80 FR 50370 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Adopt New Rule 8.17 To Provide a Process for an Expedited Suspension Proceeding and Rule 12.15 To Prohibit Layering and Spoofing on BATS Exchange, Inc.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 160 (August 19, 2015)
Federal Register Volume 80, Issue 160 (August 19, 2015)
| Page Range | 50370-50375 | |
| FR Document | 2015-20421 |
[Federal Register Volume 80, Number 160 (Wednesday, August 19, 2015)] [Notices] [Pages 50370-50375] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-20421] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75693; File No. SR-BATS-2015-57] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Adopt New Rule 8.17 To Provide a Process for an Expedited Suspension Proceeding and Rule 12.15 To Prohibit Layering and Spoofing on BATS Exchange, Inc. August 13, 2015. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on July 30, 2015, BATS Exchange, Inc. (the ``Exchange'' or ``BATS'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. On August 11, 2015, the Exchange filed Amendment No. 1 to the proposal.\3\ 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\ 17 CFR 240.19b-4. \3\ Amendment No. 1 amended and replaced the original proposal in its entirety. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to adopt a new rule to clearly prohibit layering and spoofing activity on the Exchange, as further described below. Further, the Exchange proposes to amend Exchange Rules to permit the Exchange to take prompt action to suspend Members or their clients that violate such rule. The text of the proposed rule change is available at the Exchange's Web site at www.batstrading.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 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 [[Page 50371]] 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 Statutory Basis for, the Proposed Rule Change 1. Purpose Background As a national securities exchange registered pursuant to section 6 of the Act, the Exchange is required to be organized and to have the capacity to enforce compliance by its members and persons associated with its members, with the Act, the rules and regulations thereunder, and the Exchange's Rules.\4\ Further, the Exchange's Rules are required to be ``designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade . . . and, in general, to protect investors and the public interest.'' \5\ In fulfilling these requirements, the Exchange has developed a comprehensive regulatory program that includes automated surveillance of trading activity that is both operated directly by Exchange staff and by staff of the Financial Industry Regulatory Authority (``FINRA'') pursuant to a Regulatory Services Agreement (``RSA''). When disruptive and potentially manipulative or improper quoting and trading activity is identified, the Exchange or FINRA (acting as an agent of the Exchange) conducts an investigation into the activity, requesting additional information from the Member or Members involved. To the extent violations of the Act, the rules and regulations thereunder, or Exchange Rules have been identified and confirmed, the Exchange or FINRA as its agent will commence the enforcement process, which might result in, among other things, a censure, a requirement to take certain remedial actions, one or more restrictions on future business activities, a monetary fine, or even a temporary or permanent ban from the securities industry. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b)(1). \5\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The process described above, from the identification of disruptive and potentially manipulative or improper quoting and trading activity to a final resolution of the matter, can often take several years. The Exchange believes that this time period is generally necessary and appropriate to afford the subject Member adequate due process, particularly in complex cases. However, as described below, the Exchange believes that there are certain obvious and uncomplicated cases of disruptive and manipulative behavior or cases where the potential harm to investors is so large that the Exchange should have the authority to initiate an expedited suspension proceeding in order to stop the behavior from continuing on the Exchange. In recent years, several cases have been brought and resolved by the Exchange and other SROs that involved allegations of wide-spread market manipulation, much of which was ultimately being conducted by foreign persons and entities using relatively rudimentary technology to access the markets and over which the Exchange and other SROs had no direct jurisdiction. In each case, the conduct involved a pattern of disruptive quoting and trading activity indicative of manipulative layering \6\ or spoofing.\7\ The Exchange and other SROs were able to identify the disruptive quoting and trading activity in real-time or near real-time; nonetheless, in accordance with Exchange Rules and the Act, the Members responsible for such conduct or responsible for their customers' conduct were allowed to continue the disruptive quoting and trading activity on the Exchange and other exchanges during the entirety of the subsequent lengthy investigation and enforcement process. The Exchange believes that it should have the authority to initiate an expedited suspension proceeding in order to stop the behavior from continuing on the Exchange if a Member is engaging in or facilitating layering or spoofing activity and the Member has received sufficient notice with an opportunity to respond, but such activity has not ceased. --------------------------------------------------------------------------- \6\ ``Layering'' is a form of market manipulation in which multiple, non-bona fide limit orders are entered on one side of the market at various price levels in order to create the appearance of a change in the levels of supply and demand, thereby artificially moving the price of the security. An order is then executed on the opposite side of the market at the artificially created price, and the non-bona fide orders are cancelled. \7\ ``Spoofing'' is a form of market manipulation that involves the market manipulator placing non-bona fide orders that are intended to trigger some type of market movement and/or response from other market participants, from which the market manipulator might benefit by trading bona fide orders. --------------------------------------------------------------------------- The following two examples are instructive on the Exchange's rationale for the proposed rule change. In July 2012, Biremis Corp. (formerly Swift Trade Securities USA, Inc.) (the ``Firm'') and its CEO were barred from the industry for, among other things, supervisory violations related to a failure by the Firm to detect and prevent disruptive and allegedly manipulative trading activities, including layering, short sale violations, and anti-money laundering violations.