81 FR 1666 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 8 (January 13, 2016)
Federal Register Volume 81, Issue 8 (January 13, 2016)
| Page Range | 1666-1668 | |
| FR Document | 2016-00465 |
[Federal Register Volume 81, Number 8 (Wednesday, January 13, 2016)] [Notices] [Pages 1666-1668] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-00465] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76850; File No. SR-FINRA-2016-001] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps) January 7, 2016. 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 January 4, 2016, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ``non- controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to extend the expiration date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps) to February 11, 2017. FINRA Rule 0180 temporarily limits, with certain exceptions, the application of FINRA rules with respect to security-based swaps. The text of the proposed rule change is available on FINRA's Web site at http://www.finra.org, at the principal office of FINRA and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On July 1, 2011, the SEC issued an Order granting temporary exemptive relief (the ``Temporary Exemptions'') from compliance with certain provisions of the Exchange Act in connection with the revision, pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank Act''),\4\ of the Exchange Act definition of ``security'' to encompass security-based swaps.\5\ Consistent with the Commission's action, on July 8, 2011, FINRA filed for immediate effectiveness FINRA Rule 0180,\6\ which, with certain exceptions, is intended to temporarily limit the application of FINRA rules \7\ with respect to security-based swaps, thereby helping to avoid undue market disruptions resulting from the change to the definition of ``security'' under the Act.\8\ --------------------------------------------------------------------------- \4\ Public Law 111-203, 124 Stat. 1376 (2010). \5\ See Securities Exchange Act Release No. 64795 (July 1, 2011), 76 FR 39927 (July 7, 2011) (Order Granting Temporary Exemptions Under the Securities Exchange Act of 1934 in Connection With the Pending Revision of the Definition of ``Security'' To Encompass Security-Based Swaps, and Request for Comment) (the ``Exemptive Release''). The term ``security-based swap'' is defined in Section 761 of the Dodd-Frank Act. See also Securities Exchange Act Release No. 67453 (July 18, 2012), 77 FR 48207 (August 13, 2012) (Further Definition of ``Swap,'' ``Security-Based Swap,'' and ``Security-Based Swap Agreement''; Mixed Swaps; Security-Based Swap Agreement Recordkeeping). \6\ See Securities Exchange Act Release No. 64884 (July 14, 2011), 76 FR 42755 (July 19, 2011) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change; File No. SR-FINRA-2011-033) (``FINRA Rule 0180 Notice of Filing''). See also Securities Exchange Act Release No. 74049 (January 14, 2015), 80 FR 2983 (January 21, 2015) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change; File No. SR-FINRA-2015-001) (extending the expiration date of FINRA Rule 0180 to February 11, 2016). \7\ The current FINRA rulebook consists of: (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (``Incorporated NYSE Rules''). While the NASD Rules generally apply to all FINRA members, the Incorporated NYSE Rules apply only to those members of FINRA that are also members of the NYSE. The FINRA Rules apply to all FINRA members, unless such rules have a more limited application by their terms. For more information about the rulebook consolidation process, see Information Notice, March 12, 2008 (Rulebook Consolidation Process). \8\ In its Exemptive Release, the Commission noted that the relief is targeted and does not include, for instance, relief from the Act's antifraud and anti-manipulation provisions. FINRA has noted that FINRA Rule 0180 is similarly targeted. For instance, paragraph (a) of FINRA Rule 0180 provides that FINRA rules shall not apply to members' activities and positions with respect to security- based swaps, except for FINRA Rules 2010 (Standards of Commercial Honor and Principles of Trade), 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices), 3310 (Anti-Money Laundering Compliance Program) and 4240 (Margin Requirements for Credit Default Swaps). See also paragraphs (b) and (c) of FINRA Rule 0180 (addressing the applicability of additional rules) and FINRA Rule 0180 Notice of Filing. --------------------------------------------------------------------------- The Commission, noting the need to avoid a potential unnecessary disruption to the security-based swap market in the absence of an extension of the Temporary Exemptions, and the need for additional time to consider the potential impact of the revision of the Exchange Act definition of ``security'' in light of ongoing Commission rulemaking efforts under Title VII of the Dodd-Frank Act, issued an Order which extended and refined the applicable expiration dates for the previously granted Temporary Exemptions.