SEC Grants Exemption to BATS from Certain Quoting and Trading Requirements under Tick Size Pilot Program
The SEC granted a limited exemption (the "Exemption") to BATS Exchange Inc. ("BATS") from complying with certain requirements of the Tick Size Pilot Plan under Rule 608(c) of Regulation NMS. The Tick Size Pilot Plan lays out the criteria for identifying securities subject to the Tick Size Pilot Plan ("Pilot Securities") and the method by which Pilot Securities will be grouped and placed into a control group and three test groups, which are subject to certain quoting and trading requirements (e.g., $0.05 trading increments, the "trade-at" requirement, etc.). The Exemption grants relief to BATS with respect to certain grouping, trading and quoting requirements of Rule 608(c) that include the following:
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Permitting BATS to move any Pilot Security that has a closing price below $1.00 from its assigned test group to the control group in order to avoid being subject to the quoting and trading requirements of the initial test group (such as trading in $0.05 increments).
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For certain test groups, exempting BATS members from having to execute customer orders in Pilot Securities at $0.05 increments, where the member is otherwise required by BATS rules to execute a customer order in a Pilot Security after executing a proprietary trade in that same Pilot Security (e.g., BATS Rule 12.6 ("Prohibition against Trading ahead of Customer Orders")). In these instances, the proprietary trade would have been executed at a price other than in the required $0.05 increment pursuant to an enumerated exception in the Tick Size Pilot Plan.
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For certain test groups, exempting BATS members from the "trade-at" requirement for "stopped orders" and transactions to correct bona fide errors.
Concurrent with the Exemption, the SEC also approved the proposed rule change submitted by BATS that will implement the quoting and trading requirements set forth in the Tick Size Pilot Plan by incorporating the requested relief for the items described in the limited exemption.