\8\ The Firm's sole business was to provide trade execution services via a proprietary day trading platform and order management system to day traders located in foreign jurisdictions. Thus, the disruptive and allegedly manipulative trading activity introduced by the Firm to U.S. markets originated directly or indirectly from foreign clients of the Firm. The pattern of disruptive and allegedly manipulative quoting and trading activity was widespread across multiple exchanges, and the Exchange, FINRA, and other SROs identified clear patterns of the behavior in 2007 and 2008. Although the Firm and its principals were on notice of the disruptive and allegedly manipulative quoting and trading activity that was occurring, the Firm took little to no action to attempt to supervise or prevent such quoting and trading activity until at least 2009. Even when it put some controls in place, they were deficient and the pattern of disruptive and allegedly manipulative trading activity continued to occur. As noted above, the final resolution of the enforcement action to bar the Firm and its CEO from the industry was not concluded until 2012, four years after the disruptive and allegedly manipulative trading activity was first identified. --------------------------------------------------------------------------- \8\ See Biremis Corp. and Peter Beck, FINRA Letter of Acceptance, Waiver and Consent No. 2010021162202, July 30, 2012. --------------------------------------------------------------------------- In September of 2012, Hold Brothers On-Line Investment Services, Inc. (the ``Firm'') settled a regulatory action in connection with the Firm's provision of a trading platform, trade software and trade execution, support and clearing services for day traders.\9\ Many traders using the Firm's services were located in foreign jurisdictions. The Firm ultimately settled the action with FINRA and several exchanges, including the Exchange, for a total monetary fine of $3.4 million. In a separate action, the Firm settled with the Commission for a monetary fine of $2.5 million.\10\ Among the alleged violations in the case were disruptive and allegedly manipulative quoting and trading activity, including spoofing, layering, wash trading, and pre-arranged trading. Through its conduct and insufficient procedures and controls, the Firm also allegedly committed anti-money laundering violations by failing to detect and report [[Page 50372]] manipulative and suspicious trading activity. The Firm was alleged to have not only provided foreign traders with access to the U.S. markets to engage in such activities, but that its principals also owned and funded foreign subsidiaries that engaged in the disruptive and allegedly manipulative quoting and trading activity. Although the pattern of disruptive and allegedly manipulative quoting and trading activity was identified in 2009, as noted above, the enforcement action was not concluded until 2012. Thus, although disruptive and allegedly manipulative quoting and trading was promptly detected, it continued for several years. --------------------------------------------------------------------------- \9\ See Hold Brothers On-Line Investment Services, LLC, FINRA Letter of Acceptance, Waiver and Consent No. 20100237710001, September 25, 2012. \10\ In the Matter of Hold Brothers On-Line Investment Services, LLC, Exchange Act Release No. 67924, September 25, 2012. --------------------------------------------------------------------------- The Exchange also notes the current criminal proceedings that have commenced against Navinder Singh Sarao. Mr. Sarao's allegedly manipulative trading activity, which included forms of layering and spoofing in the futures markets, has been linked as a contributing factor to the ``Flash Crash'' of 2010, and yet continued through 2015. The Exchange believes that the activities described in the cases above provide justification for the proposed rule change, which is described below. Rule 8.17--Expedited Client Suspension Proceeding The Exchange proposes to adopt new Rule 8.17 to set forth procedures for issuing suspension orders, immediately prohibiting a Member from conducting continued layering or spoofing activity on the Exchange. Importantly, these procedures would also provide the Exchange the authority to order a Member to cease and desist from providing access to the Exchange to a client of the Member that is conducting layering or spoofing activity in violation of proposed Rule 12.15. Under proposed paragraph (a) of Rule 8.17, with the prior written authorization of the Chief Regulatory Officer (``CRO'') or such other senior officers as the CRO may designate, the Office of General Counsel or Regulatory Department of the Exchange (such departments generally referred to as the ``Exchange'' for purposes of proposed Rule 8.17) may initiate an expedited suspension proceeding with respect to alleged violations of Rule 12.15, which is proposed as part of this filing and described in detail below. Proposed paragraph (a) would also set forth the requirements for notice and service of such notice pursuant to the Rule, including the required method of service and the content of notice. Proposed paragraph (b) of Rule 8.17 would govern the appointment of a Hearing Panel as well as potential