80_FR_63831 80 FR 63629 - Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 3.20, Influencing or Rewarding Employees of Others, Concerning Gifts and Gratuities in Relation to the Business of the Employer of the Recipient

80 FR 63629 - Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 3.20, Influencing or Rewarding Employees of Others, Concerning Gifts and Gratuities in Relation to the Business of the Employer of the Recipient

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 202 (October 20, 2015)

Page Range63629-63631
FR Document2015-26578

Federal Register, Volume 80 Issue 202 (Tuesday, October 20, 2015) 
[Federal Register Volume 80, Number 202 (Tuesday, October 20, 2015)]
[Notices]
[Pages 63629-63631]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-26578]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76157; File No. SR-EDGA-2015-39]


Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt 
Rule 3.20, Influencing or Rewarding Employees of Others, Concerning 
Gifts and Gratuities in Relation to the Business of the Employer of the 
Recipient

October 15, 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 September 30, 2015, EDGA Exchange, Inc. (the ``Exchange'' or 
``EDGA'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III 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 filed a proposal to adopt Rule 3.20 to conform to the 
rules of the Financial Industry Regulatory Authority, Inc. (``FINRA'') 
for purposes of an agreement between the Exchange and FINRA pursuant to 
Rule 17d-2 under the Act.\5\ The Exchange also proposes to adopt Rule 
3.20 to conform to the rules of BATS Exchange, Inc. (``BZX'') and BATS 
Y-Exchange, Inc. (``BYX'').\6\
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    \5\ 17 CFR 240.17d-2.
    \6\ See SR-BATS-2015-79 and SR-BYX-2015-43 (filed September 30, 
2015) (Notice of Filing and Immediate Effectiveness to Amend Rule 
3.22 to Conform to FINRA Rule 3220).
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    The text of the proposed rule change is available at the Exchange's 
Web site

[[Page 63630]]

