. Like above, a User
who wishes otherwise may cancel and resubmit their order with a new
Minimum Execution Quantity. As amended, the Minimum Execution Quantity
instruction will operate similarly to the BATS Minimum Quantity Order
under BATS Rule 11.9(c)(5).\20\
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    \19\ The term ``Non-Displayed'' is defined as ``[a]n instruction
the User may attach to an order stating that the order is not to be
displayed by the System on the EDGA Book.'' See Exchange Rule
1.5(e)(2).
    \20\ See Securities Exchange Act Release Nos. 72646 (July 21,
2014), 79 FR 43516 (July 25, 2014) (SR-BATS-2014-027) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Rules 11.9, 11.12, 11.18, 21.1 and 21.7 of BATS Exchange, Inc.);
72647 (July 21, 2014), 79 FR 43522 (July 25, 2014) (SR-BYX-2014-010)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change to Rules 11.9, 11.12, and 11.18 of BATS Y-Exchange, Inc.). As
amended, Exchange Rule 11.6(h) only differs from BATS Rule
11.9(c)(5) to extent necessary to conform with existing rule text or
to account for details or descriptions currently included in the
Exchange's Rule that are not included in BATS Rule 11.9(c)(5).
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Pegged (Rule 11.6(j))
    Current Functionality. An order with a Pegged instruction enables a
User to specify that the order's price will peg to a price a certain
amount away from the NBB or NBO (offset). If an order with a Pegged
instruction displayed on the Exchange would lock the market, the price
of the order will be automatically adjusted by the System to one
Minimum Price Variation below the current NBO (for bids) or to one
Minimum Price Variation above the current NBB (for offers). A new time
stamp is created for the order each time it is automatically adjusted
and orders with a Pegged instruction are not eligible for routing
pursuant to Rule 11.11. For purposes of the Pegged instruction, the
System's calculation of the NBBO does not take into account any orders
with Pegged instructions that are resting on the EDGA Book. An order
with a Pegged instruction is cancelled if an NBB or NBO, as applicable,
is no longer available.
    An order with a Pegged instruction may be a Market Peg or Primary
Peg. An order that includes a Primary Peg instruction will have its
price pegged by the System to the NBB, for a buy order, or the NBO for
a sell order. A User may, but is not required to, select an offset
equal to or greater than one Minimum Price Variation \21\ above or
below the NBB or NBO that the order is pegged to. An order with a
Primary Peg instruction is currently eligible to join the Exchange's
Best Bid or Offer (``Exchange BBO'') when the EDGA Book has been locked
or crossed by another market. If an order with a Primary Peg
instruction creates a Locking Quotation \22\ or Crossing Quotation,\23\
the price of the order is automatically adjusted by the System to one
Minimum Price Variation below the current NBO (for bids) or to one
Minimum Price Variation above the current NBB (for offers).
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    \21\ The term ``Minimum Price Variation'' is defined as
``[b]ids, offers, or orders in securities traded on the Exchange
shall not be made in an increment smaller than: (i) $0.01 If those
bids, offers, or orders are priced equal to or greater than $1.00
per share; or (ii) $0.0001 if those bids, offers, or orders are
priced less than $1.00 per share; or (iii) any other increment
established by the Commission for any security which has been
granted an exemption from the minimum price increments requirements
of SEC Rule 612(a) or 612(b) of Regulation NMS.'' See Exchange Rule
11.6(i).
    \22\ The term ``Locking Quotation'' is defined as ``[t]he
display of a bid for an NMS stock at a price that equals the price
of an offer for such NMS stock previously disseminated pursuant to
an effective national market system plan, or the display of an offer
for an NMS stock at a price that equals the price of a bid for such
NMS stock previously disseminated pursuant to an effective national
market system plan in violation of Rule 610(d) of Regulation NMS.''
See Exchange Rule 11.6(g).
    \23\ The term ``Crossing Quotation'' is defined as ``[t]he
display of a bid (offer) for an NMS stock at a price that is higher
(lower) than the price of an offer (bid) for such NMS stock
previously disseminated pursuant to an effective national market
system plan in violation of Rule 610(d) of Regulation NMS.'' See
Exchange Rule 11.6(c).
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    An order that includes a Market Peg instruction will have its price
pegged by the System to the NBB, for a sell order, or the NBO, for a
buy order. An order with a Market Peg instruction that is to be
displayed by the System on the EDGA Book must include an offset for an
order to buy (sell) that is equal to or greater than one Minimum Price
Variation below (above) the NBO (NBB) that the order is pegged to. If a
User does not select an offset, the System will automatically include
an offset on an order to buy (sell) that is equal to one Minimum Price
Variation below (above) the NBO (NBB) that the order is pegged to. For
an order with a Non-Displayed instruction, a User may, but is not
required to, select an offset for an order to buy (sell) that is equal
to or greater than one Minimum Price Variation below (above) the NBO
(NBB) that the order is pegged to.
    Proposed Functionality. The Exchange proposes to amend the Pegged
instruction under Rule 11.6(j) to align

