81 FR 1245 - Self-Regulatory Organizations; International Securities Exchange; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the Securities Trader and Securities Trader Principal Registration Categories
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 6 (January 11, 2016)
Federal Register Volume 81, Issue 6 (January 11, 2016)
| Page Range | 1245-1249 | |
| FR Document | 2016-00248 |
[Federal Register Volume 81, Number 6 (Monday, January 11, 2016)] [Notices] [Pages 1245-1249] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-00248] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76835; File No. SR-ISE-2015-44] Self-Regulatory Organizations; International Securities Exchange; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the Securities Trader and Securities Trader Principal Registration Categories January 5, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ [[Page 1246]] notice is hereby given that on December 23, 2015, the International Securities Exchange, LLC (the ``Exchange'' or the ``ISE'') filed with the Securities and Exchange Commission the proposed rule change as described in Items I, II, and III below, of which Items I and II have been prepared by the self-regulatory organization. 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 ISE proposes to codify, in the Supplementary Material to Rule 313 Registration Requirements, the categories of registration and respective qualification examinations required for individual associated persons (``associated persons'') that engage in the securities activities of members on the Exchange. Specifically, the Exchange proposes to (1) replace the Proprietary Trader registration category and the Series 56 Proprietary Trader registration qualification examination with the newly codified Securities Trader category of registration and the Series 57 Securities Trader registration qualification examination for Securities Traders respectively and (2) replace the Proprietary Trader Principal registration category with the newly codified registration category of Securities Trader Principal and require Securities Trader Principals to take the Series 57 qualification examination in addition to the Series 24 qualification examination. The Exchange also proposes to amend Rule 604, Continuing Education for Registered Persons, by deleting the rule text referring to the S501 continuing education program currently applicable to Proprietary Traders and replacing it with the S101, and replacing a reference to the Series 56 with the 57. Specifically, the Exchange proposes that Series 57 registered persons take the S101 General Program for Series 7 and all other registered persons. Finally, the Exchange proposes to amend Rule 604 to provide for Web-based delivery of the continuing education regulatory element for registered persons. The text of the proposed rule change is available on the Exchange's Web site at www.ise.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 self-regulatory organization 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 Exchange proposes to amend Rule 313 Registration Requirements. This amendment will replace the Proprietary Trader (PT) registration category and qualification examination (Series 56) with the newly codified Securities Trader (TD) registration category and qualification examination (Series 57). In addition, the Exchange proposes to replace the Proprietary Trader Principal (TP) registration category with the newly codified Securities Trader Principal (TP) registration category for associated persons who either: (i) Supervise or monitor proprietary trading, market-making and/or brokerage activities for broker-dealers; (ii) supervise or train those engaged in proprietary trading, market- making and/or effecting transactions on behalf of a broker-dealer, with respect to those activities; and/or (iii) are officers, partners or directors of a member, as described in paragraph in proposed paragraph (a) to .08 of Supplementary Material to Rule 313. The Exchange also proposes to replace the Proprietary Trader Compliance Officer (CT) registration category with the newly codified Securities Trader Compliance Officer (CT) registration category for Chief Compliance Officers (or individuals performing similar functions) of a member or member organization. This filing is, in all material respects, based upon SR-FINRA-2015-015 and 2015-017, and SR-C2-2015-027.\3\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 75581 (July 31, 2015), 80 FR 47018 (August 6, 2015) (SR-FINRA-2015-015); Securities Exchange Act Release No. 75783 (August 28, 2015), 80 FR 53369 (September 3, 2015) (SR-FINRA-2015-017); and Securities Exchange Act Release No. 76408 (November 10, 2015) (SR-C2-2015-027). --------------------------------------------------------------------------- Currently, Rule 313 requires, among other things, an associated person engaged or to be engaged in the securities business of a member to register with the Exchange in the category of registration appropriate to the function to be performed and to pass the qualification examination appropriate to the category of registration as prescribed by the Exchange. Among the qualification and registration requirements set forth by the Exchange, an associated person who engages in proprietary trading, market-making, or effecting transactions on behalf of a broker-dealer must register and qualify as a Proprietary Trader (PT) in WebCRD.\4\ To qualify as a Proprietary Trader, an associated person must either pass the Series 56 Proprietary Trader qualification examination \5\ or Series 7 General Securities Representative qualification examination. Several exchanges, including ISE currently use the Series 56 examination as a qualification standard.