80 FR 65828 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.25, Retail Order Attribution Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 207 (October 27, 2015)
Federal Register Volume 80, Issue 207 (October 27, 2015)
| Page Range | 65828-65830 | |
| FR Document | 2015-27221 |
[Federal Register Volume 80, Number 207 (Tuesday, October 27, 2015)] [Notices] [Pages 65828-65830] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-27221] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76205; File No. SR-BATS-2015-90] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.25, Retail Order Attribution Program October 21, 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 October 14, 2015, BATS Exchange, Inc. (the ``Exchange'' or ``BATS'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b- 4(f)(6) 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. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change The Exchange filed a proposal to amend Rule 11.25, which governs the Exchange's Retail Order Attribution Program (``Retail Program''), to distinguish between retail orders routed on behalf of other broker- dealers and retail orders that are routed on behalf of introduced retail accounts that are carried on a fully disclosed basis, as further described below. 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 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 The Exchange proposes to amend Rule 11.25, which governs the Exchange's Retail Program,\5\ to distinguish between orders routed on behalf of other broker-dealers and orders routed on behalf of introduced retail accounts that are carried on a fully disclosed basis, as further described below. --------------------------------------------------------------------------- \5\ The Exchange adopted the Retail Program as Rule 11.24 in 2014. See Securities Exchange Act Release No. 73237 (September 26, 2014), 79 FR 59537 (October 2, 2014) (SR-BATS-2014-043). The Retail Program was subsequently re-numbered as 11.25. See Securities Exchange Act Release No. 73677 (November 24, 2014), 79 FR 71150 (December 1, 2014) (SR-BATS-2014-058). --------------------------------------------------------------------------- The Exchange established the Retail Program in an attempt to attract retail order flow to the Exchange, primarily by offering pricing incentives. Under the Retail Program, Retail Member Organizations \6\ (``RMOs'') are permitted to submit Retail Orders,\7\ and receive rebates for added liquidity that are higher than the exchanges standard rebates for added liquidity.\8\ In addition, RMOs may optionally designate Retail Orders to be identified as Retail on the Exchange's proprietary data feeds.\9\ --------------------------------------------------------------------------- \6\ A Retail Member Organization is a Member (or a division thereof) that has been approved by the Exchange under Rule 11.25 to submit Retail Orders. \7\ A Retail Order is an agency order that originates from a natural person and is submitted to the Exchange by a RMO, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any computerized methodology. \8\ See BZX Exchange Fee Schedule, available at http://batstrading.com/support/fee_schedule/bzx/. \9\ See Rule 11.25(e). --------------------------------------------------------------------------- Exchange Rule 11.25(b)(1) currently states that ``[t]o qualify as a Retail Member Organization, a Member must conduct a retail business or handle retail orders on behalf of another broker-dealer.'' \10\ Rather than stating that one way to qualify as an RMO is to ``handle'' retail orders on behalf of another broker-dealer, the Exchange proposes to state that a Member may qualify as an RMO if it ``routes'' retail orders on behalf of another broker-dealer. The Exchange believes that providing routing services on behalf of other broker-dealers with retail order flow was the intended meaning of the provision and that the term ``handle'' is vague. Thus, the Exchange believes that the description would be better if it referred to routing services provided to another broker-dealer with retail customers. The Exchange also proposes to distinguish such routing services on behalf of another broker-dealer from services provided by broker-dealers that carry retail customer accounts on a fully disclosed basis, as described below. --------------------------------------------------------------------------- \10\ Emphasis added. --------------------------------------------------------------------------- As background with respect to the proposed change, the Exchange first would like to describe the terms ``introducing broker'', ``carrying firm'' or ``carrying broker-dealer'', and ``fully disclosed,'' as such terms are commonly used in the securities industry. An ``introducing'' broker-dealer is ``one that [[Page 65829]] has a contractual arrangement with another firm, known as the carrying or clearing firm, under which