\9\ The Commission previously noted that extending the Temporary Exemptions would facilitate a coordinated consideration of these issues with the [[Page 1667]] relief provided pursuant to FINRA Rule 0180.\10\ In establishing Rule 0180, and in extending the rule's expiration date, FINRA noted its intent, pending the implementation of any SEC rules and guidance that would provide greater regulatory clarity in relation to security-based swap activities, to align the expiration date of FINRA Rule 0180 with the termination of relevant provisions of the Temporary Exemptions.\11\ --------------------------------------------------------------------------- \9\ See Securities Exchange Act Release No. 71485 (February 5, 2014), 79 FR 7731 (February 10, 2014) (Order Extending Temporary Exemptions Under the Securities Exchange Act of 1934 in Connection With the Revision of the Definition of ``Security'' to Encompass Security-Based Swaps, and Request for Comment) (``Temporary Exemptions Extension Release'') stating that, for those expiring Temporary Exemptions ``that are not directly linked to pending security-based swap rulemakings, the Commission is extending the expiration date until the earlier of such time as the Commission issues an order or rule determining whether any continuing exemptive relief is appropriate for security-based swap activities with respect to any of these Exchange Act provisions or until three years following the effective date of this Order.'' The Temporary Exemptions Extension Release further stated that for each expiring Temporary Exemption ``that is related to pending security-based swap rulemakings, the Commission is extending the expiration date until the compliance date for the related security-based swap-specific rulemaking.'' See also Securities Exchange Act Release No. 71482 (February 5, 2014), 79 FR 7570 (February 10, 2014) (Extension of Exemptions for Security-Based Swaps) (extending the expiration dates in interim final rules that provide exemptions under the Securities Act of 1933 (the ``Securities Act''), the Exchange Act, and the Trust Indenture Act of 1939 for those security-based swaps that prior to July 16, 2011 were security-based swap agreements and are defined as ``securities'' under the Securities Act and the Exchange Act as of July 16, 2011 due solely to the provisions of Title VII of the Dodd-Frank Act). \10\ See Securities Exchange Act Release No. 68864 (February 7, 2013), 78 FR 10218 (February 13, 2013) (Order Extending Temporary Exemptions Under the Securities Exchange Act of 1934 in Connection With the Revision of the Definition of ``Security'' to Encompass Security-Based Swaps, and Request for Comment). \11\ See note 6 supra. --------------------------------------------------------------------------- The Commission's rulemaking and development of guidance in relation to security-based swap activities is ongoing. As such, FINRA believes it is appropriate and in the public interest, in light of the Commission's goals as set forth in the Exemptive Release and the Temporary Exemptions Extension Release, to extend FINRA Rule 0180 for a limited period, to February 11, 2017, so as to avoid undue market disruptions resulting from the change to the definition of ``security'' under the Act. As noted in the FINRA Rule 0180 Notice of Filing, FINRA will amend the expiration date of Rule 0180 in subsequent filings as necessary such that the expiration date will be coterminous with the termination of relevant provisions of the Temporary Exemptions. FINRA has filed the proposed rule change for immediate effectiveness. FINRA is proposing that the implementation date of the proposed rule change will be February 11, 2016. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,\12\ which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change would further the purposes of the Act because, consistent with the goals set forth by the Commission in the Exemptive Release and in the Temporary Exemptions Extension Release, the proposed rule change will help to avoid undue market disruption that could result if FINRA Rule 0180 expires before the implementation of any SEC rules and guidance that would provide greater regulatory clarity in relation to security-based swap activities. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. FINRA believes that the proposed rule change would prevent undue market disruption that would otherwise result if security-based swaps were, by virtue of the expansion of the Act's definition of ``security'' to encompass security-based swaps, subject to the application of all FINRA rules before the implementation of any SEC rules and guidance that would provide greater regulatory clarity in relation to security-based swap activities. FINRA believes that, by extending the expiration of FINRA Rule 0180, the proposed rule change will serve to promote regulatory clarity and consistency, thereby reducing burdens on the marketplace and facilitating investor protection. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b- 4(f)(6) thereunder.\14\ --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A). \14\ 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-FINRA-2016-001 on the subject line. Paper Comments Send paper comments in triplicate to Robert W. Errett, Deputy Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FINRA-2016-001. 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 FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FINRA-2016-001 and should be submitted on or before February 3, 2016. [[Page 1668]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-00465 Filed 1-12-16; 8:45 am] BILLING CODE 8011-01-P
![1666 Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices
Therefore, it is ordered, pursuant to II. Self-Regulatory Organization’s respect to security-based swaps, thereby
Section 12(k) of the Securities Exchange Statement of the Purpose of, and helping to avoid undue market
Act of 1934, that trading in the Statutory Basis for, the Proposed Rule disruptions resulting from the change to
securities of the above-listed company is Change the definition of ‘‘security’’ under the
suspended for the period from 9:30 a.m. In its filing with the Commission, Act.8
EST on January 11, 2016, through 11:59 The Commission, noting the need to
FINRA included statements concerning
p.m. EST on January 25, 2016. avoid a potential unnecessary
the purpose of and basis for the
By the Commission. disruption to the security-based swap
proposed rule change and discussed any
market in the absence of an extension of
Brent J. Fields, comments it received on the proposed the Temporary Exemptions, and the
Secretary. rule change. The text of these statements need for additional time to consider the
[FR Doc. 2016–00591 Filed 1–11–16; 11:15 am] may be examined at the places specified potential impact of the revision of the
BILLING CODE 8011–01–P in Item IV below. FINRA has prepared Exchange Act definition of ‘‘security’’ in
summaries, set forth in sections A, B, light of ongoing Commission
and C below, of the most significant rulemaking efforts under Title VII of the
SECURITIES AND EXCHANGE aspects of such statements. Dodd-Frank Act, issued an Order which
COMMISSION extended and refined the applicable
A. Self-Regulatory Organization’s
[Release No. 34–76850; File No. SR–FINRA– Statement of the Purpose of, and expiration dates for the previously
2016–001] Statutory Basis for, the Proposed Rule granted Temporary Exemptions.9 The
Change Commission previously noted that
Self-Regulatory Organizations; extending the Temporary Exemptions
Financial Industry Regulatory 1. Purpose would facilitate a coordinated
Authority, Inc.; Notice of Filing and On July 1, 2011, the SEC issued an consideration of these issues with the
Immediate Effectiveness of a Proposed Order granting temporary exemptive
Rule Change To Extend the Expiration relief (the ‘‘Temporary Exemptions’’) limited application by their terms. For more
Date of FINRA Rule 0180 (Application from compliance with certain information about the rulebook consolidation
of Rules to Security-Based Swaps) process, see Information Notice, March 12, 2008
provisions of the Exchange Act in (Rulebook Consolidation Process).