\6\ --------------------------------------------------------------------------- \4\ WebCRD is a secure registration and licensing system operated by FINRA and is the central licensing and registration system for the U.S. securities industry and its regulators. The system contains the registration records of more than 6,500 registered broker-dealers, and the qualification, employment and disclosure histories of more than 650,000 active registered associated persons. In addition, Web CRD facilitates the processing and payment of FINRA registration-related fees such as form filings, fingerprint submissions, qualification exams and continuing education sessions. \5\ The Series 56 Proprietary Trader Examination is a two hour and thirty minute exam, consisting of 100 scored multiple-choice questions. The Series 56 examination is administered by FINRA, but is not recognized by FINRA as an acceptable qualification examination for associated persons engaged in securities trading. Under FINRA rules, associated persons of FINRA members that engage in over-the-counter securities trading are required to pass the Series 55 Equity Trader Exam. Nevertheless, as FINRA has recognized, because the Series 55 and Series 56 are intended to test the core knowledge required of associated persons engaged in trading activities as well as self-regulatory organization (``SRO'') rules, including trading rules that are common across all SROs, there is significant overlap in the content of the Series 55 and Series 56 qualification examinations. See Securities Exchange Act Release No. 75394 (July 8, 2015), 80 FR 41119 (Notice of Filing of a Proposed Rule Change to Establish the Securities Trader and Securities Trader Principal Registration Categories) (SR-FINRA-2015-017). \6\ See, e.g., BATS Exchange, Inc. (``BATS'') Interpretation and Policy .01 to Rule 2.5 (Proficiency Examinations); Miami International Securities Exchange, LLC (``MIAX'') Rule 1302 (Registration of Representatives). --------------------------------------------------------------------------- .07 of Supplementary Material to Rule 313 further requires that an associated person with supervisory responsibility over proprietary trading activities or who is an (i) officer; (ii) partner; (iii) director; (iv) supervisor of proprietary trading, market-making or brokerage activities; and/or (v) supervisor of those engaged in proprietary trading, market-making or brokerage activities with respect to those activities is required to register and qualify as a Proprietary Trader Principal (TP) in WebCRD and satisfy prerequisite registration and qualification requirements, including, but not limited to passing the Series 24 General Securities Principal [[Page 1247]] Examination or an acceptable alternative qualification examination. An associated person who is a Chief Compliance Officer (or performs similar functions) for a member that engages in proprietary trading, market-making, or effecting transactions on behalf of a broker-dealer is also required to register and qualify as a Proprietary Trader Compliance Officer (CT) in WebCRD and satisfy the prerequisite registration and qualification requirements, including, but not limited to passing the Series 14 Compliance Official Examination or an acceptable alternative qualification exam. Codification of Examination and Registration Requirements The Exchange proposes to replace the Series 56 qualification examination with the newly codified Series 57 qualification examination for those registration categories where the Series 56 is currently an acceptable qualification standard. Specifically, with respect to the Proprietary Trader registration, the Exchange proposes to replace the Proprietary Trader (PT) registration category with the newly codified Securities Trader (TD) registration category as well as eliminate the current Series 56 Proprietary Trader Exam prerequisite and, instead, include a Series 57 Securities Trader qualification examination in its place.\7\ The Proprietary Trader Principal (PT) and Proprietary Trader Compliance Officer (CT) registration categories would be replaced with the newly codified renamed registration categories of Securities Trader Principal (TP) and Securities Trader Compliance Officer respectively (CT).\8\ --------------------------------------------------------------------------- \7\ Neither the Exchange's current Rules nor the proposal would require that a Proprietary Trader or Securities Trader work at, or be associated with, a ``proprietary trading firm.'' Rather, both the current Rules and the proposal would require that an associated person that engages in proprietary trading, market-making, or effecting transactions on behalf of a broker-dealer qualify and register as a Proprietary Trader (or Securities Trader) in WebCRD. Whereas the current rule allows an associated person to qualify and register as a Proprietary Trader by either passing the Series 56 Proprietary Trader qualification examination or Series 7 General Securities Representative qualification examination, the proposal would require an associated person to pass the Series 57 Securities Trader qualification examination in order to qualify as a Securities Trader after the effective date of the proposal. \8\ As is the case under the current Rules, under the proposed rule, only individuals qualified and registered as a Proprietary Trader Principal (TP) (Securities Trader Principal TP)) would be permitted to supervise a