the carrying firm agrees to perform certain services for the introducing firm. Usually, the introducing firm submits its customer accounts and customer orders to the carrying firm, which executes the orders and carries the account. The carrying firm's duties include the proper disposition of the customer funds and securities after the trade date, the custody of customer securities and funds, and the recordkeeping associated with carrying customer accounts.'' \11\ --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 31511 (Nov. 24, 1992), 57 FR 56973 (December 2, 1992). --------------------------------------------------------------------------- Further, a ``fully disclosed'' introducing arrangement is ``distinguished from an omnibus clearing arrangement where the clearing firm maintains one account for all the customer transactions of the introducing firm. In an omnibus relationship, the clearing firm does not know the identity of the customers of the introducing firm. In a fully disclosed clearing arrangement, the clearing firm knows the names, addresses, securities positions and other relevant data as to each customer.'' \12\ --------------------------------------------------------------------------- \12\ Id. --------------------------------------------------------------------------- With respect to a broker-dealer that is routing on behalf of another broker-dealer, the Exchange does not believe that the routing broker-dealer has sufficient information to assess whether orders are truly retail in nature, and thus, requires an RMO routing on behalf of other broker-dealers to maintain additional supervisory procedures and obtain annual attestations, as described below, in order to submit Retail Orders to the Exchange. In contrast, however, if a broker-dealer is carrying a customer account on a fully disclosed basis, then such carrying broker-dealer is required to perform certain diligence regarding such account that the Exchange believes is sufficient to assess whether a customer is a retail customer in order to submit orders on behalf of such a customer to the Exchange as a Retail Order. The carrying broker of an account typically handles orders from its retail customers that are ``introduced'' by an introducing broker. However, as noted above, in contrast to a typical routing relationship on behalf of another broker-dealer, a carrying broker does obtain a significant level of information regarding each customer introduced by the introducing broker. Accordingly, the Exchange proposes to state in Rule 11.25(b)(1) that for purposes of Rule 11.25, ``conducting a retail business shall include carrying retail customer accounts on a fully disclosed basis.'' Rule 11.25(b)(6) currently states, in part, that ``[i]f a Retail Member Organization represents Retail Orders from another broker-dealer customer, the Retail Member Organization's supervisory procedures must be reasonably designed to assure that the orders it receives from such broker-dealer customer that it designates as Retail Orders meet the definition of a Retail Order.'' This includes obtaining attestations from the other broker-dealers for whom the RMO routes. In addition to the proposed changes to Rule 11.25(b)(1) described above, the Exchange proposes to modify the language of Rule 11.25(b)(6) to again distinguish between an RMO that conducts a retail business because it carries accounts on a fully disclosed basis from an RMO that routes orders on behalf of another broker-dealer. As proposed, the additional attestation requirements of Rule 11.25(b)(6) would apply to an RMO that does not itself conduct a retail business but routes Retail Orders on behalf of other broker-dealers. In turn, such attestation requirements would not apply to an RMO that carries retail customer accounts on a fully disclosed basis. In connection with this change, the Exchange is proposing various edits to the existing rule text so that the reference is consistently to ``other broker-dealers'' rather than ``broker-dealer customers.'' The Exchange believes that allowing an RMO that carries retail customer accounts on a fully disclosed basis to submit Retail Orders to the Exchange without obtaining attestations from broker-dealers that might introduce such accounts will encourage participation in the Retail Program. As noted above, the Exchange believes that the carrying broker has sufficient information to itself confirm that orders are Retail Orders without such attestations. The Exchange still believes it is necessary to require the attestation by broker-dealers that route Retail Orders on behalf of other broker-dealers, because, in contrast, such broker-dealers typically do not have a relationship with the retail customer and would not be in position to confirm that such customers are in fact retail customers. 2. Statutory Basis The Exchange believes the rule change proposed in this submission is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.