BATS Global Markets, Inc. Q | August 2010

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

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. NBO: $20.01 NBB: $20.00 BATS Bid: $20.01

$20.02 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. Display Price Sliding Mechanics BATS Bid BATS Offer NBO NBB BATS Bid Display Price on this order is slid to $20.00 BATS still displays a quote of $20.00 x $20.02 even though the BATS book is now effectively $20.01 x $ $20.00 $20.01

$20.02 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. Display Price Sliding Mechanics BATS Bid BATS Offer NBO NBB BATS Bid $20.00 $20.01 BATS $20.00

Display Price Sliding Mechanics Two events can cause an “un-slide” $20.02 BATS Offer NBO NBB BATS Bid $20.00 $20.01 BATS Bid 1.Change in a Protected Quotation BATS now displays a quote of $20.01 x $20.02.

Display Price Sliding Mechanics Two events can cause an “un-slide” $20.02 BATS Offer NBO NBB BATS Bid $20.00 $20.01 BATS Bid 2.BATS ISO (which changes BATS’ view of the Protected Quote) BATS Bid (ISO) BATS now displays a quote of $20.01 x $20.02.

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

BATS BidBATS Post Only Offer $20.02 The Enhancement Two-Penny Wide BATS Market BATS Bid BATS Offer NBO NBB $20.00 $20.01 $ 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 $

BATS Bid BATS Post Only Offer $20.02 The Enhancement (cont.) Two-Penny Wide BATS Market BATS Bid NBO NBB $20.00 $20.01 $ 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 $ BATS Offer

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.

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. 12 $20.02 BATS Bid BATS OfferNBO NBB $20.00 $20.01 BATS Short Sell ($19.75 limit) Non-Post-Only Short Sell Order is slid (display and working price) to NBB + 1 trading increment BATS Short Sell ($19.75 limit) Non-Post-Only Short Sell Order ratchets down to NBB + 1 trading increment when NBB changes Multiple Display Price Sliding is scheduled to be available on BATS BZX and BYX on August 24, 2012.

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. 13 $20.02 NBO NBB $20.00 $20.01 BATS Buy Order ($20.05 limit) BATS Offer BATS Buy Order ($20.05 limit) Display Price on this order is slid to $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.

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. 14 $20.02 BATS Bid BATS OfferNBO NBB $20.00 $20.01 BATS Hidden Bid A sell order at $20.00 would execute against all displayed bids at $20.00 before executing against the Hidden bid at $20.00.

BATS Hidden Post Only Bid - Executable 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. 15 $20.01 BATS Bid BATS OfferNBO NBB $20.00 $ BATS Hidden Post Only Bid

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. 16 $20.01 BATS Bid BATS OfferNBO NBB $20.00 $ BATS Midpoint Peg Buy A Midpoint Buy and a Midpoint Sell can co-exist as long as the inbound order is Post Only. BATS Midpoint Peg Sell Post Only

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