80 FR 48375 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change To Implement CHX SNAPSM

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 155 (August 12, 2015)

Page Range		48375-48376
FR Document		2015-19760

Federal Register, Volume 80 Issue 155 (Wednesday, August 12, 2015)

[Federal Register Volume 80, Number 155 (Wednesday, August 12, 2015)]
[Notices]
[Pages 48375-48376]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-19760]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75630; File No. SR-CHX-2015-03]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Designation of a Longer Period for Commission Action on a 
Proposed Rule Change To Implement CHX SNAP^SM, an Intra-Day 
and On-Demand Auction Service

August 6, 2015.
    On June 23, 2015, the Chicago Stock Exchange, Inc. (``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
implement CHX SNAP^SM, which would be an intra-day and on-
demand auction service that would be initiated at the request of market 
participants seeking to trade securities in bulk. The proposed rule 
change was published for comment in the Federal

[[Page 48376]]

Register on July 8, 2015.\3\ The Commission has received no comment 
letters regarding the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 75346 (July 1, 
2015), 80 FR 39172 (``Notice'').
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    Section 19(b)(2) of the Act \4\ provides that, within 45 days of 
the publication of the notice of the filing of a proposed rule change, 
or within such longer period up to 90 days as the Commission may 
designate if it finds such longer period to be appropriate and 
publishes its reasons for so finding, or as to which the self-
regulatory organization consents, the Commission shall either approve 
the proposed rule change, disapprove the proposed rule change, or 
institute proceedings to determine whether the proposed rule change 
should be disapproved. The Commission is extending this 45-day time 
period.
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    \4\ 15 U.S.C. 78s(b)(2).
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    The Commission finds that it is appropriate to designate a longer 
period within which to take action on the proposed rule change so that 
it has sufficient time to consider the proposed rule change. 
Accordingly, the Commission, pursuant to Section 19(b)(2) of the 
Act,\5\ designates October 6, 2015 as the date by which the Commission 
should either approve or disapprove or institute proceedings to 
determine whether to disapprove the proposed rule change (File Number 
SR-CHX-2015-03).
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    \5\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(31).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19760 Filed 8-11-15; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices 48375

Specifically, the Commission cannot provide additional clarification to what formation,61 but, as discussed above, the
find that each iteration of the amended the trading rotation exception under Commission cannot find that the
process would qualify as an exception Section 5(b)(ii) means.58 In addition, as proposed rule change is consistent with
under Section 5(b)(ii) of the Linkage noted above, all seven exchanges that the Options Linkage Plan or Section
Plan. The Commission notes that when jointly proposed the Linkage Plan 6(b)(5) of the Act.
the Original Participant Exchanges explicitly represented to the
Commission that the trading rotation IV. Conclusion
proposed the Options Linkage Plan, all
seven exchanges represented to the exception is ‘‘similar to an exception For the foregoing reasons, the
Commission that: available for NMS stocks under Commission does not find that the
Section 5(b)(ii) of the Plan carries forward Regulation NMS’’ and is ‘‘effectively a proposed rule change, is consistent with
the current Trade-Through exception in the single price auction to price the the Act and the rules and regulations
old plan and is the options equivalent to the option.’’ 59 Accordingly, in the absence thereunder applicable to a national
single price opening exception in Regulation of any basis in the Options Linkage Plan securities exchange, and, in particular,
NMS for equity securities. Options exchanges itself for the Commission to determine with Section 6(b)(5) of the Act.
use a trading rotation to open an option for otherwise, and in light of prior, explicit IT IS THEREFORE ORDERED,
trading, or to reopen an option after a trading representations by the Original pursuant to section 19(b)(2) of the Act,
halt. The rotation is effectively a single price Participant Exchanges that the trading that the proposed rule change (SR–ISE–
auction to price the option and there are no rotation exception applies to a ‘‘single
practical means to include prices on other
2014–24), be, and hereby is,
price auction,’’ the Commission cannot disapproved.
exchanges in that auction.
find that the Exchange’s proposal is
For the Commission, by the Division of
(emphasis added).55 Relying on this consistent with the Linkage Plan and Trading and Markets, pursuant to delegated
unanimous representation from all thereby the Act. authority.62
exchanges who jointly proposed the The Commission acknowledges that
Robert W. Errett,
Options Linkage Plan, the Commission the ISE’s proposed iterative opening
process, unlike its current process, Deputy Secretary.
stated in the Options Linkage Plan
Approval Order that the language used would provide away market protection [FR Doc. 2015–19762 Filed 8–11–15; 8:45 am]
in the Section 5(b)(ii) is ‘‘similar to an for Public Customer Orders. For the BILLING CODE 8011–01–P

