80 FR 19381 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 4.3, Record of Written Complaints

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 69 (April 10, 2015)

[Federal Register Volume 80, Number 69 (Friday, April 10, 2015)]
[Notices]
[Pages 19381-19383]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-08204]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74656; File No. SR-BATS-2015-25]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rule 4.3, Record of Written Complaints

April 6, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 26, 2015, BATS Exchange, Inc. (the ``Exchange'' or 
``BATS'') 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 Exchange. The Exchange 
has designated this proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 4.3, Record of Written 
Complaints. The text of the proposed rule change is below. Proposed new 
language is in

[[Page 19382]]

italics; proposed deletions are in brackets.
* * * * *
Rule 4.3. Record of Written Complaints
    (a) Each Member shall keep and preserve for a period of not less 
than [five]four years a file of all written complaints of customers and 
action taken by the Member in respect thereof, if any. Further, for the 
first two years of the [five]four-year period, the Member shall keep 
such file in a place readily accessible to examination or spot checks.
    (b) (No change).
* * * * *

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 Exchange 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 these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections II.A., II.B., and II.C. below, of the most significant aspects 
of such statements.

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange filed a proposal to amend Rule 4.3, Record of Written 
Complaints, to conform with the rules of the Financial Industry 
Regulatory Authority, Inc. (``FINRA'') for purposes of an agreement 
between the Exchange and FINRA, as well as to conform Exchange Rule 4.3 
with the rules of the EDGX Exchange, Inc. (``EDGX'') and the EDGA 
Exchange, Inc. (``EDGA'').\5\
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    \5\ See EDGA and EDGX Rules 4.3. See also Securities Exchange 
Act Release Nos. 70715 (October 15, 2013), 78 FR 64041 (October 18, 
2013) (SR-EDGA-2013-31) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change to Amend EDGA Rule 4.3, Record 
of Written Complains, to Conform with Financial Industry Regulatory 
Authority, Inc. Rule 4513); and 70714 (October 15, 2013), 78 FR 
64038 (October 18, 2013) (SR-EDGX-2013-39) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change to Amend EDGX Rule 
4.3, Record of Written Complains, to Conform with Financial Industry 
Regulatory Authority, Inc. Rule 4513).
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    Pursuant to Rule 17d-2 under the Act,\6\ the Exchange and FINRA 
entered into an agreement to allocate regulatory responsibility for 
common rules (the ``17d-2 Agreement''). The 17d-2 Agreement covers 
common members of the Exchange and FINRA and allocates to FINRA 
regulatory responsibility, with respect to common members, for the 
following: (i) Examination of common members of the Exchange and FINRA 
for compliance with federal securities laws, rules and regulations and 
rules of the Exchange that the Exchange has certified as identical or 
substantially similar to FINRA rules; (ii) investigation of common 
members of the Exchange and FINRA for violations of federal securities 
laws, rules or regulations, or Exchange rules that the Exchange has 
certified as identical or substantially identical to a FINRA rule; and 
(iii) enforcement of compliance by common members of the Exchange and 
FINRA with the federal securities laws, rules and regulations, and the 
rules of the Exchange that the Exchange has certified as identical or 
substantially similar to FINRA rules.\7\
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    \6\ 17 CFR 240.17d-2.
    \7\ See Securities and Exchange Release No. 58375 (August 13, 
2008), 75 FR 51295 (August 19, 2008) (approving File No. 10-198).
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    The 17d-2 Agreement included a certification by the Exchange that 
states that the requirements contained in certain Exchange rules are 
identical to, or substantially similar to, certain FINRA rules that 
have been identified as comparable. To conform to comparable FINRA 
rules for purposes of the 17d-2 Agreement, the Exchange proposes to 
amend Rule 4.3, Record of Written Complaints, to align with FINRA Rule 
4513.\8\
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    \8\ See also Securities Exchange Act Release No. 63784 (January 
27, 2011), 76 FR 5850 (February 2, 2011) (Order Approving Proposed 
Rule Change); (File No. SR-FINRA-2010-052).
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    Exchange Rule 4.3 currently requires that members of the Exchange 
(``Members'') keep and preserve written customer complaints \9\ for a 
period of not less than five years, the first two of which must be in a 
readily accessible place. To take into account FINRA's four-year 
routine examination cycle for certain members, FINRA Rule 4513 requires 
that members preserve the customer complaint records for a period of at 
least four years. Under the 17d-2 Agreement, FINRA examines common 
members of the Exchange and FINRA for compliance with Exchange Rule 
4.3. However, because of the differing retention periods between 
Exchange Rule 4.3 and FINRA Rule 4513, the 17d-2 Agreement specifically 
states that FINRA has the regulatory responsibilities for the first 
four years of Exchange Rule 4.3's five year record retention 
requirement.
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    \9\ Exchange Rule 4.3(b) defines a ``complaint'' as ``any 
written statement of a customer or any person acting on behalf of a 
customer alleging a grievance involving the activities of a Member 
or persons under the control of the Member in connection with (1) 
the solicitation or execution of any transaction conducted or 
contemplated to be conducted through the facilities of the Exchange 
or (2) the disposition of securities or funds of that customer which 
activities are related to such a transaction.''
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    The Exchange, therefore, proposes to decrease the record retention 
requirements under Rule 4.3 from five to four years. The Exchange 
believes that amending the record retention requirements for customer 
complaints to align with FINRA Rule 4513 would help to avoid confusion 
among Members that are also members of FINRA, EDGA, or EDGX. The 
Exchange further believes that aligning the Exchange's rules with FINRA 
Rule 4513 would account for FINRA's four-year routine examination cycle 
for certain members, which FINRA conducts on the Exchange's behalf 
under the 17d-2 Agreement ensuring consistent regulation of Members 
that are also members of FINRA.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \10\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \11\ in particular, in that it 
is designed to promote just and equitable principles of trade, 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, by eliminating unnecessary confusion 
with respect to the Exchange's rules. The proposed rule change should 
provide greater harmonization between similar Exchange, EDGA, EDGX and 
FINRA rules, resulting in greater uniformity and less burdensome and 
more efficient regulatory compliance. The proposed rule change should 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities and should remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system consistent with the requirements of Section 6(b)(5) of 
the Act.\12\
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    \10\ See 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(b)(5).
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(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 not necessary or appropriate in 
furtherance of the purposes of the Act because the proposed change 
would apply to all Members equally.

[[Page 19383]]

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing 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 for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \13\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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    \13\ See 15 U.S.C. 78s(b)(3)(a)(ii).
    \14\ See 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

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 [email protected]. Please include 
File No. SR-BATS-2015-25 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 No. SR-BATS-2015-25. 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 filing also will be available for inspection 
and copying at the principal office of the Exchange. 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 No. SR-BATS-2015-25 and should 
be submitted on or before May 1, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ See 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-08204 Filed 4-9-15; 8:45 am]
 BILLING CODE 8011-01-P