80 FR 16707 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13-Equities Relating to Pegging Interest
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 60 (March 30, 2015)
Federal Register Volume 80, Issue 60 (March 30, 2015)
| Page Range | 16707-16710 | |
| FR Document | 2015-07135 |
[Federal Register Volume 80, Number 60 (Monday, March 30, 2015)] [Notices] [Pages 16707-16710] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-07135] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74571; File No. SR-NYSEMKT-2015-19] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 13-- Equities Relating to Pegging Interest March 24, 2015. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that on March 17, 2015, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 13--Equities (Orders and Modifiers) relating to pegging interest. The text of the proposed rule change is available on the Exchange's Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 13--Equities (``Rule 13'') relating to pegging interest to provide that if the protected best bid or offer (``PBBO'') is not within the range of the pegging interest, the pegging interest would peg to the ``next best-priced available displayable interest,'' rather than the ``next best-priced available interest.'' This amendment would therefore exclude non-displayed interest from consideration as part of the ``next best-priced available interest'' under the rule. Background Under current Rule 13, pegging interest pegs to prices based on (i) a PBBO, which may be available on the Exchange or an away market, or (ii) interest that establishes a price on the Exchange.\4\ In addition, pegging interest will peg only within a price range specified by the floor broker submitting the order. Thus, if the PBBO is not within the specified price range of the pegging interest, the pegging interest will instead peg to the next available best-priced interest that is within the specified price range.\5\ For example, if pegging interest to buy 100 shares has a specified price range up to $10.00, but the best protected bid (``PBB'') of 100 shares is $10.01, then such pegging interest could not peg to the $10.01 PBB because it is not within the specified price range of the pegging interest. The pegging interest would instead peg to [[Page 16708]] the next available best-priced interest within the specified price range of up to $10.00.\6\ --------------------------------------------------------------------------- \4\ See paragraph (a)(3) to Rule 13 governing pegging interest. \5\ See paragraph (a)(4) to Rule 13 governing pegging interest. \6\ See paragraph (a)(4)(A) to Rule 13 governing pegging interest. Similarly, if pegging interest would peg to a price that would lock or cross the Exchange best offer or bid, the pegging interest would instead peg to the next available best-priced interest that would not lock or cross the Exchange best bid or offer. See paragraph (c)(1) to Rule 13 governing pegging interest. --------------------------------------------------------------------------- The ``next available best-priced interest'' concept in the current rule was originally expressed in a different fashion (when pegging was based on the Exchange's BBO, rather than the PBBO), but the basic functionality has always been the same. Specifically, when the pegging interest was introduced in 2006 on the New York Stock Exchange LLC (``NYSE''), if the Exchange BBO was higher (lower) than the price limit on the pegging interest to buy (sell), the pegging interest would peg to the highest (lowest) price at which there was other interest within the pegging price range.\7\ In 2008, the NYSE introduced Non-Displayed Reserve Orders, without changing the underlying functionality of pegging interest to exclude the prices of such orders from the evaluation of what constitutes the highest (lowest) price at which there is other interest available within the range of the pegging interest.\8\ In 2011, the Exchange amended the rule governing pegging interest to make a non-substantive change to the rule text to use the term ``next available best-priced non-pegging interest'' to describe the highest (lowest) priced interest in the Exchange Book or a protected bid or offer on an away market to which pegging interest to buy (sell) could peg.\9\ Accordingly, the next available best-priced interest for pegging interest to buy (sell) is the next highest (lowest)-priced buy (sell) interest within Exchange systems or an away market protected quote that is available for an execution at any given time. That interest could be same-side non-marketable displayable interest or same-side non-marketable non-displayable interest. --------------------------------------------------------------------------- \7\ On October 1, 2008, the Commission approved the Exchange's rule proposal to establish new membership, member firm conduct, and equity trading rules that were based on the existing NYSE rules to reflect that equities trading on the Exchange would be supported by the NYSE's trading system. See Securities Exchange Act Release No. 58705 (Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008) (SR-Amex-2008-63) (approval order). Because the Exchange's rules are based on the existing NYSE rules, the Exchange believes that pre-October 1, 