81 FR 21914 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Require Registration as Securities Traders of Associated Persons Primarily Responsible for the Design, Development, Significant Modification of Algorithmic Trading Strategies or Responsible for the Day-to-Day Supervision of Such Activities
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 71 (April 13, 2016)
Federal Register Volume 81, Issue 71 (April 13, 2016)
| Page Range | 21914-21916 | |
| FR Document | 2016-08424 |
[Federal Register Volume 81, Number 71 (Wednesday, April 13, 2016)] [Notices] [Pages 21914-21916] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-08424] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77551; File No. SR-FINRA-2016-007] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Require Registration as Securities Traders of Associated Persons Primarily Responsible for the Design, Development, Significant Modification of Algorithmic Trading Strategies or Responsible for the Day-to-Day Supervision of Such Activities April 7, 2016. I. Introduction On February 11, 2016, the Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend NASD Rule 1032 (Categories of Representative Registration) to require registration as Securities Traders of associated persons primarily responsible for the design, development or significant modification of algorithmic trading strategies, or who are responsible for the day-to-day supervision or direction of such activities. The proposed rule change was published for comment in the Federal Register on February 24, 2016.\3\ The Commission received one comment on the proposal.\4\ This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 77175 (February 18, 2016), 81 FR 9235 (``Notice''). The Notice contains a detailed description of the proposal. \4\ See Letter from Michele Van Tassel, President, Association of Registration Management, to Marcia E. Asquith, Office of the Corporate Secretary, Financial Industry Regulatory Authority, dated March 15, 2016 (``ARM Letter''). --------------------------------------------------------------------------- II. Description of the Proposed Rule Change FINRA's rules generally require each person associated with a member included within the definition of a representative to register with FINRA as a Securities Trader if, with respect to transactions in equity, preferred or convertible debt securities effected otherwise than on a securities exchange, such person is engaged in proprietary trading, the execution of transactions on an agency basis, or the direct supervision of such activities.\5\ FINRA proposes to expand the registration requirement so that associated persons who are (i) primarily responsible for the design, development or significant modification \6\ of algorithmic trading strategies, or (ii) responsible for the day-to-day supervision or direction of such activities, be required to register as Securities Traders with FINRA.\7\ --------------------------------------------------------------------------- \5\ NASD Rule 1032(f). \6\ FINRA notes that a ``significant modification'' to an algorithmic trading strategy generally would be any change to the code of the algorithm that affects the logic and functioning of the trading strategy employed by the algorithm. Therefore, for example, a data feed/data vendor change generally would not be considered a ``significant modification,'' whereas a change to a benchmark (such as an index) used by the strategy generally would be considered a ``significant modification.'' See Notice, supra note 3, at 9237 n. 5. \7\ Id. at 9237. FINRA notes, for example, while an equity trader involved in the design of an algorithmic trading strategy would currently be required to register pursuant to NASD Rule 1032(f), the developer with which the trader collaborates to create an algorithmic trading strategy, however, may not be. Id. --------------------------------------------------------------------------- For purposes of the proposal, FINRA defines an ``algorithmic trading strategy'' as an automated system that generates or routes orders or order-related messages--such as routes or cancellations--but does not include an automated system that solely routes orders received in their entirety to a market center. The proposed registration requirement applies to orders and order related messages whether ultimately routed or sent to be routed to an exchange or over the counter.\8\ An order router alone would not constitute an algorithmic trading strategy. However, an order router that performs any additional functions would be considered an algorithmic trading strategy.\9\ An algorithm that solely [[Page 21915]] generates trading ideas or investment allocations--including an automated investment service that constructs portfolio recommendations--but that is not equipped to automatically generate orders and order-related messages to effectuate such trading ideas into the market--whether independently or via a linked router--would not constitute an algorithmic trading strategy. --------------------------------------------------------------------------- \8\ Id. \9\ See Notice, supra note 3, at 9236-37. --------------------------------------------------------------------------- The associated persons covered by the expanded registration requirement must pass the requisite qualification examination and be subject to the same continuing education requirements that are applicable to individual Securities Traders. FINRA believes that problematic conduct stemming from algorithmic trading strategies--such as failure to check for order accuracy, inappropriate levels of messaging traffic, wash sales, failure to mark orders as ``short'' or perform proper short sale ``locates,'' and inadequate risk management controls--could be reduced or prevented, in part, through improved education regarding securities regulations for the specified individuals involved in the algorithm design and development process.