81 FR 50573 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Collection of Exchange Fees and Other Claims and Billing Policy
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 147 (August 1, 2016)
Federal Register Volume 81, Issue 147 (August 1, 2016)
| Page Range | 50573-50576 | |
| FR Document | 2016-18054 |
[Federal Register Volume 81, Number 147 (Monday, August 1, 2016)] [Notices] [Pages 50573-50576] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-18054] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78416; File No. SR-IEX-2016-01] Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Collection of Exchange Fees and Other Claims and Billing Policy July 26, 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 July 12, 2016, the Investors Exchange LLC (``IEX'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b- 4(f)(6) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt Rule 15.120 and entitle it ``Collection of Exchange Fees and Other Claims and Billing Policy'' that (a) requires each IEX Member, and all applications for membership, to provide a clearing account number for an account at the National Securities Clearing Corporation (``NSCC'') for purposes of permitting the Exchange to debit certain fees, fines, charges and/or other monetary sanctions or other monies due and owing to the Exchange; and (b) require [sic] IEX Members to submit billing disputes within a certain time period. The text of the proposed rule change is available at the Exchange's Web site at www.iextrading.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 self-regulatory organization 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 statement [sic] may be examined at the places specified in Item IV below. The self-regulatory organization 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to adopt Rule 15.120 to (a) require each IEX Member, and all applications for membership, to provide a clearing account number for an account at the National Securities Clearing Corporation (``NSCC'') for purposes of permitting the Exchange to debit certain fees, fines, charges and/or other monetary sanctions or other monies due and owing to the Exchange; and (b) require IEX Members to submit billing disputes within a certain time period. Direct Debit Process As proposed, paragraph (a) of Rule 15.120 requires IEX Members, and all applicants for membership, to provide a [[Page 50574]] clearing account number for an account at NSCC for purposes of permitting the Exchange to debit any undisputed or final fees, fines, charges and/or other monetary sanctions or other monies due and owing to the Exchange or other charges pursuant to Rule 15.110, including the Exchange Fee Schedule thereto; Regulatory Transaction Fees pursuant to Rule 15.110(b); dues, assessments and other charges pursuant to Rule 2.200 to the extent the Exchange were to determine to charge such fees; and fines, sanctions and other charges pursuant to Chapters 8 and 9 of the IEX Rulebook \5\ which are due and owing to IEX (collectively ``Debit Amount''). The Exchange Fee Schedule specifies charges for transactions, routing and other services provided by the Exchange and certain fees that are collected by the Financial Industry Regulatory Authority (``FINRA''). Only the charges which require payment to the Exchange would be subject to direct debit. The Exchange does not currently charge fees for certain of the services listed on the Exchange Fee Schedule. The Exchange would entitle Rule 15.120 ``Collection of Exchange Fees and Other Claims and Billing Policy.'' --------------------------------------------------------------------------- \5\ This includes, among other things, fines and sanctions which result from disciplinary proceedings or actions taken pursuant to Chapters 8 and 9 of the IEX Rules, as specified in Rule 8.310. In addition, the IEX notes that it also has authority under Rules 8.350 and 9.553 to suspend, cancel or bar a Member that fails to pay final fees, fines, charges and/or other monetary sanctions or other monies due and owing to the Exchange or other charges pursuant to Rule 15.110, including the Exchange Fee Schedule thereto. While this direct debit process should minimize failures to pay, those rules nevertheless will act as a backstop to the direct debit process. With respect to disciplinary proceedings, the Exchange would not debit any monies until such action is final. The Exchange would not consider an action final until all appeal periods have run and/or all appeal timeframes are exhausted. With respect to non- disciplinary actions, the Exchange would similarly not take action to debit a Member account until all appeal periods have run and/or all appeal timeframes are exhausted. Any uncontested disciplinary or non-disciplinary actions will be debited, and the amount due will appear on the IEX Member's invoice prior to the actual NSCC debit. --------------------------------------------------------------------------- As proposed, the Exchange will send a monthly electronic invoice by email to each Member, generally by the 12th day of each month for the Debit Amount due to IEX for the prior month. IEX will also send files to