Proprietary Trader (PT) (Securities Trader (TD)). --------------------------------------------------------------------------- The Exchange will announce the effective date of the proposed rule change in a Regulatory Circular. Currently, the Exchange intends for the effective date to be January 4, 2016. Under the proposed rule, associated persons who have passed the Proprietary Trader (Series 56) qualification examination and who have registered as a Proprietary Trader (PT) in WebCRD on or before the effective date of the proposed rule change, and associated persons who have passed the General Securities Representative (Series 7) qualification examination and who have registered as Proprietary Traders (PT) in WebCRD on or before the effective date of the proposed rule change, would be grandfathered as Securities Traders (TDs) without having to take any additional examinations and without having to take any other action, provided that the associated person's registration has not been revoked by the Exchange as a disciplinary sanction and no more than two years have passed between the date that the associated person last registered as a Proprietary Trader (PT) and the effective date. After the effective date, an associated person would need to pass the new Series 57 Securities Trader qualification examination and register as a Securities Trader (TD). In addition, associated persons who have either passed the Proprietary Trader (PT) qualification examination or the General Securities Representative (Series 7) qualification examination and who have registered as Proprietary Traders (PT) in WebCRD on or before the effective date of the proposed rule change, and who have also passed the General Securities Principal (Series 24) qualification examination (or have completed any of the alternative acceptable qualifications requirements as defined in new .08 of Supplementary Material to Rule 313) and who have also registered as Proprietary Trader Principals (TP) in WebCRD on or before the effective date of the proposed rule change, would be eligible to register as Securities Trader Principals (TPs), provided that the associated person's registration has not been revoked by the Exchange as a disciplinary sanction and no more than two years have passed between the date that the associated person last registered as a Proprietary Trader Principal (TP) and the date they register as a Securities Trader Principal (TP).\9\ After the effective date, a Securities Trader Principal (TP) would need to pass the Securities Trader (Series 57) qualification examination and the General Securities Principal (Series 24) qualification examination (or have completed any of the alternative acceptable qualifications as defined in new .08 of Supplementary Material to Rule 313) and be registered as such in order to register as a Securities Trader Principal (TP).\10\ --------------------------------------------------------------------------- \9\ See Rule 313(e) (Requirement for Examination on Lapse of Registration). \10\ As part of codifying this rule, the Exchange will include text .08 of Supplementary Material to Rule 313 regarding the supervisory responsibilities of the Securities Trader Principals, which would limit Securities Trader Principals' supervisory responsibilities to supervision of the securities trading functions of members as described in paragraph (a)(2) of .08 of Supplementary Material to Rule 313, and the activities of officers, partners, and directors of members. --------------------------------------------------------------------------- Continuing Education Requirements Persons registered in the new category would be subject to the continuing education requirements of Rule 604 Continuing Education for Registered Persons. The Exchange proposes to amend Rule 604 by removing the option for Series 56 registered persons to participate in the S501 Series 56 Proprietary Trader continuing education program in order to satisfy the Regulatory Element. The S501 Series 56 Proprietary Trader continuing education program is being phased out along with the Series 56 Proprietary Trader qualification examination. As a result, effective January 4, 2016, the S501 Series 56 Proprietary Trader continuing education program for Series 56 registered persons will cease to exist. In place of the S501 Series 56 Proprietary Trader continuing education program for Series 56 registered persons, the Exchange proposes that Series 57 registered persons be permitted to enroll in the S101 General Program for Series 7 and all other registered persons. Delivery of Regulatory Element The Exchange further proposes to provide for Web-based delivery of the Continuing Education Regulatory Element for registered persons. As proposed, Rule 604 would specify that the Continuing Education Regulatory Element set forth in the rule will be administered through Web-based delivery or such other technological manner and format as specified by the Exchange from and after January 4, 2016. Most registered persons currently complete the Regulatory Element in a test center and the remainder do so in-house. Given the advances in Web- based technology, the Exchange believes that there is diminishing utility in the test center and in-house Continuing Education delivery methods. The Exchange notes that the Web-based format will include safeguards to authenticate the identity of the Continuing Education Candidate. Moreover, according to FINRA, registered persons have raised concerns with the current test center delivery [[Page 1248]] method because of the travel involved, the limited time currently available to complete a Regulatory Element session, and the use of rigorous security measures at test centers, which are appropriate for taking qualification examinations, but onerous for a Continuing Education program.