January 7, 2016. connection with the revision, pursuant 8 In its Exemptive Release, the Commission noted
Pursuant to Section 19(b)(1) of the to Title VII of the Dodd-Frank Wall that the relief is targeted and does not include, for
instance, relief from the Act’s antifraud and anti-
Securities Exchange Act of 1934 Street Reform and Consumer Protection manipulation provisions. FINRA has noted that
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Act (the ‘‘Dodd-Frank Act’’),4 of the FINRA Rule 0180 is similarly targeted. For instance,
notice is hereby given that on January 4, Exchange Act definition of ‘‘security’’ to paragraph (a) of FINRA Rule 0180 provides that
encompass security-based swaps.5 FINRA rules shall not apply to members’ activities
2016, Financial Industry Regulatory and positions with respect to security-based swaps,
Authority, Inc. (‘‘FINRA’’) filed with the Consistent with the Commission’s except for FINRA Rules 2010 (Standards of
Securities and Exchange Commission action, on July 8, 2011, FINRA filed for Commercial Honor and Principles of Trade), 2020
(‘‘SEC’’ or ‘‘Commission’’) the proposed immediate effectiveness FINRA Rule (Use of Manipulative, Deceptive or Other
0180,6 which, with certain exceptions, Fraudulent Devices), 3310 (Anti-Money Laundering
rule change as described in Items I, II, Compliance Program) and 4240 (Margin
and III below, which Items have been is intended to temporarily limit the Requirements for Credit Default Swaps). See also
prepared by FINRA. FINRA has application of FINRA rules 7 with paragraphs (b) and (c) of FINRA Rule 0180
designated the proposed rule change as (addressing the applicability of additional rules)
4 Public Law 111–203, 124 Stat. 1376 (2010). and FINRA Rule 0180 Notice of Filing.
constituting a ‘‘non-controversial’’ rule 9 See Securities Exchange Act Release No. 71485
5 See Securities Exchange Act Release No. 64795
change under paragraph (f)(6) of Rule (February 5, 2014), 79 FR 7731 (February 10, 2014)
(July 1, 2011), 76 FR 39927 (July 7, 2011) (Order
19b–4 under the Act,3 which renders Granting Temporary Exemptions Under the (Order Extending Temporary Exemptions Under the
the proposal effective upon receipt of Securities Exchange Act of 1934 in Connection Securities Exchange Act of 1934 in Connection
this filing by the Commission. The With the Pending Revision of the Definition of With the Revision of the Definition of ‘‘Security’’
‘‘Security’’ To Encompass Security-Based Swaps, to Encompass Security-Based Swaps, and Request
Commission is publishing this notice to for Comment) (‘‘Temporary Exemptions Extension
and Request for Comment) (the ‘‘Exemptive
solicit comments on the proposed rule Release’’). The term ‘‘security-based swap’’ is Release’’) stating that, for those expiring Temporary
change from interested persons. defined in Section 761 of the Dodd-Frank Act. See Exemptions ‘‘that are not directly linked to pending
also Securities Exchange Act Release No. 67453 security-based swap rulemakings, the Commission
I. Self-Regulatory Organization’s (July 18, 2012), 77 FR 48207 (August 13, 2012)
is extending the expiration date until the earlier of
Statement of the Terms of Substance of such time as the Commission issues an order or rule
(Further Definition of ‘‘Swap,’’ ‘‘Security-Based
determining whether any continuing exemptive
the Proposed Rule Change Swap,’’ and ‘‘Security-Based Swap Agreement’’;
relief is appropriate for security-based swap
Mixed Swaps; Security-Based Swap Agreement
FINRA is proposing to extend the activities with respect to any of these Exchange Act
Recordkeeping).
provisions or until three years following the
expiration date of FINRA Rule 0180 6 See Securities Exchange Act Release No. 64884
effective date of this Order.’’ The Temporary
(Application of Rules to Security-Based (July 14, 2011), 76 FR 42755 (July 19, 2011) (Notice Exemptions Extension Release further stated that
Swaps) to February 11, 2017. FINRA of Filing and Immediate Effectiveness of Proposed for each expiring Temporary Exemption ‘‘that is
Rule Change; File No. SR–FINRA–2011–033) related to pending security-based swap
Rule 0180 temporarily limits, with (‘‘FINRA Rule 0180 Notice of Filing’’). See also rulemakings, the Commission is extending the
certain exceptions, the application of Securities Exchange Act Release No. 74049 (January expiration date until the compliance date for the
FINRA rules with respect to security- 14, 2015), 80 FR 2983 (January 21, 2015) (Notice of related security-based swap-specific rulemaking.’’
based swaps. Filing and Immediate Effectiveness of Proposed See also Securities Exchange Act Release No. 71482
Rule Change; File No. SR–FINRA–2015–001)
asabaliauskas on DSK5VPTVN1PROD with NOTICES
The text of the proposed rule change (February 5, 2014), 79 FR 7570 (February 10, 2014)
(extending the expiration date of FINRA Rule 0180 (Extension of Exemptions for Security-Based
is available on FINRA’s Web site at to February 11, 2016). Swaps) (extending the expiration dates in interim
http://www.finra.org, at the principal 7 The current FINRA rulebook consists of: (1)
final rules that provide exemptions under the
office of FINRA and at the FINRA Rules; (2) NASD Rules; and (3) rules Securities Act of 1933 (the ‘‘Securities Act’’), the
Commission’s Public Reference Room. incorporated from NYSE (‘‘Incorporated NYSE Exchange Act, and the Trust Indenture Act of 1939
Rules’’). While the NASD Rules generally apply to for those security-based swaps that prior to July 16,
all FINRA members, the Incorporated NYSE Rules 2011 were security-based swap agreements and are
1 15 U.S.C. 78s(b)(1). apply only to those members of FINRA that are also defined as ‘‘securities’’ under the Securities Act and
2 17 CFR 240.19b–4. members of the NYSE. The FINRA Rules apply to the Exchange Act as of July 16, 2011 due solely to
3 17 CFR 240.19b–4(f)(6). all FINRA members, unless such rules have a more the provisions of Title VII of the Dodd-Frank Act).
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![1668 Federal Register / Vol. 81, No. 8 / Wednesday, January 13, 2016 / Notices
For the Commission, by the Division of and discussed any comments it received program trades that are submitted to and
Trading and Markets, pursuant to delegated on the proposed rule change. The text executed on the Exchange.5 Since 2009,
authority.15 of those statements may be examined at the Exchange has used ATI data to
Robert W. Errett, the places specified in Item IV below. report program trading statistics for
Deputy Secretary. The Exchange has prepared summaries, portions of program trades executed on
[FR Doc. 2016–00465 Filed 1–12–16; 8:45 am] set forth in sections A, B, and C below, the Exchange to the Commission on a
BILLING CODE 8011–01–P of the most significant parts of such weekly basis.6
statements.
Proposed Rule Change
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s The Exchange proposes to amend the
COMMISSION Statement of the Purpose of, and the current requirement in subsection (9) of
Statutory Basis for, the Proposed Rule Rule 132.30 that clearing member
[Release No. 34–76845; File No. SR–NYSE– Change
2016–07] organizations identify whether the
1. Purpose account for which an order was
Self-Regulatory Organizations; New executed was that of a member or
The Exchange proposes to amend
York Stock Exchange LLC; Notice of member organization or of a non-
Supplementary Material .30 of Rule 132
Filing and Immediate Effectiveness of member or non-member organization.
to conform the Exchange’s rules to
Proposed Rule Change To Amend Rule The current requirement can be satisfied
industry-wide standards for recording
132.30(9) To Conform the Exchange’s by entering the appropriate ATI from a
the capacity in which a member
Rules to Industry-Wide Standards for list of ATIs that have evolved over the
organization executes a transaction. To
Recording the Capacity in Which a past 30 years.7
effect this change, the Exchange would
Member Organization Executes a In place of this cumbersome process,
eliminate the current requirement to
Transaction the Exchange proposes to require
identify the account for which an order
member organizations to identify the
January 7, 2016. was executed and require instead that
capacity in which the member
Pursuant to Section 19(b)(1) 1 of the clearing members and member
organization executed the transaction as
Securities Exchange Act of 1934 (the organizations submit account type
follows: Agency, principal or riskless
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 indicators (‘‘ATI’’) reflecting the
principal.8 The ‘‘principal’’ category
notice is hereby given that on January 4, capacity in which the member
would include proprietary trades by a
2016, New York Stock Exchange LLC organization executed a transaction
member on the trading Floor relating to
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with (e.g., agency, principal or riskless
the member’s error account pursuant to
the Securities and Exchange principal). The Exchange believes that
Rule 134.9
Commission (the ‘‘Commission’’) the the proposed rule change would align
By requiring member organizations to
proposed rule change as described in the Exchange’s rules with industry-wide
identify the capacity in which a broker-
Items I, II, and III below, which Items conventions focusing on the capacity in
dealer enters an order, the Exchange
have been prepared by the self- which a broker-dealer acts in effecting a
would be harmonizing its order entry
regulatory organization. The transaction and, by eliminating the
requirements with those of other
Commission is publishing this notice to complex set of ATIs developed over the
solicit comments on the proposed rule years, significantly simplify order entry 5 Prior to 2009, member organizations reported
change from interested persons. on the Exchange. program trading activity to the Exchange via the
Background Daily Program Trading Report (‘‘DPTR’’). See
I. Self-Regulatory Organization’s Securities Exchange Act Release No. 60179 (June
Statement of the Terms of Substance of Rule 132 requires clearing member 26, 2009), 74 FR 31786, 31786 (July 2, 2009) (SR–
the Proposed Rule Change organizations submitting transactions to NYSE–2009–61). The DPTR requirement was
decommissioned in July 2009. See id. at 31787.