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 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
    Pursuant to Rule 17d-2 under the Act,\7\ 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 certain 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 certain 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 with certain 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.\8\
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    \7\ 17 CFR 240.17d-2.
    \8\ See Securities and Exchange Release No. 62078 (May 11, 
2010), 75 FR 28078 (May 19, 2010) (approving File No. 4-597).
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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. The Exchange does not currently 
maintain a rule similar to FINRA Rule 3220 governing a Member's giving 
of gifts. To conform to comparable FINRA rules for purposes of the 17d-
2 Agreement, the Exchange proposes [sic] adopt Rule 3.20, Influencing 
or Rewarding Employees of Others, that is identical to FINRA Rule 3220. 
The proposed rule text is also identical to New York Stock Exchange, 
Inc. (``NYSE'') Rule 3220, which has been approved by the 
Commission.\9\
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    \9\ See Securities Exchange Act Release No. 59965 (May 21, 
2009), 74 FR 25783 (May 29, 2009) (SR-NYSE-2009-25).
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    The Exchange believes that these changes will help to avoid 
confusion among Members of the Exchange that are also members of FINRA 
by further aligning the Exchange Rules with FINRA Rule 3220. The 
proposed adoption of Rule 3.20 is designed to enable the Exchange to 
incorporate Rule 3.20 into the 17d-2 Agreement, further harmonizing 
regulation of Members that are also members of FINRA. For the avoidance 
of doubt, Rule 3.20 would equally apply to Exchange-only Members as the 
Exchange believes it appropriately protects against improprieties that 
might arise when substantial gifts or monetary payments are given to 
certain persons. The Exchange will issue a Regulatory Notice to its 
Members, including Exchange-only Members that may not also be FINRA 
Members, and those Members registered with FINRA, clarifying that 
FINRA's interpretive guidance related to FINRA Rule 3220 is considered 
part of Exchange Rule 3.20, and that all Members are required to 
regulate their conduct according to Rule 3.20 and the interpretive 
guidance related to FINRA Rule 3220.\10\
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    \10\ See, e.g., FINRA's interpretative guidance concerning 
business entertainment expenses, including a June 24, 1999, Letter 
to Henry H. Hopkins and Sarah McCafferty, T. Rowe Price Investment 
Services, Inc. This interpretative letter and other interpretive 
guidance concerning gifts and gratuities expenses are currently 
available at FINRA's Web site.
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    As amended, like FINRA Rule 3220(a), proposed paragraph (a) of Rule 
3.20 would prevent gifts in excess of $100.00 per individual per year 
where the gift or gratuity is in relation to the business of the 
employee \11\ of the recipient. A gift of any kind would be considered 
a gratuity. The Rule would also contain an express exclusion for 
payments made pursuant to bona fide, written employment contracts. 
Specifically, like FINRA Rule 3220(b), proposed paragraph (b) of Rule 
3.20 would state that the rule would not apply to contracts of 
employment with or to compensation for services rendered by persons 
enumerated in paragraph (a) of the Rule, provided that there is in 
existence prior to the time of employment or before the services are 
rendered, a written agreement between the member and the person who is 
to be employed to perform such services. Proposed paragraph (c) would 
require such agreement to include the nature of the proposed 
employment, the amount of the proposed compensation, and the written 
consent of such person's employer or principal.
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    \11\ The Commission notes that both FINRA Rule 3220 and proposed 
EDGA Rule 3.20 limit gifts and gratuities in relation to the 
employer of the recipient, rather than those in relation to the 
``employee'' of the recipient as stated above.
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    The Rule would also require each Member to maintain a separate 