exception available for NMS stocks reasons discussed above, however, the
under Regulation NMS,’’ 56 and ‘‘[a]s Commission cannot find that the
noted by the Participants, the trading proposed rule change is consistent with SECURITIES AND EXCHANGE
rotation is effectively a single price the Options Linkage Plan or the Act. COMMISSION
auction to price the option.’’ 57 Further, the Commission does not agree
The Commission acknowledges that with the Exchange that the decision of [Release No. 34–75630; File No. SR–CHX–
the text of Section 5(b)(ii) of the Options other options exchanges not to comment 2015–03]
Linkage Plan refers to the trade-through on the proposed rule change equates to
exception during a ‘‘trading rotation,’’ agreement with ISE’s interpretation of Self-Regulatory Organizations;
not a ‘‘single price auction.’’ But as even the trading rotation exception. It would Chicago Stock Exchange, Inc.; Notice
the Exchange notes in the ISE Letter, the be inappropriate for the Commission to of Designation of a Longer Period for
Options Linkage Plan also does not draw any such conclusion unless Commission Action on a Proposed
define the term ‘‘trading rotation’’ nor explicitly stated by a commenter. As ISE Rule Change To Implement CHX
itself noted, ‘‘exchanges may have SNAPSM, an Intra-Day and On-Demand
55 See Letter from Michael Simon, Secretary, ISE, several reasons for not commenting on Auction Service
dated November 7, 2008, and available at http:// a proposed rule change.’’ 60 August 6, 2015.
www.sec.gov/rules/sro/nms/2008/4-546-ise- Finally, in analyzing the proposed
amend3.pdf. See also Letters from Peter G.
rule change, and in making its On June 23, 2015, the Chicago Stock
Armstrong, Managing Director, Options, NYSE Exchange, Inc. (‘‘Exchange’’) filed with
Arca, dated October 30, 2008, available at https:// determination to disapprove the rule
www.sec.gov/rules/sro/nms/2008/4-546-nysearca- change, the Commission has considered the Securities and Exchange
amend3.pdf; Edward J. Joyce, President & Chief whether the action will promote Commission (‘‘Commission’’), pursuant
Operating Officer, Chicago Board Options
efficiency, competition, and capital to Section 19(b)(1) of the Securities
Exchange, dated November 21, 2008, available at Exchange Act of 1934 (‘‘Act’’) 1 and Rule
http://www.sec.gov/rules/sro/nms/2008/4-546-cboe-
amend1.pdf; Jeffrey P. Burns, Managing Director, 58 Further, the Commission notes that the Linkage 19b–4 thereunder,2 a proposed rule
NYSE Alternext US LLC, dated November 25, 2008, Plan refers to a singular ‘‘trading rotation’’ not, as change to implement CHX SNAPSM,
available at https://www.sec.gov/rules/sro/nms/ ISE implies, multiple ‘‘trading rotations.’’ which would be an intra-day and on-
2008/4-546-nysealtr-amend1.pdf; John Katovich, 59 See supra note 55.
demand auction service that would be
Vice President, BSE, dated December 1, 2008, 60 See ISE Letter, supra note 7, at 3. ISE also
available at https://www.sec.gov/rules/sro/nms/
initiated at the request of market
provides as an exhibit to its response letter data
2008/4-546-bse-amend1.pdf; Richard S. Rudolph, purporting to show trade-throughs from all options
participants seeking to trade securities
Counsel, Nasdaq OMX Phlx, dated December 3, exchanges during the first minute of trading on in bulk. The proposed rule change was
2008, available at https://www.sec.gov/rules/sro/ April 29, 2015, and April 30, 2015. According to published for comment in the Federal
nms/2008/4-546-phlx-amend1.pdf; and Jeffrey S. ISE, the data shows trade-throughs from every
Davis, Vice President & Deputy General Counsel, exchange, with the total number of contracts trading 61 Whenever pursuant to the Act the Commission
Nasdaq Stock Market LLC, dated December 4, 2008, through being 9,316 on April 29, and 48,269
available at https://www.sec.gov/rules/sro/nms/ contracts on April 30. See Exhibit to ISE Letter, is engaged in rulemaking or the review of a rule of
2008/4-546-nasdaq-amend1.pdf. supra note 7. The Commission cannot surmise from a self-regulatory organization, and is required to
mstockstill on DSK4VPTVN1PROD with NOTICES