\10\ --------------------------------------------------------------------------- \10\ See Notice, supra note 3, at 9236. --------------------------------------------------------------------------- The proposal is intended to ensure the registration of one or more associated persons that possesses knowledge of, and responsibility for, both the design of the intended trading strategy and the technological implementation of the strategy, sufficient to evaluate whether the resulting product is designed to achieve regulatory compliance in addition to business objectives.\11\ For example, a lead developer who liaises with a head trader regarding the head trader's desired algorithmic trading strategy and is primarily responsible for the supervision of the development of the algorithm to meet such objectives must be registered under the proposal as the associated person primarily responsible for the development of the algorithmic trading strategy and supervising or directing the team of developers.\12\ Individuals under the lead developer's supervision would not be required to register under the proposal if they are not primarily responsible for the development of the algorithmic trading strategy or are not responsible for the day-to-day supervision or direction of others on the team.\13\ Under this scenario, the person on the business side that is primarily responsible for the design of the algorithmic trading strategy, as communicated to the lead developer, also would be required to register. In the event of a significant modification to the algorithm, members, likewise, must ensure that the associated person primarily responsible for the significant modification (or the associated person supervising or directing such activity), is registered as a Securities Trader.\14\ --------------------------------------------------------------------------- \11\ See Notice, supra note 3, at 9237. FINRA states the registration requirement is not intended to apply to every associated person that touches or otherwise is involved in the design or development of a trading algorithm. For example, if a sole associated person determines the design of the trading strategy employed by an algorithm, writes the code to effectuate such strategy, and executes or directs the modification of such code going forward, then that person alone would be required to register as a Securities Trader under the proposal. Id. \12\ Id. \13\ FINRA notes that a junior developer on the lead developer's team presumably is not ``primarily'' responsible for the design, development or significant modification of an algorithmic trading strategy and, therefore, would not be required to register under the proposal. Id. By limiting the registration requirements to those persons primarily responsible for the design, development or significant modification of algorithmic trading strategies or responsible for the day-to-day supervision or direction of such activities FINRA aims to ensure that the member has identified the individuals primarily responsible for covered activities, and for the day-to-day supervision and direction of covered activities, and equip them with a basic level of familiarity with the regulatory obligations of the firm employing the algorithm. Id. FINRA expects that the competency of these associated persons will inform the behaviors of those acting under their supervision or at their direction. Id. \14\ Id. --------------------------------------------------------------------------- FINRA notes that FINRA Rule 3110(a)(2) generally requires that all registered persons be designated to an appropriately registered principal or principals with authority to carry out the supervisory responsibilities of the member for each type of business in which it engages for which registration as a broker-dealer is required. With the addition of algorithmic trading activities to the Securities Trader registration category, members will be required to designate developers to a registered principal for Rule 3110(a)(2) purposes.\15\ In such instances, members may ``assign'' a lead algorithm developer (or other non-trader) engaging in covered activities to one or more other registered persons of the member that supervise trading activities outside such developer's or other non-trader's usual reporting line.\16\ Accordingly, the proposal may not necessarily trigger registration requirements for the current supervisor of algorithm design or development personnel if that supervisor is not responsible for the day-to-day supervision or direction of the specific activities covered by this proposal. However, the firm must designate an appropriately registered person to be responsible for supervising the algorithmic trading strategy activities.\17\ --------------------------------------------------------------------------- \15\ See Notice, supra note 3, at 9238. \16\ FINRA notes that the adequacy of a member's supervisory structure must be evaluated on an individual firm basis, and that members are afforded a degree of flexibility in arranging for the appropriate supervision of a lead developer (or other non-trader) that engages in covered activities. See Notice, supra note 3, at 9238. \17\ Id. --------------------------------------------------------------------------- FINRA notes that a member employing an algorithm is responsible for the algorithm's activities whether the algorithm is designed or developed in-house or by a third-party.\18\ Thus, in all cases, robust supervisory procedures, both before and after deployment of an algorithmic trading strategy, are a key component in protecting against problematic behavior stemming from algorithmic trading. In addition, associated persons responsible for monitoring or reviewing the performance of an algorithmic trading strategy must be registered pursuant to NASD Rule 1032(f); a member's trading activity must always be supervised by an appropriately registered person.