80 FR 64039 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Amendment No. 1 and Order Granting Accelerated Approval to a Proposed Rule Change, as Modified by Amendment No. 1, To Require an Indicator When a TRACE Report Does Not Reflect a Commission or Mark-up/Mark-down

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 204 (October 22, 2015)

Page Range		64039-64041
FR Document		2015-26808

Federal Register, Volume 80 Issue 204 (Thursday, October 22, 2015)

[Federal Register Volume 80, Number 204 (Thursday, October 22, 2015)]
[Notices]
[Pages 64039-64041]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-26808]

[[Page 64039]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76176; File No. SR-FINRA-2015-026]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Amendment No. 1 and Order Granting
Accelerated Approval to a Proposed Rule Change, as Modified by
Amendment No. 1, To Require an Indicator When a TRACE Report Does Not
Reflect a Commission or Mark-up/Mark-down

October 16, 2015.

I. Introduction

On July 20, 2015, Financial Industry Regulatory Authority, Inc.
(``FINRA'') 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 amend FINRA Rule 6730, which governs the
reporting of eligible transactions to its Trade Reporting and
Compliance Engine (``TRACE''). The proposed rule change was published
for comment in the Federal Register on August 7, 2015.\3\ The
Commission received two comment letters on the proposed rule change.\4\
On September 10, 2015, the Commission extended the time to act on the
proposal until November 5, 2015.\5\ On October 6, 2015, FINRA filed
Amendment No. 1 to the proposed rule change.\6\ The Commission is
publishing this Notice and Order to solicit comment on Amendment No. 1
and to approve the proposed rule change, as modified by Amendment No.
1, on an accelerated basis.
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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. 75588 (August 3,
2015), 80 FR 47546 (August 7, 2015) (``Notice'').
\4\ See letter from Sean Davy, Managing Director, SIFMA, to
Elizabeth M. Murphy, Secretary, Commission, dated August 27, 2015
(``SIFMA Letter''); letter from Michael Nicholas, Chief Executive
Officer, Bond Dealers of America, to Secretary, Commission, dated
August 28, 2015 (``BDA Letter'').
\5\ See Securities Exchange Act Release No. 75875, 80 FR 55671
(September 16, 2015).
\6\ Amendment No. 1 revised the proposal to include three
exceptions to the requirement that members append the ``no
remuneration'' indicator to trade reports that do not reflect either
a commission or mark-up/mark-down, for: (i) List or Fixed Offering
Price Transactions, (ii) Takedown Transactions, and (iii) inter-
dealer transactions. Amendment No. 1 is available in the public
comment file for SR-FINRA-2015-026 on the Commission's Web site.
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II. Description of the Proposal

