81 FR 39984 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7018(a)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 118 (June 20, 2016)
Federal Register Volume 81, Issue 118 (June 20, 2016)
| Page Range | 39984-39985 | |
| FR Document | 2016-14448 |
[Federal Register Volume 81, Number 118 (Monday, June 20, 2016)] [Notices] [Pages 39984-39985] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-14448] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78064; File No. SR-BX-2016-029] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7018(a) June 14, 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 June 1, 2016, NASDAQ BX, Inc. (``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Rule 7018(a) to delete text from the preamble [sic] the rule concerning Consolidated Volume. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to delete rule text from the preamble of Rule 7018(a) concerning Consolidated Volume. The rule currently defines Consolidated Volume as the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. The Exchange excludes from the calculations of fees and credits that have a Consolidated Volume component all trading that occurs on the date of the annual reconstitution of the Russell Investments. The annual reconstitution represents a day of abnormal trading volume, as the Russell Investment indexes adjust holdings to accurately reflect the current state of equity markets and their market segments.\3\ Consequently, the Exchange excludes the date of the Russell Investment reconstitution in all calculations of fees and credits because it is not reflective of a member's normal trading. The Exchange expresses this under the rule by stating that, ``[f]or purposes of calculating Consolidated Volume and the extent of a member's trading activity, expressed as a percentage of or ratio to Consolidated Volume, the date of the annual reconstitution of the Russell Investments Indexes shall be excluded from both total Consolidated Volume and the member's trading activity.'' The Exchange believes that the text stating ``expressed as a percentage of, or ratio to, Consolidated Volume'' may be confusing to market participants in understanding how the Exchange excludes trading activity on the day of the Russell Investment reconstitution should the Exchange ever adopt a fee or credit tier based on a different measure of Consolidated Volume. Specifically, the Exchange seeks to clarify that all trading activity on the date of the Russell Investment reconstitution (including trading activity not based on a percentage or ratio of Consolidated Volume) is excluded from a member's trading activity for determining credit and fee tiers. This proposed change has no impact on the Exchange at this time, as all tiers under the rule are currently expressed as a percentage of Consolidated Volume; however, if the Exchange adopted a new metric, such as a certain nominal level of share volume (e.g., a requirement to add 5 million shares), the Exchange wants to ensure that member understand that all trading activity on the day of the Russell Investment reconstitution would be excluded for purposes of determining what fees and credits a member qualifies for. --------------------------------------------------------------------------- \3\ See https://www.ftserussell.com/research-insights/russell-reconstitution. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \4\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act \5\ in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the Exchange operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b). \5\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that deleting rule text from the preamble of Rule 7018(a) concerning Consolidated Volume is reasonable because it will help clarify how credit and fee tiers that [[Page 39985]] rely on a calculation of Consolidated Volume will be handled by the Exchange during the annual Russell Indexes reconstitution. Currently, the rule text could be interpreted to apply to only a member organization's trading activity under a fee or credit tier that is expressed as a ratio or percentage of Consolidated Volume. The Exchange believes that, should it ever adopt a credit or fee tier based on another measure of Consolidated Volume, such an interpretation would undermine the Exchange's intent to exclude the abnormal trading activity that occurs on that day. Accordingly, the Exchange believes that it is reasonable to remove the potentially confusing rule text. The Exchange believes that deleting rule text from the preamble of Rule 7018(a) concerning Consolidated Volume is an equitable allocation and is not unfairly discriminatory because the proposed change only serves to clarify the application of the rule and does not alter how Consolidated Volume is calculated. Thus, the Exchange will apply the same process to all similarly situated member organizations that seek to qualify under a fee or credit tier under the rule that relies on a calculation of Consolidated Volume. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is being made to clarify the rule and avoid potential market participant confusion that may be caused by the existing rule text. As such, the Exchange does not believe that the proposed change places any burden on competition whatsoever. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.\6\ --------------------------------------------------------------------------- \6\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BX-2016-029 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2016-029. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BX-2016-029 and should be submitted on or before July 11, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\7\ --------------------------------------------------------------------------- \7\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-14448 Filed 6-17-16; 8:45 am] BILLING CODE 8011-01-P
![39984 Federal Register / Vol. 81, No. 118 / Monday, June 20, 2016 / Notices
Commission process and review your The Commission is publishing this reconstitution in all calculations of fees
comments more efficiently, please use notice to solicit comments on the and credits because it is not reflective of
only one method. The Commission will proposed rule change from interested a member’s normal trading. The
post all comments on the Commission’s persons. Exchange expresses this under the rule
Internet Web site (http://www.sec.gov/ by stating that, ‘‘[f]or purposes of
I. Self-Regulatory Organization’s
rules/sro.shtml). Copies of the calculating Consolidated Volume and
Statement of the Terms of Substance of
submission, all subsequent the extent of a member’s trading
the Proposed Rule Change
amendments, all written statements activity, expressed as a percentage of or
with respect to the proposed rule The Exchange proposes to amend the ratio to Consolidated Volume, the date
change that are filed with the Rule 7018(a) to delete text from the of the annual reconstitution of the
Commission, and all written preamble [sic] the rule concerning Russell Investments Indexes shall be
communications relating to the Consolidated Volume. excluded from both total Consolidated
proposed rule change between the The text of the proposed rule change Volume and the member’s trading
Commission and any person, other than is available on the Exchange’s Web site activity.’’ The Exchange believes that
those that may be withheld from the at http:// the text stating ‘‘expressed as a
public in accordance with the nasdaqomxbx.cchwallstreet.com/, at the percentage of, or ratio to, Consolidated
provisions of 5 U.S.C. 552, will be principal office of the Exchange, and at Volume’’ may be confusing to market
available for Web site viewing and the Commission’s Public Reference participants in understanding how the
printing in the Commission’s Public Room. Exchange excludes trading activity on
Reference Room, 100 F Street NE., II. Self-Regulatory Organization’s the day of the Russell Investment
Washington, DC 20549, on official Statement of the Purpose of, and reconstitution should the Exchange ever
business days between the hours of Statutory Basis for, the Proposed Rule adopt a fee or credit tier based on a
10:00 a.m. and 3:00 p.m. Copies of such Change different measure of Consolidated
filing will also be available for Volume. Specifically, the Exchange
inspection and copying at the principal In its filing with the Commission, the seeks to clarify that all trading activity
office of the Exchange. All comments Exchange included statements on the date of the Russell Investment
received will be posted without change; concerning the purpose of and basis for reconstitution (including trading
the Commission does not edit personal the proposed rule change and discussed activity not based on a percentage or
identifying information from any comments it received on the ratio of Consolidated Volume) is
submissions. You should submit only proposed rule change. The text of these excluded from a member’s trading
information that you wish to make statements may be examined at the activity for determining credit and fee
available publicly. All submissions places specified in Item IV below. The tiers. This proposed change has no
should refer to File Number SR– Exchange has prepared summaries, set impact on the Exchange at this time, as
BatsEDGX–2016–21 and should be forth in sections A, B, and C below, of all tiers under the rule are currently
submitted on or before July 11, 2016. the most significant aspects of such expressed as a percentage of
statements. Consolidated Volume; however, if the
For the Commission, by the Division of
Trading and Markets, pursuant to delegated A. Self-Regulatory Organization’s Exchange adopted a new metric, such as
authority.18 Statement of the Purpose of, and a certain nominal level of share volume
Robert W. Errett, Statutory Basis for, the Proposed Rule (e.g., a requirement to add 5 million
Deputy Secretary. Change shares), the Exchange wants to ensure
[FR Doc. 2016–14446 Filed 6–17–16; 8:45 am] that member understand that all trading
1. Purpose
BILLING CODE 8011–01–P
activity on the day of the Russell
The purpose of the proposed rule Investment reconstitution would be
change is to delete rule text from the excluded for purposes of determining
SECURITIES AND EXCHANGE preamble of Rule 7018(a) concerning what fees and credits a member
COMMISSION Consolidated Volume. The rule qualifies for.
currently defines Consolidated Volume
[Release No. 34–78064; File No. SR–BX– as the total consolidated volume 2. Statutory Basis
2016–029] reported to all consolidated transaction The Exchange believes that its
reporting plans by all exchanges and proposal is consistent with Section 6(b)
Self-Regulatory Organizations;
trade reporting facilities during a month of the Act 4 in general, and furthers the
NASDAQ BX, Inc.; Notice of Filing and
in equity securities, excluding executed objectives of Sections 6(b)(4) and 6(b)(5)
Immediate Effectiveness of Proposed
orders with a size of less than one round of the Act 5 in particular, in that it
Rule Change To Amend Rule 7018(a)
lot. The Exchange excludes from the provides for the equitable allocation of
June 14, 2016. calculations of fees and credits that have reasonable dues, fees and other charges
Pursuant to Section 19(b)(1) of the a Consolidated Volume component all among members and issuers and other
Securities Exchange Act of 1934 trading that occurs on the date of the persons using any facility or system
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 annual reconstitution of the Russell which the Exchange operates or
notice is hereby given that on June 1, Investments. The annual reconstitution controls, and is not designed to permit
2016, NASDAQ BX, Inc. (‘‘Exchange’’) represents a day of abnormal trading unfair discrimination between
asabaliauskas on DSK3SPTVN1PROD with NOTICES
filed with the Securities and Exchange volume, as the Russell Investment customers, issuers, brokers, or dealers.
Commission (‘‘SEC’’ or ‘‘Commission’’) indexes adjust holdings to accurately The Exchange believes that deleting
the proposed rule change as described reflect the current state of equity rule text from the preamble of Rule
in Items I, II, and III, below, which Items markets and their market segments.3 7018(a) concerning Consolidated
have been prepared by the Exchange. Consequently, the Exchange excludes Volume is reasonable because it will
the date of the Russell Investment help clarify how credit and fee tiers that
18 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1). 3 See https://www.ftserussell.com/research- 4 15 U.S.C. 78f(b).
2 17 CFR 240.19b–4. insights/russell-reconstitution. 5 15 U.S.C. 78f(b)(4) and (5).
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![Federal Register / Vol. 81, No. 118 / Monday, June 20, 2016 / Notices 39985
rely on a calculation of Consolidated the public interest; (ii) for the protection For the Commission, by the Division of
Volume will be handled by the of investors; or (iii) otherwise in Trading and Markets, pursuant to delegated
Exchange during the annual Russell furtherance of the purposes of the Act. authority.7
Indexes reconstitution. Currently, the If the Commission takes such action, the Robert W. Errett,
rule text could be interpreted to apply Commission shall institute proceedings Deputy Secretary.
to only a member organization’s trading to determine whether the proposed rule [FR Doc. 2016–14448 Filed 6–17–16; 8:45 am]
activity under a fee or credit tier that is should be approved or disapproved.
BILLING CODE 8011–01–P
expressed as a ratio or percentage of IV. Solicitation of Comments
Consolidated Volume. The Exchange
believes that, should it ever adopt a Interested persons are invited to
submit written data, views, and SECURITIES AND EXCHANGE
credit or fee tier based on another COMMISSION
measure of Consolidated Volume, such arguments concerning the foregoing,
an interpretation would undermine the including whether the proposed rule
Exchange’s intent to exclude the change is consistent with the Act. [Investment Advisers Act of 1940; Release
abnormal trading activity that occurs on Comments may be submitted by any of No. IA–4421/June 14, 2016]
that day. Accordingly, the Exchange the following methods:
Order Approving Adjustment for
believes that it is reasonable to remove Electronic Comments Inflation of the Dollar Amount Tests in
the potentially confusing rule text.
The Exchange believes that deleting • Use the Commission’s Internet Rule 205–3 Under the Investment
rule text from the preamble of Rule comment form (http://www.sec.gov/ Advisers Act of 1940
7018(a) concerning Consolidated rules/sro.shtml); or
• Send an email to rule-comments@ I. Background
Volume is an equitable allocation and is
sec.gov. Please include File Number SR–
not unfairly discriminatory because the Section 205(a)(1) of the Investment
BX–2016–029 on the subject line.
proposed change only serves to clarify Advisers Act of 1940 (‘‘Advisers Act’’)
the application of the rule and does not Paper Comments generally prohibits an investment
alter how Consolidated Volume is • Send paper comments in triplicate adviser from entering into, extending,
calculated. Thus, the Exchange will to Brent J. Fields, Secretary, Securities renewing, or performing any investment
apply the same process to all similarly and Exchange Commission, 100 F Street advisory contract that provides for
situated member organizations that seek NE., Washington, DC 20549–1090. compensation to the adviser based on a
to qualify under a fee or credit tier share of capital gains on, or capital
All submissions should refer to File
under the rule that relies on a appreciation of, the funds of a client
Number SR–BX–2016–029. This file
calculation of Consolidated Volume. (also known as performance
number should be included on the
compensation or performance fees).1
B. Self-Regulatory Organization’s subject line if email is used. To help the
Section 205(e) authorizes the Securities
Statement on Burden on Competition Commission process and review your
and Exchange Commission
The Exchange does not believe that comments more efficiently, please use
(‘‘Commission’’) to exempt any advisory
the proposed rule change will impose only one method. The Commission will
contract from the performance fee
any burden on competition not post all comments on the Commission’s
prohibition if the contract is with
necessary or appropriate in furtherance Internet Web site (http://www.sec.gov/
persons who the Commission
of the purposes of the Act. The rules/sro.shtml).
Copies of the submission, all determines do not need the protections
proposed rule change is being made to of the prohibition, on the basis of
clarify the rule and avoid potential subsequent amendments, all written
statements with respect to the proposed certain factors described in that
market participant confusion that may section.2 Rule 205–3 under the Advisers
be caused by the existing rule text. As rule change that are filed with the
Commission, and all written Act exempts an investment adviser from
such, the Exchange does not believe that the prohibition against charging a client
the proposed change places any burden communications relating to the
proposed rule change between the performance fees in certain
on competition whatsoever. circumstances when the client is a
Commission and any person, other than
C. Self-Regulatory Organization’s those that may be withheld from the ‘‘qualified client.’’ The rule allows an
Statement on Comments on the public in accordance with the adviser to charge performance fees if the
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be client has at least a certain dollar
Members, Participants, or Others available for Web site viewing and amount in assets under management
printing in the Commission’s Public (currently, $1,000,000) with the adviser
No written comments were either immediately after entering into the
solicited or received. Reference Room, 100 F Street NE.,
Washington, DC 20549, on official advisory contract (‘‘assets-under-
III. Date of Effectiveness of the business days between the hours of management test’’) or if the adviser
Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of the reasonably believes, immediately prior
Commission Action filing also will be available for to entering into the contract, that the
The foregoing rule change has become inspection and copying at the principal client had a net worth of more than a
effective pursuant to Section office of the Exchange. All comments
7 17 CFR 200.30–3(a)(12).
received will be posted without change;
asabaliauskas on DSK3SPTVN1PROD with NOTICES
19(b)(3)(A)(ii) of the Act.6 1 15 U.S.C. 80b–5(a)(1).
At any time within 60 days of the the Commission does not edit personal 2 Under section 205(e), the Commission may
filing of the proposed rule change, the identifying information from determine that persons do not need the protections
Commission summarily may submissions. You should submit only of section 205(a)(1) on the basis of such factors as
temporarily suspend such rule change if information that you wish to make ‘‘financial sophistication, net worth, knowledge of
it appears to the Commission that such available publicly. and experience in financial matters, amount of
assets under management, relationship with a
action is: (i) Necessary or appropriate in All submissions should refer to File registered investment adviser, and such other
Number SR–BX–2016–029 and should factors as the Commission determines are consistent
6 15 U.S.C. 78s(b)(3)(A)(ii). be submitted on or before July 11, 2016. with [section 205].’’ 15 U.S.C. 80b–5(e).
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Document Created: 2016-06-18 00:09:36
Document Modified: 2016-06-18 00:09:36
| 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 39984 |
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