with BATS Rule 11.9(c)(8).\24\ First, the Exchange proposes to no
longer cancel an order with a Pegged instruction where the NBB or NBO,
as applicable, is no longer available. In such case, instead of being
cancelled, the order will not be eligible for execution. The order will
receive a new time stamp and be eligible for execution where the NBB or
NBO it is pegged to becomes available.
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    \24\ See Securities Exchange Act Release Nos. 73188 (September
23, 2014), 79 FR 58004 (September 26, 2014) (SR-BATS-2014-041)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change to Rule 11.9 of BATS Exchange, Inc.); 73190 (September 23,
2014), 79 FR 58019 (September 26, 2014) (SR-BYX-2014-022) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule
11.9 of BATS Y-Exchange, Inc.). As amended, Exchange Rule 11.6(j)
only differs from BATS Rule 11.9(c)(8) to extent necessary to
conform with existing rule text or to account for details or
descriptions currently included in the Exchange's Rule that are not
included in BATS Rule 11.9(c)(8).
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    Second, the Exchange proposes to amend the Market Peg instruction
under Rule 11.6(j)(1) to state that such orders are not eligible for
display on the EDGA Book. As a result, the Exchange also proposes to
delete the requirement that an order with a Market Peg instruction that
is to be displayed on the EDGA Book must include an offset for an order
to buy (sell) that is equal to or greater than one Minimum Price
Variation below (above) the NBO (NBB) that the order is pegged to.
    Third, the Exchange proposes to amend the Primary Peg instruction
under Rule 11.6(j)(2) to define an offset equal to or greater than one
Minimum Price Variation above or below the NBB or NBO that the order is
pegged to as the ``Primary Offset Amount''. The Exchange also proposes
to specify that the Primary Offset Amount for an order with a Primary
Peg instruction that is to be displayed on the EDGA Book must result in
the price of such order being inferior to or equal to the inside quote
on the same side of the market.
    Fourth, the Exchange proposes to amend the provisions governing the
operation of an order with a Primary Peg instruction during a locked or
crossed market. As proposed, an order with a Primary Peg instruction
will no longer be able to join the Exchange BBO when the EDGX Book
[sic] is locked or crossed by another market. When the EDGX Book [sic]
is crossed by another market, the Exchange proposes to automatically
adjust an order with a Primary Peg instruction to the current NBO (for
bids) or the current NBB (for offers). For example, assume the NBBO is
$10.08 x $10.09. An order with a Primary Peg instruction to buy with a
limit price of $10.10 is entered and displayed by the System at $10.08,
the current NBB. Assume the NBO updates to $10.07, resulting in a
crossed market. The order with a Primary Peg instruction to buy would
then be pegged and displayed at $10.07, the updated NBO.
    Rule 11.6(j)(2) will continue to require that an order with a
Primary Peg instruction that would otherwise be a Locking Quotation or
Crossing Quotation be automatically adjusted by the System to one
Minimum Price Variation below the current NBO (for bids) or to one
Minimum Price Variation above the current NBB (for offers). For
example, assume the NBBO is $10.09 x $10.08, resulting in a crossed
market. An order with a Primary Peg instruction to buy with a limit
price of $10.10 is entered and displayed by the System at $10.07, one
Minimum Price Variation below the current NBB. Assume the NBBO is
updated to $10.08 x $10.09, the order with a Primary Peg instruction to
buy would then be pegged and displayed at $10.08, the updated NBB now
that the market is no longer crossed. This proposed rule change is
representative of additional detail with regard to the operation of
orders with a Pegged instruction during locked or crossed markets that
is currently included in Rule 11.6(j) and is consistent with Exchange's
current re-pricing options under Rule 11.6(l), as well as Exchange Rule
11.10(f) and BATS Rule 11.20(a)(3), which outline the prohibition
against displaying locking and crossing quotations under Rule 610 of
Regulation NMS.
Permitted Price (Rule 11.6(k))
    Permitted Price is currently defined as the price at which a sell
order will be priced, ranked and displayed at one Minimum Price
Variation above the NBB. As amended, the definition of Permitted Price
will only state that it is the price that the order is displayed at one
Minimum Price Variation above the NBBO.\25\ This is to update the
definition of Permitted Price to reflect the decommissioning of the
Short Sale Price Adjust and Short Sale Price Sliding instructions and
the proposed amendment that an order with both a Short Sale instruction
and Hide Not Slide instruction will be ranked at the mid-point of the
NBBO, but displayed at the Permitted Price discussed below. While the
amended definition of Permitted Price is not identical to the
definition of Permitted Price under BATS Rules, any differences are
necessary to conform the proposed rule text with the other proposed
rule changes described above.
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    \25\ The proposed definition of Permitted Price is also similar
to that of other exchange. See e.g., Nasdaq Rule 4763(e); NYSE MKT
Rule 440B(e); Rule 7016(f)(v)(C).
---------------------------------------------------------------------------

Re-Pricing (Rule 11.6(l))
    The Exchange currently offers re-pricing instructions which, in all
cases, result in the ranking and/or display of an order at a price
other than the order's limit price in order to comply with applicable
securities laws and Exchange Rules. Specifically, the Exchange's re-
pricing instructions are designed to permit Users to comply with Rule
610(d) of Regulation NMS or Rule 201 of Regulation SHO. Rule 11.6(l)
sets forth the re-pricing instructions currently available to Users
with regard to Regulation NMS compliance--Price Adjust, Hide Not Slide,
and Routed and Returned Re-Pricing, and with regard to Regulation SHO
compliance--Short Sale Price Adjust and Short Sale Price Sliding. The
Exchange now proposes to amend its re-pricing instructions to
streamline the re-pricing options available to Users in order to align
Exchange functionality with that of BATS.
Re-Pricing Instructions To Comply With Rule 610(d) of Regulation NMS
    The Exchange proposes to amend its re-pricing instructions to
comply with Rule 610(d) of Regulation NMS as follows: (i) Amend the
Price Adjust instruction to enable Users to elect that their order be
adjusted multiple times in response to changes in the NBBO; rename the
Hide Not Slide instruction as Displayed Price Sliding and amend it to
allow for multiple re-pricing; and (iii) delete Routed and Returned Re-
Pricing.
    Routed and Returned Re-Pricing (Rule 11.6(l)(1)(B)(i)). The
Exchange proposes to delete the Routed and Returned Re-Pricing
instruction under Rule 11.6(l)(1)(B)(i). Pursuant to current Exchange
Rules and Functionality, under the Routed and Returned Re-Pricing
instruction, a Limit Order that is returned to the EDGA Book after
being routed to an away Trading Center with a limit price that would
cause the order to be a Locking Quotation or Crossing Quotation will be
displayed by the System on the EDGA Book at a price that is one Minimum
Price Variation lower (higher) than the Locking Price \26\ for orders
to buy (sell), will be ranked at the Locking Price with the ability to
execute at the Locking Price. Each time the NBBO is updated, a buy
(sell) order

subject to the Routed and Returned Re-Pricing instruction will be
further adjusted so that it continues to be displayed by the System on
the EDGA Book at one Minimum Price Variation below (above) the NBO
(NBB) and will be ranked at the Locking Price with the ability to
execute at the Locking Price until the price of such order reaches its
limit price, at which point it will remain displayed by the System on
the EDGA Book at that price and cease to be further adjusted pursuant
to the Routed and Returned Re-Pricing instruction. The order will
receive a new time stamp when it is returned to the EDGA Book and each
time it is subsequently re-ranked.
---------------------------------------------------------------------------

    \26\ The term ``Locking Price'' is defined as ``the price at
which an order to buy (sell), that if displayed by the System on the
EDGA Book, either upon entry into the System, or upon return to the
System after being routed away, would be a Locking Quotation.'' See
Exchange Rule 11.6(i).
---------------------------------------------------------------------------

    Upon completion of the migration of the Exchange to BATS
technology, Limit Orders that are returned to the EDGA Book after being
routed to an away Trading Center with a limit price that would cause
the order to be a Locking Quotation or Crossing Quotation will be
subject to the Exchange's standard re-pricing instructions; i.e.,
automatically defaulted by the System to the Price Adjust Re-Pricing
instruction, unless the User affirmatively elects the Cancel Back
instruction or the Hide Not Slide instruction. The Exchange also
proposes to remove a reference to the Routed and Returned Re-Pricing
instruction from Rule 11.6(l)(1)(B).
    Price Adjust Re-Pricing (Rule 11.6(l)(1)(A)). Under the Price
Adjust instruction, where a buy (sell) order would be a Locking
Quotation or Crossing Quotation if displayed by the System on the EDGA
Book at the time of entry, the order will be displayed and ranked \27\
at a price that is one Minimum Price Variation lower (higher) than the
Locking Price. The order will be displayed and ranked by the System on
the EDGA Book at the Locking Price if: (i) The NBBO changes such that
the order, if displayed at the Locking Price, would not be a Locking
Quotation or Crossing Quotation, including where an ISO with a TIF
instruction of Day is entered into the System and displayed on the EDGA
Book on the same side of the market as the order at a price that is
equal to or more aggressive than the Locking Price.\28\ An order re-
priced as set forth above would not be subject to further re-ranking
and will be displayed by the System on the EDGA Book at the Locking
Price until executed or cancelled by the User. The order will receive a
new time stamp at the time it is re-ranked.
---------------------------------------------------------------------------