FINRA Rule 6730 (Transaction Reporting) sets forth the requirements
applicable to members reporting transactions in TRACE-Eligible
Securities,\7\ and provides the specific items of information that must
be included in a TRACE trade report. Rules 6730(c) and (d) require a
member firm to report the commission (total dollar amount) separately
on the TRACE trade report for an agency transaction. FINRA combines the
dollar amount that is reported as the commission with the amount that
is reported in the price field, and disseminates to the market this
aggregate amount as the transaction's price. For a principal
transaction, Rule 6730(d)(1) provides that a firm must report a price
that includes the mark-up/mark-down, and FINRA disseminates this price
to the market. FINRA notes that the goal of these reporting
requirements is to provide investors and market participants with
pricing information that better reflects comparable prices for
principal and agency trades in a TRACE-Eligible Security.
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\7\ See FINRA Rule 6710 (defining ``TRACE-Eligible Security'').
Most transactions reported to TRACE are publicly disseminated
immediately upon receipt of a transaction report.
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FINRA believes that the pricing information currently being
disseminated might be incomplete and in some cases misleading, given
that disseminated prices on transactions that do not include
remuneration are not distinguished from transactions that do include a
commission or mark-up/mark-down. This proposal is designed to provide
more meaningful pricing transparency through TRACE by identifying any
transaction where a commission or mark-up/mark-down was not charged or
known at the time of TRACE reporting.
The proposal amends Rule 6730 to require a member firm to identify
any transactions for which a commission or mark-up/mark-down is not
reflected in the TRACE trade report because the firm does not charge,
or does not know the amount of, the commission or mark-up/mark-down at
the time of TRACE reporting. For example, a firm might assess a charge
that is not transaction-based, as in the case of a ``fee-based
account'' where remuneration is based upon assets under management (and
individual commissions or mark-ups/mark-downs are not charged).\8\
Thus, for such transactions, the price is not inclusive of a commission
or mark-up/mark-down. In another case, a firm might charge a commission
or mark-up/mark-down, but might not know the exact amount of that
commission or mark-up/mark-down at the time that the TRACE transaction
report is required to be submitted because of their remuneration
structure (e.g., a firm might not calculate a mark-up for a transaction
on a trade-by-trade basis, but could nonetheless ultimately assess
transaction remuneration pursuant to a monthly volume-based
schedule).\9\ The proposal requires a firm to identify all such trades
for which the firm does not charge or does not know the amount of the
commission or mark-up/market-down at the time of TRACE reporting. In
addition, if a firm does not charge any remuneration associated with
the trade (in any form), it would be required to identify the trade as
one for which no remuneration was assessed to the transaction. FINRA
will flag these disseminated transactions as not being inclusive of
remuneration. Based on current rules, the disseminated TRACE feed will
not explicitly distinguish between agency and principal transactions,
and the ``no remuneration'' flag will apply to both principal and
agency transactions.
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\8\ Another example of a fee structure that is not transaction-
based is where an alternative trading system (``ATS'') charges
subscribers a fixed fee for unlimited trading each month. See
Notice, 80 FR at 47547.
\9\ FINRA states that, as a practical matter, firms have
difficulty complying with the current TRACE rules for these types of
volume-based mark-up/mark-down arrangements, since they are unable
to report accurately all the required information related to the
transaction on a timely basis and would need to submit a cancel and
replace to update the pricing information. In some cases, this
information might not be known until the end of the month. See id.
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FINRA believes that, in addition to improving transparency for
disseminated prices, this proposal will enhance its regulatory audit
trail and surveillance patterns. With this additional level of detail,
surveillance patterns should yield fewer false positives regarding
mark-up and best execution surveillance, reduce regulatory inquiries,
and provide greater focus for FINRA's regulatory efforts. FINRA has
represented, for example, that without the ``no remuneration''
designation FINRA's surveillance patterns for best execution might
generate alerts for transactions whose prices reflect a commission or a
mark-up as being outliers compared to transactions whose prices do not
reflect a charge.\10\
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\10\ See Notice, 80 FR at 47548.
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FINRA plans to implement the proposal on May 23, 2016.

III. Summary of Comments and Amendment No. 1

As noted above, the Commission received two comment letters on the

[[Page 64040]]

proposal.\11\ The SIFMA Letter generally supports the proposal.
However, SIFMA believes that the requirement to report trades involving
no remuneration should be limited to customer trades and should not
apply to dealer-to-dealer trades, consistent with SR-MSRB-2015-02.\12\
The BDA Letter also supports the proposal but recommends that the
proposed reporting requirement extend only to customer trades,
consistent with MSRB Rule G-14.\13\ The BDA Letter expresses concern
with how the proposed requirement would affect smaller introducing
dealers and dealers already having difficulty with trade reporting
deadlines under current rules, particularly if the requirement applies
to inter-dealer transactions.
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\11\ See supra note 4.
\12\ See SIFMA Letter at 1. See also Securities Exchange Act
Release No. 75039 (May 22, 2015), 80 FR 31084 (June 1, 2015) (SR-
MSRB-2015-02) (approving an MSRB proposal to, among other things,
require dealers to include a new indicator on their trade reports
that would be disseminated publicly to distinguish customer
transactions that do not include a dealer compensation component and
those that include a markup, mark-down, or a commission) (``MSRB
Order'').
\13\ See BDA Letter at 1.
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In response to commenters' concerns, FINRA proposed in Amendment
No. 1 to provide an exception to the proposed ``no remuneration''
requirement for inter-dealer transactions. FINRA notes that this change
would further align the proposal with the comparable MSRB rule, as
requested by the commenters.\14\ FINRA believes that, given that inter-
dealer transactions typically do not involve remuneration, excluding
such transactions from the requirement better focuses the use of the
indicator on the types of transactions that would provide the
additional price transparency sought by the proposal, which are
transactions between dealers and customers.
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\14\ The MSRB's rule limits the use of its ``non-transaction-
based compensation arrangement indicator'' to transactions with
customers. See MSRB Order, 80 FR at 31085.
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Also in Amendment No. 1, FINRA proposed to add exceptions from the
``no remuneration'' indicator requirement for List or Fixed Offering
Price Transactions, as defined in FINRA Rule 6710(q), and Takedown
Transactions, as defined in FINRA Rule 6710(r). These transactions are
not currently subject to dissemination; FINRA believes, therefore, that
applying the ``no remuneration'' indicator to these transactions would
not provide additional transparency to the market.