\13\ Specifically, the proposed change is consistent with Section 6(b)(5) of the Act,\14\ in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices because it highlights the parties for whom additional procedures are required because they do not maintain relationships with the end customer (i.e., routing brokers) and still requires the RMO to follow such procedures to ensure that such orders qualify as Retail Orders. As proposed, however, an RMO would not be required to follow such procedures, including obtaining annual attestations, to the extent such RMO actually knows the end customer and carries the account of such customer and thus can itself confirm that the orders qualify as Retail Orders. The Exchange believes that the proposed rule change will remove impediments to and perfect the mechanism of a free and open market and a national market system because it will allow RMOs that carry retail customer accounts to participate in the Program without imposing additional attestation requirements that the Exchange did not initially intend to impose upon them. By removing impediments to participation in the Program, the proposed change would permit expanded access of retail customers to the Program. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the amendment, by increasing the level of participation in the Program, will increase the level of competition around retail executions. The Exchange believes that the transparency and competitiveness of operating a program such as the Program on an exchange market would result in better prices for retail investors and benefits retail investors by expanding the capabilities of Exchanges to encompass practices currently allowed on non-exchange venues. [[Page 65830]] 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 \15\ and paragraph (f)(6) of Rule 19b-4 thereunder.\16\ 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.\17\ --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(3)(A). \16\ 17 CFR 240.19b-4. \17\ The Exchange has satisfied this requirement. --------------------------------------------------------------------------- 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 proposed rule change 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-2015-90 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-BATS-2015-90. 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 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 Number SR-BATS-2015-90, and should be submitted on or before November 16, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\18\ --------------------------------------------------------------------------- \18\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-27221 Filed 10-26-15; 8:45 am] BILLING CODE 8011-01-P
![65828 Federal Register / Vol. 80, No. 207 / Tuesday, October 27, 2015 / Notices
file number should be included on the Securities and Exchange Commission distinguish between orders routed on
subject line if email is used. To help the (‘‘Commission’’) the proposed rule behalf of other broker-dealers and orders
Commission process and review your change as described in Items I and II routed on behalf of introduced retail
comments more efficiently, please use below, which Items have been prepared accounts that are carried on a fully
only one method. The Commission will by the Exchange. The Exchange has disclosed basis, as further described
post all comments on the Commission’s designated this proposal as a ‘‘non- below.
Internet Web site (http://www.sec.gov/ controversial’’ proposed rule change The Exchange established the Retail
rules/sro.shtml). Copies of the pursuant to Section 19(b)(3)(A) of the Program in an attempt to attract retail
submission, all subsequent Act 3 and Rule 19b–4(f)(6) thereunder,4 order flow to the Exchange, primarily by
amendments, all written statements which renders it effective upon filing offering pricing incentives. Under the
with respect to the proposed rule with the Commission. The Commission Retail Program, Retail Member
change that are filed with the is publishing this notice to solicit Organizations 6 (‘‘RMOs’’) are permitted
Commission, and all written comments on the proposed rule change to submit Retail Orders,7 and receive
communications relating to the from interested persons. rebates for added liquidity that are
proposed rule change between the higher than the exchanges standard
Commission and any person, other than I. Self-Regulatory Organization’s rebates for added liquidity.8 In addition,
those that may be withheld from the Statement of the Terms of the Substance RMOs may optionally designate Retail
public in accordance with the of the Proposed Rule Change Orders to be identified as Retail on the
provisions of 5 U.S.C. 552, will be The Exchange filed a proposal to Exchange’s proprietary data feeds.9
available for Web site viewing and amend Rule 11.25, which governs the Exchange Rule 11.25(b)(1) currently