\11\ Also, according to FINRA, the test center is expensive to operate.\12\ --------------------------------------------------------------------------- \11\ See supra, note 1. \12\ Id. --------------------------------------------------------------------------- 2. Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \13\ in general, and furthers the objectives of Section 6(b)(5) of the Act \14\ 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. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78f(b). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange further believes its proposed rule change is consistent with Section 6(c) of the Act,\15\ and in particular furthers the objectives of Section 6(c)(3) of the Act,\16\ which authorizes the Exchange to prescribe standards of training, experience, and competence for associated persons. The Exchange believes that the requirements of the Securities Trader and Securities Trader Principal registration categories, the new Securities Trader qualification and continuing education requirement, as well as Web-based delivery of the continuing education requirement, should help ensure that proprietary traders and the principals who supervise proprietary traders and proprietary trading are, and will continue to be, properly trained and qualified to perform their functions which should protect investors and the public interest. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f(c). \16\ 15 U.S.C. 78f(c)(3). --------------------------------------------------------------------------- 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. Implementation of the proposed changes to ISE's registration rules in coordination with the FINRA Amendments does not present any competitive issues, but rather is designed to provide less burdensome and more efficient regulatory compliance for associated persons and enhance the ability of the Exchange to fairly and efficiently regulate associated persons, which will further enhance competition. Additionally, the proposed rule change should not affect intramarket competition because all similarly situated representatives and principals will be required to complete the same qualification examinations and maintain the same registrations. Finally, the proposed rule change does not impose any additional examination burdens on persons who are already registered. There is no obligation to take the proposed Series 57 examination in order to continue in their present duties, so the proposed rule change is not expected to disadvantage current registered persons relative to new entrants in this regard. 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 this proposed rule change. The Exchange has not received any written comments from members or other interested parties. 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) of the Act \17\ and Rule 19b- 4(f)(6) thereunder.\18\ The Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing the proposed rule change, or such shorter time as designated by the Commission, as required by Rule 19b-4(f)(6). --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- The Exchange has requested that the Commission waive the thirty-day operative delay so that the proposal may become operative as of January 4, 2016. The Commission believes that waiving the thirty day delay is consistent with the protection of investors and the public interest, as it will enable the Exchange to have the new requirements in effect at the same time as the other SROs. Therefore, the Commission hereby waives the thirty-day operative delay and designates the proposal operative as of January 4, 2016.\19\ --------------------------------------------------------------------------- \19\ For purposes of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of such 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 No. SR-ISE-2015-44 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-ISE-2015-44. 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 Commissions 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. Copies of such filing [[Page 1249]] also will be available for inspection and copying at the principal office of the ISE. 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-ISE- 2015-44 and should be submitted by February 1, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-00248 Filed 1-8-16; 8:45 am] BILLING CODE 8011-01-P
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trust registered under the Act as an Funds’’) to acquire shares of Underlying investment companies’’ as the Fund of
open-end management investment Funds 2 in excess of the limits in Funds through control or voting power,
company with multiple series, sections 12(d)(1)(A) and (C) of the Act or in connection with certain services,
Ascendant Advisors, LLC (‘‘Ascendant’’ and (b) each Underlying Fund that is a transactions, and underwritings, (ii)
or the ‘‘Adviser’’), a Texas limited registered open-end investment excessive layering of fees, and (iii)
liability company registered as an company or series thereof, the overly complex fund structures, which
investment adviser under the Distributor or any principal underwriter are the concerns underlying the limits
Investment Advisers Act of 1940, and and any broker or dealer registered in sections 12(d)(1)(A), (B), and (C) of
Northern Lights Distributors, LLC (the under the Exchange Act to sell shares of the Act.