record of all gifts or gratuities. Like FINRA Rule 3220(c), proposed 
paragraph (c) of Rule 3.20 would require a separate record of all 
payments or gratuities in any amount known to the member, the 
employment agreement referred to in proposed paragraph (b) of Rule 3.20 
and any employment compensation paid as a result thereof shall be 
retained by the member for the period specified by Exchange Act Rule 
17a-4.\12\
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    \12\ 17 CFR 240.17a-4.
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    In early 2014, the Exchange and its affiliate, EDGX Exchange, Inc. 
(``EDGX'') received approval to effect a merger (the ``Merger'') of the 
Exchange's parent company, Direct Edge Holdings LLC, with BATS Global 
Markets, Inc., the parent of BZX and the BYX (together with BZX, EDGA 
and EDGX, the ``BGM Affiliated Exchanges'').\13\ In the context of the 
Merger, the BGM Affiliated Exchanges are working to align their rules, 
retaining only intended differences between the BGM Affiliated 
Exchanges. Thus, the proposed text of Rule 3.20 is also identical to 
recent rule changes filed with the Commission by BZX and BYX to adopt 
identical rule text to that proposed herein and FINRA Rule 3220. This 
proposed rule change would enable the Exchange to adopt rules that 
correspond to rules of BYX and BZX and provide a consistent rule set 
across each of the BGM Affiliated Exchanges.\14\
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    \13\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
    \14\ The Exchange notes that EDGX intends to file an identical 
proposal with the Commission to adopt Rule 3.20, Influencing or 
Rewarding Employees of Others.
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2. Statutory Basis
    The Exchange believes that proposed rule change is consistent with 
Section 6(b)(5) of the Act,\15\ which requires, among other things, 
that the Exchange's rules be designed to prevent fraudulent and 
manipulative acts and practices, to

[[Page 63631]]

promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system. The Exchange 
believes that the proposed rule change will further these requirements 
by providing greater harmonization between Exchange and FINRA rules of 
similar purpose, resulting in greater uniformity and less burdensome 
and more efficient regulatory compliance. As such, the proposed rule 
change would foster cooperation and coordination with persons engaged 
in facilitating transactions in securities and would remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system.
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    \15\ 15 U.S.C. 78f(b)(5).
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    In addition, the proposed rule change would provide greater 
harmonization between rules of similar purpose on the BGM Affiliated 
Exchanges, resulting in greater uniformity and less burdensome and more 
efficient regulatory compliance and understanding of Exchange Rules. As 
such, the proposed rule change would foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities and would remove impediments to and perfect the mechanism of 
a free and open market and a national market system. Similarly, the 
Exchange also believes that, by harmonizing the rules across each BGM 
Affiliated Exchange, the proposal will enhance the Exchange's ability 
to fairly and efficiently regulate its Members, meaning that the 
proposed rule change would promote just and equitable principles of 
trade in accordance with Section 6(b)(5) of the Act.\16\
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    \16\ Id.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issues but rather to provide 
greater harmonization among Exchange and FINRA rules of similar 
purpose, resulting in less burdensome and more efficient regulatory 
compliance for common members and facilitating FINRA's performance of 
its regulatory functions under the 17d-2 Agreement. In addition, 
allowing the Exchange to implement substantively identical rules that 
apply to all members of the BGM Affiliated Exchanges across each of the 
BGM Affiliated Exchanges does not present any competitive issues, but 
rather is designed to provide greater harmonization among Exchange, 
BZX, BYX, and EDGA rules of similar purpose.