    \27\ For purposes of the description of the re-pricing
instructions under proposed Rule 11.6(l), the terms ``ranked'' and
``priced'' are synonymous and used interchangeably.
    \28\ See Division of Trading and Markets: Response to Frequently
Asked Questions Concerning Rule 611 and Rule 610 of Regulation NMS,
Question 5.02, available at http://www.sec.gov/divisions/marketreg/nmsfaq610-11.htm (last visited March 6, 2014).
---------------------------------------------------------------------------

    The Exchange proposes to amend the Price Adjust instruction to
provide Users with additional flexibility by enabling them to elect
that their order be adjusted multiple times in response to changes in
the NBBO. The ranked and displayed prices of an order subject to the
Price Adjust instruction will only be adjusted once, unless the User
elects that the order be adjusted multiple times in response to changes
to the prevailing NBBO. Unless a User has elected the multiple re-
pricing option, the order would not be subject to further re-ranking
and will be displayed on the EDGA Book at the Locking Price until
executed or cancelled by the User. An order subject to the multiple re-
pricing option will be further re-ranked and re-displayed to the extent
it can permissibly be ranked and displayed at a more aggressive price
based on changes to the prevailing NBBO. Multiple re-pricing pursuant
to Price Adjust would be optional and would have to be explicitly
selected by a User before it will be applied. Orders subject to
multiple re-pricing for Price Adjust will be permitted to move all the
way back to their most aggressive price, whereas orders subject to
Price Adjust may not be adjusted to their most aggressive price,
depending upon market conditions and the limit price of the order upon
entry. The Exchange notes that this functionality is identical to the
operation of BATS Rule 11.9(g)(2).\29\ The Exchange does not propose to
amend any other aspect of the Price Adjust instruction.
---------------------------------------------------------------------------

    \29\ See Securities Exchange Act Release Nos. 73359 (October 15,
2014), 79 FR 63003 (October 21, 2014) (SR-BATS-2014-038) (Order
Granting Approval of Proposed Rule Change to Rule 11.9 of the BATS
Exchange, Inc. to Add Price Adjust Functionality); and 73366
(October 15, 2014), 79 FR 62993 (October 21, 2014) (SR-EDGA-2014-
019) [sic] (Order Granting Approval of Proposed Rule Change to Rule
11.9 of the BATS Y-Exchange, Inc. to Add Price Adjust
Functionality).
---------------------------------------------------------------------------

    As an example of multiple re-pricing for Price Adjust assume the
Exchange has a posted and displayed bid to buy 100 shares of a security
priced at $10.10 per share and a posted and displayed offer to sell 100
shares at $10.14 per share. Assume the NBBO is $10.10 by $10.12. If the
Exchange receives a non-routable bid to buy 100 shares at $10.13 per
share, the Exchange would rank and display the order to buy at $10.11
because displaying the bid at $10.13 would cross an external market's
Protected Offer to sell for $10.12. If the NBO then moved to $10.13,
the Exchange would un-slide the bid to buy and rank and display it at
$10.12. Under existing Price Adjust functionality, the Exchange does
not further adjust the ranked or displayed price following this un-
slide. However, under multiple re-pricing for Price Adjust if the NBO
then moved to $10.14, the Exchange would un-slide the bid to buy and
rank and display it at its full limit price of $10.13.
    Hide Not Slide Re-Pricing (Rule 11.6(l)(1)(B)). The Exchange
proposes to rename the Hide Not Slide Re-Pricing instruction under Rule
11.6(l)(1)(B) as Displayed Price Sliding and to amend the rule to allow
for multiple re-pricing.\30\ Under the renamed Displayed Price Sliding
instruction, where an order would be a Locking Quotation or Crossing
Quotation if displayed by the System on the EDGA Book at the time of
entry, the order will be displayed at a price that is one Minimum Price
Variation lower (higher) than the Locking Price for orders to buy
(sell), will be ranked at the Locking Price with the ability to execute
at the Locking Price; provided, however, that if a contra-side order
that equals the Locking Price is displayed by the System on the EDGA
Book, the order's ability to execute at the Locking Price will be
suspended unless and until there is no contra-side displayed order on
the EDGA Book that equals the Locking Price. However, in such case, an
order subject to the Displayed Price Sliding instruction may execute
against other orders at its displayed price. Where the NBBO changes
such that the order, if displayed by the System on the EDGA Book at the
Locking Price, would not be a Locking Quotation or Crossing Quotation,
the System will rank and display such orders at the Locking Price. The
order will not be subject to further re-ranking and will be displayed
on the EDGA Book at the Locking Price retaining its time stamp until
executed or cancelled by the User. Currently, an order subject to the
Displayed Price Sliding instruction will only receive a new time stamp
when it is re-ranked by

the System upon clearance of a Locking Quotation due to the receipt of
an ISO with a TIF instruction of Day that establishes a new NBBO at the
Locked Price in accordance with Rule 11.9(a)(2)(B).
---------------------------------------------------------------------------

    \30\ The Exchange notes that it is proposing to re-name the Hide
Not Slide Re-Pricing instruction to the Displayed Price Sliding
instruction, which is the same name used to describe analogous
functionality on BATS. The Exchange understands that, its affiliate,
EDGX, will retain the current name with respect to the Hide Not
Slide Re-Pricing instruction because such functionality is
distinguishable from Displayed Price Sliding functionality. The
primary difference between Hide Not Slide functionality and
Displayed Price Sliding functionality is that an order with a Hide
Not Slide re-pricing instruction will be ranked at the mid-point of
the NBBO with discretion to execute at the Locking Price whereas an
order with a Displayed Price Sliding instruction (including an
analogous order on BZX or BYX) is ranked at the Locking Price.
---------------------------------------------------------------------------