‘‘Distributor’’), a Nebraska limited the Underlying Fund to the Fund of 3. Section 12(d)(1)(J) of the Act
liability company registered as a broker- Funds in excess of the limits in section provides that the Commission may
dealer under the Securities Exchange 12(d)(1)(B) of the Act.3 Applicants also exempt any person, security, or
Act of 1934 (‘‘Exchange Act’’). request an order of exemption under transaction, or any class or classes of
Filing Dates: The application was sections 6(c) and 17(b) of the Act from persons, securities, or transactions, from
filed on July 23, 2015 and amended on the prohibition on certain affiliated any provision of section 12(d)(1) if the
December 9, 2015. transactions in section 17(a) of the Act exemption is consistent with the public
Hearing or Notification of Hearing: An to the extent necessary to permit the interest and the protection of investors.
order granting the requested relief will Underlying Funds to sell their shares to, Section 17(b) of the Act authorizes the
be issued unless the Commission orders and redeem their shares from, the Funds Commission to grant an order
a hearing. Interested persons may of Funds.4 Applicants state that such permitting a transaction otherwise
request a hearing by writing to the transactions will be consistent with the prohibited by section 17(a) if it finds
Commission’s Secretary and serving policies of each Fund of Funds and each that (a) the terms of the proposed
applicants with a copy of the request, Underlying Fund and with the general transaction are fair and reasonable and
personally or by mail. Hearing requests purposes of the Act and will be based do not involve overreaching on the part
should be received by the Commission on the net asset values of the of any person concerned; (b) the
by 5:30 p.m. on Friday, January 29, 2016 Underlying Funds. proposed transaction is consistent with
and should be accompanied by proof of 2. Applicants agree that any order the policies of each registered
service on the applicants, in the form of granting the requested relief will be investment company involved; and (c)
an affidavit, or, for lawyers, a certificate subject to the terms and conditions the proposed transaction is consistent
of service. Pursuant to Rule 0–5 under stated in the application. Such terms with the general purposes of the Act.
the Act, hearing requests should state and conditions are designed to, among Section 6(c) of the Act permits the
the nature of the writer’s interest, any other things, help prevent any potential Commission to exempt any persons or
facts bearing upon the desirability of a (i) undue influence over an Underlying transactions from any provision of the
hearing on the matter, the reason for the Fund that is not in the same ‘‘group of Act if such exemption is necessary or
request, and the issues contested. appropriate in the public interest and
company or series thereof that is advised by
Persons who wish to be notified of a Ascendant or its successor-in-interest or by any consistent with the protection of
hearing may request notification by entity controlling, controlled by or under common investors and the purposes fairly
writing to the Commission’s Secretary. control with Ascendant or its successor-in-interest intended by the policy and provisions of
and is part of the same ‘‘group of investment the Act.
ADDRESSES: Secretary, U.S. Securities companies’’ as the Trust (each, a ‘‘Fund’’). For
and Exchange Commission, 100 F Street purposes of the requested order, ‘‘successor-in- For the Commission, by the Division of
NE., Washington, DC 20549–1090. interest’’ is limited to an entity that results from a Investment Management, pursuant to
reorganization into another jurisdiction or a change delegated authority.
Applicants: c/o JoAnn Strasser, Esq., in the type of business organization. For purposes
Thompson Hine LLP, 41 South High of the request for relief, the term ‘‘group of Robert W. Errett,
Street, Suite 1700, Columbus, Ohio investment companies’’ means any two or more Deputy Secretary.
43215. investment companies, including closed-end
[FR Doc. 2016–00210 Filed 1–8–16; 8:45 am]
investment companies and business development
FOR FURTHER INFORMATION CONTACT: companies, that hold themselves out to investors as BILLING CODE 8011–01–P
Kaitlin C. Bottock, Senior Counsel, at related companies for purposes of investment and
investor services.
(202) 551–8658, or Daniele Marchesani, 2 Certain of the Underlying Funds have obtained
Branch Chief, at (202) 551–6821 SECURITIES AND EXCHANGE
exemptions from the Commission necessary to
(Division of Investment Management, permit their shares to be listed and traded on a COMMISSION
Chief Counsel’s Office). national securities exchange at negotiated prices
and, accordingly, to operate as exchange-traded [Release No. 34–76835; File No. SR–ISE–
SUPPLEMENTARY INFORMATION: The funds (‘‘ETFs’’). 2015–44]
following is a summary of the 3 Applicants do not request relief for the Funds
application. The complete application of Funds to invest in business development Self-Regulatory Organizations;
may be obtained via the Commission’s companies or closed-end investment companies International Securities Exchange;
that are not listed on a national securities exchange.
