On August 18, the Securities and Exchange Commission approved the application of BATS Exchange, Inc. for registration as a national securities exchange. Both the corporate structure and the membership rules proposed by BATS were similar to those of other securities exchanges that have been privatized. Membership on BATS will be open to any registered broker or dealer that is a member of another registered national securities exchange or the Financial Industry Regulatory Authority (FINRA), or any natural person associated with such a registered broker or dealer. To remain eligible for membership in BATS, a broker or dealer must be a member of another Self-Regulatory Organization (SRO) at all times. Although BATS will be an SRO with all of the attendant regulatory obligations under the Securities Exchange Act of 1934, it has entered into agreements with FINRA under which FINRA will perform examination, enforcement and disciplinary functions on BATS’ behalf.

BATS will operate a fully electronic order book, with members and entities that enter into sponsorship arrangements with members given access to the BATS system. Users will be able to electronically submit market and various types of limit orders to the exchange from remote locations. BATS plans to offer routing services to users through its affiliated broker-dealer, BATS Trading. BATS Trading will provide outbound routing of orders from the exchange to other trading centers, and will engage in no other activities unless approved by the SEC. BATS does not initially intend to list any securities. Members entering orders in the BATS system will be given an exception permitting a member of a national securities exchange to effect transactions on that exchange for its own account or accounts of associated persons. The SEC also approved BATS’ request for an exemption from rule filing requirements in favor of incorporating by reference categories of FINRA rules that are not trading rules.