printing in the Commission’s Public Exchange’s Retail Order Attribution states that ‘‘[t]o qualify as a Retail
Reference Room, 100 F Street NE., Program (‘‘Retail Program’’), to Member Organization, a Member must
Washington, DC 20549 on official distinguish between retail orders routed conduct a retail business or handle
business days between the hours of on behalf of other broker-dealers and retail orders on behalf of another broker-
10:00 a.m. and 3:00 p.m. Copies of such retail orders that are routed on behalf of dealer.’’ 10 Rather than stating that one
filing also will be available for introduced retail accounts that are way to qualify as an RMO is to ‘‘handle’’
inspection and copying at the principal carried on a fully disclosed basis, as retail orders on behalf of another broker-
office of the Exchange. All comments further described below. dealer, the Exchange proposes to state
received will be posted without change; The text of the proposed rule change that a Member may qualify as an RMO
the Commission does not edit personal is available at the Exchange’s Web site if it ‘‘routes’’ retail orders on behalf of
identifying information from at www.batstrading.com, at the another broker-dealer. The Exchange
submissions. You should submit only principal office of the Exchange, and at believes that providing routing services
information that you wish to make the Commission’s Public Reference on behalf of other broker-dealers with
available publicly. All submissions Room. retail order flow was the intended
should refer to File Number SR– meaning of the provision and that the
NYSEMKT–2015–79, and should be II. Self-Regulatory Organization’s term ‘‘handle’’ is vague. Thus, the
submitted on or before November 17, Statement of the Purpose of, and Exchange believes that the description
2015. Statutory Basis for, the Proposed Rule would be better if it referred to routing
For the Commission, by the Division of Change services provided to another broker-
Trading and Markets, pursuant to delegated In its filing with the Commission, the dealer with retail customers. The
authority.14 Exchange included statements Exchange also proposes to distinguish
Brent J. Fields, concerning the purpose of and basis for such routing services on behalf of
Secretary. the proposed rule change and discussed another broker-dealer from services
[FR Doc. 2015–27223 Filed 10–26–15; 8:45 am] any comments it received on the provided by broker-dealers that carry
BILLING CODE 8011–01–P proposed rule change. The text of these retail customer accounts on a fully
statements may be examined at the disclosed basis, as described below.
places specified in Item IV below. The As background with respect to the
SECURITIES AND EXCHANGE Exchange has prepared summaries, set proposed change, the Exchange first
COMMISSION forth in Sections A, B, and C below, of would like to describe the terms
the most significant parts of such ‘‘introducing broker’’, ‘‘carrying firm’’ or
[Release No. 34–76205; File No. SR–BATS–
2015–90] statements. ‘‘carrying broker-dealer’’, and ‘‘fully
disclosed,’’ as such terms are commonly
Self-Regulatory Organizations; BATS A. Self-Regulatory Organization’s used in the securities industry. An
Exchange, Inc.; Notice of Filing and Statement of the Purpose of, and ‘‘introducing’’ broker-dealer is ‘‘one that
Immediate Effectiveness of a Proposed Statutory Basis for, the Proposed Rule
Rule Change To Amend Rule 11.25, Change 73677 (November 24, 2014), 79 FR 71150
(December 1, 2014) (SR–BATS–2014–058).
Retail Order Attribution Program 1. Purpose 6 A Retail Member Organization is a Member (or
October 21, 2015. The Exchange proposes to amend a division thereof) that has been approved by the
Exchange under Rule 11.25 to submit Retail Orders.
Pursuant to Section 19(b)(1) of the Rule 11.25, which governs the 7 A Retail Order is an agency order that originates
Securities Exchange Act of 1934 (the Exchange’s Retail Program,5 to from a natural person and is submitted to the
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Exchange by a RMO, provided that no change is
tkelley on DSK3SPTVN1PROD with NOTICES
notice is hereby given that on October 3 15 U.S.C. 78s(b)(3)(A). made to the terms of the order with respect to price
4 17 CFR 240.19b–4(f)(6). or side of market and the order does not originate
14, 2015, BATS Exchange, Inc. (the from a trading algorithm or any computerized
5 The Exchange adopted the Retail Program as
‘‘Exchange’’ or ‘‘BATS’’) filed with the methodology.
Rule 11.24 in 2014. See Securities Exchange Act
8 See BZX Exchange Fee Schedule, available at
Release No. 73237 (September 26, 2014), 79 FR
14 17 CFR 200.30–3(a)(12). http://batstrading.com/support/fee_schedule/bzx/.
59537 (October 2, 2014) (SR–BATS–2014–043). The
1 15 U.S.C. 78s(b)(1). 9 See Rule 11.25(e).
Retail Program was subsequently re-numbered as
2 17 CFR 240.19b–4. 11.25. See Securities Exchange Act Release No. 10 Emphasis added.