2008 NYSE rule filings provide guidance concerning Exchange equity rules. See Securities Exchange Act Release No. 54577 (Oct. 5, 2006), 71 FR 60208, 60210-11 (Oct. 12, 2006) (SR-NYSE-2006-36) (``Pegging Approval Order'') (order approving, among other things, introduction of pegging functionality for Floor brokers, including ``if the Exchange best bid is higher than the ceiling price of a pegging buy- side e-Quote or d-Quote, the e-Quote or d-Quote would remain at its quote price or the highest price at which there is other interest within its pegging price range, whichever is higher (consistent with the limit price of the order underlying the e-Quote or d-Quote). Similarly, if the Exchange best offer is lower than the floor price of a pegging sell-side e-Quote or d-Quote, the e-Quote or d-Quote would remain at its quote price or the lowest price at which there is other interest within its pegging price range, whichever is lower (consistent with the limit price of the order underlying the e-Quote or d-Quote).'' (emphasis added)). \8\ See Securities Exchange Act Release No. 59022 (Nov. 26, 2008), 73 FR 73683 (Dec. 3, 2008) (SR-NYSEALTR-2008-10) (introducing Non-Display Reserve Orders). \9\ See Securities Exchange Act Release No. 66032 (Dec. 22, 2011), 76 FR 82009 (Dec. 29, 2011) (SR-NYSEAmex-2011-99) (``Because the next available best-priced non-pegging interest may be on an away market, the Exchange further proposes to amend paragraph (vii) to Supplementary Material .26 to specify that the non-pegging interest against which pegging interest pegs may either be available on the Exchange or may be a protected bid or offer on an away market.'') (``2011 Pegging Filing''); see also Securities Exchange Act Release No. 68305 (Nov. 28, 2012), 77 FR 71853, 71857 (Dec. 4, 2012) (SR-NYSEMKT-2012-67) (amending Exchange rule governing pegging to, among other things, consolidate rule text from separate parts of the then-existing rule in a streamlined format, including use of the term ``next available best-priced interest'') (``2012 Pegging Filing''). --------------------------------------------------------------------------- Taking the above example, assume that the next price points on the Exchange's book priced below the $10.01 PBB are a Non-Display Reserve Order to buy 100 for $9.99 and a Limit Order to buy 100 for $9.98. Because the Non-Display Reserve Order is the next available best-priced interest within the specified price range, the pegging interest would peg to the $9.99 price of the Non-Display Reserve Order. Proposed Rule Change The Exchange proposes to revise its rule to limit the type of interest to which pegging interest would peg if the PBBO is not within the specified price range of the pegging interest. As proposed, if the PBBO is not within the specified price range, the pegging interest would only peg to the next available best-priced displayable interest. The term ``displayable'' is defined in Rule 72(a)(i) as that portion of interest that could be published as, or as part of, the Exchange BBO and includes non-marketable odd-lot and round-lot orders. Using the above example, under the proposed change, the pegging interest to buy would instead peg to the Limit Order to buy for $9.98, and not the higher-priced Non-Display Reserve Order to buy for $9.99. The Exchange also proposes to make a conforming change to paragraph (c)(1) of Rule 13 to provide that if pegging interest would peg to a price that is locking or crossing the Exchange best bid or offer, the pegging interest would instead peg to the next available best-priced displayable interest that would not lock or cross the Exchange best bid or offer. Currently, under any circumstance when pegging interest cannot peg to the PBBO, whether because of a price restriction or if the PBBO does not meet a minimum size designation, pegging interest pegs instead to the next available best-priced interest. For example, pursuant to paragraph (c)(5) of Rule 13 governing pegging interest, the Exchange offers an optional feature whereby pegging interest may be designated with a minimum size of same-side volume to which such pegging interest would peg. If the PBBO does not meet the optional minimum size designation, the pegging interest pegs to the next available best- priced interest, without regard to size.\10\ Accordingly, the Exchange also proposes to make a related change to current paragraph (c)(5) (which is being renumbered as paragraph (b)(4)) to --------------------------------------------------------------------------- \10\ When the NYSE adopted this feature in 2006, it only considered the NYSE BBO for purposes of determining whether the size condition was met, and specifically excluded pegging interest that was pegging to the NYSE BBO. See Pegging Approval Order, supra, n. 7 at 60211. The Exchange now evaluates the minimum size requirement based on the PBBO instead of the Exchange BBO. See 2012 Pegging Filing, supra, n. 9 at 71858. ---------------------------------------------------------------------------specify that, if the PBBO does not meet a minimum size requirement specified by the pegging interest, the pegging interest pegs to the next available best-priced interest, without regard to size, and modify current functionality so that only displayable interest may be pegged to in such circumstances.