Web site by searching for the file 4 A Fund of Funds generally would purchase and
Notice of Filing and Immediate
number, or for an applicant using the sell shares of an Underlying Fund that operates as Effectiveness of Proposed Rule
Company name box, at http:// an ETF through secondary market transactions Change To Establish the Securities
www.sec.gov/search/search.htm, or by rather than through principal transactions with the Trader and Securities Trader Principal
Underlying Fund. Applicants nevertheless request Registration Categories
calling (202) 551–8090. relief from section 17(a) to permit a Fund of Funds
ebenthall on DSK6SPTVN1PROD with NOTICES
to purchase or redeem shares from the ETF. A Fund
Summary of the Application of Funds will purchase and sell shares of an
January 5, 2016.
1. Applicants request an order to Underlying Fund that is a closed-end fund through Pursuant to Section 19(b)(1) of the
permit (a) a Fund 1 (each a ‘‘Fund of
secondary market transactions at market prices Securities Exchange Act of 1934 (the
rather than through principal transactions with the ‘‘Act’’),1 and Rule 19b–4 thereunder,2
closed-end fund. Accordingly, applicants are not
1 Applicants request that the order apply to each requesting section 17(a) relief with respect to
1 15 U.S.C. 78s(b)(1).
existing and future series of the Trust and to each transactions in shares of closed-end funds
existing and future registered open-end investment (including business development companies). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 20:49 Jan 15, 2016 Jkt 238001 PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 E:\FR\FM\11JAN1.SGM 11JAN1](https://thefederalregister.org/doc/81_FR_1251/page/1.svg)
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also will be available for inspection and II. Self-Regulatory Organization’s to Nasdaq. Currently, there are three
copying at the principal office of the Statement of the Purpose of, and rates that a member firm may qualify for
ISE. All comments received will be Statutory Basis for, the Proposed Rule based on the execution price of the
posted without change; the Commission Change displayed liquidity and whether the
does not edit personal identifying In its filing with the Commission, the shares of displayed liquidity were
information from submissions. You Exchange included statements entered through an ISP-designated port.
should submit only information that concerning the purpose of and basis for Subsequent to the adoption of the ISP
you wish to make available publicly. All the proposed rule change and discussed Program,4 Nasdaq adopted a new
submissions should refer to File any comments it received on the program under Rule 7018 5 to use
proposed rule change. The text of these financial incentives to encourage greater
Number SR–ISE–2015–44 and should be
statements may be examined at the participation. The new program adopted
submitted by February 1, 2016.
places specified in Item IV below. The liquidity provider credit tiers for orders
For the Commission, by the Division of designated by a member firm as
Exchange has prepared summaries, set
Trading and Markets, pursuant to delegated Designated Retail Orders. Currently,
forth in sections A, B, and C below, of
authority.20 Nasdaq has a single liquidity provider
the most significant aspects of such
Robert W. Errett, statements. credit tier of $0.0034 per share executed
Deputy Secretary. provided for orders designated by a
A. Self-Regulatory Organization’s member firm as Designated Retail
[FR Doc. 2016–00248 Filed 1–8–16; 8:45 am]
Statement of the Purpose of, and Orders.6 Nasdaq has excluded
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule Designated Retail Orders from the
Change calculation of credits available under
1. Purpose the NBBO Program, QMM Program, and
SECURITIES AND EXCHANGE
the ISP Program, since those orders
COMMISSION The Exchange is proposing to make already receive a significant credit
two changes to Rule 7014. Rule 7014 under Rule 7018(a). Similarly, Nasdaq
[Release No. 34–76826; File No. SR– provides the Exchange’s Market Quality excludes Designated Retail Orders from
NASDAQ–2015–164] Incentive Programs. Nasdaq currently the credits provided for providing
provides the following incentive displayed quotes/orders for securities of
Self-Regulatory Organizations; The programs under the rule: Investor all three tapes.7 Unlike the NBBO
NASDAQ Stock Market LLC; Notice of Support Program, Qualified Market Program and QMM Program rules,
Filing and Immediate Effectiveness of Maker Program, Lead Market Maker which reflect that Designated Retail