NSCC each month by the 28th day of each month to initiate the debit of the Debit Amount due to IEX as stated on the Member's invoice for the prior month. If the 28th day of the month is not a business day, IEX will send the files to NSCC by the preceding business day. IEX anticipates that NSCC will process the debits on the day it receives the file or the following business day. Because Members will receive an invoice approximately two weeks before the debit date, Members will have adequate time to contact IEX staff with any questions concerning their invoice. If an IEX Member disagrees with the invoice in whole or in part, the Exchange would not commence the debit for the disputed amount until the dispute is resolved. Specifically, the Exchange will not include the disputed amount (or the entire invoice if it is not feasible to identify the disputed amounts) in the NSCC Debit Amount if the Member has provided written notification of the dispute to the IEX accounting department at [email protected] by the later of the 25th of the month (or the following business day if the 25th is not a business day) or ten days after the date the electronic invoice was sent to the Member, and the amount in dispute is at least $10,000 or greater. Once NSCC receives the file from the Exchange, NSCC would proceed to debit the amounts indicated from the clearing Members' account and disburse such amounts to the Exchange. In the instance where the Member clears through an IEX clearing member, the Exchange understands that the estimated transaction fees owed to the Exchange are typically debited by the IEX clearing Member on a daily basis using daily transaction detail reports provided by the Exchange to the IEX clearing Member in order to ensure adequate funds have been escrowed. The Exchange believes that the proposed debiting process for IEX members would create an efficient method of collecting undisputed or final fees, fines, charges and/or other monetary sanctions or monies due and owing to the Exchange. Collection matters could divert staff resources away from the Exchange's regulatory and business purposes. Moreover, the Exchange believes that it is reasonable to provide for a $10,000 limitation on pre-debit billing disputes since it would be inefficient to delay a direct debit for a de minimis amount. Members will still be able to dispute billing amounts that are less than $10,000 pursuant to paragraph (b) of Rule 15.120, as described below. The Exchange notes that a comparable debiting process is used by the NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX Phlx.\6\ --------------------------------------------------------------------------- \6\ See, NASDAQ Stock Market Rule 7007, NASDAQ OMX BX Rule 7011 and NASDAQ OMX Phlx Rule 909. --------------------------------------------------------------------------- Billing Dispute Process In addition to, and separate from, the pre-debit dispute process described above, the Exchange also proposes to adopt a billing policy, pursuant to paragraph (b) of Rule 15.120 to require all pricing disputes, with respect to fees payable to the Exchange,\7\ to be submitted to the Exchange in writing \8\ and accompanied by supporting documentation within sixty days of receipt of an invoice. The Exchange believes that this policy will conserve Exchange resources, which are expended when untimely billing disputes require staff to research applicable fees and order information beyond two months after the invoice was issued. The sixty-day limitation would be applicable to all fees specified in paragraph (a) of Rule 15.120. --------------------------------------------------------------------------- \7\ Fees that are collected by FINRA would not be subject to the billing policy, and any disputes would need to be raised by the Member directly with FINRA. \8\ The Exchange invoice will specify that billing disputes must be submitted to [email protected]. --------------------------------------------------------------------------- The Exchange expects that the proposed policy will provide a potential cost savings to the Exchange in that it would alleviate administrative burdens related to belated billing disputes, which could divert staff resources away from the Exchange's regulatory and business purposes. A similar policy is in place today at the NASDAQ Stock Market.\9\ --------------------------------------------------------------------------- \9\ See, NASDAQ Stock Market Rule 7007. --------------------------------------------------------------------------- 2. Statutory Basis IEX believes that the proposed rule change is consistent with Section 6(b) \10\ of the Act in general, and furthers the objectives of Section 6(b)(5) of the Act,\11\ in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. Specifically, the Exchange believes that the direct debit process will provide IEX Members with an efficient process to pay undisputed or final fees, fines, charges and/ or monetary sanctions or monies due and owing to the Exchange. Similarly, the billing policy will set an objective process and will be fair to Members. Further, both aspects of the proposal are [[Page 50575]] expected to result in lower administrative costs for the Exchange. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f. \11\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that its proposal to debit NSCC accounts is reasonable because it would ease the IEX Member's administrative burden in paying monthly invoices, avoid overdue balances and provide efficient collection from all IEX members who owe monies to the Exchange. Moreover, the Exchange believes that the 10-day minimum time frame that will be provided to Members to dispute invoices is reasonable and adequate to enable Members to identify potentially erroneous charges. In addition, the Exchange believes that the $10,000 limitation on pre-debit billing disputes is reasonable because it would be inefficient to delay a direct debit for a de minimis amount. Members will still be able to dispute billing amounts that are less than $10,000 pursuant to paragraph (b) of Rule 15.120. Further, the Exchange believes that the requirement that billing disputes for specified fees be submitted to the Exchange within sixty days from receipt of the invoice will set objective standards, will be fair to Members, and that sixty days is ample time to review an invoice and dispute any pricing related to the transactions for that time period. It is also expected to lower the Exchange's administrative costs. An identical provision is applicable to NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX Phlx.\12\ --------------------------------------------------------------------------- \12\ See, NASDAQ Stock Market Rule 7007, NASDAQ OMX BX Rule 7011 and NASDAQ OMX Phlx Rule 909. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition IEX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. With this proposal, the proposed debit process and billing policy would apply uniformly to all IEX members. Further, this proposal is expected to provide a cost savings to the Exchange in that it would alleviate administrative processes related to the collection of monies owed to the Exchange by Members. Collection matters divert staff resources away from the Exchange's regulatory and business purposes. In addition, the debiting process would mitigate against IEX Member accounts becoming overdue. The Exchange does not believe that the proposal will create an intermarket burden on competition since the Exchange will only debit fees (other than de minimis fees below $10,000) that are undisputed by the Member and Members will have a reasonable opportunity to dispute fees both before and after the direct debit process. The Exchange also does not believe that the proposal will create an intramarket burden on competition, since the proposed direct debit process and billing policy will be applied equally to all Members. Moreover, other exchanges use a comparable process which IEX believes is generally familiar to Members. Consequently, IEX does not believe that the proposal raises any new or novel issues that have not been previously considered by the Commission in connection with direct debit and billing policies of other exchanges.\13\ --------------------------------------------------------------------------- \13\ See note 7 [sic]. --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\ --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A). \15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b- 4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative at the time of the launch of its operation as a national securities exchange. The Exchange stated that such waiver will allow the Exchange to implement a consistent process for its members to pay undisputed or final fees, fines, charges and/or monetary sanctions or monies due and owing to the Exchange. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, as it will allow IEX to implement a rule that provides a process similar to that used by other exchanges for the direct debit of certain fees, fines, and charges, and also provides a mechanism to protect IEX members if they choose to contest an invoice. Therefore, the Commission hereby waives the operative delay and designates the proposed rule change operative upon filing.\18\ --------------------------------------------------------------------------- \16\ 17 CFR 240.19b-4(f)(6). \17\ 17 CFR 240.19b-4(f)(6)(iii). \18\ For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change 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-IEX-2016-01 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-IEX-2016-01. 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 [[Page 50576]] 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-IEX-2016-01, and should be submitted on or before August 22, 2016. --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12) and (59). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ Robert W. Errett, Deputy Secretary. [FR Doc. 2016-18054 Filed 7-29-16; 8:45 am] BILLING CODE 8011-01-P
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substantively altering the routing Commission and any person, other than comments on the proposed rule change
options it offers but rather is amending those that may be withheld from the from interested persons.
