BATS Exchange Registration—OATS Impacts

On August 18, 2008, BATS Trading ("BATS") announced that it had received approval from the Securities Exchange Commission to operate a stock exchange, BATS Exchange, Inc. BATS also announced that its transition from ECN to Exchange will take place on a security-by-security phase-in approach over a two week period commencing on October 24, 2008. This phase-in schedule is subject to change -- the latest version can be viewed at http://www.batstrading.com/exchange.

FINRA recognizes a phase-in approach raises programming challenges with respect to members' OATS reporting obligations. FINRA therefore will not require a phase-in approach with respect to OATS reporting.

During the transition period, firms may continue to identify orders routed to BATS as orders routed to an ECN with a Destination Code of "E" on OATS Route and Combined Order/Route Reports, until the last security has been transitioned. Firms may also choose to follow the transition schedule and report routes of transitioned securities to the BATS Exchange with the new Destination Code of "XZ". Once the last security is transitioned, all orders routed to the BATS Exchange must be coded with a Destination Code of "XZ".

Please note: firms may not use the Destination Code of "XZ" to reflect a route of a non-transitioned security to the BATS Exchange. Route Reports reflecting orders in non-transitioned securities routed to BATS must continue to have the Destination Code of "E". In other words, until the last security is transitioned, firms may report orders in transitioned securities with the Destination Code of "E", but may not report non-transitioned securities with a code of "XZ."

FINRA staff reminds firms that non-transitioned securities routed to BATS remain subject to the OATS matching requirements and firms must continue to provide a Routed Order ID to BATS until the security is transitioned.

Please contact the OATS Helpdesk at 1-800-321-6273 with questions regarding this notice or on OATS in general.