disqualification or recusal of Hearing Officers. The proposed provision is consistent with existing Exchange Rule 8.6 and includes the requirement for a Hearing Officer to be recused in the event he or she has a conflict of interest or bias or other circumstances exist where his or her fairness might reasonably be questioned. In addition to recusal initiated by such a Hearing Officer, a party to the proceeding will be permitted to file a motion to disqualify a Hearing Officer. However, due to the compressed schedule pursuant to which the process would operate under Rule 8.17, the proposed rule would require such motion to be filed no later than 5 days after the announcement of the Hearing Panel and the Exchange's brief in opposition to such motion would be required to be filed no later than 5 days after service thereof. Pursuant to existing Rule 8.6(b), if the Hearing Panel believes the Respondent has provided satisfactory evidence in support of the motion to disqualify, the applicable Hearing Officer shall remove himself or herself and request the Chief Executive Officer to reassign the hearing to another Hearing Officer such that the Hearing Panel still meets the compositional requirements described in Rule 8.6(a). If the Hearing Panel determines that the Respondent's grounds for disqualification are insufficient, it shall deny the Respondent's motion for disqualification by setting forth the reasons for the denial in writing and the Hearing Panel will proceed with the hearing. Under paragraph (c) of the proposed Rule, the hearing would be held not later than 15 days after service of the notice initiating the suspension proceeding, unless otherwise extended by the Chairman of the Hearing Panel with the consent of the Parties for good cause shown. In the event of a recusal or disqualification of a Hearing Officer, the hearing shall be held not later than five days after a replacement Hearing Officer is appointed. Proposed paragraph (c) would also govern how the hearing is conducted, including the authority of Hearing Officers, witnesses, additional information that may be required by the Hearing Panel, the requirement that a transcript of the proceeding be created and details related to such transcript, and details regarding the creation and maintenance of the record of the proceeding. Proposed paragraph (c) would also state that if a Respondent fails to appear at a hearing for which it has notice, the allegations in the notice and accompanying declaration may be deemed admitted, and the Hearing Panel may issue a suspension order without further proceedings. Finally, as proposed, if the Exchange fails to appear at a hearing for which it has notice, the Hearing Panel may order that the suspension proceeding be dismissed. Under paragraph (d) of the proposed Rule, the Hearing Panel would be authorized to issue a written decision stating whether a suspension order would be imposed. The Hearing Panel would be required to issue the decision not later than 10 days after receipt of the hearing transcript, unless otherwise extended by the Chairman of the Hearing Panel with the consent of the Parties for good cause shown. The Rule would state that a suspension order shall be imposed if the Hearing Panel finds by a preponderance of the evidence that the alleged violation specified in the notice has occurred and that the violative conduct or continuation thereof is likely to result in significant market disruption or other significant harm to investors. Proposed paragraph (d) would also describe the content, scope and form of a suspension order. As proposed, a suspension order shall be limited to ordering a Respondent to cease and desist from violating proposed Rule 12.15, and, where applicable, to ordering a Respondent to cease and desist from providing access to the Exchange to a client of Respondent that is causing violations of Rule 12.15. Under the proposed rule, a suspension order shall also set forth the alleged violation and the significant market disruption or other significant harm to investors that is likely to result without the issuance of an order, describe in reasonable detail the act or acts the Respondent is to take or refrain from taking, and include the date and hour of its issuance. As proposed, a suspension order would remain effective and enforceable unless modified, set aside, limited, or revoked pursuant to proposed paragraph (e), as described below. Finally, paragraph (d) would require service of the Hearing Panel's decision and any suspension order consistent with other portions of the proposed rule related to service. Proposed paragraph (e) of Rule 8.17 would state that at any time after the Office of Hearing Officers served the Respondent with a suspension order, a Party could apply to the Hearing Panel to have the order modified, set aside, limited, or revoked. The Hearing Panel generally would be required to respond to the request in writing within 10 days after receipt of the request. An application to modify, set aside, limit or revoke a suspension order would not [[Page 50373]] stay the effectiveness of the suspension order. Paragraph (f) of the proposed Rule would authorize the cancellation of a Respondent's membership with the Exchange or bar from associating with any member of the Exchange if the Respondent violated a suspension order. The Exchange believes that this authority is necessary in particular in the event a Member is ordered to but fails to prevent access to the Exchange by a client that is engaging in activity prohibited by Rule 12.15. Paragraph (f) would require notice of such action, served in accordance with the proposed Rule. The notice would be required to explicitly identify the provision of the suspension order that is alleged to have been violated and contain a statement of facts specifying the alleged violation. The notice would also state when the Exchange's action will take effect and explain what the respondent must do to avoid such action. Finally, proposed paragraph (g) would provide that sanctions issued under the proposed Rule 8.17 would constitute final and immediately effective disciplinary