the terminology it uses to identify one public in accordance with the
I. Self-Regulatory Organization’s
particular routing option. Therefore, the provisions of 5 U.S.C. 552, will be
Statement of the Terms of Substance of
Commission hereby waives the available for Web site viewing and
the Proposed Rule Change
operative delay and designates the printing in the Commission’s Public
proposed rule change operative upon Reference Room, 100 F Street NE., The Exchange proposes to adopt Rule
filing.12 Washington, DC 20549, on official 15.120 and entitle it ‘‘Collection of
At any time within 60 days of the business days between the hours of Exchange Fees and Other Claims and
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the Billing Policy’’ that (a) requires each IEX
Commission summarily may filing also will be available for Member, and all applications for
temporarily suspend such rule change if inspection and copying at the principal membership, to provide a clearing
it appears to the Commission that such office of the Exchange. All comments account number for an account at the
action is necessary or appropriate in the received will be posted without change; National Securities Clearing Corporation
public interest, for the protection of the Commission does not edit personal (‘‘NSCC’’) for purposes of permitting the
investors, or otherwise in furtherance of identifying information from Exchange to debit certain fees, fines,
the purposes of the Act. If the submissions. You should submit only charges and/or other monetary sanctions
Commission takes such action, the information that you wish to make or other monies due and owing to the
Commission shall institute proceedings available publicly. All submissions Exchange; and (b) require [sic] IEX
under Section 19(b)(2)(B) 13 of the Act to should refer to File Number SR–IEX– Members to submit billing disputes
determine whether the proposed rule 2016–02 and should be submitted on or within a certain time period.
change should be approved or before August 22, 2016. The text of the proposed rule change
disapproved. is available at the Exchange’s Web site
For the Commission, by the Division of at www.iextrading.com, at the principal
IV. Solicitation of Comments Trading and Markets, pursuant to delegated office of the Exchange, and at the
authority.14
Interested persons are invited to Commission’s Public Reference Room.
submit written data, views and Robert W. Errett,
Deputy Secretary. II. Self-Regulatory Organization’s
arguments concerning the foregoing,
Statement of the Purpose of, and
including whether the proposed rule [FR Doc. 2016–18056 Filed 7–29–16; 8:45 am]
Statutory Basis for, the Proposed Rule
change is consistent with the Act. BILLING CODE 8011–01–P
Change
Comments may be submitted by any of
the following methods: In its filing with the Commission, the
SECURITIES AND EXCHANGE self-regulatory organization included
Electronic Comments COMMISSION statements concerning the purpose of
• Use the Commission’s Internet and basis for the proposed rule change
comment form (http://www.sec.gov/ [Release No. 34–78416; File No. SR–IEX– and discussed any comments it received
rules/sro.shtml); or 2016–01] on the proposed rule change. The text
• Send an email to rule-comments@ of these statement [sic] may be
sec.gov. Please include File SR–IEX– Self-Regulatory Organizations; examined at the places specified in Item
2016–02 on the subject line. Investors Exchange LLC; Notice of IV below. The self-regulatory
Filing and Immediate Effectiveness of organization has prepared summaries,
Paper Comments Proposed Rule Change Relating to the set forth in Sections A, B, and C below,
• Send paper comments in triplicate Collection of Exchange Fees and Other of the most significant aspects of such
to Secretary, Securities and Exchange Claims and Billing Policy statements.
Commission, 100 F Street NE., July 26, 2016.