56 See Options Linkage Plan Approval Order,
the data whether the trade-throughs are occurring consider or determine whether an action is
supra note 32, at 39366. See also Rule 611(b)(3) of without an exception or whether the exchanges are necessary or appropriate in the public interest, the
Regulation NMS under the Act (17 CFR not complying with the Linkage Plan or their own Commission shall also consider, in addition to the
242.611(b)(3)) which provides that ‘‘the transaction rules. The Commission notes that the Options protection of investors, whether the action will
that constituted the trade-through was a single- Linkage Plan provides that if a participant exchange promote efficiency, competition, and capital
priced opening, reopening, or closing transaction by relies on a trade-through exception, it would be formation. See 15 U.S.C. 78c(f).
62 17 CFR 200.30–3(a)(12).
the trading center.’’ required to establish, maintain, and enforce written
57 See Options Linkage Plan Approval Order, 1 15 U.S.C. 78s(b)(1).
policies and procedures reasonably designed to
supra note 32, at 39366. assure compliance with the terms of the exception. 2 17 CFR 240.19b–4.

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48376 Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices

Register on July 8, 2015.3 The SECURITIES AND EXCHANGE II. Description of the Proposed Rule
Commission has received no comment COMMISSION a. Background
letters regarding the proposed rule
change. As stated in the Notice, FINRA is
[Release No. 34–75633; File No. SR–FINRA–
proposing to adopt Rule 2272 to govern
Section 19(b)(2) of the Act 4 provides 2015–009]
sales or offers of sales of securities on
that, within 45 days of the publication the premises of any military installation
of the notice of the filing of a proposed Self-Regulatory Organizations;
to members of the U.S. Armed Forces or
rule change, or within such longer Financial Industry Regulatory
their dependents.7 Proposed Rule 2272
period up to 90 days as the Commission Authority, Inc.; Order Approving a
would impose a number of restrictions
may designate if it finds such longer Proposed Rule Change To Adopt
upon FINRA members engaged in the
period to be appropriate and publishes FINRA Rule 2272 To Govern Sales or sales or offers of sales of securities,
its reasons for so finding, or as to which Offers of Sales of Securities on the including a disclosure requirement, a
the self-regulatory organization Premises of Any Military Installation to suitability obligation, and a ban on
consents, the Commission shall either Members of the U.S. Armed Forces or referral fees to persons not associated
Their Dependents with a FINRA member.8
approve the proposed rule change,
disapprove the proposed rule change, or August 6, 2015. i. Statutory Basis
institute proceedings to determine
I. Introduction To comply with the requirements of
whether the proposed rule change
Section 15A(b)(14) of the Exchange
should be disapproved. The On April 23, 2015, the Financial Act,9 FINRA proposed rules governing
Commission is extending this 45-day Industry Regulatory Authority, Inc. the sales, or offers of sales, of securities
time period. (‘‘FINRA’’) filed with the Securities and on the premises of any military
The Commission finds that it is Exchange Commission (‘‘Commission’’), installation to members of the U.S.
appropriate to designate a longer period pursuant to Section 19(b)(1) of the Armed Forces or their dependents.10
within which to take action on the Securities Exchange Act of 1934 (‘‘Act’’ Section 15A(b)(14) requires these rules
proposed rule change so that it has or ‘‘Exchange Act’’) 1 and Rule 19b–4 mandate: (1) A broker-dealer performing
sufficient time to consider the proposed thereunder,2 a proposed rule change to brokerage services to military personnel
rule change. Accordingly, the adopt FINRA Rule 2272. Rule 2272 or dependents disclose (a) that
Commission, pursuant to Section would govern sales or offers of sales of securities offered are not being offered