\11\ --------------------------------------------------------------------------- \11\ The Exchange also proposes to delete the clause ``which may not be the PBB or PBO'' in current paragraph (c)(5), which is rule text that related to when primary pegging interest had an optional offset feature, in which case the minimum quantity would not have been evaluated against the PBBO because primary pegging interest with an offset would not have pegged to the PBBO. The Exchange did not implement the offset functionality and previously filed a rule change to delete the rule text relating to the optional offset. See Securities Exchange Act Release No. 71898 (April 8, 2014), 79 FR 20957 (April 14, 2014) (SR-NYSEMKT-2014-27) (amending rules governing pegging interest to conform to functionality that is available at the Exchange). --------------------------------------------------------------------------- The Exchange also proposes non-substantive amendments to delete references to ``reserved'' paragraphs of the rule and renumber the rule accordingly. Because of the technology changes associated with this proposed rule change, the Exchange will announce by Trader Update when this change will be [[Page 16709]] implemented, which will be within 30 days of the effective date of this filing. 2. Statutory Basis The proposed rule change is consistent with Section 6(b) of the Act,\12\ in general, and furthers the objectives of Section 6(b)(5),\13\ in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to, and perfect the mechanism of, a free and open market and a national market system and, in general, to protect investors and the public interest. Specifically, the proposed change is intended to respond to the concern raised by the Commission \14\ that the current rule permitting pegging to prices of non-displayable same- side non-marketable interest could potentially allow the user of the pegging interest to ascertain the presence of hidden liquidity at those price levels. Eliminating that functionality to respond to the Commission concern (along with conforming changes in the relevant rule) is, therefore, consistent with the Act. Similarly, the Exchange believes that specifying in its rules how the Exchange treats pegging interest that cannot peg to the PBBO, whether because of a price or size restriction, would remove impediments to and perfect the mechanism of a free and open market because it would provide transparency regarding the Exchange's pegging functionality. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b). \13\ 15 U.S.C. 78f(b)(5). \14\ See Securities Exchange Act Release No. 74298 (Feb. 18, 2015), 80 FR 9770, 9772-73 (Feb. 24, 2015) (SR-NYSEMKT-2014-95) (Order instituting proceedings to determine whether to approve or disapprove a proposed rule change to Rule 13). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is not intended to address any competitive issues but rather to specify and amend the functionality associated with pegging interest to respond to concerns raised regarding current functionality. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \15\ and Rule 19b-4(f)(6) thereunder.\16\ Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b- 4(f)(6)(iii) thereunder.\17\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A)(iii). \16\ 17 CFR 240.19b-4(f)(6). \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange's intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),\19\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange asserts that such a waiver is consistent with the protection of investors and the public interest because it would permit the Exchange to implement the proposed change as soon as the technology supporting the change is available, because it would respond to the Commission concerns that the current rule could potentially allow the user of pegging interest to ascertain the presence of hidden liquidity, and because it would provide transparency regarding the pegging functionality. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.\20\ --------------------------------------------------------------------------- \18\ 17 CFR 240.19b-4(f)(6). \19\ 17 CFR 240.19b-4(f)(6)(iii). \20\ For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.\21\ --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(3)(C). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-NYSEMKT-2015-19 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEMKT-2015-19. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the [[Page 16710]] filing will also be available for inspection and copying at the NYSE's principal office and on its Internet Web site at www.nyse.com. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEMKT-2015-19 and should be submitted on or before April 20, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(59). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-07135 Filed 3-27-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Notices 16707
from the pilot program without public in accordance with the www.nyse.com, at the principal office of
interruption after April 14, 2015. The provisions of 5 U.S.C. 552, will be the Exchange, and at the Commission’s
Commission believes that waiving the available for Web site viewing and Public Reference Room.