Proposed Rule Change To Amend Rule Program, and NBBO Program. The Orders are not included in those
7014 Exchange is proposing to add new rule programs’ credits, Nasdaq neglected to
text concerning what is not considered amend the ISP Program rules to state
January 5, 2016. eligible displayed liquidity under the that Designated Retail Orders are not
Pursuant to Section 19(b)(1) of the Investor Support Program and to add considered in the calculation of the ISP
Securities Exchange Act of 1934 clarifying rule text to the NBBO credit. In adopting the Designated Retail
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Program. Order credit tiers, Nasdaq intended to
First, the Exchange is adding new rule also exclude Designated Retail Orders
notice is hereby given that, on December text to the Investor Support Program
23, 2015, The NASDAQ Stock Market from the calculation of credits available
(‘‘ISP’’) under rule 7014(b) to state that under the ISP Program, consistent with
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed Designated Retail Orders 3 are not
with the Securities and Exchange the other programs under the rule. Thus,
included in the number of shares of Nasdaq is proposing to state in the rule
Commission (‘‘SEC’’ or ‘‘Commission’’) displayed liquidity. The Investor
the proposed rule change as described that Designated Retail Orders are not
Support Program enables Nasdaq included in the number of shares of
in Items I, II, and III below, which Items member firms to earn a monthly fee displayed liquidity used to calculate
have been prepared by the Exchange. credit for providing displayed liquidity credit received under the ISP Program.
The Commission is publishing this Second, Nasdaq is proposing to add
notice to solicit comments on the 3 A ‘‘Designated Retail Order’’ is an agency or
clarifying rule text to Rule 7014(g),
proposed rule change from interested riskless principal order that meets the criteria of
FINRA Rule 5320.03 and that originates from a
which concerns the NBBO Program. The
persons. natural person and is submitted to Nasdaq by a NBBO Program provides rebates per
I. Self-Regulatory Organization’s member that designates it pursuant to Rule 7018, share executed with respect to all other
provided that no change is made to the terms of the displayed orders (other than Designated
Statement of the Terms of Substance of order with respect to price or side of market and
Retail Orders) in securities priced at $1
the Proposed Rule Change the order does not originate from a trading
algorithm or any other computerized methodology. or more per share that provide liquidity
The Exchange is proposing to make An order from a ‘‘natural person’’ can include and establish the NBBO. When Nasdaq
orders on behalf of accounts that are held in a adopted the rule, it neglected to note
two changes to Rule 7014. corporate legal form—such as an Individual
Retirement Account, Corporation, or a Limited
that the displayed quantity of the NBBO
The text of the proposed rule change Program-qualifying order must be at
Liability Company—that has been established for
is available on the Exchange’s Web site the benefit of an individual or group of related least one round lot at the time of
at http://nasdaq.cchwallstreet.com, at family members, provided that the order is execution. An odd lot order of less than
the principal office of the Exchange, and submitted by an individual. Members must submit
ebenthall on DSK6SPTVN1PROD with NOTICES
a signed written attestation, in a form prescribed by
at the Commission’s Public Reference Nasdaq, that they have implemented policies and
4 See Securities Exchange Act Release No. 63270
Room. procedures that are reasonably designed to ensure (November 8, 2010), 75 FR 69489 (November 12,
that substantially all orders designated by the 2010) (SR–NASDAQ–2010–141).
5 See Securities Exchange Act Release No. 69133
member as ‘‘Designated Retail Orders’’ comply with
these requirements. Orders may be designated on an (March 14, 2013), 78 FR 17272 (March 20, 2013)
20 17 CFR 200.30–3(a)(12).
order-by-order basis, or by designating all orders on (SR–NASDAQ–2013–042).
1 15 U.S.C. 78s(b)(1). 6 See Rule 7018(a).
a particular order entry port as Designated Retail
2 17 CFR 240.19b–4. Orders. See Rule 7018. 7 See Rule 7018(a)(1), (2) and (3).
VerDate Sep<11>2014 21:33 Jan 14, 2016 Jkt 238001 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\11JAN1.SGM 11JAN1](https://thefederalregister.org/doc/81_FR_1251/page/5.svg)
Document Created: 2016-01-16 01:05:01
Document Modified: 2016-01-16 01:05:01
| 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 | 81 FR 1245 |
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