80 FR 69259 - Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rules 3.22, Proxy Voting, and 13.3, Forwarding of Proxy and Other Issuer Materials

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 216 (November 9, 2015)

[Federal Register Volume 80, Number 216 (Monday, November 9, 2015)]
[Notices]
[Pages 69259-69261]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-28400]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76329; File No. SR-EDGX-2015-51]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Rules 3.22, Proxy Voting, and 13.3, Forwarding of Proxy and Other 
Issuer Materials

November 3, 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 23, 2015, EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') 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)(iii) thereunder,\4\ which renders it effective upon filing with 
the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to restructure and amend Rules 3.22, 
Proxy Voting, and 13.3, Forwarding or [sic] Proxy and other Issuer 
Materials, to conform to the rules of BATS Exchange, Inc. (``BZX'') and 
BATS Y-Exchange, Inc. (``BYX'').\5\
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    \5\ See BYX and BZX Rule 13.3.
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    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
    In early 2014, the Exchange and its affiliate, EDGA Exchange, Inc. 
(``EDGA'') received approval to effect a merger (the ``Merger'') of the 
Exchange's parent company, Direct Edge Holdings LLC, with BATS Global 
Markets, Inc., the parent of BZX and the BATS Y-Exchange, Inc. 
(``BYX'', together with BZX, EDGA and EDGX, the ``BGM Affiliated 
Exchanges'').\6\ In the context of the Merger, the BGM Affiliated 
Exchanges are working to align their rules, retaining only intended 
differences between the BGM Affiliated Exchanges.
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    \6\ See Securities Exchange Act Release No. 71449 (January 30, 
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
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    The Exchange provisions regarding proxy delivery and voting are 
currently included in two separate rules--Rule 3.22 governing proxy 
voting, and Rule 13.3 governing the forwarding of proxy and other 
issuer related materials. Conversely, BZX and BYX rules consolidate 
their proxy delivery and voting requirements into a single rule, Rule 
13.3. Thus, the Exchange proposes to restructure and amend Rules 3.22, 
Proxy Voting, and 13.3, Forwarding or Proxy and other Issuer Materials, 
to conform to the corresponding rules of BYX and BZX in order to 
provide a consistent rule set across each of the BGM Affiliated 
Exchanges.\7\
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    \7\ The Exchange notes that EDGA intends to file an identical 
proposal with the Commission to restructure and amend its Rules 
3.22. Proxy Voting, and 13.3, Forwarding or Proxy and other Issuer 
Materials, to conform to BYX and BZX Rules 13.3.
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    In sum, Rule 3.22 limits the circumstances in which a Member may 
vote a proxy without instructions from beneficial owners while Rule 
13.3 requires Members to transmit proxy materials and other 
communications to beneficial owners of securities. The Exchange notes 
the provisions of Exchange Rules 3.22 and 13.3 are substantially 
similar to BYX and BZX Rules 13.3 which also limits the circumstances 
in which a Member may vote a proxy and requires Members to transmit 
proxy materials to beneficial owners of securities. Nonetheless, the 
Exchange proposes to consolidate its proxy rules into a single Rule 
13.3 with minor revisions to make the rule identical to the 
corresponding BYX and BZX Rules 13.3. Each of these revisions are 
discussed below.
    First, the Exchange proposes to number the current text of Rule 
13.3 as paragraph (a) with the following modification: Remove reference 
to Rule 3.22 regarding the definition of ``designated investment 
adviser'' under Interpretation and Policy .01 as that rule is to be 
relocated to Rule 13.3 as described below.
    Second, the Exchange proposes to relocate Rule 3.22, Proxy Voting, 
in its entirety to Rule 13.3 as follows:
     Rule 3.22(a) would be renumbered as Rule 13.3(b) with a 
revision to subsections (ii) and (iii) to include the phrase ``such 
proxy is given'' in order to mirror BZX and BYX Rules 13.3(b). The rule 
would continue to prohibit Members from giving a proxy to vote stock 
that is registered in its name, unless: (i) Such Member is the 
beneficial owner of such stock; (ii) such proxy is given pursuant to 
the written instructions of the beneficial owner; or (iii) such proxy 
is given pursuant to the rules of any national securities exchange or 
association of which it is a member provided that the records of the 
Member clearly indicate the procedure it is following.
     Rule 3.22(b) would be renumbered as Rule 13.3(c) with a 
revision to replace a reference to ``SEC'' with ``Commission'' in order 
to mirror BZX and BYX Rules 13.3(c).
     Rule 3.22(c) would be renumbered as Rule 13.3(d) with a 
revision to replace a reference to ``Rule 13.3'' with paragraph (a) of 
this Rule as the current text of Rule 13.3 is proposed to be numbered 
as paragraph (a). As amended, Rule 13.3(d) would mirror BZX and BYX 
Rules 13.3(d).
     Interpretation and Policies to Rule 3.22 would be 
relocated in its entirety to Rule 13.3 with no changes.
    Other than as described above, the Exchange does not propose any 
additional changes to the relocated text of Rule 3.22. As amended, 
Exchange

[[Page 69260]]

Rule 13.3 would be identical to BYX and BZX Rules 13.3. The Exchange 
believes that the changes described above will help avoid confusion 
amongst Members of the Exchange that are also members of EDGA, BYX, and 
BZX by adopting identical rules across the BGM Affiliated Exchanges 
with regard to proxy delivery and beneficial owner voting.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are 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.\8\ 
Specifically, the proposed changes are consistent with Section 6(b)(5) 
of the Act,\9\ because they are designed to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of, a free and open market and a national market system, and, 
in general, to protect investors and the public interest. None of these 
changes alter the Exchange's current proxy delivery and voting 
requirements. Rather, as mentioned above, the proposed rule changes, 
combined with the planned filing for EDGA, would allow the BGM 
Affiliated Exchanges to provide an identical set of rules as it relates 
to proxy delivery and voting. Consistent rules, in turn, will simplify 
the regulatory requirements for Members of the Exchange that are also 
participants on EDGA, BYZ and/or BZX. The proposed rule change would 
provide greater harmonization between rules of similar purpose on the 
BGM Affiliated Exchanges, resulting in greater uniformity and less 
burdensome and more efficient regulatory compliance and understanding 
of Exchange Rules. As such, the proposed rule change would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and would remove impediments to and perfect 
the mechanism of a free and open market and a national market system. 
Similarly, the Exchange also believes that, by harmonizing the rules 
across each BGM Affiliated Exchange, the proposal will enhance the 
Exchange's ability to fairly and efficiently regulate its Members, 
meaning that the proposed rule change would promote just and equitable 
principles of trade in accordance with Section 6(b)(5) of the Act.\10\. 
[sic] Finally, the Exchange believes that the non-substantive changes 
discussed above will contribute to the protection of investors and the 
public interest by helping to avoid confusion with respect to Exchange 
Rules.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, allowing the 
Exchange to implement identical rules across each of the BGM Affiliated 
Exchanges does not present any competitive issues, but rather is 
designed to provide greater harmonization among Exchange, BZX, BYX, and 
EDGA rules of similar purpose. The proposed rule change should, 
therefore, result in less burdensome and more efficient regulatory 
compliance as well as a better understanding of Exchange Rules for 
common members of the BGM Affiliated Exchanges.

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

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) 
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 \11\ and paragraph 
(f)(6) of Rule 19b-4 thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    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: (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 Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-EDGX-2015-51 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-EDGX-2015-51. 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-EDGX-2015-51, and should be 
submitted on or before November 30, 2015.


[[Page 69261]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-28400 Filed 11-6-15; 8:45 am]
BILLING CODE 8011-01-P