(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 change.

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

    The Exchange has designated this rule filing as non-controversial 
under Section 19(b)(3)(A) of the Act \17\ and paragraph (f)(6) of Rule 
19b-4 thereunder.\18\ The proposed rule change effects a change that 
(A) does not significantly affect the protection of investors or the 
public interest; (B) does not impose any significant burden on 
competition; and (C) by its terms, does not become operative for 30 
days after the date of the filing, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest; provided that the self-regulatory organization 
has given the Commission written notice of its 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.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily temporarily suspend such rule 
change if it appears to the Commission that such action is: (1) 
Necessary or appropriate in the public interest; (2) for the protection 
of investors; or (3) 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 proposal 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-EDGA-2015-39 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 No. SR-EDGA-2015-39. 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 will also 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-EDGA-2015-39 and should be 
submitted on or before November 10, 2015.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26578 Filed 10-19-15; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 202 / Tuesday, October 20, 2015 / Notices 63629 the SEC, the ‘‘Commissions’’) regarding not have been. The SEC estimates the Dated: October 13, 2015. whether a particular instrument (or total burden for the one request for Robert W. Errett, class of instruments) is a swap, a which the joint interpretation pursuant Deputy Secretary. security-based swap, or both (i.e., a to 3a68–2 was not requested would be [FR Doc. 2015–26514 Filed 10–19–15; 8:45 am] mixed swap). Under Rule 3a68–2, a 30 hours, and the total burden BILLING CODE 8011–01–P person provides to the Commissions a associated with the other nine requests copy of all material information would be 20 hours per request because regarding the terms of, and a statement some of the information required to be SECURITIES AND EXCHANGE of the economic characteristics and submitted pursuant to Rule 3a68–4(c) COMMISSION purpose of, each relevant agreement, would have already been submitted [Release No. 34–76157; File No. SR–EDGA– contract, or transaction (or class pursuant to Rule 3a68–2. The burden in 2015–39] thereof), along with that person’s determination as to whether each such both cases is evenly divided between the SEC and the CFTC. Self-Regulatory Organizations; EDGA agreement, contract, or transaction (or Exchange, Inc.; Notice of Filing and class thereof) should be characterized as The SEC estimates that the total costs Immediate Effectiveness of a Proposed a swap, security-based swap, or both resulting from a submission under Rule Rule Change To Adopt Rule 3.20, (i.e., a mixed swap). The Commissions 3a68–4(c) would be approximately Influencing or Rewarding Employees also may request the submitting person $20,000 for the services of outside of Others, Concerning Gifts and to provide additional information. attorneys to retrieve, review, and submit Gratuities in Relation to the Business The SEC expects 25 requests pursuant the information associated with the of the Employer of the Recipient to Rule 3a68–2 per year. The SEC submission of the one request for which estimates the total paperwork burden a request for a joint interpretation October 15, 2015. associated with preparing and Pursuant to Section 19(b)(1) of the pursuant to Rule 3a68–2 was not submitting each request would be 20 Securities Exchange Act of 1934 (the previously made (1 request × 50 hours/ hours to retrieve, review, and submit the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 request × $400). For the nine requests notice is hereby given that on information associated with the submission. This 20 hour burden is for which a request for a joint September 30, 2015, EDGA Exchange, divided between the SEC and the CFTC, interpretation pursuant to Rule 3a68–2 Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed with 10 hours per