Agenda

2. Agenda • Why Price Slide? • Display Price Sliding Mechanics • Two Penny Wide BATS Market • Multiple Display Price Sliding • Hidden Orders and Midpoint Pegs

3. Why Price Slide? Rule 610(d) of Regulation NMS Exchanges must establish, maintain and enforce written rules that require members to reasonably avoid displaying quotations that lock or cross any protected quotation in an NMS stock. BATS Bid: $20.01 NBO: $20.01 NBB: $20.00

4. Display Price Sliding Mechanics Display Price Sliding allows BATS to comply with Rule 610(d) by sliding the Display Price on a BATS order that would lock or cross a Protected Quotation. BATS Offer $20.02 BATS Bid NBO $20.01 Display Price on this order is slid to $20.00 BATS Bid NBB $20.00 BATS still displays a quote of $20.00 x $20.02 even though the BATS book is now effectively $20.01 x $20.02.

5. Display Price Sliding Mechanics An aggressive sell order with a limit price of $20.00 targeting the NBB will be executed at $20.01 on BATS against the slid buy order. This seller receives $0.01 in price improvement. BATS Offer $20.02 BATS Sell @ $20.00 BATS Bid NBO $20.01 BATS Bid NBB $20.00

6. Display Price Sliding Mechanics Two events can cause an “un-slide” Change in a Protected Quotation BATS Offer $20.02 BATS Bid NBO $20.01 BATS Bid NBB $20.00 BATS now displays a quote of $20.01 x $20.02.

7. Display Price Sliding Mechanics Two events can cause an “un-slide” BATS ISO (which changes BATS’ view of the Protected Quote) BATS Offer $20.02 BATS Bid BATS Bid (ISO) NBO $20.01 BATS Bid NBB $20.00 BATS now displays a quote of $20.01 x $20.02.

8. Two-Penny Wide BATS Market Prior to September 16, 2011, a two-Penny-Wide BATS book was unable to tighten due to a slid order. BATS Offer $20.02 Cancelled: Would Remove! BATS Bid BATS Post Only Offer NBO $20.01 Display Price on this order is slid to $20.00 BATS Bid NBB $20.00 BATS still displays a quote of $20.00 x $20.02 even though our book is now effectively $20.01 x $20.02.

9. Two-Penny Wide BATS Market The Enhancement BATS Offer $20.02 BATS Bid BATS Post Only Offer NBO $20.01 $20.005 BATS Bid NBB $20.00 BATS book has now tightened to $20.00 x $20.01 equaling the NBBO. The slid bid is still displayed at $20.00, but the order is now only executable at $20.005.

10. Two-Penny Wide BATS Market The Enhancement (cont.) BATS Offer $20.02 BATS Post Only Offer NBO $20.01 BATS Bid $20.005 BATS Bid NBB $20.00 If the Post Only Offer is removed (due to execution or cancellation) from the book, the executable price on the slid bid is adjusted back to $20.01.

11. Benefits of the Enhancement • BATS’ market is able to tighten so that it equals the width of the prevailing NBBO. • Liquidity providers may always tighten the BATS market to the NBBO with a Post Only order. • Reduces number of “WouldRemove” cancellations resulting in less system load and fewer repeated attempts from liquidity providers trying to tighten the BATS book.

12. Multiple Display Price Sliding (MDPS) Anticipated to be most commonly used with securities in a Reg SHO Circuit Breaker (Short Sell Circuit Breaker). Sending DisplayIndicator(9479)=M allows a displayed order to ratchet up or down as the Protected Quote changes. BATS Offer BATS Short Sell ($19.75 limit) Non-Post-Only NBO $20.02 Short Sell Order is slid (display and working price) to NBB + 1 trading increment Short Sell Order ratchets down to NBB + 1 trading increment when NBB changes BATS Bid BATS Short Sell ($19.75 limit) Non-Post-Only NBB $20.01 $20.00 Multiple Display Price Sliding is scheduled to be available on BATS BZX and BYX on August 24, 2012.

13. Multiple Display Price Sliding (MDPS) MDPS can also be used with standard limit orders in order to allow them to work at the most aggressive price possible based on the prevailing NBBO. BATS Offer $20.02 BATS Buy Order ($20.05 limit) NBO $20.01 Display Price on this order is slid to $20.00 BATS Buy Order ($20.05 limit) NBB $20.00 When the NBO lifts, MDPS allows the buy order to also lift. This results in an execution against the $20.02 offer on BATS.

14. Hidden Orders Hidden orders can be used to post an order to the BATS book that is not displayed to the rest of the market. Hidden orders have a lower priority than displayed orders at the same price. $20.02 BATS Offer NBO $20.01 BATS Hidden Bid BATS Bid NBB $20.00 A sell order at $20.00 would execute against all displayed bids at $20.00 before executing against the Hidden bid at $20.00.

15. Hidden Orders Hidden orders that are also Post Only will be accepted even if the order locks or crosses the displayed BATS book, but they are only executable at the midpoint when displayed liquidity locks the hidden order. BATS Hidden Post Only Bid - Executable BATS Hidden Post Only Bid BATS Offer NBO $20.01 $20.005 BATS Bid NBB $20.00

16. Midpoint Peg Orders Midpoint Peg orders are hidden orders that are pegged to the midpoint of the NBBO. Midpoint Peg orders always work at the true midpoint, even if the true midpoint is a ½ penny price. BATS Offer NBO $20.01 BATS Midpoint Peg Sell Post Only BATS Midpoint Peg Buy $20.005 BATS Bid NBB $20.00 A Midpoint Buy and a Midpoint Sell can co-exist as long as the inbound order is Post Only.

17. Disclaimer:  BATS makes no representations or warranties as to the accuracy or completeness of the information provided in this presentation.  BATS will not have any liability to any party resulting from the use of the information contained in this presentation.