\19\ Therefore, even where a firm purchases an algorithm off-the-shelf and does not significantly modify the algorithm, the associated person responsible for monitoring or reviewing the performance of the algorithm must be registered pursuant to NASD Rule 1032(f).\20\ --------------------------------------------------------------------------- \18\ Id. FINRA also notes that an algorithmic trading strategy employed by a member may not have originated in-house and, therefore, may not have been designed or built by the member's associated persons. In cases where the design and development of an algorithmic trading strategy was performed solely by a third-party, the proposed registration requirement would not apply to the member with regard to the design or development of such algorithm. However, FINRA notes that, to the extent associated persons were involved in the design or development, or are able to significantly modify the algorithmic trading strategy in-house, such persons must be registered as Securities Traders. In addition, members also may engage a third-party to custom-build an algorithmic trading strategy for the member. In such cases, the associated person responsible for directing the third-party in the design, development or significant modification of the algorithmic trading strategy also would be included within the scope of this proposal and must be registered as a Securities Trader. Similarly, after the member has launched the externally built algorithm, any significant modification by the member to such algorithm must be performed by a registered Securities Trader. Id. \19\ Id. \20\ Id. --------------------------------------------------------------------------- III. Comment Letter The Commission received one comment letter that supports the proposal.\21\ The commenter states ``ARM understands the need to address the increased significance of algorithmic trading strategies, and therefore [[Page 21916]] supports the FINRA proposal.'' However, the commenter requested additional information regarding the definition of ``algorithmic trading'' and requested that FINRA provide adequate time for member firms to identify the personnel who must register pursuant to the proposal.\22\ The Commission notes that FINRA will announce the effective date of the proposed rule change in a Regulatory Notice to be published no later than 60 days following Commission approval, and the effective date will be no sooner than 180 days following publication of the Regulatory Notice but no later than 300 days following Commission approval.\23\ The Commission also notes that FINRA gave a list of examples of what would be included in the definition of an algorithmic trading strategy.\24\ FINRA further notes that what is considered an ``algorithmic trading strategy'' may evolve as new trading strategies are designed and developed.\25\ The Commission also expects that FINRA will provide more detailed guidance in connection with the implementation of the registration requirement. --------------------------------------------------------------------------- \21\ See ARM Letter, supra note 4. \22\ Id. \23\ See Notice, supra note 3, at 9238. \24\ See Notice, supra note 3, at 9236. \25\ Id. --------------------------------------------------------------------------- IV. Discussion and Findings After carefully considering the proposed rule change and the comment submitted the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.\26\ In particular, the Commission finds that the proposed rule change is consistent with Section 15A(b)(6) of the Act,\27\ which requires, among other things, that FINRA rules 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. In addition, the Commission finds that the proposed rule change is consistent with Section 15A(g)(3)(A) of the Act which authorizes FINRA to examine and verify the qualifications of an applicant to become a member, and the natural persons associated with such an applicant, in accordance with procedures established by FINRA's rules.\28\ The proposed rule change requires associated persons primarily responsible for the design, development or significant modification of an algorithmic trading strategy or responsible for the day-to-day supervision or direction of such activities to register and meet a minimum standard of knowledge regarding the securities rules and regulations applicable to the member employing the algorithmic trading strategy. The Commission notes that this minimum standard of knowledge is identical to the standard of knowledge currently applicable to traditional securities traders. The Commission believes that improved education of firm personnel may reduce the problematic market conduct and manipulative trading activities identified by FINRA.\29\ --------------------------------------------------------------------------- \26\ In approving this proposed rule change, the Commission has considered the proposed rule change's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \27\ 15 U.S.C. 78o-3(b)(6). \28\ 15 U.S.C. 78o-3(g)(3)(A). \29\ See Notice, supra note 3, at 9238-39. --------------------------------------------------------------------------- V. Conclusion It is therefore ordered pursuant to Section 19(b)(2) of the Act \30\ that the proposed rule change (SR-FINRA-2016-007), be and hereby is approved. --------------------------------------------------------------------------- \30\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\31\ --------------------------------------------------------------------------- \31\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-08424 Filed 4-12-16; 8:45 am] BILLING CODE 8011-01-P
![21914 Federal Register / Vol. 81, No. 71 / Wednesday, April 13, 2016 / Notices
III. Date of Effectiveness of the 20549–1090, on official business days The Commission received one comment
Proposed Rules and Timing for between the hours of 10:00 a.m. and on the proposal.4 This order approves
Commission Action 3:00 p.m. Copies of such filing will also the proposed rule change.
Pursuant to Section 19(b)(2)(A)(ii) of be available for inspection and copying
II. Description of the Proposed Rule
the Exchange Act,17 and based on its at the principal office of the PCAOB. All
Change
determination that an extension of the comments received will be posted
without change; we do not edit personal FINRA’s rules generally require each
period set forth in Section 19(b)(2)(A)(i)
identifying information from person associated with a member
of the Exchange Act 18 is appropriate in
submissions. You should submit only included within the definition of a
light of the Commission’s consideration
information that you wish to make representative to register with FINRA as
of Section 103(a)(3)(C) of the Sarbanes-
available publicly. All submissions a Securities Trader if, with respect to
Oxley Act with respect to applicability
should refer to File No. PCAOB–2007– transactions in equity, preferred or
of the proposed rules to audits of
04 and should be submittedon or before convertible debt securities effected
emerging growth companies, as defined
May 4, 2016. otherwise than on a securities exchange,
in Section 3(a)(80) of the Exchange Act,
such person is engaged in proprietary
the Commission has determined to For the Commission, by the Office of the
Chief Accountant, by delegated authority.19 trading, the execution of transactions on
extend to July 12, 2016 the date by
an agency basis, or the direct
which the Commission should take Brent J. Fields,
supervision of such activities.5 FINRA
action on the proposed rules. Secretary.
proposes to expand the registration
[FR Doc. 2016–08444 Filed 4–12–16; 8:45 am] requirement so that associated persons
IV. Solicitation of Comments
Interested persons are invited to
BILLING CODE 8011–01–P who are (i) primarily responsible for the
submit written data, views and design, development or significant
arguments concerning the foregoing, modification 6 of algorithmic trading
SECURITIES AND EXCHANGE strategies, or (ii) responsible for the day-
including whether the proposed rules COMMISSION
are consistent with the requirements of to-day supervision or direction of such
Title I of the Sarbanes-Oxley Act. [Release No. 34–77551; File No. SR–FINRA– activities, be required to register as
Comments may be submitted by any of 2016–007] Securities Traders with FINRA.7
For purposes of the proposal, FINRA
the following methods: Self-Regulatory Organizations; defines an ‘‘algorithmic trading
Electronic Comments Financial Industry Regulatory strategy’’ as an automated system that
Authority, Inc.; Order Approving a generates or routes orders or order-
• Use the Commission’s Internet
Proposed Rule Change To Require related messages—such as routes or
comment form (http://www.sec.gov/
Registration as Securities Traders of cancellations—but does not include an
rules/pcaob.shtml); or
• Send an email to rule-comments@ Associated Persons Primarily automated system that solely routes
sec.gov. Please include File Number Responsible for the Design, orders received in their entirety to a
PCAOB–2007–04 on the subject line. Development, Significant Modification market center. The proposed registration
of Algorithmic Trading Strategies or requirement applies to orders and order
Paper Comments Responsible for the Day-to-Day related messages whether ultimately
• Send paper comments in triplicate Supervision of Such Activities routed or sent to be routed to an
to Brent J. Fields, Secretary, Securities exchange or over the counter.8 An order
April 7, 2016.
and Exchange Commission, 100 F Street router alone would not constitute an
NE., Washington, DC 20549–1090. I. Introduction algorithmic trading strategy. However,
On February 11, 2016, the Financial an order router that performs any
All submissions should refer to File additional functions would be
Number PCAOB–2007–04. This file Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and considered an algorithmic trading
number should be included on the strategy.9 An algorithm that solely
subject line if email is used. To help the Exchange Commission (‘‘Commission’’),
Commission process and review your pursuant to Section 19(b)(1) of the 4 See Letter from Michele Van Tassel, President,
comments more efficiently, please use Securities Exchange Act of 1934 Association of Registration Management, to Marcia
only one method. The Commission will (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a E. Asquith, Office of the Corporate Secretary,
post all comments on the Commission’s proposed rule change to amend NASD Financial Industry Regulatory Authority, dated
Rule 1032 (Categories of Representative March 15, 2016 (‘‘ARM Letter’’).