VerDate Sep<11>2014 18:24 Oct 26, 2015 Jkt 238001 PO 00000 Frm 00142 Fmt 4703 Sfmt 4703 E:\FR\FM\27OCN1.SGM 27OCN1](https://thefederalregister.org/doc/80_FR_66035/page/1.svg)
![Federal Register / Vol. 80, No. 207 / Tuesday, October 27, 2015 / Notices 65829
has a contractual arrangement with retail customer accounts on a fully Section 6(b) of the Act.13 Specifically,
another firm, known as the carrying or disclosed basis.’’ the proposed change is consistent with
clearing firm, under which the carrying Rule 11.25(b)(6) currently states, in Section 6(b)(5) of the Act,14 in that it is
firm agrees to perform certain services part, that ‘‘[i]f a Retail Member designed to prevent fraudulent and
for the introducing firm. Usually, the Organization represents Retail Orders manipulative acts and practices, to
introducing firm submits its customer from another broker-dealer customer, promote just and equitable principles of
accounts and customer orders to the the Retail Member Organization’s trade, and to remove impediments to
carrying firm, which executes the orders supervisory procedures must be and perfect the mechanism of a free and
and carries the account. The carrying reasonably designed to assure that the open market and a national market
firm’s duties include the proper orders it receives from such broker- system.
disposition of the customer funds and dealer customer that it designates as The Exchange believes that the
securities after the trade date, the Retail Orders meet the definition of a proposed rule change is designed to
custody of customer securities and Retail Order.’’ This includes obtaining prevent fraudulent and manipulative
funds, and the recordkeeping associated attestations from the other broker- acts and practices because it highlights
with carrying customer accounts.’’ 11 dealers for whom the RMO routes. In the parties for whom additional
Further, a ‘‘fully disclosed’’ addition to the proposed changes to procedures are required because they do
introducing arrangement is Rule 11.25(b)(1) described above, the not maintain relationships with the end
‘‘distinguished from an omnibus Exchange proposes to modify the customer (i.e., routing brokers) and still
language of Rule 11.25(b)(6) to again requires the RMO to follow such
clearing arrangement where the clearing
distinguish between an RMO that procedures to ensure that such orders
firm maintains one account for all the
conducts a retail business because it qualify as Retail Orders. As proposed,
customer transactions of the introducing
carries accounts on a fully disclosed however, an RMO would not be
firm. In an omnibus relationship, the
basis from an RMO that routes orders on required to follow such procedures,
clearing firm does not know the identity
behalf of another broker-dealer. As including obtaining annual attestations,
of the customers of the introducing firm.
proposed, the additional attestation to the extent such RMO actually knows
In a fully disclosed clearing
requirements of Rule 11.25(b)(6) would the end customer and carries the
arrangement, the clearing firm knows
apply to an RMO that does not itself account of such customer and thus can
the names, addresses, securities
conduct a retail business but routes itself confirm that the orders qualify as
positions and other relevant data as to Retail Orders on behalf of other broker-
each customer.’’ 12 Retail Orders.
dealers. In turn, such attestation
With respect to a broker-dealer that is requirements would not apply to an The Exchange believes that the
routing on behalf of another broker- RMO that carries retail customer proposed rule change will remove
dealer, the Exchange does not believe accounts on a fully disclosed basis. In impediments to and perfect the
that the routing broker-dealer has connection with this change, the mechanism of a free and open market
sufficient information to assess whether Exchange is proposing various edits to and a national market system because it
orders are truly retail in nature, and the existing rule text so that the will allow RMOs that carry retail
thus, requires an RMO routing on behalf reference is consistently to ‘‘other customer accounts to participate in the
of other broker-dealers to maintain broker-dealers’’ rather than ‘‘broker- Program without imposing additional
additional supervisory procedures and dealer customers.’’ attestation requirements that the
obtain annual attestations, as described The Exchange believes that allowing Exchange did not initially intend to
below, in order to submit Retail Orders an RMO that carries retail customer impose upon them. By removing
to the Exchange. In contrast, however, if accounts on a fully disclosed basis to impediments to participation in the
a broker-dealer is carrying a customer submit Retail Orders to the Exchange Program, the proposed change would
account on a fully disclosed basis, then without obtaining attestations from permit expanded access of retail
such carrying broker-dealer is required broker-dealers that might introduce customers to the Program.