    Like as proposed for the Price Adjust instruction described above,
the Exchange proposes to amend the Displayed Price Sliding instruction
to provide Users with additional flexibility by enabling them to elect
that their order be adjusted multiple times in response to changes in
the NBBO. The ranked and displayed prices of an order subject to the
Displayed Price Sliding instruction will only be adjusted once, unless
the User elects that the order be adjusted multiple times in response
to changes to the prevailing NBBO. Unless a User has elected the
multiple re-pricing option, the order would not be subject to further
re-ranking and will be displayed on the EDGA Book at the Locking Price
until executed or cancelled by the User. An order subject to the
multiple re-pricing option will be further re-ranked and re-displayed
to the extent it can permissibly be ranked and displayed at a more
aggressive price based on changes to the prevailing NBBO. Multiple re-
pricing pursuant to Displayed Price Sliding would be optional and would
have to be explicitly selected by a User before it will be applied.
Orders subject to multiple re-pricing for Displayed Price Sliding will
be permitted to move all the way back to their most aggressive price,
whereas orders subject to Price Adjust may not be adjusted to their
most aggressive price, depending upon market conditions and the limit
price of the order upon entry. The Exchange notes that this
functionality is identical to the operation of BATS Rule
11.9(g)(1).\31\ To account for option multiple price sliding, the
Exchange proposes to state that an order subject to the Displayed Price
Sliding instruction will receive a new time stamp each time is re-
ranked, which will include when the order is re-ranked by the System
upon clearance of a Locking Quotation due to the receipt of an ISO with
a TIF instruction of Day that establishes a new NBBO at the Locked
Price in accordance with Rule 11.9(a)(2)(B).The Exchange does not
propose to amend any other aspect of the Displayed Price Sliding
instruction.
---------------------------------------------------------------------------

    \31\ See Securities Exchange Act Release Nos. 67657 (August 14,
2012), 77 FR 50199 (August 20, 2012) (SR-BATS-2012-035) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change by the
BATS Exchange, Inc. to Amend BATS Rules Related to Price Sliding
Functionality); and 67656 (August 14, 2012), 77 FR 50193 (August 20,
2012) (SR-BYX-2012-018) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the BATS Y-Exchange, Inc.
to Amend BYX Rules Related to Price Sliding Functionality).
---------------------------------------------------------------------------

    As an example of multiple Displayed Price Sliding, assume the
Exchange has a posted and displayed bid to buy 100 shares of a security
priced at $10.10 per share and a posted and displayed offer to sell 100
shares at $10.13 per share. Assume the NBBO is $10.10 by $10.12. If the
Exchange receives a non-routable bid to buy 100 shares at $10.12 per
share the Exchange will rank the order to buy at $10.12 and display the
order at $10.11 because displaying the bid at $10.12 would lock an
external market's Protected Offer to sell for $10.12. If the NBO then
moved to $10.13, the Exchange would un-slide the bid to buy and display
it at its ranked price (and limit price) of $10.12.
Re-Pricing Instructions To Comply With Rule 201 of Regulation SHO
    The Exchange proposes to amend its Re-Pricing instructions to
comply with Rule 201 of Regulation SHO by deleting Short Sale Price
Adjust and Short Sale Price Sliding and adopting a new, streamlined
rule to align with BATS Rule 11.9(g)(5).
    Current Functionality. The Exchange currently offers two re-pricing
instructions to comply with Rule 201 of Regulation SHO--Short Sale
Price Adjust and Short Sale Price Sliding. Under the Short Sale Price
Adjust instruction, an order to sell with a Short Sale instruction will
be ranked and displayed by the System on the EDGA Book at the Permitted
Price. Following the initial ranking, the order will, to the extent the
NBB declines, continue to be re-ranked and displayed by the System on
the EDGA Book at the Permitted Price down to the order's limit price.
The Short Sale Price Sliding instruction operates similarly to the
Short Sale Price Adjust instruction; except that after its initial
ranking, the order will, to the extent the NBB declines, be re-ranked
and displayed by the System on the EDGA Book one additional time at a
price that is equal to the NBB at the time the order was received by
the System. In both cases, the order to sell with a Short Sale
instruction will receive a new time stamp each time it is re-ranked.
    Proposed Functionality. The Exchange proposes to delete the Short
Sale Price Adjust and Short Sale Price Sliding and adopt a new,
streamlined rule to align with BATS Rule 11.9(g)(5). Under the amended
Rule 11.6(l)(2), an order to sell with a Short Sale instruction that,
at the time of entry, could not be executed or displayed in compliance
with Rule 201 of Regulation SHO will be re-priced by the System at the
Permitted Price. Like BATS Rule 11.9(g)(5), proposed Exchange Rule
11.6(l)(2)(A) would state that the default short sale re-pricing
process will only re-price an order upon entry.
    As proposed, depending upon the instructions of a User, to reflect
declines in the NBB the System will continue to re-price and re-display
a short sale order at the Permitted Price down to the order's limit
price. In the event the NBB changes such that the price of an order
with a Non-Displayed instruction subject to Rule 201 of Regulation SHO
would be a Locking Quotation or Crossing Quotation, the order will
receive a new time stamp, and will be re-priced by the System to the
Permitted Price. Like the Short Sale Price Adjust process that is to be
decommissioned, an order to sell with a Short Sale instruction that is
re-priced will be ranked at the Permitted Price.
    Like BATS Rule 11.9(g)(5), amended Rule 11.6(l)(2) would state
that: (i) When a Short Sale Circuit Breaker is in effect, the System
will execute a sell order with a Displayed and Short Sale instruction
at the price of the NBB if, at the time of initial display of the sell
order with a Short Sale instruction, the order was at a price above the
then current NBB; (ii) orders with a Short Exempt instruction will not
be subject to re-pricing under amended Rule 11.6(l)(2); and (iii) the
re-pricing instructions to comply with Rule 610(d) of Regulation NMS
will be continue to be ignored for an order to sell with a Short Sale
instruction when a Short Sale Circuit Breaker is in effect and the re-
pricing instructions to comply with Rule 201 of Regulation SHO under
this Rule will apply.
Re-Pricing of Orders With a Non-Displayed Instruction (Rule 11.6(l)(3))
    Rule 11.6(l)(3) currently sets forth the re-pricing process for
orders with a Non-Displayed instruction to avoid potentially trading
through Protected Quotations of external markets. Currently, under Rule
11.6(l)(3), a non-routable order with a Non-Displayed instruction that
would be a Crossing Quotation of an external market will be ranked at
the Locking Price, unless the User affirmatively elects that the order
Cancel Back. Rule 11.6(l)(3) states that to avoid potentially trading
through Protected Quotations of external markets, a non-routable order
with a Non-Displayed instruction that would be a Crossing Quotation of
an external market will be ranked at the Locking Price, unless the User
affirmatively elects that the order Cancel Back. Each time the NBBO is
updated and the order continues to be a Locking Quotation or

Crossing Quotation of an external market, the order will be adjusted so
that it continues to be ranked at the current Locking Price. Once an
order with a Non-Displayed instruction has been ranked at its limit
price it will only be adjusted in the event the NBBO is updated and the
order would again be a Crossing Quotation of an external market. The
order will receive a new time stamp each time it is subsequently re-
ranked. For example, assume the NBBO is $24.00 x $26.00 and there are
no orders resting on the EDGA Book. If an incoming order with a Non-
Displayed instruction is entered into the System to buy at $27.00, it
will be ranked by the System at $26.00, the Locking Price. Assume the
NBBO changes to $24.00 x $25.00. The buy order with a Non-Displayed
instruction will be re-ranked at $25.00, the new Locking Price, and be
given a new time stamp.
    The Exchange proposes to amend Rule 11.6(l)(3) to align with BATS
Rule 11.9(g)(4).\32\ As amended, an order with a Non-Displayed
instruction that has been re-ranked by the System in accordance with
Rule 11.6(l)(3) will not be re-ranked by the System each time the NBBO
is adjusted. Rather, such order will only be re-ranked by the System
should it is again be Crossing Quotation of an external market upon the
NBBO being updated. Assume the same facts as the above example. Assume
the NBBO again changes to $24.00 x $27.00. The buy order with a Non-
Displayed instruction will be remain ranked at $25.00 because it is not
a Crossing Quotation upon the NBBO changing. However, assume the NBBO
changed to $23.00 x $24.00. The buy order with a Non-Displayed
instruction will be remain ranked at $24.00, and be given a new time
stamp, because it would be a Crossing Quotation if it remained ranked
at $25.00.
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