response regarding was previously made, the SEC estimates with the Securities and Exchange reporting to the SEC and 10 hours of the total costs associated with preparing Commission (‘‘Commission’’) the response regarding third party and submitting a party’s request proposed rule change as described in disclosure to the CFTC.1 The SEC pursuant to Rule 3a68–4(c) would be Items I, II, and III below, which Items estimates this would result in an $6,000 less per request because, as have been prepared by the Exchange. aggregate annual burden of 500 hours discussed above, some of the The Exchange has designated this (25 requests × 20 hours/request). information required to be submitted proposal as a ‘‘non-controversial’’ The SEC estimates that the total costs pursuant to Rule 3a68–4(c) already proposed rule change pursuant to resulting from a submission under Rule would have been submitted pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 3a68–2 would be approximately $12,000 Rule 3a68–2. The SEC estimates this 19b–4(f)(6)(iii) thereunder,4 which for outside attorneys to retrieve, review, would result in an aggregate cost each renders it effective upon filing with the and submit the information associated year of $126,000 for the services of Commission. The Commission is with the submission. The SEC estimates outside attorneys (9 requests × 35 hours/ publishing this notice to solicit this would result in aggregate costs each request × $400). comments on the proposed rule change year of $300,000 (25 requests × 30 from interested persons. hours/request × $400). An agency may not conduct or Rule 3a68–4(c) establishes a process sponsor, and a person is not required to I. Self-Regulatory Organization’s for persons to request that the respond to, a collection of information Statement of the Terms of Substance of Commissions issue a joint order under the PRA unless it displays a the Proposed Rule Change permitting such persons (and any other currently valid OMB control number. The Exchange filed a proposal to person or persons that subsequently The public may view background adopt Rule 3.20 to conform to the rules lists, trades, or clears that class of mixed documentation for this information of the Financial Industry Regulatory swap) to comply, as to parallel collection at the following Web site: Authority, Inc. (‘‘FINRA’’) for purposes provisions only, with specified parallel www.reginfo.gov. Comments should be of an agreement between the Exchange provisions of either the Commodity directed to: (i) Desk Officer for the and FINRA pursuant to Rule 17d–2 Exchange Act (‘‘CEA’’) or the Securities Securities and Exchange Commission, under the Act.5 The Exchange also Exchange Act of 1934 (‘‘Exchange Act’’), Office of Information and Regulatory proposes to adopt Rule 3.20 to conform and related rules and regulations Affairs, Office of Management and to the rules of BATS Exchange, Inc. (collectively ‘‘specified parallel (‘‘BZX’’) and BATS Y-Exchange, Inc. Budget, Room 10102, New Executive provisions’’), instead of being required (‘‘BYX’’).6 Office Building, Washington, DC 20503, The text of the proposed rule change to comply with parallel provisions of or by sending an email to: Shagufta_ both the CEA and the Exchange Act. is available at the Exchange’s Web site Ahmed@omb.eop.gov; and (ii) Pamela The SEC expects ten requests Dyson, Director/Chief Information mstockstill on DSK4VPTVN1PROD with NOTICES 1 15 U.S.C. 78s(b)(1). pursuant to Rule 3a68–4(c) per year. The SEC estimates that nine of these Officer, Securities and Exchange 2 17 CFR 240.19b–4. requests will have also been made in a Commission, c/o Remi Pavlik-Simon, 3 15 U.S.C. 78s(b)(3)(A). request for a joint interpretation 100 F Street NE., Washington, DC 4 17 CFR 240.19b–4(f)(6)(iii). 5 17 CFR 240.17d–2. pursuant to Rule 3a68–2, and one will 20549, or by sending an email to: PRA_ 6 See SR–BATS–2015–79 and SR–BYX–2015–43 Mailbox@sec.gov. Comments must be (filed September 30, 2015) (Notice of Filing and 1 The burdens imposed by the CFTC are included submitted to OMB within 30 days of Immediate Effectiveness to Amend Rule 3.22 to in this collection of information. this notice. Conform to FINRA Rule 3220). VerDate Sep<11>2014 17:55 Oct 19, 2015 Jkt 238001 PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 E:\FR\FM\20OCN1.SGM 20OCN1

