81 FR 63543 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change Amending NYSE Arca Equities Rules 2.16(c) and 2.21(i) Regarding the Timing for Submission of a Uniform Termination Notice for Securities Industry Registration (“Form U5”) by an ETP Holder

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 179 (September 15, 2016)

[Federal Register Volume 81, Number 179 (Thursday, September 15, 2016)]
[Notices]
[Page 63543]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-22158]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78809; File No. SR-NYSEArca-2016-104]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change Amending NYSE Arca Equities Rules 2.16(c) and 
2.21(i) Regarding the Timing for Submission of a Uniform Termination 
Notice for Securities Industry Registration (``Form U5'') by an ETP 
Holder

September 9, 2016.

I. Introduction

    On July 14, 2016, NYSE Arca, Inc. (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') 
\2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to amend NYSE 
Arca Equities Rules 2.16, Amendments to ETP Documents, and 2.21, 
Employees of ETP Holders Registration. The proposed rule change was 
published for comment in the Federal Register on July 27, 2016.\4\ The 
Commission received no comment letters on the proposed rule change. 
This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 78383 (July 21, 
2016), 81 FR 49309 (``Notice'').
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II. Description of the Proposed Rule Change

    The Exchange currently has two different requirements in its rules 
governing when a Form U5 must be filed: NYSE Arca Equities Rule 2.16(c) 
requires an ETP Holder to file a Form U5 and any amendment thereto 
within 30 days of ``when a person associated with that ETP Holder 
terminates their [sic] affiliation with an ETP Holder''; Rule 2.21(i) 
requires an ETP Holder to file a Form U5 and any amendment thereto 
within 30 business days of the termination date, ``when a person's 
employment by such ETP Holder terminates.''
    The Exchange proposed to amend these two rules to make the time 
frame within which a Form U5 must be submitted the same. As revised, an 
ETP Holder must promptly file a Form U5 with the Central Registration 
Depository (``CRD''), but not later than 30 calendar days after the 
date of termination of a person associated with the ETP Holder or of an 
employee, as applicable. The proposed rule change also requires that 
any amendment to a Form U5 be filed promptly with CRD, but not later 
than 30 calendar days after learning of the facts or circumstances 
giving rise to the amendment. Finally, the proposed rule change 
requires that all Forms U5 be provided to the terminated person 
concurrently with filing with CRD. This last requirement is new but is 
consistent with the rules of other SROs.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\5\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b) of the Act,\6\ in general, and with the 
objectives of Section 6(b)(5),\7\ in particular, which requires, among 
other things, that the rules of a national securities exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
remove impediments to, and perfect the mechanism of, a free and open 
market and, in general, to protect investors and the public interest.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the change to Rule 2.21 shortens the time 
within which the Form U5 must be submitted from 30 business days to 30 
calendar days. (The change to Rule 2.16 merely adds ``calendar'' to 
modify the number of days. The Exchange made this change so that the 
two rules would be consistent.) Shortening the time within which a Form 
U5 must be submitted is important, as the Form U5 must be filed by 
member firms when they terminate the association of a registered 
person, or employee. The Form U5 includes the reason for termination of 
the registered person, which is important when a firm has terminated a 
registered person for cause. State regulators use the information on 
Form U5 to determine whether to approve requests by a firm to have an 
associated person registered in a particular state. Broker-dealer firms 
review the information on Form U5 when they are deciding whether to 
hire a registered person. Therefore, the sooner the Form U5 is filed 
the sooner regulators and broker-dealers will have access to the 
information. Thus, shortening the time within which a Form U5 must be 
submitted, so that regulators and broker-dealers can have access to the 
information sooner, would remove impediments to, and perfect the 
mechanism of, a free and open market and protect investors and the 
public interest. For these reasons, the Commission believes that the 
proposed rule change is consistent with the Act.

IV. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NYSEArca-2016-104) be, and 
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(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)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-22158 Filed 9-14-16; 8:45 am]
 BILLING CODE 8011-01-P