Reserve Quantity and Replenishment Amounts (Rule 11.6(m))
    Current Functionality. If the portion of the order with a Displayed
instruction is reduced to less than a Round Lot, the System will, in
accordance with the User's instruction, replenish the displayed
quantity from the Reserve Quantity by at least a single Round-Lot using
either the Random or Fixed Replenishment instructions. A new time stamp
is created for the displayed quantity of the order each time it is
replenished from the Reserve Quantity, while the Reserve Quantity
retains the time stamp of its original entry. Where the combined amount
of the displayed quantity and Reserve Quantity of an order are reduced
to less than one Round Lot, the order converts to an order with a
Displayed instruction and be treated as Displayed for purposes of
execution priority under Rule 11.9.
    Proposed Functionality. The Exchange proposes to amend Rule 11.6(m)
to align with BATS Rule 11.9(c)(1).\33\ First, the Exchange proposes to
no longer require that the displayed quantity from the Reserve Quantity
be replenished by at least a single Round-Lot. Instead, the displayed
quantity will be replenished in accordance with the replenishment
instruction the User selects. Specifically, like on BATS, Users will be
required to designate the original display quantity of an order, which
is also the amount to which an order is replenished (unless the
remainder of an order is smaller than the original displayed quantity)
under the current replenishment functionality. The Exchange refers to
this quantity as ``max floor'' in its specifications. The Exchange
proposes to add a defined term of ``Max Floor'' to Rule 11.6(m), which
would be a mandatory value entered by a User that will determine the
quantity of the order to be initially displayed by the System and will
also be used to determine the replenishment amount under both
replenishment options described below. If the remainder of an order is
less than the replenishment amount, the Exchange will replenish and
display the entire remainder of the order.
---------------------------------------------------------------------------

    \33\ See supra note 20.
---------------------------------------------------------------------------

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

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

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

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

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

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

    Under Fixed Replenishment, the displayed quantity of an order is
replenished for a Fixed Replenishment quantity designated by the User.
The Fixed Replenishment quantity for the order equals the initial
displayed quantity designated by the User. The Exchange proposes to
amend Rule 11.6(m) to specify that the Fixed Replenishment quantity
will be the Max Floor designated by the User. In addition, Rule 11.6(m)
will also specify

that Fixed Replenishment will apply to any order for which Random
Replenishment has not been selected. Lastly, like proposed for Random
Replenishment discussed above, the Exchange will no longer prohibit the
displayed replenishment quantity from being less than a single Round
Lot or greater than the remaining unexecuted shares in the order. As
amended, Fixed Replenishment will be identical to BATS Rule
11.9(c)(1)(B).\37\
---------------------------------------------------------------------------

    \37\ See supra note 20.
---------------------------------------------------------------------------

Super Aggressive (Rule 11.6(n)(2))
    Super Aggressive is an order instruction that directs the System to
route the order if an away Trading Center locks or crosses the limit
price of the order resting on the EDGA Book. Like BATS Rule
11.13(a)(4)(B), the Exchange proposes to also permit a User to
designate an order as Super Aggressive solely to routable orders posted
to the EDGA Book with remaining size of an Odd Lot.\38\ To the extent
the amended text of Exchange Rule 11.6(n)(2) differs from BATS Rule
11.13(a)(4)(B), such differences are necessary to conform the rule with
existing rule text, and in this case, to account for details or
descriptions currently included in BATS Rule 11.9(d) [sic] that are not
necessary under the structure of the Exchange's Rules.
---------------------------------------------------------------------------

    \38\ See Securities Exchange Act Release Nos. 73295 (October 3,
2014), 79 FR 61117 (October 9, 2014) (SR-BATS-2014-044) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Rules
11.13 and 21.9 of the BATS Exchange, Inc.); and 73296 (October 3,
2014), 79 FR 61121 (October 9, 2014) (SR-BYX-2014-026) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Rule
11.13 of the BATS Y-Exchange, Inc.). As amended, Exchange Rule
11.6(n)(2) only differs from BATS Rule 11.13(a)(4)(B) to extent
necessary to conform the rule with existing Exchange rule text or to
account for details or descriptions currently included in the
Exchange's Rule but not included in BATS Rule 11.13(a)(4)(B). An
``Odd Lot' is defined as ``any amount less than a Round Lot. See
Exchange Rule 11.8(s)(2).
---------------------------------------------------------------------------

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

    \39\ See supra note 20.
---------------------------------------------------------------------------

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

any unexecuted portion of an ISO that is designated RHO will be
converted into a non-ISO and be queued for participation in the Opening
Process.
---------------------------------------------------------------------------

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

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

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

    Currently, with the exception of a Market Order with a Destination-
on-Open instruction, any portion of a Market Order that would execute
at a price more than the greater of $0.50 or 5 percent worse than the
consolidated last sale as published by the responsible single plan
processor at the time the order is entered into the System will be
cancelled. As amended, such order will be cancelled where they would
execute at a price more than $0.50 or 5 percent worse than the NBBO at
the time the order initially reaches the Exchange,

whichever is greater. This is identical to BATS Rule 11.9(a)(2).
    Limit Orders (Rule 11.8(b)). The Exchange proposes to state that a
Limit Order may also include a TIF instruction of RHO or GTX, in
addition to IOC, FOK, Day or GTD. In addition, Limit Orders with a TIF
instruction of IOC that do not include a Book Only \43\ instruction and
will be eligible for routing away pursuant to Rule 11.11, while Limit
Orders with a TIF instruction of FOK will not. This is designed to
provide additional detail regarding the operation of Limit Order and is
consistent with BATS Rule 11.13(a)(2), which states, in sum, that
``[w]ith respect to an order that is eligible for routing, the System
will designate orders as IOCs and will cause such orders to be routed
to one or more Trading Centers.''
---------------------------------------------------------------------------