to perform certain diligence regarding such accounts will encourage B. Self-Regulatory Organization’s
such account that the Exchange believes participation in the Retail Program. As Statement on Burden on Competition
is sufficient to assess whether a noted above, the Exchange believes that
customer is a retail customer in order to the carrying broker has sufficient The Exchange does not believe that
submit orders on behalf of such a information to itself confirm that orders the proposed rule change will impose
customer to the Exchange as a Retail are Retail Orders without such any burden on competition that is not
Order. The carrying broker of an attestations. The Exchange still believes necessary or appropriate in furtherance
account typically handles orders from it is necessary to require the attestation of the purposes of the Act. The
its retail customers that are by broker-dealers that route Retail Exchange believes that the amendment,
‘‘introduced’’ by an introducing broker. Orders on behalf of other broker-dealers, by increasing the level of participation
However, as noted above, in contrast to because, in contrast, such broker-dealers in the Program, will increase the level
a typical routing relationship on behalf typically do not have a relationship of competition around retail executions.
of another broker-dealer, a carrying with the retail customer and would not The Exchange believes that the
broker does obtain a significant level of be in position to confirm that such transparency and competitiveness of
information regarding each customer customers are in fact retail customers. operating a program such as the
introduced by the introducing broker. Program on an exchange market would
2. Statutory Basis result in better prices for retail investors
Accordingly, the Exchange proposes to
tkelley on DSK3SPTVN1PROD with NOTICES
state in Rule 11.25(b)(1) that for The Exchange believes the rule and benefits retail investors by
purposes of Rule 11.25, ‘‘conducting a change proposed in this submission is expanding the capabilities of Exchanges
retail business shall include carrying consistent with the requirements of the to encompass practices currently
Act and the rules and regulations allowed on non-exchange venues.
11 See Securities Exchange Act Release No. 31511 thereunder that are applicable to a
(Nov. 24, 1992), 57 FR 56973 (December 2, 1992). national securities exchange, and, in 13 15 U.S.C. 78f(b).
12 Id. particular, with the requirements of 14 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014 18:24 Oct 26, 2015 Jkt 238001 PO 00000 Frm 00143 Fmt 4703 Sfmt 4703 E:\FR\FM\27OCN1.SGM 27OCN1](https://thefederalregister.org/doc/80_FR_66035/page/2.svg)
![65830 Federal Register / Vol. 80, No. 207 / Tuesday, October 27, 2015 / Notices
C. Self-Regulatory Organization’s • Send an email to rule-comments@ SECURITIES AND EXCHANGE
Statement on Comments on the sec.gov. Please include File Number SR– COMMISSION
Proposed Rule Change Received From BATS–2015–90 on the subject line.
Members, Participants, or Others [Release No. 34–76214; File No. SR–
Paper Comments
The Exchange has neither solicited ISEGemini–2015–21]
nor received written comments on the • Send paper comments in triplicate
proposed rule change. to Brent J. Fields, Secretary, Securities Self-Regulatory Organizations; ISE
and Exchange Commission, 100 F Street Gemini, LLC; Notice of Filing and
III. Date of Effectiveness of the NE., Washington, DC 20549–1090. Immediate Effectiveness of Proposed
Proposed Rule Change and Timing for Rule Change To Amend the Schedule
Commission Action All submissions should refer to File of Fees
Number SR–BATS–2015–90. This file
The Exchange has designated this rule number should be included on the October 21, 2015.