30-day operative delay is consistent printing in the Commission’s Public
II. Self-Regulatory Organization’s
with the protection of investors and the Reference Room, 100 F Street NE.,
Statement of the Purpose of, and
public interest because such waiver Washington, DC 20549 on official
Statutory Basis for, the Proposed Rule
would allow the pilot to continue business days between the hours of
Change
uninterrupted, thereby avoiding any 10:00 a.m. and 3:00 p.m. Copies of such
potential investor confusion that could filing also will be available for In its filing with the Commission, the
result from temporary interruption in inspection and copying at the principal self-regulatory organization included
the pilot program. For this reason, the offices of the Exchange. All comments statements concerning the purpose of,
Commission designates the proposal received will be posted without change; and basis for, the proposed rule change
operative on April 14, 2015.15 the Commission does not edit personal and discussed any comments it received
At any time within 60 days of the identifying information from on the proposed rule change. The text
filing of the proposed rule change, the submissions. You should submit only of those statements may be examined at
Commission summarily may information that you wish to make the places specified in Item IV below.
temporarily suspend such rule change if available publicly. All submissions The Exchange has prepared summaries,
it appears to the Commission that such should refer to File Number SR– set forth in sections A, B, and C below,
action is necessary or appropriate in the NYSEARCA–2015–22, and should be of the most significant parts of such
public interest, for the protection of submitted on or before April 20, 2015. statements.
investors, or otherwise in furtherance of For the Commission, by the Division of A. Self-Regulatory Organization’s
the purposes of the Act. Trading and Markets, pursuant to delegated Statement of the Purpose of, and the
IV. Solicitation of Comments authority.16 Statutory Basis for, the Proposed Rule
Brent J. Fields, Change
Interested persons are invited to
Secretary.
submit written data, views, and 1. Purpose
arguments concerning the foregoing, [FR Doc. 2015–07136 Filed 3–27–15; 8:45 am]
BILLING CODE 8011–01–P The Exchange proposes to amend
including whether the proposed rule
Rule 13—Equities (‘‘Rule 13’’) relating
change is consistent with the Act.
to pegging interest to provide that if the
Comments may be submitted by any of
SECURITIES AND EXCHANGE protected best bid or offer (‘‘PBBO’’) is
the following methods:
COMMISSION not within the range of the pegging
Electronic Comments interest, the pegging interest would peg
[Release No. 34–74571; File No. SR–
• Use the Commission’s Internet NYSEMKT–2015–19]
to the ‘‘next best-priced available
comment form (http://www.sec.gov/ displayable interest,’’ rather than the
rules/sro.shtml); or Self-Regulatory Organizations; NYSE ‘‘next best-priced available interest.’’
• Send an email to rule-comments@ MKT LLC; Notice of Filing and This amendment would therefore
sec.gov. Please include File Number SR– Immediate Effectiveness of Proposed exclude non-displayed interest from
NYSEARCA–2015–22 on the subject Rule Change Amending Rule 13— consideration as part of the ‘‘next best-
line. Equities Relating to Pegging Interest priced available interest’’ under the
rule.
Paper Comments March 24, 2015.
Background
• Send paper comments in triplicate Pursuant to Section 19(b)(1) 1 of the
to Brent J. Fields, Secretary, Securities Securities Exchange Act of 1934 Under current Rule 13, pegging
and Exchange Commission, 100 F Street (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 interest pegs to prices based on (i) a
NE., Washington, DC 20549–1090. notice is hereby given that on March 17, PBBO, which may be available on the
All submissions should refer to File 2015, NYSE MKT LLC (‘‘Exchange’’ or Exchange or an away market, or (ii)
Number SR–NYSEARCA–2015–22. This ‘‘NYSE MKT’’) filed with the Securities interest that establishes a price on the
file number should be included on the and Exchange Commission Exchange.4 In addition, pegging interest
subject line if email is used. To help the (‘‘Commission’’) the proposed rule will peg only within a price range
Commission process and review your change as described in Items I and II specified by the floor broker submitting
comments more efficiently, please use below, which Items have been prepared the order. Thus, if the PBBO is not
only one method. The Commission will by the self-regulatory organization. The within the specified price range of the
post all comments on the Commission’s Commission is publishing this notice to pegging interest, the pegging interest
Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule will instead peg to the next available
rules/sro.shtml). Copies of the change from interested persons. best-priced interest that is within the
submission, all subsequent specified price range.5 For example, if
I. Self-Regulatory Organization’s
amendments, all written statements pegging interest to buy 100 shares has
Statement of the Terms of Substance of
with respect to the proposed rule a specified price range up to $10.00, but
the Proposed Rule Change
change that are filed with the the best protected bid (‘‘PBB’’) of 100
Commission, and all written The Exchange proposes to amend shares is $10.01, then such pegging
communications relating to the Rule 13—Equities (Orders and interest could not peg to the $10.01 PBB
mstockstill on DSK4VPTVN1PROD with NOTICES
proposed rule change between the Modifiers) relating to pegging interest. because it is not within the specified
Commission and any person, other than The text of the proposed rule change is price range of the pegging interest. The
those that may be withheld from the available on the Exchange’s Web site at pegging interest would instead peg to
16 17 CFR 200.30–3(a)(12), (59). 4 See paragraph (a)(3) to Rule 13 governing
15 For purposes only of waiving the 30-day
1 15 U.S.C. 78s(b)(1).