sanctions imposed by the Exchange, and that the right to have any action under the Rule reviewed by the Commission would be governed by section 19 of the Act. The filing of an application for review would not stay the effectiveness of a suspension order, cancellation of membership or a bar from associating with any member, unless the Commission otherwise ordered. Rule 12.15--Layering and Spoofing Prohibited The Exchange currently has authority to prohibit and take action against manipulative trading activity, including layering and spoofing, pursuant to its general market manipulation rules, including Rule 3.1. The Exchange proposes to adopt new Rule 12.15, which would more specifically define and prohibit layering and spoofing activity on the Exchange. As noted above, the Exchange also proposes to apply the proposed suspension rules to proposed Rule 12.15. Proposed Rule 12.15 would prohibit Members from engaging in or facilitating layering or spoofing activity on the Exchange, as described in proposed Interpretation and Policy .01 of the Rule, including acting in concert with other persons to effect such activity. The Exchange believes that it is necessary to extend the prohibition to situations when persons are acting in concert to avoid a potential loophole where layering and spoofing activity is simply split between several brokers or customers. To provide proper context for the situations in which the Exchange proposes to utilize its proposed authority, the Exchange believes it is necessary to describe the types of disruptive and manipulative layering and spoofing activity that would cause the Exchange to use its authority. Accordingly, the Exchange proposes to adopt Interpretation and Policy .01 and .02, providing additional details regarding layering and spoofing activity. Proposed Interpretation and Policy .01, related to layering, would describe a layering activity as a frequent pattern in which the following facts are present: (a) A party enters multiple limit orders on one side of the market at various price levels (the ``Layering Orders''); and (b) following the entry of the Layering Orders, the level of supply and demand for the security changes; and (c) the party enters one or more orders on the opposite side of the market of the Layering Orders (the ``Contra-Side Orders'') that are subsequently executed; and (d) following the execution of the Contra- Side Orders, the party cancels the Layering Orders. Proposed Interpretation and Policy .02, related to spoofing, would describe spoofing activity as a frequent pattern in which the following facts are present: (a) A party narrows the spread for a security by placing an order inside the national best bid or offer (the ``Spoofing Order''); and (b) the party then submits an order on the opposite side of the market (``Contra-Side Order'') that executes against another market participant that joined the new inside market established by the Spoofing Order. The Exchange believes that the proposed descriptions of layering and spoofing activity articulated in the rule are consistent with the activities that have been identified and described in the client access cases described above. The Exchange further believes that the proposed descriptions will provide Members with clear descriptions of layering and spoofing activity that will help them to avoid engaging in such activities or allowing their clients to engage in such activities. The Exchange proposes to make clear in Interpretation and Policy .03 that, unless otherwise indicated, the descriptions of layering activity and spoofing activity do not require the facts to occur in a specific order in order for the rule to apply. For instance, it is of no consequence whether a party first enters Layering Orders and then Contra-side Orders or vice-versa. However, as proposed, it is required for supply and demand to change following the entry of Layering Orders. The Exchange also proposes to make clear that layering activity and spoofing activity includes a pattern or practice in which some portion of the layering or spoofing activity is conducted on the Exchange and the other portions of the layering or spoofing activity are conducted on one or more other exchanges. The Exchange believes that this authority is necessary to address market participants who would otherwise seek to avoid the prohibitions of the proposed Rule by spreading their activity amongst various execution venues. In sum, proposed Rule 12.15 coupled with proposed Rule 8.17 would provide the Exchange with authority to promptly act to prevent layering activity and spoofing activity from continuing on the Exchange. Below is an example of how the proposed rule would operate. Assume that through its surveillance program, Exchange staff identifies a pattern of potential layering activity. After an initial investigation the Exchange would then contact the Member responsible for the orders that caused the activity to request an explanation of the activity as well as any additional relevant information, including the source of the activity. If the Exchange were to continue to see the same pattern from the same Member and the source of the activity is the same or has been previously identified as a frequent source of layering activity then the Exchange could initiate an expedited suspension proceeding by serving notice on the Member that would include details regarding the alleged violations as well as the proposed sanction. In such a case the proposed sanction would likely be to order the Member to cease and desist providing access to the Exchange to the client that is responsible for the layering activity. The Member would have the opportunity to be heard in front of a Hearing Panel at a hearing to be conducted within 15 days of the notice. If the Hearing Panel determined that the violation alleged in the notice did not occur or that the conduct or its continuation would not have the potential to result in significant market disruption or other significant harm to investors, then the Hearing Panel would dismiss the suspension order proceeding. If the Hearing Panel determined that the