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

    Rule 11.8(b)(11) describes the application of the re-pricing
instruction to comply with Regulation SHO to Limit Orders. The Exchange
proposes to amend this paragraph to reflect the decommissioning of
Short Sale Price Adjust and Short Sale Price Sliding in order to align
and streamline its short sale pricing functionality with BATS Rule
11.9(g)(5) with no substantive differences from existing BATS Rules or
functionality. The Exchange proposes to replace the reference to the
Hide Not Slide instruction in Rule 11.8(b)(11) with Displayed Price
Sliding to reflect the name change discussed above. The Exchange also
proposes to delete Rule 11.8(b)(12) regarding the re-pricing of Routed
and Returned orders as this functionality will not be available upon
the Exchange being migrated to BATS technology as discussed above.
Lastly, the Exchange proposes to renumber Rule 11.8(b)(13) regarding
the re-pricing of non-displayed orders as 11.8(b)(12).
    ISOs (Rule 11.8(c)). The Exchange proposes to state that an ISO may
also include a TIF instruction of RHO or GTX, in addition to IOC, Day
or GTD. The Exchange also proposes to amend Rule 11.8(c) to reflect the
ISO with a Post Only and TIF instruction of GTD, GTX, or Day will no
longer be eligible for the Re-Pricing Instructions to Comply with Rule
610 of Regulation NMS or Rule 201 of Regulation SHO. Also, as amended,
an ISO that includes a Post Only instruction and a TIF instruction of
GTD, GTX, or Day will be cancelled if the System is displaying orders
at the Locking Price at the time of entry unless such order removes
liquidity pursuant to current Rule 11.6(n)(4), which governs the
execution of orders with a Post Only instruction against resting
liquidity on the EDGA Book. Such orders that also include a Short Sale
instruction that cannot be executed or displayed at their limit price
at the time of entry because of the existence of a Short Sale Circuit
Breaker will also be cancelled. This proposed rule change is
representative of additional detail with regard to the re-pricing of
ISOs that, if displayed on the EDGA Book, would be a Locking or
Crossing Quotation in the Exchange's rules. Cancelling ISOs in the
above situations is reasonable because ISOs would no longer be eligible
for the Re-Pricing Instructions to comply with Rule 610 of Regulation
NMS or 201 of Regulation SHO, thereby ensuring the Exchange does not
post an order that would lock or cross the market or violate Rule 201
of Regulation SHO consistent with BATS functionality. The Exchange
notes, however, that absent a Short Sale Circuit Breaker being in
effect, an ISO that includes a Post Only instruction and TIF
instruction of GTD, GTX, or Day will remove liquidity when the System
is displaying an order at the Locking price if the value of such
execution equals or exceeds the value of such execution if the order
instead posted to the EDGA Book and provided liquidity, including
applicable fees and rebates, under current Rule 11.6(n)(4).
    MidPoint Peg Orders (Rule 11.8(d)). The Exchange proposes amend
Rule 11.8(d) to reflect the operation of MidPoint Peg Orders once the
Exchange is migrated onto BATS technology. As amended, a MidPoint Peg
Order maybe pegged to the less aggressive of the midpoint of the NBBO
or one minimum price variation inside the same side of the NBBO as the
order, in addition to the mid-point of the NBBO. This is identical to
current BATS Rule 11.9(c)(9). In addition, the rule would specify that
a MidPoint Peg Order will not be eligible for execution when an NBBO is
not available. In such case, a MidPoint Peg Order would rest on the
EDGA Book and would not be eligible for execution in the System until
an NBBO is available. The Exchange believes MidPoint Peg Orders being
ineligible for execution when no NBBO exists is reasonable and
consistent with a User's intent and the purpose of the order type. A
User entering an MidPoint Peg Order is doing so to receive an execution
at the mid-point of the NBBO and a mid-point does not exist in the
absence of an NBBO. The MidPoint Peg Order will receive a new time
stamp when an NBBO becomes available and a new midpoint of the NBBO is
established. In such case, all MidPoint Peg Orders that are ranked at
the midpoint of the NBBO will retain their priority as compared to each
other based upon the time such orders were initially received by the
System.
    The Exchange proposes to state that a MidPoint Peg Order may also
include a TIF instruction of RHO or GTX, in addition to IOC, FOK, Day
or GTD. In addition, Users will be able to enter MidPoint Peg Orders as
an Odd Lot, in addition to a Round Lot or Mixed Lot. Currently,
MidPoint Peg Orders may only be executed during Regular Trading Hours.
Upon migration of the Exchange onto BATS technology, MidPoint Peg
Orders will also be eligible for execution during the Pre-Opening
Session, Regular Session and Post Closing Session. While MidPoint Peg
Orders may be submitted to be executed during the Opening Process
described in Rule 11.7(c), any Minimum Execution Quantity instruction
on aMidPoint Peg Order will not be applied during the Opening Process.
Lastly, the Exchange proposes to specify that MidPoint Peg Orders may
include a Book Only or Post Only instruction.
    MidPoint Discretionary Order (Rule 11.8(e)). In sum, a MidPoint
Discretionary Order (``MDO'') is a limit order to buy that is displayed
at and pegged to the NBB, with discretion to execute at prices up to
and including the midpoint of the NBBO, and a limit order to sell that
is displayed at and pegged to the NBO, with discretion to execute at
prices down to and including the midpoint of the NBBO. The Exchange
proposes to amend Rule 11.8(e)(1) to specify that an MDO may include a
TIF instruction of RHO or GTX, in addition to GTD or Day. The Exchange
also proposes to state that MDOs may be entered as Odd Lots, in
addition to Round Lots and Mixed Lots. Currently, MDOs may only be
executed during Regular Trading Hours. Upon migration of the Exchange
onto BATS technology, MDOs will also be eligible for execution during
the Pre-Opening Session and Post Closing Session. The Exchange does not
proposes any other changes to MDO.
    In addition, similar to the changes to orders with a Primary Peg
instruction described above, the Exchange proposes to amend the
provisions governing when an MDO is locked or crossed by another market
and when an MDO would itself create a Locking or Crossing Quotation
(i.e., locking or crossing another market's quotation). As proposed, an
MDO will no longer be able to join the Exchange BBO when the EDGA Book
is locked by another

market. When the EDGA Book is crossed by another market, the Exchange
proposes to automatically adjust an MDO to the current NBO (for bids)
or the current NBB (for offers). Rule 11.8(e)(7) will continue to
require that an MDO that would otherwise be a Locking Quotation or
Crossing Quotation be automatically adjusted by the System to one
Minimum Price Variation below the current NBO (for bids) or to one
Minimum Price Variation above the current NBB (for offers) with no
discretion to execute to the midpoint of the NBBO. This proposed rule
change is representative of additional detail with regard to the
operation of MDOs during locked or crossed markets that is currently
included in Rule 11.8(e)(7) and is consistent with Exchange's current
re-pricing options under Rule 11.6(l), as well as Exchange Rule
11.10(f) and BATS Rule 11.20(a)(3) outlining the prohibition against
locked and crossed markets under Rule 610 of Regulation NMS.
    NBBO Offset Peg Order (Rule 11.8(f)). The Exchange proposes to
change the name of the NBBO Offset Peg Order to the Market Maker Peg
Order, which is the equivalent order type on BATS.\44\ A Market Maker
Peg Order is a Limit Order that, upon entry or at the beginning of
Regular Trading Hours, as applicable, will be automatically priced by
the System at the Designated Percentage \45\ away from the last
reported sale, rather than then current NBO (in the case of an order to
buy) or NBB (in the case of an order to sell), as is currently the
case. A Market Maker Peg order may also include a TIF instruction of
RHO or GTD, in addition to Day. Market Maker Peg Orders may also be
entered as Odd Lots, in addition to Round Lots and Mixed Lots.
---------------------------------------------------------------------------