IV. Discussion and Commission Findings

After careful review of the proposal and comments submitted, the
Commission finds that the proposal, as modified by Amendment No. 1, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
association.\15\ In particular, the Commission finds that the proposed
rule change is consistent with Section 15A(b)(6) of the Act,\16\ which
requires, among other things, that FINRA's rules 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. The Commission also finds the proposal
consistent with Section 15A(b)(9) of the Act,\17\ which requires that
FINRA's rules not impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act. The
Commission notes that it previously has approved a similar proposed
rule change of the MSRB.\18\
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\15\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\16\ 15 U.S.C. 78o-3(b)(6).
\17\ 15 U.S.C. 78o-3(b)(9).
\18\ See MSRB Order, 80 FR at 31086-87.
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The Commission believes that the proposed rule change is reasonably
designed to improve transparency of disseminated TRACE trade reports by
requiring firms to indicate when the trade report does not include a
commission or mark-up/mark-down. Use of a ``no remuneration'' indicator
will make investors better able to assess disseminated transaction
prices. Finally, the Commission believes that it is reasonable and
consistent with the Act for FINRA to provide exceptions to this
requirement for inter-dealer transactions, which do not typically have
remuneration, and for List or Fixed Offering Price and Takedown
Transactions, for which there currently is no TRACE dissemination of
the transaction information.
Therefore, the Commission finds that the proposed rule change, as
modified by Amendment No. 1, is consistent with the Act.

V. Accelerated Approval of Proposal, as Modified by Amendment No. 1

The Commission finds good cause, pursuant to Section 19(b)(2) of
the Exchange Act \19\ for approving the proposal, as modified by
Amendment No. 1, prior to the 30th day after publication of Amendment
No. 1 in the Federal Register.
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\19\ See 15 U.S.C. 78s(b)(2).
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Amendment No. 1 revised the proposal to include limited exceptions
to the proposed ``no remuneration'' indicator requirement. The
Commission believes that Amendment No. 1 does not raise any novel
regulatory issues because these exceptions are measured and do not
appear to impose any undue burdens on affected persons.
Accordingly, the Commission finds that good cause exists to approve
the proposal, as modified by Amendment No. 1, on an accelerated basis.

VI. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
to the proposed rule change is consistent with the Act. Comments may be
submitted by any of the following methods:

Electronic Comments

Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-FINRA-2015-026 on the subject line.

Paper Comments

Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2015-026. 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 FINRA. 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

[[Page 64041]]

should refer to File Number SR-FINRA-2015-026, and should be submitted
on or before November 12, 2015.

VII. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\20\ that the proposed rule change (SR-FINRA-2015-026), as modified
by Amendment No. 1, be, and hereby is, approved on an accelerated
basis.
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\20\ 15 U.S.C. 78s(b)(2).
\21\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Brent J. Fields,
Secretary.
[FR Doc. 2015-26808 Filed 10-21-15; 8:45 am]
BILLING CODE 8011-01-P