violation alleged in the notice did occur and that the conduct or its continuation is likely to result in significant market disruption or other significant harm to investors, then the Hearing Panel would issue the order including the proposed sanction, ordering the Member to cease providing [[Page 50374]] access to the client at issue. If the Member obeyed the order and ceased providing such access, then the Member would be permitted to do business on the Exchange without any limit to access for such Member or its other clients. The Exchange notes, however, that abiding by a suspension order and continuing to be permitted to access the Exchange would not alter the Exchange's ability to further investigate the matter and/or later sanction the Member pursuant to the Exchange's standard disciplinary process for supervisory violations or other violations of Exchange rules or the Act. If the Exchange instead learned that the Member failed to abide by the order and continued to provide access to the client at issue in the suspension order, the Exchange would have the authority to cancel the Member's membership with the Exchange or to bar an individual from associating with any Member of the Exchange. The Exchange reiterates that it already has broad authority to take action against a Member in the event that such Member is engaging in or facilitating disruptive or manipulative trading activity on the Exchange. For the reasons described above, and in light of recent cases like the client access cases described above, as well as other cases currently under investigation, the Exchange believes that it is equally important for the Exchange to have the authority to promptly initiate expedited suspension proceedings against any Member who has demonstrated a clear pattern or practice of layering or spoofing activity, as described above and to take action including ordering such Member to terminate access to the Exchange to one or more of such Member's clients if such clients are responsible for the activity. The Exchange recognizes that its proposed authority to issue a suspension order is a powerful measure that should be used very cautiously. Consequently, the proposed rules have been designed to ensure that the proceedings are used to address only the most clear and serious types of layering and spoofing activity and that the interests of Respondents are protected. For example, to ensure that proceedings are used appropriately and that the decision to initiate a proceeding is made only at the highest staff levels, the proposed rules require the CRO or another senior officer of the Exchange to issue written authorization before the Exchange can institute an expedited suspension proceeding. In addition, the Exchange believes that it would use this authority in limited circumstances, when necessary to protect investors, other Members and the Exchange. Further, the Exchange believes that the proposed expedited suspension provisions described above that provide the opportunity to respond as well as a Hearing Panel determination prior to taking action will ensure that the Exchange would not utilize its authority in the absence of a clear pattern or practice of layering or spoofing activity. 2. Statutory Basis The Exchange believes that the proposed rule changes are consistent with section 6(b) of the Act \11\ and further the objectives of section 6(b)(5) of the Act \12\ because they are 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 regulating 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. Pursuant to the proposal, the Exchange will have a mechanism to promptly initiate expedited suspension proceedings in the event the Exchange believes that it has sufficient proof that a violation of Rule 12.15 has occurred and is ongoing. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78f(b). \12\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Further, the Exchange believes that the proposal is consistent with sections 6(b)(1) and 6(b)(6) of the Act,\13\ which require that the rules of an exchange enforce compliance with, and provide appropriate discipline for, violations of the Commission and Exchange rules. The Exchange also believes that the proposal is consistent with the public interest, the protection of investors, or otherwise in furtherance of the purposes of the Act because the proposal helps to strengthen the Exchange's ability to carry out its oversight and enforcement responsibilities as a self-regulatory organization in cases where awaiting the conclusion of a full disciplinary proceeding is unsuitable in view of the potential harm to other Members and their customers as well as the Exchange if conduct is allowed to continue on the Exchange. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b)(1) and 78f(b)(6). --------------------------------------------------------------------------- The Exchange further believes that the proposal is consistent with section 6(b)(7) of the Act,\14\ which requires that the rules of an exchange ``provide a fair procedure for the disciplining of members and persons associated with persons . . . and the prohibition or limitation by the exchange of any person with respect to access to services offered by the exchange or a member thereof.'' Finally, the Exchange also believes the proposal is consistent with sections 6(d)(1) and 6(d)(2) of the Act,\15\ which require that the rules of an exchange with respect to a disciplinary proceeding or proceeding that would limit or prohibit access to or membership in the exchange require the exchange to: provide adequate and specific notice of the charges brought against a member or person associated with a member, provide an opportunity to defend against such charges, keep a record, and provide details regarding the findings and applicable sanctions in the event a determination to impose a disciplinary sanction is made. The Exchange believes that each of these requirements is addressed by the notice and due process provisions included within proposed Rule 8.17. Importantly, as noted above, the Exchange anticipates using the authority proposed in this filing only in clear and egregious cases when necessary to protect investors, other Members and the Exchange, and even in such cases, the Respondent will be afforded due process in connection with the suspension proceedings. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b)(7). \15\ 15 U.S.C. 78f(d)(1). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the Exchange believes that each self-regulatory organization should be empowered to regulate trading occurring on their market consistent with the Act and without regard to competitive issues. The Exchange is requesting authority to take appropriate action if necessary for the protection of investors, other Members and the Exchange. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule changes. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period [[Page 50375]] to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (b) Institute proceedings to determine whether the proposed rule change should be 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, as modified by Amendment No. 1, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BATS-2015-57 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BATS-2015-57. 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 such filing also will be available for inspection and copying at the principal offices 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 Number SR-BATS-2015-57, and should be submitted on or before September 9, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-20421 Filed 8-18-15; 8:45 am] BILLING CODE 8011-01-P
![50370 Federal Register / Vol. 80, No. 160 / Wednesday, August 19, 2015 / Notices
be, registered as an investment adviser 6. Section 6(c) of the Act provides that SECURITIES AND EXCHANGE
under the Investment Advisers Act of the Commission may exempt any COMMISSION
1940 (‘‘Advisers Act’’). The Adviser and person, security or transaction, or any
[Release No. 34–75693; File No. SR–BATS–
the Trust may retain one or more class of persons, securities or 2015–57]
subadvisers (each a ‘‘Subadviser’’) to transactions, from any provisions of the
manage the portfolios of the Funds. Any Act, if and to the extent that such Self-Regulatory Organizations; BATS
Subadviser will be registered, or not exemption is necessary or appropriate Exchange, Inc.; Notice of Filing of a
subject to registration, under the in the public interest and consistent Proposed Rule Change, as Modified by
Advisers Act. with the protection of investors and the Amendment No. 1 Thereto, To Adopt
3. The Distributor is a Nebraska New Rule 8.17 To Provide a Process
purposes fairly intended by the policy
limited liability company and a broker- for an Expedited Suspension
dealer registered under the Securities and provisions of the Act. Section 17(b)
of the Act authorizes the Commission to Proceeding and Rule 12.15 To Prohibit
Exchange Act of 1934 and will act as the Layering and Spoofing on BATS
principal underwriter of Shares of the exempt a proposed transaction from
section 17(a) of the Act if evidence Exchange, Inc.
Funds. Applicants request that the
requested relief apply to any distributor establishes that the terms of the August 13, 2015.
of Shares, whether affiliated or transaction, including the consideration Pursuant to section 19(b)(1) of the
unaffiliated with the Adviser (included to be paid or received, are reasonable Securities Exchange Act of 1934
in the term ‘‘Distributor’’). Any and fair and do not involve (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Distributor will comply with the terms overreaching on the part of any person notice is hereby given that on July 30,
and conditions of the Order. concerned, and the proposed 2015, BATS Exchange, Inc. (the
Applicants’ Requested Exemptive Relief transaction is consistent with the ‘‘Exchange’’ or ‘‘BATS’’) filed with the
policies of the registered investment Securities and Exchange Commission
4. Applicants seek the requested company and the general purposes of (‘‘SEC’’ or ‘‘Commission’’) the proposed
Order under section 6(c) of the Act for the Act. Section 12(d)(1)(J) of the Act rule change as described in Items I and
an exemption from sections 2(a)(32), II below, which Items have been
provides that the Commission may
5(a)(1), 22(d) and 22(e) of the Act and prepared by the Exchange. On August
exempt any person, security, or
rule 22c–1 under the Act, under 11, 2015, the Exchange filed
sections 6(c) and 17(b) of the Act for an transaction, or any class or classes of
persons, securities or transactions, from Amendment No. 1 to the proposal.3 The
exemption from sections 17(a)(1) and Commission is publishing this notice to
17(a)(2) of the Act, and under section any provision of section 12(d)(1) if the
exemption is consistent with the public solicit comments on the proposed rule
12(d)(1)(J) of the Act for an exemption
interest and the protection of investors. change from interested persons.
from sections 12(d)(1)(A) and (B) of the
Act. The requested Order would permit 7. Applicants submit that for the I. Self-Regulatory Organization’s
applicants to offer exchange-traded reasons stated in the Reference Order: Statement of the Terms of Substance of
managed funds. Because the relief (1) With respect to the relief requested the Proposed Rule Change
requested is the same as the relief pursuant to section 6(c) of the Act, the The Exchange is proposing to adopt a
granted by the Commission under the relief is appropriate, in the public new rule to clearly prohibit layering and
Reference Order and because the interest and consistent with the spoofing activity on the Exchange, as
Adviser has entered into, or anticipates protection of investors and the purposes further described below. Further, the
entering into, a licensing agreement Exchange proposes to amend Exchange
fairly intended by the policy and
with Eaton Vance Management, or an Rules to permit the Exchange to take
provisions of the Act; (2) with respect to
affiliate thereof in order to offer prompt action to suspend Members or
exchange-traded managed funds,2 the the relief request pursuant to section
17(b) of the Act, the proposed their clients that violate such rule.