19(b)(2) of the Act,5 designates October securities on the premises of any or provided on behalf of the federal
6, 2015 as the date by which the military installation to members of the government, and that their offer is not
Commission should either approve or U.S. Armed Forces or their dependents. sanctioned, recommended, or
disapprove or institute proceedings to The proposed rule was published for encouraged by the federal government
determine whether to disapprove the comment in the Federal Register on and (b) the identity of the registered
proposed rule change (File Number SR– May 6, 2015.3 The Commission received broker-dealer offering the securities; (2)
four comment letters in response to the such broker-dealer to perform an
CHX–2015–03).
proposal.4 On June 18, 2015, FINRA appropriate suitability determination
For the Commission, by the Division of granted the Commission an extension of prior to making a recommendation of a
Trading and Markets, pursuant to delegated time, until August 10, 2015, to act on security to a member of the U.S. Armed
authority.6 the proposal.5 FINRA responded to the Forces or a dependent thereof; and (3)
Robert W. Errett, comment letters on July 21, 2015.6 that no person receive referral fees or
Deputy Secretary. incentive compensation unless such
This order approves the rule as
[FR Doc. 2015–19760 Filed 8–11–15; 8:45 am] person is an associated person of a
proposed. registered broker-dealer and qualified
BILLING CODE 8011–01–P
pursuant to the rules of a self-regulatory
1 15 U.S.C. 78s(b)(1).
2 17
organization.11
CFR 240.19b–4.
3 See Notice of Filing of a Proposed Rule to Adopt ii. Proposed Rule
FINRA Rule 2272 to Govern Sales or Offers of Sales
of Securities on the Premises of Any Military Proposed FINRA Rule 2272 requires
Installation to Members of the U.S. Armed Forces that, prior to engaging in sales or offers
or Their Dependents; Exchange Act Release No. of sales of securities on the premises of
74890 (May 6, 2015), 80 FR 27220 (May 12, 2015)
(‘‘Notice’’).
a military installation to any member of
4 See Letters from Jason T. Robinson, Georgia the U.S. Armed Forces or a dependent
State University College of Law Investor Advocacy thereof, a FINRA member must clearly
Clinic, dated May 30, 2015 (‘‘GSU Letter’’); Hugh and conspicuously disclose in writing:
D. Berkson, Public Investors Arbitration Bar (1) The identity of the member offering
Association, dated June 1, 2015 (‘‘PIABA Letter’’);
David T. Bellaire, Esq., Financial Services Institute,
7 See Notice at 27221.
dated June 2, 2015 (‘‘FSI Letter’’); David M. Rader,
8 See id.
Michigan State University College of Law Investor
Advocacy Legal Clinic, dated June 9, 2015 (‘‘MSU 9 15 U.S.C. 78o–3(b)(14).

Letter’’). 10 Congress amended Section 15A(b) of the
mstockstill on DSK4VPTVN1PROD with NOTICES

5 See Letter from Jeanette Wingler, Assistant Exchange Act in the Military Personnel Financial
General Counsel, FINRA, to Katherine England, Services Protection Act (‘‘Military Act’’). Pub. L.
Assistant Director, Division of Trading and Markets, 109–290, 120 Stat. 1317. The Military Act requires
3 See Securities Exchange Act Release No. 75346 Securities and Exchange Commission, dated June the rules of a registered national securities
18, 2015. association to include provisions governing the
(July 1, 2015), 80 FR 39172 (‘‘Notice’’).
6 See Letter from Jeanette Wingler, Assistant sales, or offers of sales, of securities on the premises
4 15 U.S.C. 78s(b)(2).
General Counsel, FINRA, to Brent J. Fields, of any military installation to any member of the
5 Id.
Secretary, Securities and Exchange Commission, Armed Forces or a dependent thereof.
6 17 CFR 200.30–3(a)(31). dated July 21, 2015 (‘‘FINRA Response Letter’’). 11 15 U.S.C. 78o–3(b)(14).

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Document Created: 2016-09-27 22:27:34
Document Modified: 2016-09-27 22:27:34

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 48375