Internet Web site (http://www.sec.gov/ 5 NASD Rule 1032(f).
rules/pcaob.shtml). Copies of the Registration) to require registration as 6 FINRA notes that a ‘‘significant modification’’ to
submission, all subsequent Securities Traders of associated persons an algorithmic trading strategy generally would be
amendments, all written statements primarily responsible for the design, any change to the code of the algorithm that affects
with respect to the proposed rules that development or significant modification the logic and functioning of the trading strategy
of algorithmic trading strategies, or who employed by the algorithm. Therefore, for example,
are filed with the Commission, and all a data feed/data vendor change generally would not
written communications relating to the are responsible for the day-to-day be considered a ‘‘significant modification,’’ whereas
proposed rules between the Commission supervision or direction of such a change to a benchmark (such as an index) used
and any person, other than those that activities. The proposed rule change by the strategy generally would be considered a
was published for comment in the ‘‘significant modification.’’ See Notice, supra note
asabaliauskas on DSK3SPTVN1PROD with NOTICES
may be withheld from the public in 3, at 9237 n. 5.
accordance with the provisions of 5 Federal Register on February 24, 2016.3 7 Id. at 9237. FINRA notes, for example, while an
U.S.C. 552, will be available for Web equity trader involved in the design of an
19 17 CFR 200.30–11(b)(2).
site viewing and printing in the algorithmic trading strategy would currently be
1 15 U.S.C. 78s(b)(1). required to register pursuant to NASD Rule 1032(f),
Commission’s Public Reference Room, 2 17 CFR 240.19b–4. the developer with which the trader collaborates to
100 F Street NE., Washington, DC 3 See Securities Exchange Act Release No. 77175 create an algorithmic trading strategy, however,
(February 18, 2016), 81 FR 9235 (‘‘Notice’’). The may not be. Id.
17 15 U.S.C. 78s(b)(2)(A)(ii). 8 Id.
Notice contains a detailed description of the
18 15 U.S.C. 78s(b)(2)(A)(i). proposal. 9 See Notice, supra note 3, at 9236–37.
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![21916 Federal Register / Vol. 81, No. 71 / Wednesday, April 13, 2016 / Notices
supports the FINRA proposal.’’ responsible for the design, development Equities Rule 8.600. The Commission
However, the commenter requested or significant modification of an published notice of the proposed rule
additional information regarding the algorithmic trading strategy or change in the Federal Register on
definition of ‘‘algorithmic trading’’ and responsible for the day-to-day February 23, 2016.3 The Commission
requested that FINRA provide adequate supervision or direction of such received no comments on the proposed
time for member firms to identify the activities to register and meet a rule change. On March 28, 2016, the
personnel who must register pursuant to minimum standard of knowledge Exchange filed Amendment No. 1 to the
the proposal.22 The Commission notes regarding the securities rules and proposed rule change.4 The Commission
that FINRA will announce the effective regulations applicable to the member is publishing this notice to solicit
date of the proposed rule change in a employing the algorithmic trading comment on Amendment No. 1 to the
Regulatory Notice to be published no strategy. The Commission notes that this proposed rule change from interested
later than 60 days following minimum standard of knowledge is persons, and is approving the proposed
Commission approval, and the effective identical to the standard of knowledge rule change, as modified by Amendment
date will be no sooner than 180 days currently applicable to traditional No. 1, on an accelerated basis.
following publication of the Regulatory securities traders. The Commission
Notice but no later than 300 days believes that improved education of II. The Exchange’s Description of the
following Commission approval.23 The firm personnel may reduce the Proposal 5
Commission also notes that FINRA gave problematic market conduct and
a list of examples of what would be The Exchange proposes to list and
manipulative trading activities
included in the definition of an trade the Shares under NYSE Arca
identified by FINRA.29
algorithmic trading strategy.24 FINRA Equities Rule 8.600, which governs the
further notes that what is considered an V. Conclusion listing and trading of Managed Fund
‘‘algorithmic trading strategy’’ may It is therefore ordered pursuant to Shares on the Exchange. The Shares will
evolve as new trading strategies are Section 19(b)(2) of the Act 30 that the be offered by the Absolute Shares Trust
designed and developed.25 The proposed rule change (SR–FINRA– (‘‘Trust’’), a statutory trust organized
Commission also expects that FINRA 2016–007), be and hereby is approved. under the laws of the State of Delaware
will provide more detailed guidance in and registered with the Commission as
For the Commission, by the Division of an open-end management investment
connection with the implementation of Trading and Markets, pursuant to delegated
the registration requirement. authority.31
3 See Securities Exchange Act Release No. 77160
IV. Discussion and Findings Robert W. Errett,
(February 17, 2016), 81 FR 9029.
Deputy Secretary. 4 In Amendment No. 1, which replaced the
After carefully considering the
[FR Doc. 2016–08424 Filed 4–12–16; 8:45 am] original filing in its entirety, the Exchange: (1)
proposed rule change and the comment Clarified a reference to debt securities is to ‘‘Debt
submitted the Commission finds that BILLING CODE 8011–01–P
Instruments,’’ as described in the filing; (2)
the proposed rule change is consistent represented that, under normal market conditions,
with the requirements of the Act and the the Fund will invest at least 75% of its corporate
rules and regulations thereunder SECURITIES AND EXCHANGE debt securities that have at least $1,000,000 par
COMMISSION amount outstanding in developed countries or at
applicable to a national securities least $200,000,000 in emerging markets countries;
association.26 In particular, the [Release No. 34–77549; File No. SR– (3) stated that the Fund’s assets invested in Debt
Commission finds that the proposed NYSEArca–2016–14] Instruments would meet certain criteria for index-
based fixed-income ETFs contained in Exchange
rule change is consistent with Section Rule 5.2(j)(3), Commentary .02; (4) stated where
15A(b)(6) of the Act,27 which requires, Self-Regulatory Organizations; NYSE
price information could be found for non-exchange
among other things, that FINRA rules be Arca, Inc.; Notice of Filing of listed ADRs, RMBS, CMBS, ABS, and municipal
designed to prevent fraudulent and Amendment No. 1 and Order Granting securities; (5) clarified that all statements and
Accelerated Approval of a Proposed representations made in the filing regarding the
manipulative acts and practices, to description of the portfolio, limitations on portfolio
promote just and equitable principles of Rule Change, as Modified by
holdings or reference assets, or the applicability of
trade, and, in general, to protect Amendment No. 1, To List and Trade Exchange rules and surveillance procedures
investors and the public interest. In Shares of the WBI Tactical Rotation constitute continued listing requirements for listing
Shares Under NYSE Arca Equities Rule the Shares on the Exchange; (6) stated that the
addition, the Commission finds that the issuer has represented to the Exchange that it will
proposed rule change is consistent with 8.600
advise the Exchange of any failure by the Fund to
Section 15A(g)(3)(A) of the Act which April 7, 2016. comply with the continued listing requirements,
authorizes FINRA to examine and verify and, pursuant to its obligations under Section
I. Introduction 19(g)(1) of the Act, the Exchange will monitor for
the qualifications of an applicant to compliance with the continued listing
become a member, and the natural On February 3, 2016, NYSE Arca, Inc. requirements, and if the Fund is not in compliance
persons associated with such an (‘‘Exchange’’) filed with the Securities with the applicable listing requirements, the
applicant, in accordance with Exchange will commence delisting procedures
and Exchange Commission under NYSE Arca Equities Rule 5.5(m); and (7)
procedures established by FINRA’s (‘‘Commission’’), pursuant to Section made other clarifying and technical amendments.
rules.28 The proposed rule change 19(b)(1) of the Securities Exchange Act Amendment No. 1 is available at: http://
requires associated persons primarily of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and www.sec.gov/comments/sr-nysearca-2016-14/
nysearca201614-1.pdf.
Rule 19b–4 thereunder,2 a proposed rule
asabaliauskas on DSK3SPTVN1PROD with NOTICES
22 Id. 5 The Commission notes that additional
change to list and trade shares information regarding the Fund, the Trust (as
23 See Notice, supra note 3, at 9238.
24 See
(‘‘Shares’’) of the WBI Tactical Rotation defined below), and the Shares, including
Notice, supra note 3, at 9236.
25 Id.
Shares (‘‘Fund’’) under NYSE Arca investment strategies, risks, creation and
redemption procedures, fees, portfolio holdings,
26 In approving this proposed rule change, the
29 See disclosure policies, calculation of net asset value
Commission has considered the proposed rule Notice, supra note 3, at 9238–39.
30 15
(‘‘NAV’’), distributions, and taxes, among other
change’s impact on efficiency, competition, and U.S.C. 78s(b)(2). things, can be found in Amendment No. 1 and the
capital formation. See 15 U.S.C. 78c(f). 31 17 CFR 200.30–3(a)(12).
Registration Statement, as applicable. See
27 15 U.S.C. 78o–3(b)(6). 1 15 U.S.C. 78s(b)(1).
Amendment No. 1, supra note 4, and Registration
28 15 U.S.C. 78o–3(g)(3)(A). 2 17 CFR 240.19b–4. Statement, infra note 6.
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Document Created: 2016-04-13 03:11:16
Document Modified: 2016-04-13 03:11:16
| 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 21914 |
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