operative delay, the Commission has considered the pegging interest.
2 15 U.S.C. 78a.
proposed rule’s impact on efficiency, competition, 5 See paragraph (a)(4) to Rule 13 governing
and capital formation. See 15 U.S.C. 78c(f). 3 17 CFR 240.19b–4. pegging interest.
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![16710 Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Notices
filing will also be available for In addition, a registered open-end additional investments in the money
inspection and copying at the NYSE’s fund, its principal underwriter, and any market fund.8
principal office and on its Internet Web registered broker or dealer cannot sell The rule also permits a registered
site at www.nyse.com. All comments that fund’s shares to another fund if, as fund to rely on the exemption to invest
received will be posted without change; a result: in an unregistered money market fund
the Commission does not edit personal that limits its investments to those in
• The acquiring fund (and any
identifying information from which a registered money market fund
companies it controls) owns more than
submissions. You should submit only may invest under rule 2a–7 under the
three percent of the acquired fund’s
information that you wish to make Act, and undertakes to comply with all
stock; or
available publicly. All submissions the other provisions of rule 2a–7.9 In
should refer to File Number SR– • all acquiring funds (and companies addition, the acquiring fund must
NYSEMKT–2015–19 and should be they control) in the aggregate own more reasonably believe that the unregistered
submitted on or before April 20, 2015. than ten percent of the acquired fund’s money market fund (i) operates in
stock.3 compliance with rule 2a–7, (ii) complies
For the Commission, by the Division of
Trading and Markets, pursuant to delegated Rule 12d1–1 under the Act provides with sections 17(a), (d), (e), 18, and
authority.22 an exemption from these limitations for 22(e) of the Act 10 as if it were a
Brent J. Fields, ‘‘cash sweep’’ arrangements in which a registered open-end fund, (iii) has
fund invests all or a portion of its adopted procedures designed to ensure
Secretary.
available cash in a money market fund that it complies with these statutory
[FR Doc. 2015–07135 Filed 3–27–15; 8:45 am] provisions, (iv) maintains the records
rather than directly in short-term
BILLING CODE 8011–01–P
instruments.4 An acquiring fund relying required by rules 31a–1(b)(1), 31a–
on the exemption may not pay a sales 1(b)(2)(ii), 31a–1(b)(2)(iv), and 31a–
load, distribution fee, or service fee on 1(b)(9); 11 and (v) preserves
SECURITIES AND EXCHANGE permanently, the first two years in an
COMMISSION acquired fund shares, or if it does, the
acquiring fund’s investment adviser easily accessible place, all books and
[SEC File No. 270–526, OMB Control No. must waive a sufficient amount of its records required to be made under these
3235–0584]
advisory fee to offset the cost of the rules.
Rule 2a–7 contains certain collection
Submission for OMB Review; loads or distribution fees.5 The acquired
of information requirements. An
Comment Request fund may be a fund in the same fund
unregistered money market fund that
complex or in a different fund complex.