63630 Federal Register / Vol. 80, No. 202 / Tuesday, October 20, 2015 / Notices at www.batstrading.com, at the FINRA Rule 3220 governing a Member’s apply to contracts of employment with principal office of the Exchange, and at giving of gifts. To conform to or to compensation for services the Commission’s Public Reference comparable FINRA rules for purposes of rendered by persons enumerated in Room. the 17d–2 Agreement, the Exchange paragraph (a) of the Rule, provided that proposes [sic] adopt Rule 3.20, there is in existence prior to the time of II. Self-Regulatory Organization’s Influencing or Rewarding Employees of employment or before the services are Statement of the Purpose of, and Others, that is identical to FINRA Rule rendered, a written agreement between Statutory Basis for, the Proposed Rule 3220. The proposed rule text is also the member and the person who is to be Change identical to New York Stock Exchange, employed to perform such services. In its filing with the Commission, the Inc. (‘‘NYSE’’) Rule 3220, which has Proposed paragraph (c) would require Exchange included statements been approved by the Commission.9 such agreement to include the nature of concerning the purpose of and basis for The Exchange believes that these the proposed employment, the amount the proposed rule change and discussed changes will help to avoid confusion of the proposed compensation, and the any comments it received on the among Members of the Exchange that written consent of such person’s proposed rule change. The text of these are also members of FINRA by further employer or principal. statements may be examined at the aligning the Exchange Rules with The Rule would also require each places specified in Item IV below. The FINRA Rule 3220. The proposed Member to maintain a separate record of Exchange has prepared summaries, set adoption of Rule 3.20 is designed to all gifts or gratuities. Like FINRA Rule forth in Sections A, B, and C below, of enable the Exchange to incorporate Rule 3220(c), proposed paragraph (c) of Rule the most significant parts of such 3.20 into the 17d–2 Agreement, further 3.20 would require a separate record of statements. harmonizing regulation of Members that all payments or gratuities in any amount (A) Self-Regulatory Organization’s are also members of FINRA. For the known to the member, the employment Statement of the Purpose of, and avoidance of doubt, Rule 3.20 would agreement referred to in proposed Statutory Basis for, the Proposed Rule equally apply to Exchange-only paragraph (b) of Rule 3.20 and any Change Members as the Exchange believes it employment compensation paid as a appropriately protects against result thereof shall be retained by the 1. Purpose improprieties that might arise when member for the period specified by Pursuant to Rule 17d–2 under the substantial gifts or monetary payments Exchange Act Rule 17a–4.12 Act,7 the Exchange and FINRA entered are given to certain persons. The In early 2014, the Exchange and its into an agreement to allocate regulatory Exchange will issue a Regulatory Notice affiliate, EDGX Exchange, Inc. (‘‘EDGX’’) responsibility for common rules (the to its Members, including Exchange- received approval to effect a merger (the ‘‘17d–2 Agreement’’). The 17d–2 only Members that may not also be ‘‘Merger’’) of the Exchange’s parent Agreement covers common members of FINRA Members, and those Members company, Direct Edge Holdings LLC, the Exchange and FINRA and allocates registered with FINRA, clarifying that with BATS Global Markets, Inc., the to FINRA regulatory responsibility, with FINRA’s interpretive guidance related to parent of BZX and the BYX (together respect to common members, for the FINRA Rule 3220 is considered part of with BZX, EDGA and EDGX, the ‘‘BGM following: (i) Examination of common Exchange Rule 3.20, and that all Affiliated Exchanges’’).13 In the context members of the Exchange and FINRA Members are required to regulate their of the Merger, the BGM Affiliated for compliance with certain federal conduct according to Rule 3.20 and the Exchanges are working to align their securities laws, rules and regulations interpretive guidance related to FINRA rules, retaining only intended and rules of the Exchange that the Rule 3220.10 differences between the BGM Affiliated Exchange has certified as identical or As amended, like FINRA Rule Exchanges. Thus, the proposed text of substantially similar to FINRA rules; (ii) 3220(a), proposed paragraph (a) of Rule Rule 3.20 is also identical to recent rule investigation of common members of 3.20 would prevent gifts in excess of changes filed with the Commission by the Exchange and FINRA for violations $100.00 per individual per year where BZX and BYX to adopt identical rule of certain federal securities laws, rules the gift or gratuity is in relation to the text to that proposed herein and FINRA or regulations, or Exchange rules that business of the employee 11 of the Rule 3220. This proposed rule change the Exchange has certified as identical recipient. A gift of any kind would be would enable the Exchange to adopt or substantially identical to a FINRA considered a gratuity. The Rule would rules that correspond to rules of BYX also contain an express exclusion for and BZX and provide a consistent rule rule; and (iii) enforcement of payments made pursuant to bona fide, set across each of the BGM Affiliated compliance by common members with written employment contracts. Exchanges.14 certain federal securities laws, rules and Specifically, like FINRA Rule 3220(b), regulations, and the rules of the 2. Statutory Basis proposed paragraph (b) of Rule 3.20 Exchange that the Exchange has would state that the rule would not The Exchange believes that proposed certified as identical or substantially similar to FINRA rules.8 rule change is consistent with Section 9 See Securities Exchange Act Release No. 59965 The 17d–2 Agreement included a 6(b)(5) of the Act,15 which requires, (May 21, 2009), 74 FR 25783 (May 29, 2009) (SR– certification by the Exchange that states NYSE–2009–25). among other things, that the Exchange’s that the requirements contained in 10 See, e.g., FINRA’s interpretative guidance rules be designed to prevent fraudulent certain Exchange rules are identical to, concerning business entertainment expenses, and manipulative acts and practices, to including a June 24, 1999, Letter to Henry H. or substantially similar to, certain mstockstill on DSK4VPTVN1PROD with NOTICES Hopkins and Sarah McCafferty, T. Rowe Price 12 17 FINRA rules that have been identified as Investment Services, Inc. This interpretative letter CFR 240.17a–4. 13 See Securities Exchange Act Release No. 71449 comparable. The Exchange does not and other interpretive guidance concerning gifts and gratuities expenses are currently available at (January 30, 2014), 79 FR 6961 (February 5, 2014) currently maintain a rule similar to FINRA’s Web site. (SR–EDGX–2013–43; SR–EDGA–2013–34). 11 The Commission notes that both FINRA Rule 14 The Exchange notes that EDGX intends to file 7 17CFR 240.17d–2. an identical proposal with the Commission to adopt 3220 and proposed EDGA Rule 3.20 limit gifts and 8 SeeSecurities and Exchange Release No. 62078 gratuities in relation to the employer of the Rule 3.20, Influencing or Rewarding Employees of (May 11, 2010), 75 FR 28078 (May 19, 2010) recipient, rather than those in relation to the Others. (approving File No. 4–597). ‘‘employee’’ of the recipient as stated above. 15 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 17:55 Oct 19, 2015 Jkt 238001 PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 E:\FR\FM\20OCN1.SGM 20OCN1