64040 Federal Register / Vol. 80, No. 204 / Thursday, October 22, 2015 / Notices

proposal.11 The SIFMA Letter generally modified by Amendment No. 1, is believes that Amendment No. 1 does not
supports the proposal. However, SIFMA consistent with the requirements of the raise any novel regulatory issues
believes that the requirement to report Act and the rules and regulations because these exceptions are measured
trades involving no remuneration thereunder applicable to a national and do not appear to impose any undue
should be limited to customer trades securities association.15 In particular, burdens on affected persons.
and should not apply to dealer-to-dealer the Commission finds that the proposed Accordingly, the Commission finds
trades, consistent with SR–MSRB– rule change is consistent with Section that good cause exists to approve the
2015–02.12 The BDA Letter also 15A(b)(6) of the Act,16 which requires, proposal, as modified by Amendment
supports the proposal but recommends among other things, that FINRA’s rules No. 1, on an accelerated basis.
that the proposed reporting requirement be designed to prevent fraudulent and VI. Solicitation of Comments
extend only to customer trades, manipulative acts and practices, to
consistent with MSRB Rule G–14.13 The promote just and equitable principles of Interested persons are invited to
BDA Letter expresses concern with how trade, and, in general, to protect submit written data, views, and
the proposed requirement would affect investors and the public interest. The arguments concerning the foregoing,
smaller introducing dealers and dealers Commission also finds the proposal including whether Amendment No. 1 to
already having difficulty with trade consistent with Section 15A(b)(9) of the the proposed rule change is consistent
reporting deadlines under current rules, Act,17 which requires that FINRA’s rules with the Act. Comments may be
particularly if the requirement applies not impose any burden on competition submitted by any of the following
to inter-dealer transactions. that is not necessary or appropriate in methods:
In response to commenters’ concerns, furtherance of the purposes of the Act. Electronic Comments
FINRA proposed in Amendment No. 1 The Commission notes that it previously
to provide an exception to the proposed has approved a similar proposed rule • Use the Commission’s Internet
‘‘no remuneration’’ requirement for change of the MSRB.18 comment form (http://www.sec.gov/
inter-dealer transactions. FINRA notes The Commission believes that the rules/sro.shtml); or
that this change would further align the proposed rule change is reasonably • Send an email to rule-comments@
proposal with the comparable MSRB designed to improve transparency of sec.gov. Please include File Number SR–
rule, as requested by the commenters.14 disseminated TRACE trade reports by FINRA–2015–026 on the subject line.
FINRA believes that, given that inter- requiring firms to indicate when the Paper Comments
dealer transactions typically do not trade report does not include a • Send paper comments in triplicate
involve remuneration, excluding such commission or mark-up/mark-down. to Brent J. Fields, Secretary, Securities
transactions from the requirement better Use of a ‘‘no remuneration’’ indicator and Exchange Commission, 100 F Street
focuses the use of the indicator on the will make investors better able to assess
NE., Washington, DC 20549–1090.
types of transactions that would provide disseminated transaction prices. Finally,
the additional price transparency sought the Commission believes that it is All submissions should refer to File
by the proposal, which are transactions reasonable and consistent with the Act Number SR–FINRA–2015–026. This file
between dealers and customers. for FINRA to provide exceptions to this number should be included on the
Also in Amendment No. 1, FINRA requirement for inter-dealer subject line if email is used. To help the
proposed to add exceptions from the transactions, which do not typically Commission process and review your
‘‘no remuneration’’ indicator have remuneration, and for List or Fixed comments more efficiently, please use
requirement for List or Fixed Offering Offering Price and Takedown only one method. The Commission will
Price Transactions, as defined in FINRA Transactions, for which there currently post all comments on the Commission’s
Rule 6710(q), and Takedown is no TRACE dissemination of the Internet Web site (http://www.sec.gov/
Transactions, as defined in FINRA Rule transaction information. rules/sro.shtml). Copies of the
6710(r). These transactions are not Therefore, the Commission finds that submission, all subsequent
currently subject to dissemination; the proposed rule change, as modified amendments, all written statements
FINRA believes, therefore, that applying by Amendment No. 1, is consistent with with respect to the proposed rule
the ‘‘no remuneration’’ indicator to the Act. change that are filed with the
these transactions would not provide Commission, and all written
additional transparency to the market. V. Accelerated Approval of Proposal, as communications relating to the
Modified by Amendment No. 1 proposed rule change between the
IV. Discussion and Commission Commission and any person, other than
The Commission finds good cause,
Findings those that may be withheld from the
pursuant to Section 19(b)(2) of the
After careful review of the proposal Exchange Act 19 for approving the public in accordance with the
and comments submitted, the proposal, as modified by Amendment provisions of 5 U.S.C. 552, will be
Commission finds that the proposal, as No. 1, prior to the 30th day after available for Web site viewing and
publication of Amendment No. 1 in the printing in the Commission’s Public
11 See supra note 4. Federal Register. Reference Room, 100 F Street NE.,
12 See SIFMA Letter at 1. See also Securities Amendment No. 1 revised the Washington, DC 20549 on official
Exchange Act Release No. 75039 (May 22, 2015), 80
FR 31084 (June 1, 2015) (SR–MSRB–2015–02) proposal to include limited exceptions business days between the hours of
(approving an MSRB proposal to, among other to the proposed ‘‘no remuneration’’ 10:00 a.m. and 3:00 p.m. Copies of such
things, require dealers to include a new indicator indicator requirement. The Commission filing also will be available for
on their trade reports that would be disseminated inspection and copying at the principal
publicly to distinguish customer transactions that
tkelley on DSK3SPTVN1PROD with NOTICES