Upon Written Request, Copies Available complies with rule 2a–7 would be
In addition to providing an exemption
From: Securities and Exchange subject to these collection of
from section 12(d)(1) of the Act, the rule information requirements. In addition,
Commission, Office of FOIA Services, provides exemptions from section 17(a) the recordkeeping requirements under
100 F Street NE., Washington, DC of the Act and rule 17d–1 thereunder, rule 31a–1 with which the acquiring
20549–2736. which restrict a fund’s ability to enter fund reasonably believes the
Extension: into transactions and joint arrangements unregistered money market fund
Rule 12d1–1. with affiliated persons.6 These complies are collections of information
Notice is hereby given that, pursuant provisions would otherwise prohibit an for the unregistered money market fund.
to the Paperwork Reduction Act of 1995 acquiring fund from investing in a The adoption of procedures by
(44 U.S.C. 3501 et seq.), the Securities money market fund in the same fund unregistered money market funds to
and Exchange Commission (the complex,7 and prohibit a fund that ensure that they comply with sections
‘‘Commission’’) has submitted to the acquires five percent or more of the 17(a), (d), (e), 18, and 22(e) of the Act
Office of Management and Budget a securities of a money market fund in also constitute collections of
request for extension of the previously another fund complex from making any information. By allowing funds to invest
approved collection of information in registered and unregistered money
discussed below. 3 See 15 U.S.C. 80a–12(d)(1)(B). market funds, rule 12d1–1 is intended
4 See 17 CFR 270.12d1–1.
An investment company (‘‘fund’’) is to provide funds greater options for cash
5 See rule 12d1–1(b)(1).
generally limited in the amount of 6 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d); 17
management. In order for a registered
securities the fund (‘‘acquiring fund’’) CFR 270.17d–1. fund to rely on the exemption to invest
can acquire from another fund 7 An affiliated person of a fund includes any in an unregistered money market fund,
(‘‘acquired fund’’). Section 12(d) of the person directly or indirectly controlling, controlled the unregistered money market fund
Investment Company Act of 1940 (the by, or under common control with such other must comply with certain collection of
‘‘Investment Company Act’’ or ‘‘Act’’) 1 person. See 15 U.S.C. 80a–2(a)(3) (definition of
‘‘affiliated person’’). Most funds today are organized
information requirements for registered
provides that a registered fund (and by an investment adviser that advises or provides money market funds. These
companies it controls) cannot: administrative services to other funds in the same requirements are intended to ensure that
• Acquire more than three percent of complex. Funds in a fund complex are generally the unregistered money market fund has
another fund’s securities; under common control of an investment adviser or
established procedures for collecting the
• invest more than five percent of its other person exercising a controlling influence over
information necessary to make adequate
the management or policies of the funds. See 15
own assets in another fund; or U.S.C. 80a–2(a)(9) (definition of ‘‘control’’). Not all credit reviews of securities in its
• invest more than ten percent of its advisers control funds they advise. The portfolio, as well as other recordkeeping
own assets in other funds in the determination of whether a fund is under the
mstockstill on DSK4VPTVN1PROD with NOTICES
aggregate.2 control of its adviser, officers, or directors depends 8 See
on all the relevant facts and circumstances. See 15 U.S.C. 80a–2(a)(3)(A), (B).
9 See 17 CFR 270.2a–7.
Investment Company Mergers, Investment
22 17 CFR 200.30–3(a)(59). 10 See 15 U.S.C. 80a–17(a), 15 U.S.C. 80a–17(d),
Company Act Release No. 25259 (Nov. 8, 2001) [66
1 See 15 U.S.C. 80a. 15 U.S.C. 80a–17(e), 15 U.S.C. 80a–18, 15 U.S.C.
FR 57602 (Nov. 15, 2001)], at n.11. To the extent
2 See 15 U.S.C. 80a–12(d)(1)(A). If an acquiring that an acquiring fund in a fund complex is under 80a–22(e).
fund is not registered, these limitations apply only common control with a money market fund in the 11 See 17 CFR 270.31a–1(b)(1), 17 CFR 270.31a–
with respect to the acquiring fund’s acquisition of same complex, the funds would rely on the rule’s 1(b)(2)(ii), 17 CFR 270.31a–1(b)(2)(iv), 17 CFR
registered funds. exemptions from section 17(a) and rule 17d–1. 270.31a–1(b)(9).
VerDate Sep<11>2014 19:57 Mar 27, 2015 Jkt 235001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\30MRN1.SGM 30MRN1](https://thefederalregister.org/doc/80_FR_16767/page/4.svg)
Document Created: 2015-12-18 11:32:15
Document Modified: 2015-12-18 11:32:15
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 16707 |
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