80 FR 65838 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Reporting of OTC Transactions in Exchange-Traded Managed Fund Shares (NextShares) to FINRA
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 207 (October 27, 2015)
Federal Register Volume 80, Issue 207 (October 27, 2015)
| Page Range | 65838-65841 | |
| FR Document | 2015-27225 |
[Federal Register Volume 80, Number 207 (Tuesday, October 27, 2015)] [Notices] [Pages 65838-65841] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-27225] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76213; File No. SR-FINRA-2015-043] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Reporting of OTC Transactions in Exchange-Traded Managed Fund Shares (NextShares) to FINRA October 21, 2015. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on October 15, 2015, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ``non- controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which renders the proposal effective upon receipt of this filing by 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\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change FINRA is proposing to adopt Rule 6184 (Transactions in Exchange- Traded Managed Fund Shares (``NextShares'')) relating to the reporting of over-the-counter (``OTC'') transactions in exchange-traded managed fund shares, which have been approved by the SEC for listing and trading on the Nasdaq Stock Market LLC (``Nasdaq''). Exchange-traded managed fund shares are referred to under Nasdaq rules and herein as ``NextShares.'' The text of the proposed rule change is available on FINRA's Web site at http://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Background In November 2014, the SEC approved a proposed rule change filed by Nasdaq to adopt Nasdaq Rule 5745 governing the listing and trading of NextShares.\4\ As described more fully in Nasdaq's filing, NextShares will trade in the secondary market using a new trading protocol called ``NAV-Based Trading.'' In NAV-Based Trading, all bids, offers and execution prices will be expressed as a premium or discount (which may be zero) to the fund's next-determined net asset value per share (``NAV''), e.g., NAV-$0.01 or NAV+$0.01. A NextShares Fund's NAV will be determined each business day after the close of trading. All trades will be binding at the time of execution, with the transaction prices contingent upon the determination of the NAV at the end of the trading day.\5\ Pursuant to Nasdaq Rule 5745, trading in NextShares is limited to Nasdaq's Regular Market Session through 4:00 p.m.\6\ --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 73562 (November 7, 2014), 79 FR 68309 (November 14, 2014) (Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of File No. SR-NASDAQ-2014-020). In SR-NASDAQ-2014-020, Nasdaq used the terms ``ETMF'' and ``ETMF Shares.'' On October 13, 2015, Nasdaq filed a proposed rule change to amend Nasdaq Rule 5745 to replace these terms with ``NextShares Fund'' and ``NextShares,'' respectively. See SR-NASDAQ-2015-121, available at nasdaq.cchwallstreet.com/NASDAQ/pdf/nasdaq-filings/2015/SR-NASDAQ-2015-121.pdf. \5\ Thus, because in NAV-Based Trading, prices of executed trades are not determined until the reference NAV is calculated, buyers and sellers of NextShares will not know the final value of their purchases and sales until the end of the trading day. \6\ As explained in SR-NASDAQ-2014-020, Nasdaq Rule 4120(b)(4) defines ``Regular Market Session'' as the trading session from 9:30 a.m. to 4:00 p.m. or 4:15 p.m.; NextShares will trade until 4:00 p.m. --------------------------------------------------------------------------- In its filing with the SEC, Nasdaq explained that, because existing order transmission and processing systems commonly used by exchanges and firms are generally not designed to accommodate pricing arrangements such as NAV-Based Trading, the prices of NextShares trades and quotes will be represented intraday using a ``proxy price'' format. In proxy price format, a NextShares Fund's next-determined NAV will be represented as 100.00. A premium or discount of a stated amount to the next-determined NAV will be represented by the same increment or decrement from 100, e.g., NAV-$0.01 will be represented as 99.99, and NAV+$0.01 will be represented as 100.01. Nasdaq will report intraday bids, offers and trades for NextShares in real-time to the consolidated tape using the proxy price format. However, the trade will not clear and settle at the price expressed in the proxy price format. After a NextShares Fund's NAV has been calculated at the end of the trading day, Nasdaq will price each [[Page 65839]] trade executed on the exchange at the NAV (plus or minus any premium or discount) and will send the final pricing information to the National Securities Clearing Corporation (``NSCC'') for clearance and settlement. Under Nasdaq Rule 5745, the Intraday Indicative Value (``IIV'') of a NextShares Fund is the estimated intraday value of a fund share based on current information regarding the value of the securities and other assets held by the fund. Nasdaq's rule requires that IIVs for each NextShares Fund be widely disseminated by one or more major market data vendors at intervals of not more than 15 minutes throughout Nasdaq's Regular Market Session. On July 21, 2015, the SEC approved Nasdaq's filing proposing to list and trade the shares of 18 NextShares Funds, each of which is registered as an open-end investment company.\7\ Nasdaq recently announced that it has completed systems development to support the listing and trading of NextShares and will announce the exact listing and trading date soon.\8\ As noted above, it is anticipated that this date will be on or about February 1, 2016. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 75499 (July 21, 2015), 80 FR 44406 (July 27, 2015) (Order Approving File No. SR- NASDAQ-2015-036). \8\ See Equity Trader Alert #2015-144: Nasdaq Completes Proprietary Platform Development to Support NextShares ETMFs (September 14, 2015), available at www.nasdaqtrader.com/TraderNews.aspx?id=ETA2015-144. In its announcement, Nasdaq indicated that the initial product listing and introduction is subject to FINRA, DTCC and broker-dealer readiness. --------------------------------------------------------------------------- Proposed FINRA Rule 6184 Because NextShares are NMS stocks, FINRA, as the self-regulatory organization (``SRO'') with responsibility for the OTC market, must support OTC trading in NextShares, and FINRA members that trade NextShares OTC will be required to report such transactions to FINRA. Thus, existing trade reporting requirements applicable to OTC transactions in NMS stocks will apply to OTC transactions in NextShares, including, for example, the requirement to report the trade as soon as practicable, but no later than 10 seconds, following execution.\9\ --------------------------------------------------------------------------- \9\ See, e.g., Rules 6282(a) and 6380A(a). --------------------------------------------------------------------------- Pursuant to paragraph (a) of proposed Rule 6184, members that execute secondary market transactions in NextShares OTC must report such transactions for public dissemination or regulatory purposes to the FINRA/Nasdaq Trade Reporting Facility (``FINRA/Nasdaq TRF'') or the Alternative Display Facility (``ADF'') in accordance with the proposed Rule and the rules applicable to the trade reporting facility used by the reporting member.\10\ NYSE, as the Business Member under its TRF Limited Liability Company agreement with FINRA, has determined that the FINRA/NYSE Trade Reporting Facility will not support the reporting of these transactions at this time. In addition, pursuant to paragraph (d)(1) of proposed Rule 6184, OTC transactions in NextShares can only be designated for submission by FINRA to NSCC for clearance and settlement through the FINRA/Nasdaq TRF; otherwise, members that execute such transactions must have an alternative means of clearing (e.g., via direct Qualified Special Representative or ``QSR'' submission to NSCC).\11\ --------------------------------------------------------------------------- \10\ See, e.g., the Rule 6200 and 7100 Series applicable to the ADF and the Rule 6300A and 7200A Series applicable to the FINRA/ Nasdaq TRF. \11\ The ADF will not support the clearing of such transactions at this time. --------------------------------------------------------------------------- Given the unique nature of NAV-Based Trading, FINRA is proposing the following specific requirements for reporting OTC transactions in NextShares to FINRA under proposed Rule 6184. First, as noted above, Nasdaq Rule 5745 limits trading in NextShares to Nasdaq's Regular Market Session. Accordingly, pursuant to paragraph (b) of proposed Rule 6184, trades in NextShares reported with an execution time outside of Regular Market Session hours will be rejected by the FINRA trade reporting facility. Second, pursuant to paragraph (c) of the proposed Rule, except as otherwise expressly provided, members must use the above-described proxy price format on all reports of transactions in NextShares submitted to FINRA, including all tape and non-tape reports, intraday clearing reports, as/of reports and reports of reversals. Third, pursuant to paragraph (d)(2)(A) of the proposed Rule, members that report transactions in NextShares for submission by the FINRA/Nasdaq TRF to NSCC for clearance and settlement must submit two clearing reports: (1) The member must submit a clearing report intraday in the proxy price format in accordance with paragraph (c); \12\ and (2) following publication of the NextShares Fund's NAV at the end of the day, the member also must submit a ``Clearing Copy'' report to reflect the final NAV-based trade price, in accordance with the following requirements set forth in paragraph (d)(2)(B) of the proposed Rule. --------------------------------------------------------------------------- \12\ Members must not wait until the NAV is published to submit transactions for clearing, because, as explained below and in the proposed Supplementary Material, all clearing submissions will be sent intraday to NSCC for risk management purposes. --------------------------------------------------------------------------- First, the Clearing Copy report must be submitted before the close of the FINRA/Nasdaq TRF on the same day as submission of the transaction in the proxy price format to ensure that the transaction is included in NSCC's end of day processing. Second, consistent with current FINRA rules,\13\ a Clearing Copy report should only be submitted to the FINRA/Nasdaq TRF if the transaction was originally reported to the FINRA/Nasdaq TRF in the proxy price format. In other words, a member cannot report a trade for dissemination purposes to the ADF and for clearing purposes to the FINRA/Nasdaq TRF. Third, the Clearing Copy report must contain (1) the unique indicator specified by FINRA to denote a Clearing Copy report, and (2) the control number of the original trade report assigned by the FINRA/Nasdaq TRF. Such information will allow FINRA to link the Clearing Copy report to the associated trade report in the proxy price format. Fourth, members are expressly prohibited from aggregating multiple OTC transactions in NextShares in a single Clearing Copy report. In other words, members must submit a separate Clearing Copy report for each transaction originally reported in the proxy price format. Fifth, the proposed Rule clarifies that following submission of the Clearing Copy report, the member is not required to cancel the initial clearing submission for the same transaction in the proxy price format. --------------------------------------------------------------------------- \13\ See, e.g., Rule 7230A(i). --------------------------------------------------------------------------- Finally, pursuant to paragraph (d)(2)(C) of the proposed Rule, clearing reports for the purpose of transferring a position related to a previously executed trade, such as step-outs,\14\ must reflect the final NAV-based trade price, if submitted after publication of the NAV. In this instance, two clearing reports would not be required, and members would submit only a single clearing report (which would not be a Clearing Copy report) at the final trade price. --------------------------------------------------------------------------- \14\ A step-out allows a member firm to allocate all or part of a client's position from a previously executed trade to the client's account at another broker-dealer. In other words, a step-out functions as a client's position transfer, rather than a trade; there is no exchange of shares and funds and no change in beneficial ownership. See, e.g., Trade Reporting FAQ 301.1, available at www.finra.org/industry/trade-reporting-faq#301. --------------------------------------------------------------------------- The proposed Supplementary Material provides additional guidance for members on reporting in the proxy price format, as well as the process for the submission of OTC transactions in NextShares to NSCC intraday before the final trade price is known. Specifically, in accordance with NSCC requirements, the FINRA/Nasdaq TRF will calculate [[Page 65840]] the contract price of the trade based on the last published IIV and submit the transaction in real-time to NSCC for purposes of intraday risk management. The transaction will not clear and settle at the IIV- based price, but instead at the final NAV-based trade price submitted by the reporting member in accordance with paragraph (d)(2)(B) described above. The proposed Supplementary Material also clarifies that members that clear directly at NSCC (and do not elect to have the FINRA/Nasdaq TRF submit trades on their behalf for clearance and settlement) must provide final pricing information for their executed trades to NSCC after the NAV is published, in accordance with NSCC requirements. FINRA will not do so on behalf of the member. FINRA notes that the staff discussed the proposed trade reporting requirements with two of its industry advisory committees, which generally indicated that the proposed approach to OTC trade reporting was reasonable. Committee members also acknowledged that firms would be required to make some systems changes for both trading and trade reporting purposes due to the unique nature of the NAV-Based Trading protocol. While some committee members indicated that they may not accept customer orders in NextShares due to the complexity of the product, other members felt that if there was customer demand, they would have to support trading in NextShares. However, FINRA notes that firms would not necessarily have to execute trades OTC, but could route to an exchange or another FINRA member for execution, and in that instance, would not be responsible for reporting the trade to FINRA. As noted in Item 2 of this filing, FINRA has filed the proposed rule change for immediate effectiveness and proposes that the operative date will be the date announced by Nasdaq for commencement of listing and trading of NextShares on the Nasdaq exchange under Nasdaq rules, which is currently anticipated to be on or about February 1, 2016. FINRA believes that the FINRA/Nasdaq TRF and members alike will have sufficient time to make and test the necessary systems changes to ensure systems readiness by the operative date.\15\ --------------------------------------------------------------------------- \15\ FINRA notes that currently there are no participants on the ADF, and FINRA does not anticipate there being an active ADF participant by the current NextShares implementation date of February 1, 2016, given the steps and timeframes required for the on-boarding of a new ADF participant. See, e.g., Securities Exchange Act Release No. 71407 (January 27, 2014), 79 FR 5472 (January 31, 2014) (Order Approving File No. SR-FINRA-2013-031 relating to participation on the ADF). --------------------------------------------------------------------------- 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,\16\ which requires, among other things, that FINRA rules must 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. FINRA believes that the proposed rule change is consistent with the Act because it requires that OTC transactions in NextShares, which are NMS stocks approved by the Commission, be reported to FINRA, in furtherance of FINRA's obligations as the SRO with responsibility for the OTC market. The proposed rule change will ensure that OTC transactions in NextShares are reported to FINRA in a uniform manner, consistent with current trade reporting rules applicable to OTC transactions in other NMS stocks. Among other things, the proposed rule change will ensure that trade data relating to OTC transactions in NextShares is disseminated to the consolidated tape and incorporated in FINRA's audit trail, and will facilitate the clearance and settlement of OTC transactions in NextShares. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change proposes specific trade reporting requirements for OTC transactions in NextShares, which are NMS stocks that have been approved and determined by the Commission to be consistent with the requirements of the Exchange Act.\17\ FINRA believes that the proposed rule change will have no impact on many members. As an initial matter, on average, only several hundred firms execute and report OTC equity trades to FINRA on a regular basis.\18\ Many firms, including smaller firms, route their order flow to another firm, e.g., their clearing firm, for execution, and as the routing firm, they do not have the trade reporting obligation. Thus, the universe of FINRA members that report OTC trades today is a small fraction of overall FINRA members.\19\ Moreover, members will not be required to trade in NextShares and could elect not to accept a customer order for NextShares. Alternatively, firms could route orders for NextShares to the Nasdaq exchange or another FINRA member for execution and reporting. --------------------------------------------------------------------------- \17\ In approving SR-NASDAQ-2014-020, the Commission stated that it considered the proposed rule's impact on efficiency, competition and capital formation. See 79 FR at 68315, fn 72. \18\ FINRA trade reporting rules require that for transactions between members, the ``executing party'' report the trade to FINRA. For transactions between a member and a non-member or customer, the member must report the trade. ``Executing party'' is defined under FINRA rules as the member that receives an order for handling or execution or is presented an order against its quote, does not subsequently re-route the order, and executes the transaction. \19\ FINRA notes that in its filings, Nasdaq did not provide an estimate of the number of firms that would be likely to trade NextShares on the exchange or the anticipated trading volume in NextShares. Accordingly, FINRA has no benchmark on which to base any reasonable estimates of the likely number of FINRA members that may elect to execute OTC transactions in NextShares (and would therefore be required to report those transactions pursuant to this proposed rule change) or the likely OTC volume in these products. --------------------------------------------------------------------------- Nonetheless, members that choose to execute OTC transactions in NextShares will need to make systems changes to comply with the proposed amendments, including coding changes to accommodate the submission of Clearing Copy reports for firms that elect to clear through the FINRA/Nasdaq TRF. In addition, firms will need to adopt policies and procedures relating to the trading and reporting of such transactions. Firms will incur costs to implement and test these changes. While these costs may vary by firm (depending, for example, on the level of sophistication of a firm's technology and trading and reporting platforms), as noted above, firms will not be required to trade in NextShares. Therefore, each firm can determine for itself whether the costs of implementing the changes necessary to support OTC trading in NextShares are warranted. Additionally, as noted above, two of FINRA's industry advisory committees indicated that they believe the proposed trade reporting requirements are reasonable. As such, FINRA does not believe that the proposed rule change would impose significant or differential costs on similarly situated firms. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect [[Page 65841]] the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6) thereunder.\21\ FINRA believes that the filing is appropriately designated as ``non- controversial'' because the proposed rule change would adopt trade reporting requirements for OTC transactions in NextShares, which have been approved by the Commission for listing and trading on the Nasdaq exchange. FINRA believes that the proposed rule change proposes reasonable trade reporting requirements for OTC transactions in these securities and that firms would not find compliance with such requirements to be burdensome. Moreover, the proposed requirements would apply only to members that choose to trade NextShares OTC. As such, each firm can determine for itself whether the costs of implementing the changes necessary to support OTC trading in NextShares are warranted. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A). \21\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or 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 rule-comments@sec.gov. Please include File Number SR-FINRA-2015-043 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FINRA-2015-043. 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 should refer to File Number SR-FINRA-2015-043, and should be submitted on or before November 17, 2015. --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ Brent J. Fields, Secretary. [FR Doc. 2015-27225 Filed 10-26-15; 8:45 am] BILLING CODE 8011-01-P
![65838 Federal Register / Vol. 80, No. 207 / Tuesday, October 27, 2015 / Notices
All submissions should refer to File (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 to adopt Nasdaq Rule 5745 governing
Number SR–EDGX–2015–46. This file notice is hereby given that on October the listing and trading of NextShares.4
number should be included on the 15, 2015, Financial Industry Regulatory As described more fully in Nasdaq’s
subject line if email is used. To help the Authority, Inc. (‘‘FINRA’’) filed with the filing, NextShares will trade in the
Commission process and review your Securities and Exchange Commission secondary market using a new trading
comments more efficiently, please use (‘‘SEC’’ or ‘‘Commission’’) the proposed protocol called ‘‘NAV-Based Trading.’’
only one method. The Commission will rule change as described in Items I, II, In NAV-Based Trading, all bids, offers
post all comments on the Commission’s and III below, which Items have been and execution prices will be expressed
Internet Web site (http://www.sec.gov/ prepared by FINRA. FINRA has as a premium or discount (which may
rules/sro.shtml). Copies of the designated the proposed rule change as be zero) to the fund’s next-determined
submission, all subsequent constituting a ‘‘non-controversial’’ rule net asset value per share (‘‘NAV’’), e.g.,
amendments, all written statements change under paragraph (f)(6) of Rule NAV¥$0.01 or NAV+$0.01. A
with respect to the proposed rule 19b–4 under the Act,3 which renders NextShares Fund’s NAV will be
change that are filed with the the proposal effective upon receipt of determined each business day after the
Commission, and all written this filing by the Commission. The close of trading. All trades will be
communications relating to the Commission is publishing this notice to binding at the time of execution, with
proposed rule change between the solicit comments on the proposed rule the transaction prices contingent upon
Commission and any person, other than change from interested persons. the determination of the NAV at the end
those that may be withheld from the of the trading day.5 Pursuant to Nasdaq
I. Self-Regulatory Organization’s Rule 5745, trading in NextShares is
public in accordance with the
Statement of the Terms of the Substance limited to Nasdaq’s Regular Market
provisions of 5 U.S.C. 552, will be
of the Proposed Rule Change Session through 4:00 p.m.6
available for Web site viewing and
printing in the Commission’s Public FINRA is proposing to adopt Rule In its filing with the SEC, Nasdaq
Reference Room, 100 F Street NE., 6184 (Transactions in Exchange-Traded explained that, because existing order
Washington, DC 20549 on official Managed Fund Shares (‘‘NextShares’’)) transmission and processing systems
business days between the hours of relating to the reporting of over-the- commonly used by exchanges and firms
10:00 a.m. and 3:00 p.m. Copies of the counter (‘‘OTC’’) transactions in are generally not designed to
filing also will be available for exchange-traded managed fund shares, accommodate pricing arrangements
inspection and copying at the principal which have been approved by the SEC such as NAV-Based Trading, the prices
office of the Exchange. All comments for listing and trading on the Nasdaq of NextShares trades and quotes will be
received will be posted without change; Stock Market LLC (‘‘Nasdaq’’). represented intraday using a ‘‘proxy
the Commission does not edit personal Exchange-traded managed fund shares price’’ format. In proxy price format, a
identifying information from are referred to under Nasdaq rules and NextShares Fund’s next-determined
submissions. You should submit only herein as ‘‘NextShares.’’ NAV will be represented as 100.00. A
information that you wish to make The text of the proposed rule change premium or discount of a stated amount
available publicly. All submissions is available on FINRA’s Web site at to the next-determined NAV will be
should refer to File Number SR–EDGX– http://www.finra.org, at the principal represented by the same increment or
2015–46, and should be submitted on or office of FINRA and at the decrement from 100, e.g., NAV¥$0.01
before November 17, 2015. Commission’s Public Reference Room. will be represented as 99.99, and
NAV+$0.01 will be represented as
For the Commission, by the Division of II. Self-Regulatory Organization’s 100.01. Nasdaq will report intraday
Trading and Markets, pursuant to delegated Statement of the Purpose of, and bids, offers and trades for NextShares in
authority.17 Statutory Basis for, the Proposed Rule real-time to the consolidated tape using
Brent J. Fields, Change the proxy price format. However, the
Secretary. In its filing with the Commission, trade will not clear and settle at the
[FR Doc. 2015–27214 Filed 10–26–15; 8:45 am] FINRA included statements concerning price expressed in the proxy price
BILLING CODE 8011–01–P the purpose of and basis for the format. After a NextShares Fund’s NAV
proposed rule change and discussed any has been calculated at the end of the
comments it received on the proposed trading day, Nasdaq will price each
SECURITIES AND EXCHANGE rule change. The text of these statements
COMMISSION may be examined at the places specified
4 See Securities Exchange Act Release No. 73562
(November 7, 2014), 79 FR 68309 (November 14,
in Item IV below. FINRA has prepared 2014) (Notice of Filing of Amendment No. 1 and
[Release No. 34–76213; File No. SR–FINRA– summaries, set forth in sections A, B, Order Granting Accelerated Approval of File No.
2015–043] and C below, of the most significant SR–NASDAQ–2014–020). In SR–NASDAQ–2014–
aspects of such statements. 020, Nasdaq used the terms ‘‘ETMF’’ and ‘‘ETMF
Self-Regulatory Organizations; Shares.’’ On October 13, 2015, Nasdaq filed a
Financial Industry Regulatory A. Self-Regulatory Organization’s proposed rule change to amend Nasdaq Rule 5745
to replace these terms with ‘‘NextShares Fund’’ and
Authority, Inc.; Notice of Filing and Statement of the Purpose of, and ‘‘NextShares,’’ respectively. See SR–NASDAQ–
Immediate Effectiveness of a Proposed Statutory Basis for, the Proposed Rule 2015–121, available at nasdaq.cchwallstreet.com/
Rule Change Relating to the Reporting Change NASDAQ/pdf/nasdaq-filings/2015/SR-NASDAQ-
of OTC Transactions in Exchange- 2015-121.pdf.
1. Purpose 5 Thus, because in NAV-Based Trading, prices of
Traded Managed Fund Shares executed trades are not determined until the
tkelley on DSK3SPTVN1PROD with NOTICES
(NextShares) to FINRA Background reference NAV is calculated, buyers and sellers of
In November 2014, the SEC approved NextShares will not know the final value of their
October 21, 2015. purchases and sales until the end of the trading day.
a proposed rule change filed by Nasdaq
Pursuant to Section 19(b)(1) of the 6 As explained in SR–NASDAQ–2014–020,
Securities Exchange Act of 1934 Nasdaq Rule 4120(b)(4) defines ‘‘Regular Market
1 15 U.S.C. 78s(b)(1). Session’’ as the trading session from 9:30 a.m. to
2 17 CFR 240.19b–4. 4:00 p.m. or 4:15 p.m.; NextShares will trade until
17 17 CFR 200.30–3(a)(12). 3 17 CFR 240.19b–4(f)(6). 4:00 p.m.
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![Federal Register / Vol. 80, No. 207 / Tuesday, October 27, 2015 / Notices 65841
the protection of investors or the public All submissions should refer to File notice is hereby given that on October
interest; (ii) impose any significant Number SR–FINRA–2015–043. This file 8, 2015, Chicago Board Options
burden on competition; and (iii) become number should be included on the Exchange, Incorporated (the ‘‘Exchange’’
operative for 30 days from the date on subject line if email is used. To help the or ‘‘CBOE’’) filed with the Securities
which it was filed, or such shorter time Commission process and review your and Exchange Commission (the
as the Commission may designate, it has comments more efficiently, please use ‘‘Commission’’) the proposed rule
become effective pursuant to Section only one method. The Commission will change as described in Items I, II and III
19(b)(3)(A) of the Act 20 and Rule 19b– post all comments on the Commission’s below, which Items have been prepared
4(f)(6) thereunder.21 FINRA believes Internet Web site (http://www.sec.gov/ by the self-regulatory organization. The
that the filing is appropriately rules/sro.shtml). Copies of the Commission is publishing this notice to
designated as ‘‘non-controversial’’ submission, all subsequent solicit comments on the proposed rule
because the proposed rule change amendments, all written statements change from interested persons.
would adopt trade reporting with respect to the proposed rule
change that are filed with the I. Self-Regulatory Organization’s
requirements for OTC transactions in
Commission, and all written Statement of the Terms of Substance of
NextShares, which have been approved
communications relating to the the Proposed Rule Change
by the Commission for listing and
trading on the Nasdaq exchange. FINRA proposed rule change between the The Exchange proposes to amend its
believes that the proposed rule change Commission and any person, other than Fees Schedule. The text of the proposed
proposes reasonable trade reporting those that may be withheld from the rule change is available on the
requirements for OTC transactions in public in accordance with the Exchange’s Web site (http://
these securities and that firms would provisions of 5 U.S.C. 552, will be www.cboe.com/AboutCBOE/
not find compliance with such available for Web site viewing and CBOELegalRegulatoryHome.aspx), at
requirements to be burdensome. printing in the Commission’s Public the Exchange’s Office of the Secretary,
Moreover, the proposed requirements Reference Room, 100 F Street NE., and at the Commission’s Public
would apply only to members that Washington, DC 20549 on official Reference Room.
choose to trade NextShares OTC. As business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such II. Self-Regulatory Organization’s
such, each firm can determine for itself Statement of the Purpose of, and
whether the costs of implementing the filing also will be available for
inspection and copying at the principal Statutory Basis for, the Proposed Rule
changes necessary to support OTC Change
trading in NextShares are warranted. offices of FINRA. All comments
At any time within 60 days of the received will be posted without change; In its filing with the Commission, the
filing of the proposed rule change, the the Commission does not edit personal self-regulatory organization included
Commission summarily may identifying information from statements concerning the purpose of,
temporarily suspend such rule change if submissions. You should submit only and basis for, the proposed rule change
it appears to the Commission that such information that you wish to make and discussed any comments it received
action is necessary or appropriate in the available publicly. All submissions on the proposed rule change. The text
public interest, for the protection of should refer to File Number SR–FINRA– of those statements may be examined at
investors, or otherwise in furtherance of 2015–043, and should be submitted on the places specified in Item IV below.
the purposes of the Act. If the or before November 17, 2015. The Exchange has prepared summaries,
Commission takes such action, the For the Commission, by the Division of set forth in sections A, B, and C below,
Commission shall institute proceedings Trading and Markets, pursuant to delegated of the most significant parts of such
to determine whether the proposed rule authority.22 statements.
should be approved or disapproved. Brent J. Fields,
A. Self-Regulatory Organization’s
Secretary. Statement of the Purpose of, and the
IV. Solicitation of Comments
[FR Doc. 2015–27225 Filed 10–26–15; 8:45 am] Statutory Basis for, the Proposed Rule
Interested persons are invited to BILLING CODE 8011–01–P Change
submit written data, views, and
arguments concerning the foregoing, 1. Purpose
including whether the proposed rule SECURITIES AND EXCHANGE The Exchange proposes to amend its
change is consistent with the Act. COMMISSION Fees Schedule 4. On May 11, 2015, the
Comments may be submitted by any of Exchange launched an updated version
[Release No. 34–76209; File No. SR–CBOE–
the following methods: 2015–090] of the Floor Broker Workstation
Electronic Comments (‘‘FBW’’), (i.e., ‘‘FBW2’’). Currently, the
Self-Regulatory Organizations; Fees Schedule provides that for every
• Use the Commission’s Internet Chicago Board Options Exchange, FBW login a TPH has, the FBW2
comment form (http://www.sec.gov/ Incorporated; Notice of Filing and monthly fee 5 is waived for the months
rules/sro.shtml); or Immediate Effectiveness of a Proposed
• Send an email to rule-comments@ of July 2015 through September 2015 on
Rule Change To Amend the Fees a one-to-one basis.6 The Exchange
sec.gov. Please include File Number SR– Schedule
FINRA–2015–043 on the subject line. 4 The Exchange initially filed the proposed fee
October 21, 2015. change on September 30, 2015 (SR–CBOE–2015–
Paper Comments
Pursuant to Section 19(b)(1) 1 of the 082). On October 8, 2015, the Exchange withdrew
tkelley on DSK3SPTVN1PROD with NOTICES
• Send paper comments in triplicate Securities Exchange Act of 1934 (the that filing and submitted this filing.
to Secretary, Securities and Exchange ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 5 The monthly fee for FBW2 is the same as the
Commission, 100 F Street NE., FBW fee (i.e., $400 per month (per login ID)).
6 For example, if a TPH has two FBW logins and
Washington, DC 20549–1090. 22 17 CFR 200.30–3(a)(12). two FBW2 logins, the total monthly fee would be
1 15 U.S.C.78s(b)(1). $800 ($400 for each FBW login). Another example
20 15 U.S.C. 78s(b)(3)(A). 2 15 U.S.C. 78a.
is if a TPH has two FBW logins and three FBW2
21 17 CFR 240.19b–4(f)(6). 3 17 CFR 240.19b–4. Continued
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Document Created: 2015-12-14 15:35:31
Document Modified: 2015-12-14 15:35:31
| 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 65838 |
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