filing as non-controversial under subject line if email is used. To help the
Section 19(b)(3)(A) of the Act 15 and Pursuant to Section 19(b)(1) of the
Commission process and review your Securities Exchange Act of 1934 (the
paragraph (f)(6) of Rule 19b–4 comments more efficiently, please use
thereunder.16 The proposed rule change ‘‘Act’’),1 and Rule 19b–4 thereunder,2
only one method. The Commission will notice is hereby given that on October
effects a change that (A) does not
post all comments on the Commission’s 7, 2015, ISE Gemini, LLC (the
significantly affect the protection of
investors or the public interest; (B) does Internet Web site (http://www.sec.gov/ ‘‘Exchange’’ or ‘‘ISE Gemini’’) filed with
not impose any significant burden on rules/sro.shtml). Copies of the the Securities and Exchange
competition; and (C) by its terms, does submission, all subsequent Commission (‘‘Commission’’) the
not become operative for 30 days after amendments, all written statements proposed rule change, as described in
the date of the filing, or such shorter with respect to the proposed rule Items I, II, and III below, which Items
time as the Commission may designate change that are filed with the have been prepared by the self-
if consistent with the protection of Commission, and all written regulatory organization. The
investors and the public interest; communications relating to the Commission is publishing this notice to
provided that the self-regulatory proposed rule change between the solicit comments on the proposed rule
organization has given the Commission Commission and any person, other than change from interested persons.
written notice of its intent to file the those that may be withheld from the
proposed rule change, along with a brief public in accordance with the I. Self-Regulatory Organization’s
description and text of the proposed provisions of 5 U.S.C. 552, will be Statement of the Terms of Substance of
rule change, at least five business days available for Web site viewing and the Proposed Rule Change
prior to the date of filing of the printing in the Commission’s Public
proposed rule change, or such shorter ISE Gemini proposes to amend the
Reference Room, 100 F Street NE.,
time as designated by the Schedule of Fees to adjust the maker
Washington, DC 20549 on official
Commission.17 rebates provided to Non-ISE Gemini
business days between the hours of
Market Maker, Firm Proprietary/Broker-
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of such
filing of the proposed rule change, the Dealer, and Professional Customer
filing also will be available for
Commission may summarily orders by adopting a new Performance
inspection and copying at the principal
temporarily suspend such rule change if Routing Program as described in more
office of the Exchange. All comments
it appears to the Commission that such detail below. The text of the proposed
received will be posted without change;
action is: (1) Necessary or appropriate in rule change is available on the
the Commission does not edit personal
the public interest; (2) for the protection Exchange’s Internet Web site at http://
identifying information from
of investors; or (3) otherwise in www.ise.com, at the principal office of
submissions. You should submit only
furtherance of the purposes of the Act. the Exchange, and at the Commission’s
information that you wish to make
If the Commission takes such action, the Public Reference Room.
available publicly. All submissions
Commission shall institute proceedings
should refer to File Number SR–BATS– II. Self-Regulatory Organization’s
to determine whether the proposed rule
2015–90, and should be submitted on or Statement of the Purpose of, and
should be approved or disapproved.
before November 16, 2015. Statutory Basis for, the Proposed Rule
IV. Solicitation of Comments For the Commission, by the Division of Change
Interested persons are invited to Trading and Markets, pursuant to delegated
In its filing with the Commission, the
submit written data, views, and authority.18
Exchange included statements
arguments concerning the foregoing, Brent J. Fields, concerning the purpose of, and basis for,
including whether the proposed rule Secretary. the proposed rule change and discussed
change is consistent with the Act. [FR Doc. 2015–27221 Filed 10–26–15; 8:45 am] any comments it received on the
Comments may be submitted by any of BILLING CODE 8011–01–P proposed rule change. The text of these
the following methods: statements may be examined at the
Electronic Comments places specified in Item IV below. The
self-regulatory organization has
tkelley on DSK3SPTVN1PROD with NOTICES
• Use the Commission’s Internet prepared summaries, set forth in
comment form (http://www.sec.gov/
Sections A, B and C below, of the most
rules/sro.shtml); or
significant aspects of such statements.
15 15U.S.C. 78s(b)(3)(A).
16 17 1 15 U.S.C. 78s(b)(1).
CFR 240.19b–4.
17 The Exchange has satisfied this requirement. 18 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:24 Oct 26, 2015 Jkt 238001 PO 00000 Frm 00144 Fmt 4703 Sfmt 4703 E:\FR\FM\27OCN1.SGM 27OCN1](https://thefederalregister.org/doc/80_FR_66035/page/3.svg)
Document Created: 2015-12-14 15:36:38
Document Modified: 2015-12-14 15:36:38
| 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 65828 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR