81 FR 33567 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendments Nos. 1, 3, and 4 Thereto, To Amend BATS Rule 14.11(i) To Adopt Generic Listing Standards for Managed Fund Shares
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 102 (May 26, 2016)
Federal Register Volume 81, Issue 102 (May 26, 2016)
| Page Range | 33567-33568 | |
| FR Document | 2016-12382 |
[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)] [Notices] [Pages 33567-33568] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-12382] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77871; File No. SR-BATS-2015-100] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendments Nos. 1, 3, and 4 Thereto, To Amend BATS Rule 14.11(i) To Adopt Generic Listing Standards for Managed Fund Shares May 20, 2016. On November 18, 2015, BATS Exchange, Inc. (now known as Bats BZX Exchange, Inc., ``Exchange'') \1\ filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to amend BATS Rule 14.11(i) by, among other things, adopting generic listing standards for Managed Fund Shares. The proposed rule change was published for comment in the Federal Register on November 25, 2015.\4\ On January 4, 2016, the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.\5\ On February 9, 2016, the Exchange filed Amendment No. 1 to the proposed rule change,\6\ which replaced the originally filed proposed rule change in its entirety.\7\ On February 11, 2016, the Exchange both filed and withdrew Amendment No. 2 to the proposed rule change. On February 11, 2016, the Exchange filed Amendment No. 3 to the proposed rule change.\8\ On February 17, 2016, the Exchange filed Amendment No. 4 to the proposed rule change.\9\ On February 22, 2016, the Commission issued notice of filing of Amendment Nos. 1, 3, and 4 to the proposed rule change and instituted proceedings under Section 19(b)(2)(B) of [[Page 33568]] the Act \10\ to determine whether to approve or disapprove the proposed rule change, as modified by Amendment Nos. 1, 3, and 4 thereto.\11\ In the Order Instituting Proceedings, the Commission solicited comments to specified matters related to the proposal.\12\ The Commission has not received any comments on the proposed rule change. --------------------------------------------------------------------------- \1\ In March 2016, BATS changed its name from ``BATS Exchange, Inc.'' to ``Bats BZX Exchange, Inc.'' See Securities Act Release No. 77307 (Mar. 7, 2016), 81 FR 12996 (Mar. 11, 2016) (SR-BATS-2016-25) (publishing notice of the name change to Bats BZX Exchange, Inc.). \2\ 15 U.S.C. 78s(b)(1). \3\ 17 CFR 240.19b-4. \4\ See Securities Exchange Act Release No. 76478 (Nov. 19, 2015), 80 FR 73841 (``Notice''). \5\ See Securities Exchange Act Release No. 76820, 81 FR 989 (Jan. 8, 2016). The Commission designated February 23, 2016 as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. See id. \6\ Amendment No. 1: (1) Clarifies the proposed treatment of convertible securities under the proposed generic listing criteria; (2) modifies the proposed criterion regarding American Depositary Receipts (``ADRs'') to provide that no more than 10% of the equity weight of the portfolio shall consist of non-exchange traded (rather than unsponsored) ADRs; (3) modifies the proposed portfolio limit on listed derivatives to require that at least 90% of the weight of such holdings invested in futures, exchange-traded options, and listed swaps shall, on both an initial and continuing basis, consist of futures, options, and swaps for which the Exchange may obtain information via the Intermarket Surveillance Group (``ISG'') from other members or affiliates of the ISG or for which the principal market is a market with which the Exchange has a comprehensive surveillance sharing agreement (``CSSA''); (4) provides that a portfolio's investments in listed and over-the-counter derivatives will be calculated for purposes the proposed limits on such holdings as the total absolute notional value of the derivatives; (5) makes certain other conforming and clarifying changes. The amendments to the proposed rule change are available at: http://www.sec.gov/comments/sr-bats-2015-100/bats2015100.shtml. \7\ See Amendment No. 1, supra note 6, at 4. \8\ Amendment No. 3 deletes from the proposal the following two sentences: (1) ``Such limitation will not apply to listed swaps because swaps are listed on swap execution facilities (``SEFs''), the majority of which are not members of ISG.'' and (2) ``Such limitation would not apply to listed swaps because swaps are listed on SEFs, the majority of which are not members of ISG.'' Amendment No. 3 also corrects an erroneous statement in Item 11 to indicate that an Exhibit 4 was included in Amendment No. 1. \9\ Amendment No. 4 deletes from the proposal the following sentence: ``Thus, if the limitation applied to swaps, there would effectively be a cap of 10% of the portfolio invested in listed swaps.'' Amendment No. 4 also amends two representations as follows (added language in brackets): The Exchange or FINRA, on behalf of the Exchange, will communicate as needed regarding trading in Managed Fund Shares [and their underlying components] with other markets that are members of the ISG, including all U.S. securities exchanges and futures exchanges on which the components are traded[, or with which the Exchange has in place a CSSA.] In addition, the Exchange or FINRA[,] on behalf of the Exchange[,] may obtain information regarding trading in Managed Fund Shares [and their underlying components] from other markets that are members of the ISG, including all U.S. securities exchanges and futures exchanges on which the components are traded, or with which the Exchange has in place a CSSA.'' \10\ 15 U.S.C. 78s(b)(2)(B). \11\ See Securities Exchange Act Release No. 77202, 81 FR 9889 (Feb. 26, 2016) (``Order Instituting Proceedings''). Specifically, the Commission instituted proceedings to allow for additional analysis of the proposed rule change's consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ``designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,'' and ``to protect investors and the public interest.'' See id., 81 FR at 9897. \12\ See id. --------------------------------------------------------------------------- Section 19(b)(2) of the Act \13\ provides that, after initiating disapproval proceedings, the Commission shall issue an order approving or disapproving the proposed rule change not later than 180 days after the date of publication of notice of the filing of the proposed rule change. The Commission may, however, extend the period for issuing an order approving or disapproving the proposed rule change by not more than 60 days if the Commission determines that a longer period is appropriate and publishes the reasons for such determination. The proposed rule change was published for notice and comment in the Federal Register on November 25, 2015.\14\ The 180th day after publication of the notice of the filing of the proposed rule change in the Federal Register is May 23, 2016. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(2). \14\ See supra note 4 and accompanying text. --------------------------------------------------------------------------- The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change, as modified by Amendment Nos. 1, 3, and 4 thereto. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,\15\ designates July 22, 2016, as the date by which the Commission shall either approve or disapprove the proposed rule change, as modified by Amendment Nos. 1, 3, and 4 thereto (File No. SR-BATS-2015- 100). --------------------------------------------------------------------------- \15\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(57). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-12382 Filed 5-25-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Notices 33567
parameters set by ISE.23 For example, an IV. Conclusion Exchange filed Amendment No. 1 to the
abnormally low order entry parameter, It is therefore ordered, pursuant to proposed rule change,6 which replaced
set over an abnormally long specified Section 19(b)(2) of the Act,26 that the the originally filed proposed rule
time period should be carefully proposed rule change (SR–ISEGemini– change in its entirety.7 On February 11,
scrutinized, particularly if a member’s 2016–03) be, and hereby is, approved. 2016, the Exchange both filed and
order flow to ISE Gemini contains withdrew Amendment No. 2 to the
agency orders. To the extent that a For the Commission, by the Division of
Trading and Markets, pursuant to delegated proposed rule change. On February 11,
member chooses sensitive parameters, a authority.27 2016, the Exchange filed Amendment
member should consider the effect of its No. 3 to the proposed rule change.8 On
Robert W. Errett,
chosen settings on its ability to receive
Deputy Secretary. February 17, 2016, the Exchange filed
a timely execution on marketable
[FR Doc. 2016–12389 Filed 5–25–16; 8:45 am] Amendment No. 4 to the proposed rule
agency orders that it sends to ISE
Gemini in various market conditions. BILLING CODE 8011–01–P change.9 On February 22, 2016, the
The Commission cautions brokers Commission issued notice of filing of
considering their best execution Amendment Nos. 1, 3, and 4 to the
obligations to be aware that the agency SECURITIES AND EXCHANGE proposed rule change and instituted
orders they represent may be rejected as COMMISSION proceedings under Section 19(b)(2)(B) of
a result of the Market Wide Risk [Release No. 34–77871; File No. SR–BATS–
Protection functionality. 2015–100] or institute proceedings to determine whether to
As discussed above, ISE Gemini disapprove, the proposed rule change. See id.
determined not to establish minimum Self-Regulatory Organizations; BATS 6 Amendment No. 1: (1) Clarifies the proposed
and maximum permissible settings for Exchange, Inc.; Notice of Designation treatment of convertible securities under the
of a Longer Period for Commission proposed generic listing criteria; (2) modifies the
the order entry and order execution proposed criterion regarding American Depositary
parameters in its rule and indicated its Action on Proceedings To Determine Receipts (‘‘ADRs’’) to provide that no more than
intent to set a minimum and maximum Whether To Approve or Disapprove a 10% of the equity weight of the portfolio shall
for the time period parameters that Proposed Rule Change, as Modified by consist of non-exchange traded (rather than
Amendments Nos. 1, 3, and 4 Thereto, unsponsored) ADRs; (3) modifies the proposed
provide broad discretion to members portfolio limit on listed derivatives to require that
(i.e., one second and a full trading day, To Amend BATS Rule 14.11(i) To at least 90% of the weight of such holdings invested
respectively).24 In light of these broad Adopt Generic Listing Standards for in futures, exchange-traded options, and listed
limits, the Commission expects ISE Managed Fund Shares swaps shall, on both an initial and continuing basis,
Gemini to periodically assess whether consist of futures, options, and swaps for which the
May 20, 2016. Exchange may obtain information via the
the Market Wide Risk Protection Intermarket Surveillance Group (‘‘ISG’’) from other
On November 18, 2015, BATS
measures are operating in a manner that members or affiliates of the ISG or for which the
Exchange, Inc. (now known as Bats BZX
is consistent with the promotion of fair principal market is a market with which the
Exchange, Inc., ‘‘Exchange’’) 1 filed with Exchange has a comprehensive surveillance sharing
and orderly markets, including whether
the Securities and Exchange agreement (‘‘CSSA’’); (4) provides that a portfolio’s
the default values and minimum and
Commission (‘‘Commission’’), pursuant investments in listed and over-the-counter
maximum permissible parameters for derivatives will be calculated for purposes the
to Section 19(b)(1) of the Securities
the applicable time period established proposed limits on such holdings as the total
Exchange Act of 1934 (‘‘Act’’) 2 and Rule absolute notional value of the derivatives; (5) makes
by ISE Gemini continue to be
19b–4 thereunder,3 a proposed rule certain other conforming and clarifying changes.
appropriate and operate in a manner
change to amend BATS Rule 14.11(i) by, The amendments to the proposed rule change are
consistent with the Act and the rules available at: http://www.sec.gov/comments/sr-bats-
among other things, adopting generic
thereunder. 2015-100/bats2015100.shtml.
Finally, the Commission believes that listing standards for Managed Fund 7 See Amendment No. 1, supra note 6, at 4.
it is consistent with the Act for ISE Shares. The proposed rule change was 8 Amendment No. 3 deletes from the proposal the
Gemini to offer its Market Wide Risk published for comment in the Federal following two sentences: (1) ‘‘Such limitation will
Protection across both ISE Gemini and Register on November 25, 2015.4 On not apply to listed swaps because swaps are listed
January 4, 2016, the Commission on swap execution facilities (‘‘SEFs’’), the majority
its affiliate, ISE, as such functionality of which are not members of ISG.’’ and (2) ‘‘Such
could assist members in managing and designated a longer period within which limitation would not apply to listed swaps because
reducing inadvertent exposure to to approve the proposed rule change, swaps are listed on SEFs, the majority of which are
excessive risk across both of these disapprove the proposed rule change, or not members of ISG.’’ Amendment No. 3 also
institute proceedings to determine corrects an erroneous statement in Item 11 to
markets if the member desires to avail indicate that an Exhibit 4 was included in
itself of that feature. Further, the whether to disapprove the proposed Amendment No. 1.
Commission notes that it previously rule change.5 On February 9, 2016, the 9 Amendment No. 4 deletes from the proposal the
approved ISE Gemini’s proposal to offer following sentence: ‘‘Thus, if the limitation applied
79 FR 57626 (Sept. 25, 2014) (SR–ISEGemini-2014– to swaps, there would effectively be a cap of 10%
cross-market risk protections for market 09) (approval order). of the portfolio invested in listed swaps.’’
maker quotes, and approval of the cross- 26 15 U.S.C. 78s(b)(2). Amendment No. 4 also amends two representations
market application of the Market Wide 27 17 CFR 200.30–3(a)(12). as follows (added language in brackets): The
Risk Protection functionality is 1 In March 2016, BATS changed its name from Exchange or FINRA, on behalf of the Exchange, will
communicate as needed regarding trading in
consistent with that prior approval.25 ‘‘BATS Exchange, Inc.’’ to ‘‘Bats BZX Exchange,
Managed Fund Shares [and their underlying
Inc.’’ See Securities Act Release No. 77307 (Mar. 7,
components] with other markets that are members
23 See Securities Exchange Act Release No. 2016), 81 FR 12996 (Mar. 11, 2016) (SR–BATS–
of the ISG, including all U.S. securities exchanges
2016–25) (publishing notice of the name change to
37619A (Sept. 6, 1996), 61 FR 48290, at 48323 and futures exchanges on which the components
sradovich on DSK3TPTVN1PROD with NOTICES
Bats BZX Exchange, Inc.).
(Sept. 12, 1996) (Order Execution Obligations are traded[, or with which the Exchange has in
2 15 U.S.C. 78s(b)(1).
adopting release); see also Securities Exchange Act place a CSSA.] In addition, the Exchange or
3 17 CFR 240.19b–4.
Release No. 51808 (June 9, 2005), 70 FR 37496, FINRA[,] on behalf of the Exchange[,] may obtain
37537–8 (June 29, 2005) (Regulation NMS adopting 4 See Securities Exchange Act Release No. 76478
information regarding trading in Managed Fund
release). (Nov. 19, 2015), 80 FR 73841 (‘‘Notice’’). Shares [and their underlying components] from
24 See Notice, supra note 3, at 20022 n.9; see also 5 See Securities Exchange Act Release No. 76820, other markets that are members of the ISG,
supra note 21. 81 FR 989 (Jan. 8, 2016). The Commission including all U.S. securities exchanges and futures
25 See ISE Gemini Rule 804(g); see also Securities designated February 23, 2016 as the date by which exchanges on which the components are traded, or
Exchange Act Release No. 73148 (Sept. 19, 2014), the Commission shall either approve or disapprove, with which the Exchange has in place a CSSA.’’
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![33568 Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Notices
the Act 10 to determine whether to For the Commission, by the Division of and basis for, the proposed rule change
approve or disapprove the proposed Trading and Markets, pursuant to delegated and discussed any comments it received
rule change, as modified by Amendment authority.16 on the proposed rule change. The text
Nos. 1, 3, and 4 thereto.11 In the Order Robert W. Errett, of these statements may be examined at
Instituting Proceedings, the Commission Deputy Secretary. the places specified in Item IV below.
solicited comments to specified matters [FR Doc. 2016–12382 Filed 5–25–16; 8:45 am] The self-regulatory organization has
related to the proposal.12 The BILLING CODE 8011–01–P prepared summaries, set forth in
Commission has not received any Sections A, B, and C below, of the most
comments on the proposed rule change. significant aspects of such statements.
SECURITIES AND EXCHANGE
Section 19(b)(2) of the Act 13 provides COMMISSION A. Self-Regulatory Organization’s
that, after initiating disapproval Statement of the Purpose of, and
proceedings, the Commission shall issue [Release No. 34–77877; File No. SR–BOX– Statutory Basis for, the Proposed Rule
2016–22] Change
an order approving or disapproving the
proposed rule change not later than 180 Self-Regulatory Organizations; BOX 1. Purpose
days after the date of publication of Options Exchange LLC; Notice of The Exchange proposes to amend
notice of the filing of the proposed rule Filing and Immediate Effectiveness of BOX Rule 12140 (Imposition of Fines
change. The Commission may, however, a Proposed Rule Change To Amend for Minor Rule Violations) to amend the
extend the period for issuing an order BOX Rule 12140 (Imposition of Fines sanctions for Quotation Parameters
approving or disapproving the proposed for Minor Rule Violations) To Amend (Rule 12140(d)(5)) and permit the
rule change by not more than 60 days the Sanctions for Quotation aggregation of violations for the purpose
if the Commission determines that a Parameters and Permit the of determining what is an occurrence.
longer period is appropriate and Aggregation of Violations for the The purpose of the proposed rule
publishes the reasons for such Purpose of Determining What Is an change is to amend the sanctions that
determination. The proposed rule Occurrence relate to Rule 8040(a)(7) regarding
change was published for notice and May 20, 2016.
spread parameters for Market Maker
comment in the Federal Register on quotations under the Exchange’s Minor
Pursuant to Section 19(b)(1) of the
November 25, 2015.14 The 180th day Rule Violation Plan or (‘‘MRVP’’). BOX
Securities Exchange Act of 1934
after publication of the notice of the Rule 8040(a)(7) 3 governs quotation
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
filing of the proposed rule change in the parameters which establish the
notice is hereby given that on May 11,
Federal Register is May 23, 2016. maximum permissible width between
2016, BOX Options Exchange LLC (the
the bid and offer in a particular series.4
The Commission finds that it is ‘‘Exchange’’) filed with the Securities
The Exchange believes the proposed
appropriate to designate a longer period and Exchange Commission
rule changes [sic] will add clarity as to
within which to issue an order (‘‘Commission’’) the proposed rule
what is considered a violation with
approving or disapproving the proposed change as described in Items I and II
respect to these quotation parameters
rule change so that it has sufficient time below, which Items have been prepared
under the MRVP.
to consider the proposed rule change, as by the self-regulatory organization. The
First, the Exchange proposes to
modified by Amendment Nos. 1, 3, and Commission is publishing this notice to
amend the sanctions applicable to
4 thereto. solicit comments on the proposed rule
violations of Rule 8040(a)(7) pursuant to
from interested persons.
Accordingly, the Commission, the Exchange’s MRVP which are laid
pursuant to Section 19(b)(2) of the I. Self-Regulatory Organization’s out in BOX Rule 12140(d)(5). The
Act,15 designates July 22, 2016, as the Statement of the Terms of the Substance sanctions would now consist of Letters
date by which the Commission shall of the Proposed Rule Change of Caution respecting the first three
either approve or disapprove the The Exchange proposes to amend occurrences and three fines thereafter
proposed rule change, as modified by BOX Rule 12140 (Imposition of Fines ($250, $500 and $1,000), before the
Amendment Nos. 1, 3, and 4 thereto for Minor Rule Violations) to amend the seventh occurrence would result in
(File No. SR–BATS–2015–100). sanctions for Quotation Parameters and referral to the Hearing Committee for
permit the aggregation of violations for disciplinary action. In addition, the fine
the purpose of determining what is an schedule would be administered on a
occurrence. The text of the proposed one year running calendar basis, such
rule change is available from the that violations within one year of the
10 15 U.S.C. 78s(b)(2)(B). principal office of the Exchange, at the last occurrence would count as the next
11 See Securities Exchange Act Release No. 77202, Commission’s Public Reference Room ‘‘occurrence’’. The Exchange then
81 FR 9889 (Feb. 26, 2016) (‘‘Order Instituting and also on the Exchange’s Internet Web proposes to add language that will allow
Proceedings’’). Specifically, the Commission site at http://boxexchange.com. BOX to aggregate individual quotation
instituted proceedings to allow for additional violations and treat such violations as a
analysis of the proposed rule change’s consistency II. Self-Regulatory Organization’s single offense.
with Section 6(b)(5) of the Act, which requires, Statement of the Purpose of, and The Exchange believes that these
among other things, that the rules of a national Statutory Basis for, the Proposed Rule changes are appropriate because quoting
securities exchange be ‘‘designed to prevent Change on the Exchange is entirely electronic.
sradovich on DSK3TPTVN1PROD with NOTICES
fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade,’’ and In its filing with the Commission, the Specifically, firms rely on their quote
‘‘to protect investors and the public interest.’’ See self-regulatory organization included
3 The Exchange’s MRVP consists of preset fines,
id., 81 FR at 9897. statements concerning the purpose of,
12 See id. pursuant to Rule 19d–1(c) under the Act 17 CFR
240.19d–1(c).
13 15 U.S.C. 78s(b)(2). 16 17 CFR 200.30–3(a)(57). 4 See Rule 8040(a)(7). The Exchange sets the
14 See supra note 4 and accompanying text. 1 15 U.S.C. 78s(b)(1). maximum width at no more than $5 between the
15 15 U.S.C. 78s(b)(2). 2 17 CFR 240.19b–4. bid and offer.
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Document Created: 2016-05-26 01:14:00
Document Modified: 2016-05-26 01:14:00
| 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 33567 |
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