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

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

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

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

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

    Rule 11.9(a)(2)(A) currently states that the System will execute
equally priced trading interest within the System in time priority in
the following order: (i) The portion of a Limit order with a Displayed
instruction; (ii) Limit Orders with a Non-Displayed instruction and the
Reserve Quantity of Limit Orders; (iii) MidPoint Discretionary Orders
executed within their Discretionary Range and Limit Orders executed
within their Discretionary Range; and (iv) Route Peg Orders. As
amended, the System will rank equally priced trading interest in such
circumstances in the following order: (i) The portion of a Limit Order
with a Displayed instruction; (ii) Limit Orders with a Non-Displayed
instruction; (iii) Orders with a Pegged and Non-Displayed instruction;
(iv) MidPoint Peg Orders; (v) Reserve Quantity of Limit Orders; (vi)
MidPoint Discretionary Orders executed within their Discretionary Range
and Limit Orders executed within their Discretionary Range; and (vii)
Supplemental Peg Orders. Orders will be substantially ranked in same
order except that, as amended, orders with a Pegged and Non-Displayed
instruction will be distinguished from and placed behind Limit Orders
with a Non-Displayed Instruction. In turn, the Reserve Quantity of
Limit Orders will be separated from and placed behind Limit Orders with
a Non-Displayed instruction and orders with a Pegged and Non-Displayed
instruction. The Exchange believes it is reasonable to rank orders with
a Pegged and Non-Displayed instruction behind Limit Orders with a
Displayed instruction and Limit Orders with a Non-Displayed instruction
because this priority sequence incentivizes the use of displayed
liquidity on the EDGA Book as well as orders that provide liquidity at
a specific limit price. These proposed changes are substantially
similar to BATS functionality and Rules 11.12(a)(2). The Exchange notes
that BATS Rule 11.12(a)(2) does not currently specify that BATS Pegged
Orders referenced in the priority rule are limited to Pegged Orders
that are not

displayed on BATS, however, the Exchange represents that BATS
technology does treat Pegged Orders displayed on BATS as displayed
orders and that only Pegged Orders that are not displayed on BATS are
afforded later priority than displayed orders and other non-displayed
orders. Thus, the Exchange's proposal (which would limit the later
priority treatment to orders with a Pegged instruction and a Non-
Displayed instruction) is consistent with BATS technology.
    Lastly, the Exchange does not propose to make any changes to the
ranking of orders that are re-ranked upon clearance of a Locking
Quotation under Rule 11.9(a)(2)(B) other than to; (i) Remove a
reference to the Routed and Returned Re-Pricing instruction because, as
described above, it will be decommissioned upon migration of the
Exchange onto BATS technology; and (ii) replace the term Hide Not Slide
with Displayed Price Sliding to reflect the name change discussed
above.
Rule 11.10, Order Execution
    Rule 11.10(a)(2) summarizes the Exchange compliance with Regulation
NMS. The rule states that for any execution to occur during Regular
Trading Hours, the price must be equal to or better than the Protected
NBBO, unless the order is marked ISO or unless the execution falls
within another exception set forth in Rule 611(b) of Regulation NMS.
For any execution to occur during the Pre-Opening Session or the Post-
Closing Session, the price must be equal to or better than the highest
bid or lowest offer in the EDGA Book or disseminated by the responsible
single plan processor, unless the order is marked ISO. To align Rule
11.10(a)(2) with BATS Rule 11.13, the Exchange proposed to further
state that such executions may occur during the Pre-Opening Session or
the Post-Closing Session where a Protected Bid is crossing a Protected
Offer. A User may, in such circumstance, instruct the Exchange to
cancel any incoming order from such User in the event a Protected Bid
is crossing a Protected Offer.
    To further align Exchange Rule 11.10(a)(2) with BATS Rule 11.13,
Rule 11.10(a)(2) will state that notwithstanding the above, in the
event that a Protected Bid is crossing a Protected Offer, whether
during or outside of Regular Trading Hours, unless an order is marked
ISO, the Exchange will not execute any portion of a bid at a price more
than the greater of 5 cents or 0.5 percent higher than the lowest
Protected Offer or any portion of an offer that would execute at a
price more than the greater of 5 cents or 0.5 percent lower than the
highest Protected Bid.
    The Exchange also proposes to amend Rule 11.12(e)(3) to mirror BATS
Rule 11.9(e)(3). Rule 11.12 currently states that only the price and
quantity terms of the order may be changed by a Replace Message
(including changing a Limit Order to a Market Order). As amended, Rule
11.12 would also allow the Stop Price, the sell long indicator, Short
Sale instruction, and Max Floor to be changed by a Replace Message.
Rule 11.11, Routing to Away Trading Centers
    The Exchange proposes to amend Rule 11.11, which describe the
Exchange's routing options align with BATS Rule 11.13.\48\ In doing so,
the Exchange proposes to eliminate obsolete routing options, modify
certain routing options, and add to Rule 11.11 to offer many of the
same routing options offered by BATS. The Exchange notes that the
proposed rule text is based on the Rule 11.13 of BATS and is different
only to the extent necessary to conform to the Exchange's current
rules. The Exchange believes that it is appropriate to amend its
routing options as described below to ensure consistency with BATS Rule
upon migration of the Exchange onto BATS technology.
---------------------------------------------------------------------------

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

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

is also similar to the Exchange's current Destination Specified order
instruction in Rule 11.6(n)(5), in that both allow the User to select
the destination the order shall be routed to. The only differences are
that under the Destination Specific order instruction, the order is
first exposed to the EDGA Book before routing and if the order is not
executed in full after routing away will be processed by the Exchange
as described in Exchange Rule 11.10(a)(4), unless the User has provided
instructions that the order reside on the book of the relevant away
Trading Center.
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    \49\ See BATS Rule 11.13(a)(3)(E).
---------------------------------------------------------------------------

    The Exchange also proposes to add a Post to Away routing option,
which is currently offered by BATS.\50\ Post to Away is a routing
option under which the System will route the remainder of a routed
order to and posts such order on the order book of a destination on the
System routing table as specified by the User. The Post to Away routing
option is an alternative to either cancelling a routed order back to a
User or posting such order to the BATS Book to the extent an order is
not completely filled through the routing process. The Post to Away
routing option can be combined with the following routing options:
ROUT, ROUX, ROUE, ROUD, ROUZ, ROUQ, RDOT, RDOX, ROBB, ROCO, ROLF, INET,
IOCM and ICMT.\51\ As a result of adding the Post to Away routing
option, the Exchange proposes to amend Rule 11.11(g)(3) to remove now
redundant language that a User may instruct that any remainder of the
order may be posted to the EDGA Book or another destination on the
System routing table.
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    \50\ See BATS Rule 11.13(a)(3)(H).
    \51\ The Exchange notes that Post to Away under BATS Rule
11.13(a)(3)(H) may be combined with less routing options than are
proposed above. This is because, due to the Exchange's taker-maker
pricing model, Members may wish to send an order to the Exchange in
order to take liquidity and receive a rebate, before being routed to
and posted on another Trading Center that incorporates a maker-taker
pricing model that provides a rebate to orders that provide
liquidity.
---------------------------------------------------------------------------

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

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

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

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

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

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

    The Exchange believes that the proposed optional multiple re-
pricing for Price Adjust and Displayed Price Sliding are consistent
with Section 6(b)(5) of the Act,\62\ as well as Rule 610 of Regulation
NMS.\63\ The Exchange is not modifying the overall functionality of
Price Adjust or Displayed Price Sliding, which, to avoid locking or
crossing quotations of other market centers, displays orders at
permissible prices while retaining a price at which the User is willing
to buy or sell, in the event display at such price or an execution at
such price becomes possible. Instead, the Exchange is making changes to
adopt an optional multiple re-pricing under Price Adjust and Displayed
Price Sliding as well as to align with other similar re-pricing
instructions under BATS Rules 11.9(g)(1) and (2).\64\ The Exchange also
believes decommissioning the Routed and Returned Re-Pricing option is
consistent with the Act because those Users who would wish to engage in
multiple re-pricing upon return to the Exchange may select the option
multiple re-pricing for Price Adjust or Displayed Price Sliding as
discussed above. Lastly, the Exchange also believes renaming Hide Not
Slide as Displayed Price Sliding is consistent with the Act because it
would avoid investor confusion with a similarly named re-pricing
instruction on EDGX.\65\
---------------------------------------------------------------------------

    \62\ 15 U.S.C. 78f(b)(5).
    \63\ 17 CFR 242.610.
    \64\ See supra note 29.
    \65\ See EDGX Rule 11.6(l)(1)(B).
---------------------------------------------------------------------------

    The Exchange also believes that cancelling ISOs with a TIF
instruction of GTD, GTX, or Day and not subjecting them to the re-
pricing instructions to comply with Rule 610 of Regulation NMS or Rule
201 of Regulation SHO is consistent with Section 6(b)(5) of the
Act,\66\ as well as Rule 610 of Regulation NMS \67\ and Rule 201 of
Regulation SHO.\68\ As amended, an ISO that includes a TIF instruction
of GTD, GTX, or Day will be cancelled if the System is displaying
orders at the Locking Price at the time of entry. Such orders that also
include a Short Sale instruction that cannot be executed or displayed
at their limit price at the time of entry because of the existence of a
Short Sale Circuit Breaker will also be cancelled. Such orders are
cancelled in order to avoid a potential violation of Rule 610(d) of
Regulation NMS or Rule 201

of Regulation SHO and is, therefore, consistent with the Act.
---------------------------------------------------------------------------

    \66\ 15 U.S.C. 78f(b)(5).
    \67\ 17 CFR 242.610.
    \68\ 17 CFR 242.201.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to its Re-Pricing
Instructions to Comply with Rule 201 of Regulation SHO are consistent
with Section 6(b)(5) of the Act,\69\ as well as Rule 201 of Regulation
SHO.\70\ The Exchange proposes to streamline and simplify its available
re-pricing instructions by deleting Short Sale Price Adjust and Short
Sale Price Sliding and adopting a new, streamlined rule to align with
BATS Rule 11.9(g)(5), with the following differences. Rule 11.6(l)(2)
states that an order to sell with a Short Sale instruction and a Price
Adjust instruction that is re-priced will be ranked at the Permitted
Price and that an order to sell with a Short Sale instruction and a
Hide Not Slide instruction that is re-priced pursuant to this paragraph
will be ranked at the Permitted Price. The Exchange's short sale price
sliding will operate the same for Users of Price Adjust on BATS while
Users who select Displayed Price Sliding will be ranked at the
Permitted Price. The proposed rule change would provide greater
harmonization between the rules of the BGM Affiliated Exchanges,
resulting in greater uniformity and less burdensome and more efficient
regulatory compliance. As such, the proposed rule change would foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and would remove impediments to and perfect
the mechanism of a free and open market and a national market system.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 78f(b)(5).
    \70\ 17 CFR 242.201.
---------------------------------------------------------------------------

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

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

    Order Types (Rule 11.8). The Exchange believes that the proposed
changes to its order types under Rule 11.8 in order to align their
functionality with BATS rules are consistent with Section 6(b)(5) of
the Act,\73\ because these changes are designed to provide Members with
additional specificity as to how their orders will be handled upon
migration of the Exchange onto BATS technologies, thereby fostering
cooperation and coordination with persons engaged in facilitating
transactions in securities and removing impediments to and perfecting
the mechanism of a free and open market and a national market system.
Each order type was amended to update the TIF instructions that would
be available upon migration of the Exchange onto BATS technology. In
addition, the proposed amendments are designed to align their operation
with like order types on BATS and do not propose any additional
functionality. For example, Market Orders under Rule 11.8(a) is to be
amended to reflect the execution parameters under BATS Rule 11.9(a)(2).
The amendments to Limit Orders under Rule 11.8(b) and ISOs under Rule
11.8(c) are designed to update TIF instruction available to each order
type. In addition, the changes are designed to update the Re-Pricing
options available to Limit Order and ISOs to reflect the
decommissioning of Routed and Returned as well as the streamlining of
the Re-Pricing Options to Comply with Regulations SHO to align with
BATS rules. In sum, the amendments to MidPoint Peg Orders under Rule
11.8(d), MidPoint Discretionary Orders under Rule 11.8(e), and
Supplemental Peg Orders under rule 11.8(g) simply clarify their
operation during a locked or crossed market as well as expand their
eligibility for execution from the Regular Session or Regular Trading
Hours to also include the Pre-Opening Session and Post-Closing Session.
The proposed changes to Rule 11.8(d) regarding MidPoint Peg Orders are
based on BATS Rule 11.9(c)(9). Lastly, the proposed changes to Rule
11.8(f) regarding Market Maker Peg Orders are based on BATS Rule
11.9(c)(17). The proposed changes to Rule 11.8(g) regarding Route Peg
Orders are based on BATS Rule 11.9(c)(19).
---------------------------------------------------------------------------

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

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

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

    \74\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

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

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \75\ and Rule 19b-
4(f)(6) thereunder.\76\
---------------------------------------------------------------------------

    \75\ 15 U.S.C. 78s(b)(3)(A).
    \76\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6) requires a self-
regulatory organization to give the Commission written notice of its
intent to file the proposed rule change at least five business days
prior to the date of filing of the proposed rule change, or such
shorter time as designated by the Commission. The Exchange has
satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \77\ normally
does not become operative prior to 30 days after the date of the