do not include a dealer compensation component
15 In approving this proposed rule change, the offices of FINRA. All comments
and those that include a markup, mark-down, or a Commission has considered the proposed rule’s received will be posted without change;
commission) (‘‘MSRB Order’’). impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
the Commission does not edit personal
13 See BDA Letter at 1.
14 The MSRB’s rule limits the use of its ‘‘non-
16 15 U.S.C. 78o–3(b)(6). identifying information from
transaction-based compensation arrangement
17 15 U.S.C. 78o–3(b)(9). submissions. You should submit only
indicator’’ to transactions with customers. See 18 See MSRB Order, 80 FR at 31086–87. information that you wish to make
MSRB Order, 80 FR at 31085. 19 See 15 U.S.C. 78s(b)(2). available publicly. All submissions

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Federal Register / Vol. 80, No. 204 / Thursday, October 22, 2015 / Notices 64041

should refer to File Number SR–FINRA– II. Self-Regulatory Organization’s of the fact that many members would
2015–026, and should be submitted on Statement of the Purpose of, and have already made arrangements to
or before November 12, 2015. Statutory Basis for, the Proposed Rule route away in accordance with the
Change Exchange’s instructions. To prevent this
VII. Conclusion
In its filing with the Commission, the undesirable result, and preserve the
It is therefore ordered, pursuant to self-regulatory organization included Exchange’s intent behind adopting
Section 19(b)(2) of the Act,20 that the statements concerning the purpose of, volume-based pricing, the Exchange
proposed rule change (SR–FINRA– and basis for, the proposed rule change proposes to allow days to be excluded
2015–026), as modified by Amendment and discussed any comments it received from its ADV calculation whenever all
No. 1, be, and hereby is, approved on an on the proposed rule change. The text members are instructed, in writing, to
accelerated basis. of these statements may be examined at route their orders to other markets.
For the Commission, by the Division of the places specified in Item IV below. 2. Statutory Basis
Trading and Markets, pursuant to delegated The self-regulatory organization has
The Exchange believes that the
authority.21 prepared summaries, set forth in
proposed rule change is consistent with
Brent J. Fields, sections A, B and C below, of the most
the provisions of Section 6 of the Act,3
Secretary. significant aspects of such statements.
in general, and Section 6(b)(4) of the
[FR Doc. 2015–26808 Filed 10–21–15; 8:45 am] A. Self-Regulatory Organization’s Act,4 in particular, in that it is designed
BILLING CODE 8011–01–P Statement of the Purpose of, and to provide for the equitable allocation of
Statutory Basis for, the Proposed Rule reasonable dues, fees, and other charges
Change among its members and other persons
SECURITIES AND EXCHANGE using its facilities. The Exchange
COMMISSION 1. Purpose
believes that it is reasonable and
Currently, for purposes of equitable to exclude a day from its ADV
[Release No. 34–76177; File No. SR–ISE– determining a member’s average daily calculations when members are
2015–31] volume (‘‘ADV’’), any day that the instructed to route their orders to other
regular or complex order books are not markets as this preserves the Exchange’s
Self-Regulatory Organizations; open for the entire trading day may be intent behind adopting volume-based
International Securities Exchange, excluded from such calculation. The pricing, and avoids penalizing members
LLC; Notice of Filing and Immediate Exchange proposes to amend language that follow this instruction. Without this
Effectiveness of Proposed Rule in the Schedule of Fees related to change, members that route away in
Change To Amend the Schedule of excluding days from the ADV accordance with the Exchange’s
Fees calculations used to determine instructions may be negatively