Order would incorporate by reference The text of the proposed rule change
the terms and conditions of the transactions are reasonable and fair and
do not involve overreaching on the part is available at the Exchange’s Web site
Reference Order.
of any person concerned, are consistent at www.batstrading.com, at the
5. Applicants request that the Order
apply to the Initial Funds and to any with the policies of each registered principal office of the Exchange, and at
other existing or future open-end investment company concerned and the Commission’s Public Reference
management investment company or consistent with the general purposes of Room.
series thereof that: (a) Is advised by the the Act; and (3) with respect to the relief II. Self-Regulatory Organization’s
Adviser or any entity controlling, requested pursuant to section 12(d)(1)(J) Statement of the Purpose of, and
controlled by, or under common control of the Act, the relief is consistent with Statutory Basis for, the Proposed Rule
with the Adviser (any such entity the public interest and the protection of Change
included in the term ‘‘Adviser’’); and (b) investors. In its filing with the Commission, the
operates as an exchange-traded managed Exchange included statements
By the Division of Investment
fund as described in the Reference concerning the purpose of and basis for
Management, pursuant to delegated
Order; and (c) complies with the terms the proposed rule change and discussed
authority.
and conditions of the Order and of the any comments it received on the
Reference Order, which is incorporated Brent J. Fields,
Secretary.
proposed rule change. The text of these
by reference herein (each such company statements may be examined at the
tkelley on DSK3SPTVN1PROD with NOTICES
or series and Initial Fund, a ‘‘Fund’’).3 [FR Doc. 2015–20419 Filed 8–18–15; 8:45 am]
places specified in Item IV below. The
BILLING CODE 8011–01–P
2 Eaton Vance Management has obtained patents
Exchange has prepared summaries, set
with respect to certain aspects of the Funds’ method
1 15 U.S.C. 78s(b)(1).
of operation as exchange-traded managed funds.
3 All entities that currently intend to rely on the with the terms and conditions of the Order and of 2 17 CFR 240.19b–4.
Order are named as applicants. Any other entity the Reference Order, which is incorporated by 3 Amendment No. 1 amended and replaced the
that relies on the Order in the future will comply reference herein. original proposal in its entirety.
VerDate Sep<11>2014 19:14 Aug 18, 2015 Jkt 235001 PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 E:\FR\FM\19AUN1.SGM 19AUN1](https://thefederalregister.org/doc/80_FR_50530/page/1.svg)
![Federal Register / Vol. 80, No. 160 / Wednesday, August 19, 2015 / Notices 50375
to be appropriate and publishes its should refer to File Number SR–BATS– the public may also participate via
reasons for so finding or (ii) as to which 2015–57, and should be submitted on or teleconference, up to the capacity of the
the Exchange consents, the Commission before September 9, 2015. teleconference phone line. To facilitate
will: For the Commission, by the Division of the building security process, and to
(A) By order approve or disapprove Trading and Markets, pursuant to delegated request reasonable accommodation,
such proposed rule change, or authority.16 those who plan to attend, or participate
(b) Institute proceedings to determine Brent J. Fields, via the teleconference line, should
whether the proposed rule change contact the meeting coordinator, Ms.
Secretary.
should be disapproved. Amy Parker, by email at Amy.M.Parker@
[FR Doc. 2015–20421 Filed 8–18–15; 8:45 am]
IV. Solicitation of Comments uscg.mil, by phone at (202) 372–1423, or
BILLING CODE 8011–01–P
in writing at 2703 Martin Luther King Jr.
Interested persons are invited to Ave. SE., Stop 7509, Washington, DC
submit written data, views, and 20593–7509, not later than August 24,
arguments concerning the foregoing, DEPARTMENT OF STATE 2015, or 7 business days prior to the
including whether the proposed rule meeting. Requests made after August 24,
[Public Notice 9226]
change, as modified by Amendment No. 2015 might not be able to be
1, is consistent with the Act. Comments Notice of Public Meeting accommodated. Please note that due to
may be submitted by any of the security considerations, a valid,
following methods: The Department of State will conduct government issued photo identification
an open meeting at 9 a.m. on must be presented to gain entrance to
Electronic Comments
Wednesday, September 2, 2015, in the DOT Headquarters building. DOT
• Use the Commission’s Internet Conference Room 8–9–10 of the
comment form (http://www.sec.gov/ Headquarters is accessible by metro via
Department of Transportation (DOT) the Navy Yard Metrorail Station, taxi,
rules/sro.shtml); or Headquarters Conference Center, West
• Send an email to rule-comments@ and privately owned conveyance.
