81 FR 46730 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing of Proposed Minor Rule Violation Plan

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 137 (July 18, 2016)

Page Range		46730-46731
FR Document		2016-16866
Federal Register, Volume 81 Issue 137 (Monday, July 18, 2016)
[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Notices]
[Pages 46730-46731]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16866]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78300; File No. 4-701]


Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing of Proposed Minor Rule Violation Plan

July 12, 2016.
    Pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19d-1(c)(2) thereunder,\2\ notice is hereby 
given that on July 11, 2016, Investors' Exchange LLC (``IEX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed minor rule violation plan (``MRVP'') with 
sanctions not exceeding $2,500 which would not be subject to the 
provisions of Rule 19d-1(c)(1) of the Act \3\ requiring that a self-
regulatory organization (``SRO'') promptly file notice with the 
Commission of any final disciplinary action taken with respect to any 
person or organization.\4\ In accordance with Rule 19d-1(c)(2) under 
the Act,\5\ the Exchange proposed to designate certain specified rule 
violations as minor rule violations, and requested that it be relieved 
of the prompt reporting requirements regarding such violations, 
provided it gives notice of such violations to the Commission on a 
quarterly basis.
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    \1\ 15 U.S.C. 78s(d)(1).
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ 17 CFR 240.19d-1(c)(1).
    \4\ The Commission adopted amendments to paragraph (c) of Rule 
19d-1 to allow SROs to submit for Commission approval plans for the 
abbreviated reporting of minor disciplinary infractions. See 
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 
23828 (June 8, 1984). Any disciplinary action taken by an SRO 
against any person for violation of a rule of the SRO which has been 
designated as a minor rule violation pursuant to such a plan filed 
with and declared effective by the Commission is not considered 
``final'' for purposes of Section 19(d)(1) of the Act if the 
sanction imposed consists of a fine not exceeding $2,500 and the 
sanctioned person has not sought an adjudication, including a 
hearing, or otherwise exhausted his administrative remedies.
    \5\ 17 CFR 240.19d-1(c)(2).
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    The Exchange proposes to include in its MRVP the procedures 
included in Exchange Rule 9.216(b) (``Procedure for Violation Under 
Plan Pursuant to Exchange Act Rule 19d-1(c)(2)'') and violations to be 
included in Exchange Rule 9.218 (``Violations Appropriate for 
Disposition Under Plan Pursuant to Exchange Act Rule 19d-1(c)(2)'').\6\ 
According to the Exchange's MRVP, under Rule 9.216(b), the Exchange may 
impose a fine (not to exceed $2,500) and/or a censure on any Member or 
associated person with respect to any rule listed in IEX Rule 9.218. If 
the Financial Industry Regulatory Authority (``FINRA'') Department of 
Enforcement or the Department of Market Regulation, on behalf of the 
Exchange, has reason to believe a violation has occurred and if the 
Member or associated person does not dispute the violation, the 
Department of Enforcement or the Department of Market Regulation may 
prepare and request that the Member or associated person execute a 
minor rule violation plan letter accepting a finding of violation, 
consenting to the imposition of sanctions, and agreeing to waive such 
Member's or associated person's right to a hearing before a Hearing 
Panel or, if applicable, an Extended Hearing Panel, and any right of 
appeal to the IEX Appeals Committee, the Board, the SEC, and the 
courts, or to otherwise challenge the validity of the letter, if the 
letter is accepted. The letter shall describe the act or practice 
engaged in or omitted, the rule, regulation, or statutory provision 
violated, and the sanction or sanctions to be imposed. Unless the 
letter states otherwise, the effective date of any sanction(s) imposed 
will be a date to be determined by IEX Regulation staff. In the event 
the letter is not accepted by the Member or associated person, or is 
rejected by the Office of Disciplinary Affairs, the matter can proceed 
in accordance with the Exchange's disciplinary rules already approved 
by the Commission, which include hearing rights for formal disciplinary 
proceedings.\7\
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    \6\ The Exchange received its grant of registration on June 17, 
2016, which included approving the rules that govern the Exchange. 
See Securities Exchange Act Release No. 78101 (June 17, 2016), 81 FR 
41141 (June 23, 2016) (File No. 10-222). The Exchange anticipates, 
upon effectiveness of its MRVP, to file a rule proposal pursuant to 
Section 19(b)(1) of the Act, and Rule 19b-4 thereunder, to amend 
Rule 9.218 to specify the violations to be subject to the MRVP. 
Exhibit A includes the entirety of Rule 9.216(b) and anticipated 
changes to Rule 9.218.
    \7\ See, Chapter 9 generally.
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    The Exchange proposes that, as set forth in Exchange Rule 9.218, 
violations of the following rules would be appropriate for disposition 
under the MRVP: Rule 2.160(p)--Continuing Education Requirements; Rule 
4.511 (General Requirements related to books and records requirements); 
Rule 4.540 (Furnishing of records); Rule 5.110 (Supervision); Rule 
8.220 (Automated submission of trading data requested); Rule 
11.151(a)(1) (Market Maker two-sided quotation requirement); Rule 
11.290 (Short sales); Rule 11.310 (Locking or crossing quotations in 
NMS stocks); and Rule 11.420 (Order audit trail system requirements).
    Upon the Commission's declaration of effectiveness of the MRVP, the 
Exchange will provide to the Commission a quarterly report for any 
actions taken on minor rule violations under the MRVP. The quarterly 
report will include: The Exchange's internal file number for the case, 
the name of the individual and/or organization, the nature of the 
violation, the specific rule provision violated, the sanction imposed, 
the number of times the rule violation occurred, and the date of the 
disposition.

[[Page 46731]]

    Additionally, the Exchange proposes that, going forward, to the 
extent that there are any changes to the rules applicable to the 
Exchange's MRVP, the Exchange hereby requests that the Commission deem 
such changes to be modifications to the Exchange's MRVP.

I. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the Exchange's proposed MRVP, including whether 
the proposed MRVP is consistent with the Act. Comments may be submitted 
by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number 4-701 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 4-701. 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 MRVP that are filed with the 
Commission, and all written communications relating to the proposed 
MRVP 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 proposed MRVP 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 4-701, and should be submitted 
on or before August 2, 2016.

II. Date of Effectiveness of the Proposed Minor Rule Violation Plan and 
Timing for Commission Action

    Pursuant to Section 19(d)(1) of the Act and Rule 19d-1(c)(2) 
thereunder,\8\ after August 2, 2016, the Commission may, by order, 
declare the Exchange proposed MRVP effective if the plan is consistent 
with the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act. The Commission in its order may 
restrict the categories of violations to be designated as minor rule 
violations and may impose any other terms or conditions to the proposed 
MRVP, File No. 4-701, and to the period of its effectiveness, which the 
Commission deems necessary or appropriate in the public interest, for 
the protection of investors or otherwise in furtherance of the purposes 
of the Act.
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    \8\ 15 U.S.C. 78s(d)(1); 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(44).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16866 Filed 7-15-16; 8:45 am]
 BILLING CODE 8011-01-P
46730 Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices

Paper Comments (‘‘Act’’),1 and Rule 19d–1(c)(2) or the Department of Market Regulation,
• Send paper comments in triplicate thereunder,2 notice is hereby given that on behalf of the Exchange, has reason to
to Brent J. Fields, Secretary, Securities on July 11, 2016, Investors’ Exchange believe a violation has occurred and if
and Exchange Commission, 100 F Street LLC (‘‘IEX’’ or the ‘‘Exchange’’) filed the Member or associated person does
NE., Washington, DC 20549–1090. with the Securities and Exchange not dispute the violation, the
Commission (‘‘Commission’’) a Department of Enforcement or the
All submissions should refer to File proposed minor rule violation plan Department of Market Regulation may
Number SR–ISE–2016–16. This file (‘‘MRVP’’) with sanctions not exceeding prepare and request that the Member or
number should be included on the $2,500 which would not be subject to associated person execute a minor rule
subject line if email is used. To help the the provisions of Rule 19d–1(c)(1) of the violation plan letter accepting a finding
Commission process and review your Act 3 requiring that a self-regulatory of violation, consenting to the
comments more efficiently, please use organization (‘‘SRO’’) promptly file imposition of sanctions, and agreeing to
only one method. The Commission will notice with the Commission of any final waive such Member’s or associated
post all comments on the Commission’s disciplinary action taken with respect to person’s right to a hearing before a
Internet Web site (http://www.sec.gov/ any person or organization.4 In Hearing Panel or, if applicable, an
rules/sro.shtml). Copies of the accordance with Rule 19d–1(c)(2) under Extended Hearing Panel, and any right
submission, all subsequent the Act,5 the Exchange proposed to of appeal to the IEX Appeals Committee,
amendments, all written statements designate certain specified rule the Board, the SEC, and the courts, or
with respect to the proposed rule violations as minor rule violations, and to otherwise challenge the validity of
change that are filed with the requested that it be relieved of the the letter, if the letter is accepted. The
Commission, and all written prompt reporting requirements letter shall describe the act or practice
communications relating to the regarding such violations, provided it engaged in or omitted, the rule,
proposed rule change between the gives notice of such violations to the regulation, or statutory provision
Commission and any person, other than Commission on a quarterly basis. violated, and the sanction or sanctions
those that may be withheld from the The Exchange proposes to include in to be imposed. Unless the letter states
public in accordance with the its MRVP the procedures included in otherwise, the effective date of any
provisions of 5 U.S.C. 552, will be Exchange Rule 9.216(b) (‘‘Procedure for sanction(s) imposed will be a date to be
available for Web site viewing and Violation Under Plan Pursuant to determined by IEX Regulation staff. In
printing in the Commission’s Public Exchange Act Rule 19d–1(c)(2)’’) and the event the letter is not accepted by
Reference Room, 100 F Street NE., violations to be included in Exchange the Member or associated person, or is
Washington, DC 20549 on official Rule 9.218 (‘‘Violations Appropriate for rejected by the Office of Disciplinary
business days between the hours of Disposition Under Plan Pursuant to Affairs, the matter can proceed in
10:00 a.m. and 3:00 p.m. Copies of such Exchange Act Rule 19d–1(c)(2)’’).6 accordance with the Exchange’s
filing also will be available for According to the Exchange’s MRVP, disciplinary rules already approved by
inspection and copying at the principal under Rule 9.216(b), the Exchange may the Commission, which include hearing
office of the Exchange. All comments impose a fine (not to exceed $2,500) rights for formal disciplinary
received will be posted without change; and/or a censure on any Member or proceedings.7
the Commission does not edit personal associated person with respect to any The Exchange proposes that, as set
identifying information from rule listed in IEX Rule 9.218. If the forth in Exchange Rule 9.218, violations
submissions. You should submit only of the following rules would be
Financial Industry Regulatory Authority
information that you wish to make appropriate for disposition under the
(‘‘FINRA’’) Department of Enforcement
available publicly. All submissions MRVP: Rule 2.160(p)—Continuing
should refer to File Number SR–ISE– 1 15
U.S.C. 78s(d)(1).
Education Requirements; Rule 4.511
2016–16, and should be submitted on or 2 17
CFR 240.19d–1(c)(2). (General Requirements related to books
before August 8, 2016. 3 17 CFR 240.19d–1(c)(1). and records requirements); Rule 4.540
For the Commission, by the Division of
4 The Commission adopted amendments to (Furnishing of records); Rule 5.110
Trading and Markets, pursuant to delegated
paragraph (c) of Rule 19d–1 to allow SROs to (Supervision); Rule 8.220 (Automated
submit for Commission approval plans for the submission of trading data requested);
authority.10 abbreviated reporting of minor disciplinary
Robert W. Errett, infractions. See Securities Exchange Act Release Rule 11.151(a)(1) (Market Maker two-
No. 21013 (June 1, 1984), 49 FR 23828 (June 8, sided quotation requirement); Rule
Deputy Secretary.
1984). Any disciplinary action taken by an SRO 11.290 (Short sales); Rule 11.310
[FR Doc. 2016–16855 Filed 7–15–16; 8:45 am] against any person for violation of a rule of the SRO (Locking or crossing quotations in NMS
BILLING CODE 8011–01–P which has been designated as a minor rule violation
pursuant to such a plan filed with and declared
stocks); and Rule 11.420 (Order audit
effective by the Commission is not considered trail system requirements).
‘‘final’’ for purposes of Section 19(d)(1) of the Act Upon the Commission’s declaration of
SECURITIES AND EXCHANGE if the sanction imposed consists of a fine not effectiveness of the MRVP, the Exchange
COMMISSION exceeding $2,500 and the sanctioned person has not will provide to the Commission a
sought an adjudication, including a hearing, or
[Release No. 34–78300; File No. 4–701] otherwise exhausted his administrative remedies. quarterly report for any actions taken on
5 17 CFR 240.19d–1(c)(2). minor rule violations under the MRVP.
Self-Regulatory Organizations; 6 The Exchange received its grant of registration The quarterly report will include: The
Exchange’s internal file number for the
asabaliauskas on DSK3SPTVN1PROD with NOTICES

Investors Exchange LLC; Notice of on June 17, 2016, which included approving the
rules that govern the Exchange. See Securities case, the name of the individual and/or
Filing of Proposed Minor Rule Exchange Act Release No. 78101 (June 17, 2016), 81
Violation Plan FR 41141 (June 23, 2016) (File No. 10–222). The organization, the nature of the violation,
Exchange anticipates, upon effectiveness of its the specific rule provision violated, the
July 12, 2016. MRVP, to file a rule proposal pursuant to Section sanction imposed, the number of times
Pursuant to Section 19(d)(1) of the 19(b)(1) of the Act, and Rule 19b–4 thereunder, to the rule violation occurred, and the date
Securities Exchange Act of 1934 amend Rule 9.218 to specify the violations to be
subject to the MRVP. Exhibit A includes the of the disposition.
entirety of Rule 9.216(b) and anticipated changes to
10 17 CFR 200.30–3(a)(12). Rule 9.218. 7 See, Chapter 9 generally.

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Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Notices 46731

Additionally, the Exchange proposes II. Date of Effectiveness of the Proposed Improvement XL (‘‘PIXLSM’’), to extend,
that, going forward, to the extent that Minor Rule Violation Plan and Timing through January 18, 2017, a pilot
there are any changes to the rules for Commission Action program (the ‘‘pilot’’) concerning (i) the
applicable to the Exchange’s MRVP, the Pursuant to Section 19(d)(1) of the Act early conclusion of the PIXL Auction (as
Exchange hereby requests that the and Rule 19d–1(c)(2) thereunder,8 after described below), and (ii) permitting
Commission deem such changes to be August 2, 2016, the Commission may, orders of fewer than 50 contracts into
modifications to the Exchange’s MRVP. the PIXL Auction. The current pilot is
by order, declare the Exchange proposed
scheduled to expire July 18, 2016.3
I. Solicitation of Comments MRVP effective if the plan is consistent
The text of the proposed rule change
with the public interest, the protection is set forth below. Proposed new text is
Interested persons are invited to
of investors, or otherwise in furtherance italicized. Deleted text is [bracketed].
submit written data, views, and
of the purposes of the Act. The
arguments concerning the Exchange’s * * * * *
Commission in its order may restrict the
proposed MRVP, including whether the
categories of violations to be designated NASDAQ PHLX LLC Rules
proposed MRVP is consistent with the
as minor rule violations and may
Act. Comments may be submitted by Options Rules
impose any other terms or conditions to
any of the following methods: Rule 1080. Phlx XL and Phlx XL II
the proposed MRVP, File No. 4–701,
Electronic Comments and to the period of its effectiveness, (a)–(m) No change.
• Use the Commission’s Internet which the Commission deems necessary (n) Price Improvement XL (‘‘PIXL’’)
comment form (http://www.sec.gov/ or appropriate in the public interest, for A member may electronically submit
rules/sro.shtml); or the protection of investors or otherwise for execution an order it represents as
in furtherance of the purposes of the agent on behalf of a public customer,
• Send an email to rule-comments@
Act. broker-dealer, or any other entity (‘‘PIXL
sec.gov. Please include File Number 4–
For the Commission, by the Division of Order’’) against principal interest or
701 on the subject line.
Trading and Markets, pursuant to delegated against any other order (except as
Paper Comments authority.9 provided in sub-paragraph (n)(i)(F)
• Send paper comments in triplicate Robert W. Errett, below) it represents as agent (an
Deputy Secretary. ‘‘Initiating Order’’) provided it submits
to Brent J. Fields, Secretary, Securities
the PIXL Order for electronic execution
and Exchange Commission, 100 F Street [FR Doc. 2016–16866 Filed 7–15–16; 8:45 am]
into the PIXL Auction (‘‘Auction’’)
NE., Washington, DC 20549–1090. BILLING CODE 8011–01–P
pursuant to this Rule. The contract size
All submissions should refer to File specified in Rule 1080(n) as applicable
Number 4–701. This file number should to PIXL Orders shall apply to Mini
be included on the subject line if email SECURITIES AND EXCHANGE
Options.
is used. To help the Commission COMMISSION
(i) Auction Eligibility Requirements.
process and review your comments [Release No. 34–78301; File No. SR–Phlx– All options traded on the Exchange are
more efficiently, please use only one 2016–75] eligible for PIXL. A member (the
method. The Commission will post all ‘‘Initiating Member’’) may initiate an
comments on the Commission’s Internet Self-Regulatory Organizations; Auction provided all of the following
Web site (http://www.sec.gov/rules/ NASDAQ PHLX LLC; Notice of Filing are met:
sro.shtml). Copies of the submission, all and Immediate Effectiveness of (A) No change.
subsequent amendments, all written Proposed Rule Change To Extend Pilot (B) No change.
statements with respect to the proposed Program Through January 18, 2017 (C) If the PIXL Order is a Complex
MRVP that are filed with the Order and of a conforming ratio, as
July 12, 2016. defined in Commentary .08(a)(i) and
Commission, and all written
communications relating to the Pursuant to Section 19(b)(1) of the (a)(ix) to Rule 1080, the Initiating
proposed MRVP between the Securities Exchange Act of 1934 Member must stop the entire PIXL order
Commission and any person, other than (‘‘Act’’),1 and Rule 19b–4 thereunder,2 at a price that is better than the best net
those that may be withheld from the notice is hereby given that on July 12, price (debit or credit) (i) available on the
public in accordance with the 2016, NASDAQ PHLX LLC (‘‘Phlx’’ or Complex Order book regardless of the
provisions of 5 U.S.C. 552, will be ‘‘Exchange’’) filed with the Securities Complex Order book size; and (ii)
available for Web site viewing and and Exchange Commission (‘‘SEC’’ or achievable from the best Phlx bids and
printing in the Commission’s Public ‘‘Commission’’) the proposed rule offers for the individual options (an
Reference Room, 100 F Street NE., change as described in Items I and II ‘‘improved net price’’), provided in
Washington, DC 20549 on official below, which Items have been prepared either case that such price is equal to or
business days between the hours of by the Exchange. The Commission is better than the PIXL Order’s limit price.
10:00 a.m. and 3:00 p.m. Copies of the publishing this notice to solicit Complex Orders consisting of a ratio
proposed MRVP also will be available comments on the proposed rule change other than a conforming ratio will not be
for inspection and copying at the from interested persons. accepted. This sub-paragraph (C) shall
principal office of the Exchange. All I. Self-Regulatory Organization’s apply to all Complex Orders submitted
comments received will be posted Statement of the Terms of Substance of into PIXL. This sub-paragraph (C),
asabaliauskas on DSK3SPTVN1PROD with NOTICES

without change; the Commission does the Proposed Rule Change where applied to Complex Orders where
not edit personal identifying the smallest leg is less than 50 contracts
information from submissions. You The Exchange proposes to amend in size, shall be effective for a pilot
should submit only information that Exchange Rule 1080(n), Price period scheduled to expire [July 18,
you wish to make available publicly. All 2016]January 18, 2017.
8 15 U.S.C. 78s(d)(1); 17 CFR 240.19d–1(c)(2).
submissions should refer to File 9 17 CFR 200.30–3(a)(44). 3 The extension of the pilot relates to several
Number 4–701, and should be 1 15 U.S.C. 78s(b)(1).
subparagraphs of Rule 1080(n) in respect of PIXL
submitted on or before August 2, 2016. 2 17 CFR 240.19b–4. and Complex Order PIXL, as discussed below.

VerDate Sep<11>2014 17:52 Jul 15, 2016 Jkt 238001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\18JYN1.SGM 18JYN1
Document Created: 2016-07-16 02:28:16
Document Modified: 2016-07-16 02:28:16
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 46730