Washington, DC 20549–1090. A. Self-Regulatory Organization’s
Pursuant to Section 19(b)(1) of the Statement of the Purpose of, and the
All submissions should refer to File Securities Exchange Act of 1934
Number SR–IEX–2016–02. This file Statutory Basis for, the Proposed Rule
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Change
number should be included on the notice is hereby given that, on July 12,
subject line if email is used. To help the 2016, the Investors Exchange LLC 1. Purpose
Commission process and review your (‘‘IEX’’ or the ‘‘Exchange’’) filed with the The purpose of the proposed rule
comments more efficiently, please use Securities and Exchange Commission change is to adopt Rule 15.120 to (a)
only one method. The Commission will (‘‘Commission’’) the proposed rule require each IEX Member, and all
post all comments on the Commission’s change as described in Items I and II applications for membership, to provide
Internet Web site (http://www.sec.gov/ below, which Items have been prepared a clearing account number for an
rules/sro.shtml). Copies of the by the Exchange. The Exchange has account at the National Securities
submission, all subsequent designated this proposal as a ‘‘non- Clearing Corporation (‘‘NSCC’’) for
amendments, all written statements controversial’’ proposed rule change purposes of permitting the Exchange to
with respect to the proposed rule pursuant to Section 19(b)(3)(A) of the debit certain fees, fines, charges and/or
change that are filed with the Act 3 and Rule 19b–4(f)(6) thereunder,4 other monetary sanctions or other
Commission, and all written which renders it effective upon filing monies due and owing to the Exchange;
communications relating to the
sradovich on DSK3GMQ082PROD with NOTICES
with the Commission. The Commission and (b) require IEX Members to submit
proposed rule change between the is publishing this notice to solicit billing disputes within a certain time
period.
12 For purposes only of waiving the 30-day
14 17 CFR 200.30–3(a)(12).
operative delay, the Commission has also
1 15
Direct Debit Process
considered the proposed rule’s impact on U.S.C. 78s(b)(1).
efficiency, competition, and capital formation. See 2 17 CFR 240.19b–4. As proposed, paragraph (a) of Rule
15 U.S.C. 78c(f). 3 15 U.S.C. 78s(b)(3)(A). 15.120 requires IEX Members, and all
13 15 U.S.C. 78s(b)(2)(B). 4 17 CFR 240.19b–4(f)(6). applicants for membership, to provide a
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expected to result in lower that are undisputed by the Member and stated that such waiver will allow the
administrative costs for the Exchange. Members will have a reasonable Exchange to implement a consistent
The Exchange believes that its opportunity to dispute fees both before process for its members to pay
proposal to debit NSCC accounts is and after the direct debit process. The undisputed or final fees, fines, charges
reasonable because it would ease the Exchange also does not believe that the and/or monetary sanctions or monies
IEX Member’s administrative burden in proposal will create an intramarket due and owing to the Exchange. The
paying monthly invoices, avoid overdue burden on competition, since the Commission believes that waiving the
balances and provide efficient collection proposed direct debit process and 30-day operative delay is consistent
from all IEX members who owe monies billing policy will be applied equally to with the protection of investors and the
to the Exchange. Moreover, the all Members. Moreover, other exchanges public interest, as it will allow IEX to
Exchange believes that the 10-day use a comparable process which IEX implement a rule that provides a
minimum time frame that will be believes is generally familiar to process similar to that used by other
provided to Members to dispute Members. Consequently, IEX does not exchanges for the direct debit of certain
invoices is reasonable and adequate to believe that the proposal raises any new fees, fines, and charges, and also
enable Members to identify potentially or novel issues that have not been provides a mechanism to protect IEX
erroneous charges. In addition, the previously considered by the members if they choose to contest an
Exchange believes that the $10,000 Commission in connection with direct invoice. Therefore, the Commission
limitation on pre-debit billing disputes debit and billing policies of other hereby waives the operative delay and
is reasonable because it would be exchanges.13 designates the proposed rule change
inefficient to delay a direct debit for a operative upon filing.18
C. Self-Regulatory Organization’s At any time within 60 days of the
de minimis amount. Members will still Statement on Comments on the
be able to dispute billing amounts that filing of the proposed rule change, the
Proposed Rule Change Received From Commission summarily may
are less than $10,000 pursuant to Members, Participants, or Others
paragraph (b) of Rule 15.120. temporarily suspend such rule change if
Further, the Exchange believes that Written comments were neither it appears to the Commission that such
the requirement that billing disputes for solicited nor received. action is necessary or appropriate in the
specified fees be submitted to the III. Date of Effectiveness of the Proposed public interest, for the protection of
Exchange within sixty days from receipt Rule Change and Timing for investors, or otherwise in furtherance of
of the invoice will set objective Commission Action the purposes of the Act. If the
standards, will be fair to Members, and Commission takes such action, the
Because the proposed rule change Commission shall institute proceedings
that sixty days is ample time to review
does not (i) significantly affect the to determine whether the proposed rule
an invoice and dispute any pricing protection of investors or the public
related to the transactions for that time change should be approved or
interest; (ii) impose any significant disapproved.
period. It is also expected to lower the burden on competition; and (iii) become
Exchange’s administrative costs. An operative for 30 days from the date on IV. Solicitation of Comments
identical provision is applicable to which it was filed, or such shorter time Interested persons are invited to
NASDAQ Stock Market, NASDAQ OMX as the Commission may designate if submit written data, views, and
BX and NASDAQ OMX Phlx.12 consistent with the protection of arguments concerning the foregoing,
B. Self-Regulatory Organization’s investors and the public interest, the including whether the proposed rule
Statement on Burden on Competition proposed rule change has become change is consistent with the Act.
effective pursuant to Section 19(b)(3)(A) Comments may be submitted by any of
IEX does not believe that the
of the Act 14 and Rule 19b–4(f)(6) the following methods:
proposed rule change will result in any
thereunder.15
burden on competition that is not A proposed rule change filed under Electronic Comments
necessary or appropriate in furtherance Rule 19b–4(f)(6) 16 normally does not • Use the Commission’s Internet
of the purposes of the Act. With this become operative prior to 30 days after comment form (http://www.sec.gov/
proposal, the proposed debit process the date of the filing. However, pursuant rules/sro.shtml); or
and billing policy would apply to Rule 19b–4(f)(6)(iii),17 the • Send an email to rule-comments@
uniformly to all IEX members. Commission may designate a shorter sec.gov. Please include File Number SR–
Further, this proposal is expected to time if such action is consistent with the IEX–2016–01 on the subject line.
provide a cost savings to the Exchange protection of investors and the public
in that it would alleviate administrative Paper Comments
interest. The Exchange has asked the
processes related to the collection of Commission to waive the 30-day • Send paper comments in triplicate
monies owed to the Exchange by operative delay so that the proposal may to Secretary, Securities and Exchange
Members. Collection matters divert staff become operative at the time of the Commission, 100 F Street NE.,
resources away from the Exchange’s launch of its operation as a national Washington, DC 20549–1090.
regulatory and business purposes. In securities exchange. The Exchange All submissions should refer to File
addition, the debiting process would Number SR–IEX–2016–01. This file
mitigate against IEX Member accounts 13 See
note 7 [sic]. number should be included on the
becoming overdue. 14 15
U.S.C. 78s(b)(3)(A). subject line if email is used. To help the
The Exchange does not believe that 15 17 CFR 240.19b–4(f)(6). As required under Rule
Commission process and review your
sradovich on DSK3GMQ082PROD with NOTICES
the proposal will create an intermarket 19b–4(f)(6)(iii), the Exchange provided the
comments more efficiently, please use
burden on competition since the Commission with written notice of its intent to file
the proposed rule change, along with a brief only one method. The Commission will
Exchange will only debit fees (other description and the text of the proposed rule
than de minimis fees below $10,000) change, at least five business days prior to the date 18 For purposes only of waiving the 30-day
of filing of the proposed rule change, or such operative delay, the Commission has also
12 See, NASDAQ Stock Market Rule 7007, shorter time as designated by the Commission. considered the proposed rule’s impact on
16 17 CFR 240.19b–4(f)(6).
NASDAQ OMX BX Rule 7011 and NASDAQ OMX efficiency, competition, and capital formation. See
Phlx Rule 909. 17 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f).
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post all comments on the Commission’s (‘‘Shares’’) of the Virtus Japan Alpha access to information concerning the
Internet Web site (http://www.sec.gov/ ETF (‘‘Fund’’) under NYSE Arca composition and/or changes to the
rules/sro.shtml). Copies of the Equities Rule 8.600 (‘‘Managed Fund Fund’s portfolio.6
submission, all subsequent Shares’’). The proposed rule change was The Exchange has made the following
amendments, all written statements published for comment in the Federal representations and statements in
with respect to the proposed rule Register on June 9, 2016.3 On June 20, describing the Fund and its investment
change that are filed with the 2016, the Exchange filed Amendment strategy, including the Fund’s portfolio
Commission, and all written No. 1 to the proposed rule change.4 The holdings and investment restrictions.7
communications relating to the Commission received no comments on
proposed rule change between the the proposed rule change. This order A. Exchange’s Description of the Fund’s
Commission and any person, other than grants approval of the proposed rule Principal Investments
those that may be withheld from the change, as modified by Amendment No. Under normal circumstances,8 the
public in accordance with the 1. Fund will invest not less than 80% of
provisions of 5 U.S.C. 552, will be its assets in the common stocks of
II. Exchange’s Description of the
available for Web site viewing and certain Japanese companies listed in the
Proposal
printing in the Commission’s Public JPX-Nikkei 400 Total Return Index
Reference Room, 100 F Street NE., The Exchange proposes to list and
(‘‘Index’’), a free-float adjusted market-
Washington, DC 20549, on official trade Shares of the Fund under NYSE
capitalization-weighted equity index
business days between the hours of Arca Equities Rule 8.600, which governs
composed of 400 Tokyo Stock
10:00 a.m. and 3:00 p.m. Copies of the the listing and trading of Managed Fund
Exchange-listed securities, and in the
filing also will be available for Shares on the Exchange. The Fund will
financial instruments listed below in
inspection and copying at the principal be an actively managed exchange-traded
fund (‘‘ETF’’). The Shares will be this section.
office of the Exchange. All comments
offered by Virtus ETF Trust II (‘‘Trust’’), The Fund will be actively-managed
received will be posted without change;
which is registered with the through the selection, at any given time,
the Commission does not edit personal
Commission as an open-end of approximately 80–100 common
identifying information from
management investment company.5 stocks from the Index based on
submissions. You should submit only
Virtus ETF Advisers LLC will serve as quantitative and qualitative factors,
information that you wish to make
the investment adviser to the Fund including an assessment of the
available publicly. All submissions
(‘‘Adviser’’). Euclid Advisors LLC will following characteristics: cash flow
should refer to File Number SR–IEX–
serve as the Fund’s sub-adviser (‘‘Sub- return on invested capital; earnings
2016–01, and should be submitted on or
Adviser’’). ETF Distributors LLC will be quality and momentum; operational
before August 22, 2016.
the principal underwriter and quality; corporate governance policies;
For the Commission, by the Division of and capital stewardship. The Fund may
Trading and Markets, pursuant to delegated
distributor of the Fund’s Shares, Virtus
ETF Solutions LLC will serve as the invest in such Index components by
authority.19
administrator for the Fund, and the directly purchasing shares of common
Robert W. Errett, stock or investing in American
Bank of New York Mellon will serve as
Deputy Secretary.
accounting services administrator,
[FR Doc. 2016–18054 Filed 7–29–16; 8:45 am]
custodian, and transfer agent for the 6 See Notice, supra note 3, 81 FR at 37223. The
BILLING CODE 8011–01–P Fund. The Exchange further states that Exchange further represents that in the event (i) the
Adviser or Sub-Adviser becomes registered as a
the Adviser and Sub-Adviser are not broker-dealer or newly affiliated with a broker-
registered broker-dealers but are dealer or (ii) any new adviser or sub-adviser is a
SECURITIES AND EXCHANGE
affiliated with a broker-dealer and each registered broker-dealer or becomes affiliated with
COMMISSION a broker-dealer, the Exchange represents that such
has implemented a ‘‘fire wall’’ with
adviser or sub-adviser, as applicable, will
[Release No. 34–78414; File No. NYSEArca– respect to such broker-dealer regarding implement a fire wall with respect to its relevant
2016–79] personnel or broker-dealer affiliate regarding access
3 See Securities Exchange Act Release No. 77992 to information concerning the composition and/or
Self-Regulatory Organizations; NYSE (Jun. 3, 2016), 81 FR 37222 (‘‘Notice’’). changes to the portfolio, and will be subject to
Arca, Inc.; Order Granting Approval of 4 In Amendment No. 1, the Exchange made procedures designed to prevent the use and
Proposed Rule Change, as Modified by minor, clarifying changes to the description of the dissemination of material non-public information
Fund, including, among other things, the Fund’s regarding the portfolio. See id.
Amendment No. 1, Relating to the permitted investments, restrictions on investments, 7 The Commission notes that additional
Listing and Trading of Shares of the calculation of net asset value (‘‘NAV’’), and publicly information regarding the Fund, the Trust, and the
Virtus Japan Alpha ETF Under NYSE available information relating to the Fund and its Shares, including investment strategies, risks,
Arca Equities Rule 8.600 investments. Because Amendment No. 1 does not creation and redemption procedures, fees, portfolio
materially alter the substance of the proposed rule holdings disclosure policies, calculation of NAV,
July 26, 2016. change or raise novel regulatory issues, Amendment distributions, and taxes, among other things, can be
No. 1 is not subject to notice and comment. found in the Notice, Amendment No. 1, and the
I. Introduction Amendment No. 1 is available at: https:// Registration Statement, as applicable. See Notice,
www.sec.gov/comments/sr-nysearca-2016-79/ Amendment No. 1, and Registration Statement,
On May 24, 2016, NYSE Arca, Inc. nysearca201679-1.pdf. supra notes 3, 4, and 5, respectively.
(‘‘Exchange’’) filed with the Securities 5 According to the Exchange, the Trust is 8 The term ‘‘under normal circumstances’’
and Exchange Commission registered under the Investment Company Act of includes, but is not limited to, the absence of
(‘‘Commission’’), pursuant to Section 1940 (15 U.S.C. 80a-1) (‘‘1940 Act’’). The Exchange extreme volatility or trading halts in the securities
also states that, on February 26, 2016, the Trust markets or the financial markets generally;
sradovich on DSK3GMQ082PROD with NOTICES
19(b)(1) of the Securities Exchange Act filed with the Commission an amendment to its circumstances under which the Fund’s investments
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’)1 and registration statement on Form N–1A under the are made for temporary defensive purposes;
Rule 19b–4 thereunder,2 a proposed rule Securities Act of 1933 (15 U.S.C. 77a), and under operational issues (e.g., systems failure) causing
change to list and trade shares the 1940 Act relating to the Fund (File Nos. 333– dissemination of inaccurate market information; or
206600 and 811–23078) (‘‘Registration Statement’’). force majeure type events such as natural or man-
The Exchange also states that the Commission has made disaster, act of God, armed conflict, act of
19 17 CFR 200.30–3(a)(12) and (59). issued an order granting certain exemptive relief to terrorism, riot or labor disruption, or any similar
1 15 U.S.C. 78s(b)(1). the Trust under the 1940 Act. See Notice, supra intervening circumstance. See Amendment No. 1,
2 17 CFR 240.19b–4. note 3, 81 FR at 37222–37223. supra note 4 at 5–6.
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Document Created: 2016-07-30 06:25:41
Document Modified: 2016-07-30 06:25:41
| 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 50573 |
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