applicable fee and rebate tiers. impacted, resulting in an effective cost
October 16, 2015. Specifically, the Exchange proposes to increase for those members. The
Pursuant to Section 19(b)(1) of the permit days to be excluded from its Exchange further believes that the
Securities Exchange Act of 1934 (the ADV calculations where the Exchange is proposed rule change is not unfairly
‘‘Act’’),1 and Rule 19b–4 thereunder,2 technically open for the entire trading discriminatory because it applies
notice is hereby given that on October day, but has instructed members to equally to all members and ADV
1, 2015, the International Securities route away due to a systems or other calculations. As is the Exchange’s
Exchange, LLC (the ‘‘Exchange’’ or the error that ultimately does not impact current practice, the Exchange will
‘‘ISE’’) filed with the Securities and trading on the Exchange. Currently, the inform members of any day to be
Exchange Commission (‘‘Commission’’) Exchange’s ability to remove days from excluded from its ADV calculations by
the proposed rule change, as described its ADV calculations is limited to days sending members a notice and posting
in Items I, II, and III below, which Items where the market is not open for the such notice on the Exchange’s Web site.
have been prepared by the self- entire trading day. This allows the
regulatory organization. The Exchange to exclude days, for example, B. Self-Regulatory Organization’s
Commission is publishing this notice to where the Exchange declares a trading Statement on Burden on Competition
solicit comments on the proposed rule halt in all securities, honors a market- In accordance with Section 6(b)(8) of
change from interested persons. wide trading halt declared by another the Act,5 the Exchange does not believe
market, or closes early for holiday that the proposed rule change will
I. Self-Regulatory Organization’s observance. Because these days
Statement of the Terms of Substance of impose any burden on intermarket or
generally have artificially lower trading intramarket competition that is not
the Proposed Rule Change volume, the Exchange believes that it is necessary or appropriate in furtherance
The ISE proposes to amend language reasonable and equitable to not include of the purposes of the Act. The
in the Schedule of Fees related to such days in determining fee and rebate Exchange believes that the proposed
excluding days from its average daily tiers. The Exchange notes, however, that modifications to its ADV calculation are
volume calculations when the market is if it has a systems issue in the morning pro-competitive and will result in lower
not open for the entire trading day. The before the market opens, it may instruct total costs to end users, a positive
text of the proposed rule change is members to route away to other markets. outcome of competitive markets. The
available on the Exchange’s Web site If the systems issue continues into Exchange operates in a highly
(http://www.ise.com), at the principal trading hours, the Exchange is permitted competitive market in which market
tkelley on DSK3SPTVN1PROD with NOTICES

office of the Exchange, and at the to exclude the day for all members that participants can readily direct their
Commission’s Public Reference Room. would have a lower ADV with the day order flow to competing venues. In such
included. If, however, the systems issue an environment, the Exchange must
20 15U.S.C. 78s(b)(2). is resolved prior to the opening of
21 17CFR 200.30–3(a)(12). trading, the Exchange is not permitted 315 U.S.C. 78f.
115 U.S.C.78s(b)(1) to exclude the day from its ADV 415 U.S.C. 78f(b)(4).
217 CFR 240.19b–4. calculations. This is the case regardless 5 15 U.S.C. 78f(b)(8).

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Document Created: 2015-12-14 15:34:38
Document Modified: 2015-12-14 15:34:38

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 64039