Building, 1200 New Jersey Avenue SE., However, parking in the vicinity of the
sec.gov. Please include File Number SR– Washington, DC 20590. The primary
BATS–2015–57 on the subject line. building is extremely limited.
purpose of the meeting is to prepare for Additional information regarding this
Paper Comments the second Session of the International and other IMO-related public meetings
Maritime Organization’s (IMO) Sub-
• Send paper comments in triplicate may be found at: www.uscg.mil/imo.
Committee on Carriage of Cargoes and
to Secretary, Securities and Exchange Dated: August 10, 2015.
Containers to be held at the IMO
Commission, 100 F Street NE., Jonathan W. Burby,
Headquarters, United Kingdom,
Washington, DC 20549–1090.
September 14–18, 2015. Coast Guard Liaison Officer, Office of Ocean
All submissions should refer to File The agenda items to be considered and Polar Affairs Department of State.
Number SR–BATS–2015–57. This file include: [FR Doc. 2015–20490 Filed 8–18–15; 8:45 am]
number should be included on the BILLING CODE 4710–09–P
subject line if email is used. To help the —Adoption of the agenda
—Decisions of other IMO bodies
Commission process and review your
—Amendments to the IGF Code and
comments more efficiently, please use development of guidelines for low- DEPARTMENT OF STATE
only one method. The Commission will flashpoint fuels
post all comments on the Commission’s [Public Notice 9229]
—Safety requirements for carriage of
Internet Web site (http://www.sec.gov/ liquefied hydrogen in bulk
Advisory Committee on International
rules/sro.shtml). Copies of the —Amendments to the IMSBC Code and
supplements Postal and Delivery Services
submission, all subsequent
—Amendments to the IMDG Code and September 2015 Meeting
amendments, all written statements
with respect to the proposed rule supplements SUMMARY: As required by the Federal
—Amendments to CSC 1972 and associated
change that are filed with the Advisory Committee Act, Public Law
circulars
Commission, and all written —Revised Guidelines for packing of cargo 92–463, the Department of State gives
communications relating to the transport units notice of a meeting of the Advisory
proposed rule change between the —Unified interpretation to provisions of IMO Committee on International Postal and
Commission and any person, other than safety, security and environment related Delivery Services. This Committee will
those that may be withheld from the Conventions meet on Wednesday, September 9, 2015,
public in accordance with the —Consideration of reports of incidents from 1:00 p.m. to 5:00 p.m. Eastern
provisions of 5 U.S.C. 552, will be involving dangerous goods or marine Time at the American Institute of
available for Web site viewing and pollutants in packaged form on board ships Architects, Board Room, 1735 New York
or in port areas
printing in the Commission’s Public Avenue NW., Washington, DC 20006.
—Mandatory requirements for classification
Reference Room, 100 F Street NE., and declaration of solid bulk cargoes as Any member of the public interested
Washington, DC 20549 on official harmful to the marine environment in providing input to the meeting
business days between the hours of —Biennial agenda and provisional agenda for should contact Ms. Shereece Robinson,
10:00 a.m. and 3:00 p.m. Copies of such CCC 3 whose contact information is listed
filing also will be available for —Election of Chairman and Vice-Chairman below (see the FOR FURTHER INFORMATION
inspection and copying at the principal for 2016 section of this notice). Each individual
—Any other business
tkelley on DSK3SPTVN1PROD with NOTICES
offices of the Exchange. All comments providing oral input is requested to
received will be posted without change; —Report to the Committees limit his or her comments to five
the Commission does not edit personal Members of the public may attend minutes. Requests to be added to the
identifying information from this meeting up to the seating capacity speakers list must be received in writing
submissions. You should submit only of the room. Upon request, members of (letter or email) prior to the close of
information that you wish to make business on Wednesday, September 2,
available publicly. All submissions 16 17 CFR 200.30–3(a)(12). 2015; written comments from members
VerDate Sep<11>2014 19:14 Aug 18, 2015 Jkt 235001 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 E:\FR\FM\19AUN1.SGM 19AUN1](https://thefederalregister.org/doc/80_FR_50530/page/6.svg)
Document Created: 2015-12-15 11:58:44
Document Modified: 2015-12-15 11:58:44
| 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 50370 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR