80 FR 73006 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Sponsored Access
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 225 (November 23, 2015)
Federal Register Volume 80, Issue 225 (November 23, 2015)
| Page Range | 73006-73009 | |
| FR Document | 2015-29709 |
[Federal Register Volume 80, Number 225 (Monday, November 23, 2015)] [Notices] [Pages 73006-73009] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-29709] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76454; File No. SR-BX-2015-067] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Sponsored Access November 17, 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 November 4, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') 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 the Exchange. 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. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BX Rule 4615 entitled, ``Sponsored Participants'' to: (1) Define the term ``Sponsored Access'' and ``Customer Agreement;'' (2) specify the requirements to comply with Rule 15c3-5 under the Securities Exchange Act of 1934 (``Market Access Rule''); and (3) remove the requirement that each Sponsored Participant and each Sponsoring Member must enter into certain agreements with the Exchange. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the filing is to amend BX Rule 4615 entitled, ``Sponsored Participants'' to: (1) Define the term ``Sponsored Access,'' and specifically stating that compliance with the Market Access Rule is required, and defining ``Customer Agreement'' to refer to the agreement that must be executed between the Sponsoring Participant and the Sponsoring Member; (2) specify the requirements to comply with the Market Access Rule; and (3) remove the requirement that each Sponsored Participant and each Sponsoring Member must enter into certain agreements with the Exchange to streamline its rule and remove unnecessarily burdensome notice requirements to the Exchange. Defining Sponsored Access A Sponsored Participant may be a member or a non-member of the Exchange, such as an institutional investor, that gains access to the Exchange \3\ and trades under a Sponsoring Member's execution and clearing identity pursuant to sponsorship arrangements currently set forth in BX Rule 4615. The Exchange is proposing to define the term ``Sponsored Access'' to clarify the type of market access arrangement that is subject to BX Rule 4615. The Exchange proposes to amend BX Rule 4615(a) to add the following definition, ``Sponsored Access shall mean an arrangement whereby a member permits its customers to enter orders into the Exchange's System that bypass the member's trading system and are routed directly to the Exchange, including routing through a service bureau or other third party technology provider.'' This definition was derived from the Commission's description of Sponsored Access used in the release approving the Market Access Rule.\4\ The Exchange believes that defining Sponsored Access in BX Rule 4615 will provide market participants with greater clarity concerning Sponsored Access and their obligations with respect to this type of access arrangement. --------------------------------------------------------------------------- \3\ For example, a broker-dealer may allow its customer--whether an institution such as a hedge fund, mutual fund, bank or insurance company, an individual, or another broker-dealer--to use the broker- dealer's MPID, account or other mechanism or mnemonic used to identify a market participant for the purposes of electronically accessing the Exchange. \4\ The Market Access Rule, among other things, requires broker- dealers providing others with access to an exchange or alternative trading system to establish, document, and maintain a system of risk management controls and supervisory procedures reasonably designed to manage the financial, regulatory, and other risks of providing such access. See Securities Exchange Act Release No. 63241 (November 3, 2010), 75 FR 69792 (November 15, 2010). --------------------------------------------------------------------------- Defining Customer Agreement The Exchange proposes to amend BX Rule 4615(b)(i) to define the agreement that Sponsored Participants must enter into and maintain with one or more Sponsoring Members to establish proper relationship(s) and account(s) through which the Sponsored Participant may trade on the BX Market, as a ``Customer Agreement.'' Market Access Rule Pursuant to BX Rule 4615, the Sponsoring Member is responsible for the activities of the Sponsored Participant. Sponsored Participants are required to have procedures in place to comply with Exchange rules, and the Sponsoring Member takes responsibility for the Sponsored Participant's activity on the Exchange. Members may have multiple Sponsored Access relationships in place at a given time. The Exchange's examination program assesses compliance with BX Rule 4615, among other rules.\5\ The Exchange proposes to specifically enumerate within BX Rule 4615 the member's obligation to comply with the Market Access Rule, which members are currently required to comply with respecting market access. The Exchange believes that specifying the obligation to comply with the Market Access Rule specifically will reinforce that BX Rule 4615 presupposes member compliance with the Market Access Rule. --------------------------------------------------------------------------- \5\ The Exchange has a Regulatory Services Agreement with Financial Industry Regulatory Authority (``FINRA'') to conduct regulatory examinations, among other obligations. --------------------------------------------------------------------------- Elimination of Certain Contract Requirements At this time, the Exchange proposes to remove requirements to submit certain forms to the Exchange. There are three forms that are currently required by BX Rule 4615: (1) An agreement between the Sponsored Participant and the Exchange (``Exchange Agreement''); (2) a [[Page 73007]] User Agreement between the Sponsored Participant and its Sponsoring Member that is provided to the Exchange; and (3) a Notice of Consent provided to the Exchange by the Sponsoring Member. BX Rule 4615 will continue to require that each Sponsored Participants enter into a Customer Agreement with each Sponsoring member to establish proper relationship(s) and account(s) through which the Sponsored Participant may trade on the BX Market. These Customer Agreement(s) must incorporate the Sponsorship Provisions set forth in paragraph (ii) in BX Rule 4615.\6\ The Customer Agreement remains unaffected by this rule proposal. Also, the Exchange is proposing to amend BX Rule 4615 to identify the aforementioned agreement as the ``Customer Agreement.'' --------------------------------------------------------------------------- \6\ The Customer Agreement is required to include, among other language, all orders entered by the Sponsored Participants and any person acting on behalf of or in the name of such Sponsored Participant and any executions occurring as a result of such orders are binding in all respects on the Sponsoring Member and, also, Sponsoring Member is responsible for any and all actions taken by such Sponsored Participant and any person acting on behalf of or in the name of such Sponsored Participant. --------------------------------------------------------------------------- Today, only members may request connectivity to the Exchange. A member may obtain one or more ports for the purpose of providing Sponsored Access. If separate ports are requested by a member for the purpose of providing Sponsored Access, the member must request those ports from the Exchange and the member is responsible for the Sponsored Participant's activity on the Exchange. In all circumstances, the Exchange will only permit members to request connectivity to the market and the member is responsible for all customer orders submitted through the member's port. First, the Exchange believes that completing and submitting the Exchange Agreement, User Agreement and Notice of Consent is unnecessarily burdensome in light of the current structure in place at the Exchange. Only members may request connectivity to the Exchange by contacting BX Subscriber Services. Such connection by the member requires approval by the Exchange for the purpose of testing as well as other relevant information sharing with the Exchange by the member to obtain a port. The Exchange is aware of the member responsible for each of its ports, however the Exchange may not be aware of the member's Sponsored Access arrangements due to varied ways that a member may utilize a port. The Exchange believes the requirement to also complete and submit an Exchange Agreement, User Agreement and Notice of Consent with our BX Membership Department is viewed as unnecessarily burdensome by members because of the multitude of relationships the member has with various customers. Members have expressed to the Exchange that they have multiple relationships with customers, which customer relationships change over time.\7\ Members have indicated that the necessity to continuously disclose the updated customer relationships to the Exchange is burdensome and unnecessary as they remain responsible for all activity conducted on the Exchange through a port assigned to the member. Further such information is available to the Exchange upon Exchange request from its regulatory group.\8\ --------------------------------------------------------------------------- \7\ For example, a broker-dealer's customers, which could include hedge funds, institutional investors, individual investors, and other broker-dealers. \8\ See BX Rule 8210. --------------------------------------------------------------------------- Second, the Exchange believes that the Exchange Agreement between the Sponsored Participant and the Exchange is also unnecessarily burdensome. The requirement to provide this form was intended to give the Exchange notification that such a relationship existed and to ensure that the Sponsored Participant was informed of the Exchange's Certificate of Incorporation, Bylaws, Rules and procedures. The agreements also provided the Exchange with contractual privity, which would no longer exist with the removal of the Exchange Agreement. The Exchange does not believe the loss of privity with the Sponsored Participant creates a concern as the Exchange has the ability to remove access to the port \9\ at any time if the activity of the Sponsored Participant warrants such removal. In addition, as discussed below, the Sponsored Participant will be made aware of its obligations through the Customer Agreement that it executed with the Sponsoring Member. As noted above, the Exchange only permits its members to request connectivity to the Exchange's System and members responsible for all trades submitted through such ports. Pursuant to BX Rule 4615 the trading activity of a Sponsored Participant must be monitored by the Sponsoring Member for compliance with the terms of the Customer Agreement with the Sponsoring Participant.\10\ Finally, the member continues to be obligated to comply with BX Rule 4615 and the Market Access Rule. The Sponsoring Member is responsible for any and all actions taken by such Sponsored Participant and any person acting on behalf of or in the name of such Sponsored Participant. --------------------------------------------------------------------------- \9\ BX Rule 4611, entitled ``NASDAQ OMX BX Market Participant Registration'' permits BX to impose upon any BX Market Maker, BX ECN or Order Entry Firm such temporary restrictions upon the automated entry or updating of orders or Quotes/Orders as BX may determine to be necessary to protect the integrity of BX's systems. \10\ See BX Rule 4615(b)(ii)(G). --------------------------------------------------------------------------- BX Rule 4615 requires that the Sponsored Participant and the Sponsored Member maintain a Customer Agreement to ensure compliance with the Exchange's Rules and obligations related to security, among other things.\11\ BX Rule 4615 requires that the Customer Agreement specify that the Sponsored Participant shall maintain, keep current and provide to the Sponsoring Member a list of individuals authorized to obtain access to the Exchange on behalf of the Sponsored Participant and provide appropriate training. In addition, pursuant to the Customer Agreement provisions, the Sponsored Participant is required to take reasonable security precautions to prevent unauthorized use or access to the Exchange, including unauthorized entry of information into the Exchange, or the information and data made available therein. Finally, the Customer Agreement must provide that the Sponsored Participant is responsible for any and all orders, trades and other messages and instructions entered, transmitted or received under identifiers, passwords and security codes of authorized individuals, and for the trading and other consequences thereof, including granting unauthorized access to the Exchange. The contents and the requirement for a Customer Agreement are unchanged. --------------------------------------------------------------------------- \11\ See BX Rule 4615(b)(ii)(B). --------------------------------------------------------------------------- Pursuant to BX Rule 4615 the Sponsoring Member must provide a Notice of Consent to the Exchange. The Exchange believes that a Notice of Consent provided to the Exchange by the Sponsoring Member is also unnecessarily burdensome. The Notice of Consent notifies the Exchange of the relationship between the Sponsoring Member and the Sponsored Participant. However, as noted above, the Exchange's regulatory group may request information about a particular customer relationship as it deems necessary. \12\ Further, the Exchange is made aware of the existence of ports when the Sponsoring Member requests connectivity to the Exchange and the Members are responsible for all trading activity by its Sponsored Participant. In addition, the Exchange, through its Regulatory Services Agreement with the [[Page 73008]] Financial Industry Regulatory Authority (FINRA), reviews for member compliance with BX Rule 4615 and the Market Access Rule. The Exchange has the ability to remove access to the port \13\ at any time if the activity of the Sponsored Participant would warrant such removal. --------------------------------------------------------------------------- \12\ See BX Rule 8210. \13\ See note 9. --------------------------------------------------------------------------- In light of the foregoing, the requirement to complete and submit an Exchange Agreement and Notice of Consent with the BX Membership Department is viewed as unnecessarily burdensome by members, who must update their customer relationships internally and provides such information upon Exchange request. Finally, the Exchange notes it is correcting a capitalization in BX Rule 4615(ii)(C). 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \14\ in general, and furthers the objectives of Section 6(b)(5) of the Act \15\ in particular, in that it is 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, by enhancing the risk protections available to Exchange members. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- Defining Sponsored Access Adding a definition of Sponsored Access will assist market participants to understand the type of arrangements that are subject to BX Rule 4615 and such clarity will serve to promote just and equitable principles of trade. Members have indicated, and the Exchange believes, that adding the Sponsored Access definition will provide members with additional guidance with respect to BX Rule 4615. Defining Customer Agreement Defining the agreement that Sponsored Participants must enter into and maintain with one or more Sponsoring Members to establish proper relationship(s) and account(s) through which the Sponsored Participant may trade on the BX Market, as a ``Customer Agreement'' will also serve to provide members with clarity on the agreement that the Exchange will continue to require and the obligations that are contained within the Customer Agreement. This amendment is non-substantive. Market Access Rule Members continue to be required to comply with Rule 4615 and the Market Access Rule. The Exchange believes that specifically enumerating the member's responsibility to comply with the Market Access Rule will provide member's with additional guidance concerning the application of the Rule. This change is non-substantive as members are currently responsible to comply with the Market Access Rule. Elimination of Certain Contract Requirements Removing the requirement to submit and complete an Exchange Agreement, User Agreement and Notice of Consent will remove impediments to and perfect the mechanism of a free and open market by removing a burdensome and time-consuming requirement for members. While elimination of the Exchange Agreement requirement will also eliminate the Exchange's contractual privity with the Sponsored Participant, he Exchange notes that any potential concerns to the loss of privity are mitigated by the Exchange's ability to restrict the Sponsored Participant's access to a port \16\ at any time it is warranted by the Sponsored Participant's trading activity. Also, members have indicated that customer relationships must be frequently updated and it is unnecessarily burdensome to continuously update the Exchange with this information that is available upon request. Connectivity to the Exchange is authorized by the Exchange and must be requested by a member of the Exchange. Such connection requires approval by the Exchange, testing and other security features as well as information sharing with the Exchange by the member. In addition, BX Rule 4615 delineates the terms of the required contractual relationship between the Sponsoring Member and the Sponsored Participant in the Customer Agreement, which remains in effect. The Exchange believes that the Notice of Consent is unnecessary as Sponsoring Members must request connectivity to the Exchange as well as enter into a Customer Agreement with the Sponsored Participant. Finally, as is the case with other Exchange Rules, the Exchange examines for compliance with BX Rule 4615 and may request information about any customer relationship which concerns the Exchange. --------------------------------------------------------------------------- \16\ See note 9. --------------------------------------------------------------------------- The requirement to also complete and submit an Exchange Agreement, User Agreement and a Notice of Consent with our BX Membership Department is viewed as unnecessarily burdensome by members, who must update their customer relationships internally. 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 for the reasons below. Defining Sponsored Access The addition of a definition for Sponsored Access will assist market participants to understand the type of arrangement subject to BX Rule 4615 and such clarity will serve to promote just and equitable principles of trade. Defining Customer Agreement Defining the agreement that Sponsored Participants must enter into and maintain with one or more Sponsoring Members to establish proper relationship(s) and account(s) through which the Sponsored Participant may trade on the BX Market, as a ``Customer Agreement'' does not create an undue burden on competition as this amendment is non-substantive and the Exchange believes that providing guidance concerning the type of arrangement subject to BX Rule 4615 will facilitate member compliance and does not unduly burden competition. Market Access Rule In addition, the Exchange believes that specifically enumerating the member's obligation to comply with the Market Access Rule does not create an undue burden on competition, but rather reinforces the application of the Rule. This change is non-substantive as members are currently responsible to comply with the Market Access Rule. Elimination of Certain Contract Requirements Removing the requirement to complete an Exchange Agreement, User Agreement and Notice of Consent under BX Rule 4615 does not create an undue burden on competition. The Exchange believes that this requirement is unnecessarily burdensome as the Exchange's regulatory group may request information about a particular customer relationship as it deems necessary.\17\ Further, the Exchange is made aware of the existence of ports when the Sponsoring Member requests connectivity to the Exchange and the [[Page 73009]] Members are responsible for all trading activity by its Sponsored Participant. In order to obtain connectivity to the Exchange, members are required to contact BX Subscriber Services and request a connection to the market. Such connection requires approval by the Exchange, testing and other security features as well as information sharing with the Exchange by the member. Only members are permitted to request connectivity to the Exchange. The requirement to also complete and submit an Exchange Agreement, User Agreement and a Notice of Consent with our BX Membership Department is viewed as unnecessarily burdensome by members, who must update their customer relationships internally. Additionally, the Exchange examines for compliance with BX Rule 4615 and may request information about any customer relationship which concerns the Exchange. --------------------------------------------------------------------------- \17\ See BX Rule 8210. --------------------------------------------------------------------------- The Sponsoring Member remains responsible for customer activity conducted on the Exchange through the Customer Agreement, among other obligations. Additionally, Sponsored Participants that obtain access to the Exchange's System are required to take reasonable security precautions and prevent unauthorized use or access to the BX Market, including unauthorized entry of information into the BX Market,\18\ pursuant to the Customer Agreement. Further, the Sponsored Participants is responsible to establish adequate procedures and controls that permit it to effectively monitor its employees', agents' and customers' use and access to the BX Market for compliance with the terms of this agreement.\19\ In addition, the Exchange, through its Regulatory Services Agreement with FINRA conducts reviews of members for compliance with BX Rule 4615 and the Market Access Rule. The Exchange has the ability to remove access to the port \20\ at any time if the activity of the Sponsored Participant would warrant such removal. Finally, BX Rule 4615 is currently applicable to all BX members that desire to sponsor access for its customers and applies to trading in all securities on the Exchange. --------------------------------------------------------------------------- \18\ See BX Rule 4615(b)(ii)(G). \19\ See BX Rule 4615(b)(ii)(H). \20\ See note 9. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not significantly affect the protection of investors or the public interest; does not impose any significant burden on competition; and by its terms does not 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) \21\ of the Act and Rule 19b- 4(f)(6) thereunder.\22\ --------------------------------------------------------------------------- \21\ 15 U.S.C. 78s(b)(3)(A). \22\ 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 [email protected]. Please include File Number SR-BX-2015-067 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-BX-2015-067. 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 the 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-BX-2015-067 and should be submitted on or December 14, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-29709 Filed 11-20-15; 8:45 am] BILLING CODE 8011-01-P
![73006 Federal Register / Vol. 80, No. 225 / Monday, November 23, 2015 / Notices
For the Commission, by the Division of concerning the purpose of and basis for Commission’s description of Sponsored
Trading and Markets, pursuant to delegated the proposed rule change and discussed Access used in the release approving the
authority.35 any comments it received on the Market Access Rule.4 The Exchange
Robert W. Errett, proposed rule change. The text of these believes that defining Sponsored Access
Deputy Secretary. statements may be examined at the in BX Rule 4615 will provide market
[FR Doc. 2015–29708 Filed 11–20–15; 8:45 am] places specified in Item IV below. The participants with greater clarity
BILLING CODE 8011–01–P Exchange has prepared summaries, set concerning Sponsored Access and their
forth in sections A, B, and C below, of obligations with respect to this type of
the most significant aspects of such access arrangement.
SECURITIES AND EXCHANGE statements.
Defining Customer Agreement
COMMISSION
A. Self-Regulatory Organization’s The Exchange proposes to amend BX
[Release No. 34–76454; File No. SR–BX– Statement of the Purpose of, and Rule 4615(b)(i) to define the agreement
2015–067] Statutory Basis for, the Proposed Rule that Sponsored Participants must enter
Change into and maintain with one or more
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing 1. Purpose Sponsoring Members to establish proper
and Immediate Effectiveness of relationship(s) and account(s) through
The purpose of the filing is to amend
Proposed Rule Change Relating to which the Sponsored Participant may
BX Rule 4615 entitled, ‘‘Sponsored
Sponsored Access trade on the BX Market, as a ‘‘Customer
Participants’’ to: (1) Define the term
Agreement.’’
‘‘Sponsored Access,’’ and specifically
November 17, 2015.
stating that compliance with the Market Market Access Rule
Pursuant to Section 19(b)(1) of the Access Rule is required, and defining
Securities Exchange Act of 1934 Pursuant to BX Rule 4615, the
‘‘Customer Agreement’’ to refer to the Sponsoring Member is responsible for
(‘‘Act’’), 1 and Rule 19b–4 thereunder,2 agreement that must be executed
notice is hereby given that on November the activities of the Sponsored
between the Sponsoring Participant and Participant. Sponsored Participants are
4, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’ the Sponsoring Member; (2) specify the
or ‘‘Exchange’’) filed with the Securities required to have procedures in place to
requirements to comply with the Market comply with Exchange rules, and the
and Exchange Commission (‘‘SEC’’ or Access Rule; and (3) remove the
‘‘Commission’’) the proposed rule Sponsoring Member takes responsibility
requirement that each Sponsored for the Sponsored Participant’s activity
change as described in Items I, II, and Participant and each Sponsoring
III, below, which Items have been on the Exchange. Members may have
Member must enter into certain multiple Sponsored Access
prepared by the Exchange. The agreements with the Exchange to
Commission is publishing this notice to relationships in place at a given time.
streamline its rule and remove The Exchange’s examination program
solicit comments on the proposed rule unnecessarily burdensome notice
change from interested persons. assesses compliance with BX Rule 4615,
requirements to the Exchange. among other rules.5 The Exchange
I. Self-Regulatory Organization’s Defining Sponsored Access proposes to specifically enumerate
Statement of the Terms of Substance of within BX Rule 4615 the member’s
A Sponsored Participant may be a
the Proposed Rule Change obligation to comply with the Market
member or a non-member of the
The Exchange proposes to amend BX Access Rule, which members are
Exchange, such as an institutional
Rule 4615 entitled, ‘‘Sponsored currently required to comply with
investor, that gains access to the
Participants’’ to: (1) Define the term respecting market access. The Exchange
Exchange 3 and trades under a
‘‘Sponsored Access’’ and ‘‘Customer believes that specifying the obligation to
Sponsoring Member’s execution and
Agreement;’’ (2) specify the comply with the Market Access Rule
clearing identity pursuant to
requirements to comply with Rule specifically will reinforce that BX Rule
sponsorship arrangements currently set
15c3–5 under the Securities Exchange 4615 presupposes member compliance
forth in BX Rule 4615. The Exchange is
Act of 1934 (‘‘Market Access Rule’’); and with the Market Access Rule.
proposing to define the term
(3) remove the requirement that each ‘‘Sponsored Access’’ to clarify the type Elimination of Certain Contract
Sponsored Participant and each of market access arrangement that is Requirements
Sponsoring Member must enter into subject to BX Rule 4615. The Exchange At this time, the Exchange proposes to
certain agreements with the Exchange. proposes to amend BX Rule 4615(a) to remove requirements to submit certain
The text of the proposed rule change add the following definition, forms to the Exchange. There are three
is available on the Exchange’s Web site ‘‘Sponsored Access shall mean an forms that are currently required by BX
at http:// arrangement whereby a member permits Rule 4615: (1) An agreement between
nasdaqomxbx.cchwallstreet.com, at the its customers to enter orders into the the Sponsored Participant and the
principal office of the Exchange, and at Exchange’s System that bypass the Exchange (‘‘Exchange Agreement’’); (2) a
the Commission’s Public Reference member’s trading system and are routed
Room. directly to the Exchange, including 4 The Market Access Rule, among other things,
II. Self-Regulatory Organization’s routing through a service bureau or requires broker-dealers providing others with access
other third party technology provider.’’ to an exchange or alternative trading system to
Statement of the Purpose of, and establish, document, and maintain a system of risk
Statutory Basis for, the Proposed Rule This definition was derived from the management controls and supervisory procedures
wgreen on DSK2VPTVN1PROD with NOTICES
Change reasonably designed to manage the financial,
3 For example, a broker-dealer may allow its regulatory, and other risks of providing such access.
In its filing with the Commission, the customer—whether an institution such as a hedge See Securities Exchange Act Release No. 63241
Exchange included statements fund, mutual fund, bank or insurance company, an (November 3, 2010), 75 FR 69792 (November 15,
individual, or another broker-dealer—to use the 2010).
broker-dealer’s MPID, account or other mechanism 5 The Exchange has a Regulatory Services
35 17 CFR 200.30–3(a)(12). or mnemonic used to identify a market participant Agreement with Financial Industry Regulatory
1 15 U.S.C. 78s(b)(1). for the purposes of electronically accessing the Authority (‘‘FINRA’’) to conduct regulatory
2 17 CFR 240.19b–4. Exchange. examinations, among other obligations.
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Members are responsible for all trading III. Date of Effectiveness of the communications relating to the
activity by its Sponsored Participant. In Proposed Rule Change and Timing for proposed rule change between the
order to obtain connectivity to the Commission Action Commission and any person, other than
Exchange, members are required to Because the foregoing proposed rule those that may be withheld from the
contact BX Subscriber Services and change does not significantly affect the public in accordance with the
request a connection to the market. protection of investors or the public provisions of 5 U.S.C. 552, will be
Such connection requires approval by interest; does not impose any significant available for Web site viewing and
the Exchange, testing and other security burden on competition; and by its terms printing in the Commission’s Public
features as well as information sharing does not become operative for 30 days Reference Room, 100 F Street NE.,
with the Exchange by the member. Only from the date on which it was filed, or Washington, DC 20549, on official
members are permitted to request such shorter time as the Commission business days between the hours of
connectivity to the Exchange. The may designate, it has become effective 10:00 a.m. and 3:00 p.m. Copies of the
requirement to also complete and pursuant to Section 19(b)(3)(A) 21 of the filing also will be available for
submit an Exchange Agreement, User Act and Rule 19b–4(f)(6) thereunder.22 inspection and copying at the principal
Agreement and a Notice of Consent with At any time within 60 days of the office of the Exchange. All comments
our BX Membership Department is filing of the proposed rule change, the received will be posted without change;
viewed as unnecessarily burdensome by Commission summarily may the Commission does not edit personal
members, who must update their temporarily suspend such rule change if identifying information from
customer relationships internally. it appears to the Commission that such submissions. You should submit only
Additionally, the Exchange examines action is: necessary or appropriate in the information that you wish to make
for compliance with BX Rule 4615 and public interest; for the protection of available publicly. All submissions
may request information about any investors; or otherwise in furtherance of should refer to File Number SR–BX–
customer relationship which concerns the purposes of the Act. If the 2015–067 and should be submitted on
the Exchange. Commission takes such action, the or December 14, 2015.
The Sponsoring Member remains Commission shall institute proceedings For the Commission, by the Division of
responsible for customer activity to determine whether the proposed rule Trading and Markets, pursuant to delegated
conducted on the Exchange through the should be approved or disapproved. authority.23
Customer Agreement, among other Robert W. Errett,
IV. Solicitation of Comments
obligations. Additionally, Sponsored Deputy Secretary.
Participants that obtain access to the Interested persons are invited to [FR Doc. 2015–29709 Filed 11–20–15; 8:45 am]
Exchange’s System are required to take submit written data, views, and BILLING CODE 8011–01–P
reasonable security precautions and arguments concerning the foregoing,
prevent unauthorized use or access to including whether the proposed rule
the BX Market, including unauthorized change is consistent with the Act. SECURITIES AND EXCHANGE
entry of information into the BX Comments may be submitted by any of COMMISSION
the following methods:
Market,18 pursuant to the Customer [Release No. 34–76455; File No. SR–EDGA–
Agreement. Further, the Sponsored Electronic Comments 2015–42]
Participants is responsible to establish • Use the Commission’s Internet
adequate procedures and controls that Self-Regulatory Organizations; EDGA
comment form (http://www.sec.gov/
permit it to effectively monitor its Exchange, Inc.; Notice of Filing and
rules/sro.shtml); or
employees’, agents’ and customers’ use • Send an email to rule- Immediate Effectiveness of a Proposed
and access to the BX Market for comments@sec.gov. Please include File Rule Change To Amend Rule 11.11,
compliance with the terms of this Number SR–BX–2015–067 on the Routing to Away Trading Centers
agreement.19 In addition, the Exchange, subject line. November 17, 2015.
through its Regulatory Services
Paper Comments Pursuant to Section 19(b)(1) of the
Agreement with FINRA conducts
Securities Exchange Act of 1934 (the
reviews of members for compliance • Send paper comments in triplicate ‘‘Act’’),1 and Rule 19b–4 thereunder,2
with BX Rule 4615 and the Market to Secretary, Securities and Exchange notice is hereby given that on November
Access Rule. The Exchange has the Commission, 100 F Street NE., 9, 2015, EDGA Exchange, Inc. (the
ability to remove access to the port 20 at Washington, DC 20549–1090. ‘‘Exchange’’ or ‘‘EDGA’’) filed with the
any time if the activity of the Sponsored All submissions should refer to File Securities and Exchange Commission
Participant would warrant such Number SR–BX–2015–067. This file (‘‘Commission’’) the proposed rule
removal. Finally, BX Rule 4615 is number should be included on the change as described in Items I and II
currently applicable to all BX members subject line if email is used. To help the below, which Items have been prepared
that desire to sponsor access for its Commission process and review your by the Exchange. The Exchange has
customers and applies to trading in all comments more efficiently, please use designated this proposal as a ‘‘non-
securities on the Exchange. only one method. The Commission will controversial’’ proposed rule change
C. Self-Regulatory Organization’s post all comments on the Commission’s pursuant to Section 19(b)(3)(A) of the
Statement on Comments on the Internet Web site (http://www.sec.gov/ Act 3 and Rule 19b–4(f)(6)(iii)
Proposed Rule Change Received From rules/sro.shtml). Copies of the thereunder,4 which renders it effective
Members, Participants, or Others submission, all subsequent upon filing with the Commission. The
wgreen on DSK2VPTVN1PROD with NOTICES
amendments, all written statements Commission is publishing this notice to
No written comments were either with respect to the proposed rule
solicited or received. change that are filed with the 23 17 CFR 200.30–3(a)(12).
Commission, and all written 1 15 U.S.C. 78s(b)(1).
18 See BX Rule 4615(b)(ii)(G). 2 17 CFR 240.19b–4.
19 See BX Rule 4615(b)(ii)(H). 21 15 U.S.C. 78s(b)(3)(A). 3 15 U.S.C. 78s(b)(3)(A).
20 See note 9. 22 17 CFR 240.19b–4(f)(6). 4 17 CFR 240.19b–4(f)(6)(iii).
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Document Created: 2018-03-01 11:17:37
Document Modified: 2018-03-01 11:17:37
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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