The Exchange proposes to amend comparison to include the audit trail 6 See id. Since the decommissioning of DPTR in
Rule 132.30(9) to conform the data elements set forth in 2009, weekly statistics regarding program trades the
Exchange’s rules to industry-wide Supplementary Material .30. Rule Exchange provides to media outlets have also been
132.30(9) requires that all orders derived from ATI data. Id.
standards for the recording the capacity 7 See note 4, supra.
in which a member organization submitted to the Exchange include 8 In general, the term ‘‘capacity’’ refers to whether
executes a transaction. The proposed specified trade data elements, including a broker-dealer acts as agent, i.e., directly on behalf
rule change is available on the ‘‘[w]hether the account for which the of a customer, or whether the broker-dealer acts as
Exchange’s Web site at www.nyse.com, order was executed was that of a principal, i.e., for its own account, in a transaction.
member or member organization or of a A riskless principal transaction is one where a
at the principal office of the Exchange, broker-dealer receives a customer order and then
and at the Commission’s Public non-member or non-member immediately executes an identical order in the
Reference Room. organization.’’ The Exchange has marketplace, while taking on the role of principal,
periodically published guidance in order to fill the customer order pursuant to Rule
II. Self-Regulatory Organization’s regarding the ATIs that can be used to 5320.
9 Rule 134 requires a member or member
Statement of the Purpose of, and satisfy this requirement.4
organization who acquires or assumes a security
Statutory Basis for, the Proposed Rule ATIs are included as part of the audit position resulting from an error transaction to clear
Change trail data reported for each transaction such error transaction in the member’s or member
asabaliauskas on DSK5VPTVN1PROD with NOTICES
In its filing with the Commission, the on the Exchange. The Exchange also organization’s error account, or in the error account
uses ATIs to capture program trade established for a group of members. Rule 123.22
self-regulatory organization included further requires members to enter orders executed
statements concerning the purpose of, information for those portions of the to offset transactions made in error into an
and basis for, the proposed rule change electronic system and sends a copy of such order
4 See, e.g., Information Memos 85–37 (Nov. 12, to an electronic system on the Floor within 60
15 17
1985); 88–29 (Oct. 19, 1988); 92–34 (Nov. 13, 1992); seconds of execution. See also Rule 123(e) (defining
CFR 200.30–3(a)(12). 96–36 (Dec. 5, 1996); 02–59 (Dec. 17, 2002); 09–31 system entry). This type of proprietary trade is
1 15 U.S.C.78s(b)(1).
(June 24, 2009); 12–25 (October 9, 2012); 14–04 currently identified by the ‘‘Q’’ account type
2 15 U.S.C. 78a.
(January 30, 2014). The current list contains 24 indicator, which would be retained to identify these
3 17 CFR 240.19b–4. distinct ATIs. trading Floor-based executions.
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Document Created: 2016-01-13 01:01:05
Document Modified: 2016-01-13 01:01:05
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 81 FR 1666 |
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