Federal Register / Vol. 80, No. 202 / Tuesday, October 20, 2015 / Notices 63631 promote just and equitable principles of Affiliated Exchanges across each of the Electronic Comments trade, to foster cooperation and BGM Affiliated Exchanges does not coordination with persons engaged in present any competitive issues, but • Use the Commission’s Internet facilitating transactions in securities, rather is designed to provide greater comment form (http://www.sec.gov/ and to remove impediments to and harmonization among Exchange, BZX, rules/sro.shtml); or perfect the mechanism of a free and BYX, and EDGA rules of similar • Send an email to rule-comments@ open market and a national market purpose. sec.gov. Please include File No. SR– system. The Exchange believes that the EDGA–2015–39 on the subject line. proposed rule change will further these (C) Self-Regulatory Organization’s requirements by providing greater Statement on Comments on the Paper Comments harmonization between Exchange and Proposed Rule Change Received From FINRA rules of similar purpose, Members, Participants or Others • Send paper comments in triplicate resulting in greater uniformity and less to Secretary, Securities and Exchange The Exchange has neither solicited burdensome and more efficient Commission, 100 F Street NE., nor received written comments on the regulatory compliance. As such, the proposed rule change. Washington, DC 20549–1090. proposed rule change would foster All submissions should refer to File No. cooperation and coordination with III. Date of Effectiveness of the Proposed Rule Change and Timing for SR–EDGA–2015–39. This file number persons engaged in facilitating should be included on the subject line transactions in securities and would Commission Action if email is used. To help the remove impediments to and perfect the The Exchange has designated this rule Commission process and review your mechanism of a free and open market filing as non-controversial under and a national market system. comments more efficiently, please use Section 19(b)(3)(A) of the Act 17 and only one method. The Commission will In addition, the proposed rule change paragraph (f)(6) of Rule 19b–4 would provide greater harmonization post all comments on the Commission’s thereunder.18 The proposed rule change Internet Web site (http://www.sec.gov/ between rules of similar purpose on the effects a change that (A) does not BGM Affiliated Exchanges, resulting in rules/sro.shtml). Copies of the significantly affect the protection of greater uniformity and less burdensome submission, all subsequent investors or the public interest; (B) does and more efficient regulatory amendments, all written statements not impose any significant burden on compliance and understanding of competition; and (C) by its terms, does with respect to the proposed rule Exchange Rules. As such, the proposed not become operative for 30 days after change that are filed with the rule change would foster cooperation the date of the filing, or such shorter Commission, and all written and coordination with persons engaged time as the Commission may designate communications relating to the in facilitating transactions in securities if consistent with the protection of proposed rule change between the and would remove impediments to and Commission and any person, other than investors and the public interest; perfect the mechanism of a free and those that may be withheld from the provided that the self-regulatory open market and a national market public in accordance with the organization has given the Commission system. Similarly, the Exchange also provisions of 5 U.S.C. 552, will be written notice of its intent to file the believes that, by harmonizing the rules available for Web site viewing and proposed rule change, along with a brief across each BGM Affiliated Exchange, description and text of the proposed printing in the Commission’s Public the proposal will enhance the rule change, at least five business days Reference Room, 100 F Street NE., Exchange’s ability to fairly and prior to the date of filing of the Washington, DC 20549, on official efficiently regulate its Members, proposed rule change, or such shorter business days between the hours of meaning that the proposed rule change would promote just and equitable time as designated by the Commission. 10:00 a.m. and 3:00 p.m. Copies of such principles of trade in accordance with At any time within 60 days of the filing will also be available for Section 6(b)(5) of the Act.16 filing of the proposed rule change, the inspection and copying at the principal Commission may summarily office of the Exchange. All comments (B) Self-Regulatory Organization’s temporarily suspend such rule change if received will be posted without change; Statement on Burden on Competition it appears to the Commission that such the Commission does not edit personal The Exchange does not believe that action is: (1) Necessary or appropriate in identifying information from the proposed rule change would impose the public interest; (2) for the protection submissions. You should submit only any burden on competition that is not of investors; or (3) otherwise in information that you wish to make necessary or appropriate in furtherance furtherance of the purposes of the Act. available publicly. All submissions of the purposes of the Act. The If the Commission takes such action, the should refer to File No. SR–EDGA– proposed rule change is not designed to Commission shall institute proceedings 2015–39 and should be submitted on or address any competitive issues but to determine whether the proposed rule before November 10, 2015. rather to provide greater harmonization should be approved or disapproved. among Exchange and FINRA rules of For the Commission, by the Division of IV. Solicitation of Comments Trading and Markets, pursuant to delegated similar purpose, resulting in less burdensome and more efficient Interested persons are invited to authority.19 regulatory compliance for common submit written data, views and Robert W. Errett, mstockstill on DSK4VPTVN1PROD with NOTICES members and facilitating FINRA’s arguments concerning the foregoing, Deputy Secretary. performance of its regulatory functions including whether the proposal is [FR Doc. 2015–26578 Filed 10–19–15; 8:45 am] under the 17d–2 Agreement. In consistent with the Act. Comments may BILLING CODE 8011–01–P addition, allowing the Exchange to be submitted by any of the following implement substantively identical rules methods: that apply to all members of the BGM 17 15 U.S.C. 78s(b)(3)(A). 16 Id. 18 17 CFR 240.19b–4. 19 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:55 Oct 19, 2015 Jkt 238001 PO 00000 Frm 00134 Fmt 4703 Sfmt 9990 E:\FR\FM\20OCN1.SGM 20OCN1


Document Created: 2015-12-14 15:25:32
Document Modified: 2015-12-14 15:25:32
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 63629 
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