81 FR 70198 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 22.3, Continuing Options Market Maker Registration, of Bats EDGX Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 196 (October 11, 2016)

Page Range		70198-70200
FR Document		2016-24426
Federal Register, Volume 81 Issue 196 (Tuesday, October 11, 2016)
[Federal Register Volume 81, Number 196 (Tuesday, October 11, 2016)]
[Notices]
[Pages 70198-70200]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-24426]



[[Page 70198]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79041; File No. SR-BatsEDGX-2016-53]


Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 
22.3, Continuing Options Market Maker Registration, of Bats EDGX 
Exchange, Inc.

October 4, 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 September 28, 2016, Bats EDGX Exchange, Inc. (``EDGX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to make a modification to Exchange Rule 
22.3, Continuing Options Market Maker Registration, to remove the 
provision of the rule that requires termination of a Member's Options 
Market Maker registration in an option series if the Options Market 
Maker fails to enter quotations in the series within five business days 
after the Options Market Maker's registration in the series becomes 
effective.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.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 parts 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 Exchange proposes to amend Exchange Rule 22.3 to remove 
subparagraph (c), which currently requires the Exchange to terminate a 
firm's Options Market Maker registration if it does not enter 
quotations in an option series in which it is registered within five 
business days after the Options Market Maker's registration in the 
series becomes effective. Currently, the Exchange surveils whether a 
newly registered Options Market Maker enters quotations in the series 
within five business days of registration. If an Options Market Maker 
does not, the Exchange is required by Exchange Rule 22.3(c) to 
automatically deregister the Options Market Maker in that series. The 
Exchange views Exchange Rule 22.3(c) as largely duplicative of other 
Exchange Rules and excessively rigid in view of other Exchange Rules 
that allow the Exchange discretion and flexibility in determining an 
appropriate remedy.
    Exchange Rule 22.5(a)(6) provides that Options Market Makers are 
expected to ``maintain active markets'' in all series in which they are 
registered. Both Rule 22.3(c) and Rule 22.5(a)(6) impose an obligation 
upon registered Options Market Maker to maintain active markets. The 
main difference is that Exchange Rule 22.3(c) applies only to the first 
five days that an Options Market Maker is registered, whereas Exchange 
Rule 22.5(a)(6) applies during the first five days and continues for as 
long as the Options Market Maker is registered in a series. The 
Exchange believes that there is no benefit to imposing stricter quoting 
obligations on a newly registered Options Market Maker than those 
imposed on existing registered Options Market Makers. Instead, in the 
Exchange's view, the requirement to maintain active markets should be 
the same from when an Options Market Maker first registers as any time 
after registration.
    The Exchange notes that it will continue to be permitted to 
deregister a registered Options Market Maker under Exchange Rule 
22.2(b) if it is found that the Options Market Maker has failed in its 
obligation to maintain active markets under Exchange Rule 22.5(a)(6) or 
fails its obligation to provide continuous two-sided quotes under Rule 
22.6(d).\3\ Removing Exchange Rule 22.3(c) would simply remove the non-
discretionary requirement that the Exchange must deregister an Options 
Market Maker's registration in a series if it does not enter quotations 
in the series within five business days of registration.
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    \3\ See Exchange Rule 22.2(b) (``The registration of any Member 
as a Market Maker may be suspended or terminated by the Exchange 
upon a determination that such Member has failed to properly perform 
as a Market Maker.'').
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    The Exchange currently conducts surveillance to monitor and enforce 
compliance with the ``active markets'' provision of Exchange Rule 
22.5(a)(6) for all Options Market Makers. A registered Options Market 
Maker is subject to the Exchange Rule 22.5(a)(6) surveillance for the 
entire time the Options Market Maker is registered, including the first 
five days covered by Exchange Rule 22.3(c). If a registered Options 
Market Maker is found by surveillance not to be maintaining active 
markets in the option series in which it is registered, the Exchange 
will determine the appropriate course of action against such Options 
Market Maker. The Exchange may take actions of escalating severity 
against the offending Options Market Maker from an informal warning up 
to deregistering the Options Market Maker in the options in which it 
fails to maintain active markets or bringing formal action.\4\ The 
Exchange has found that this discretion has allowed for effective 
enforcement of Options Market Maker obligations while allowing the 
Exchange to consider the facts and circumstances of each case in 
determining the appropriate remedy.
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    \4\ See Exchange Rules 22.2(b) and 22.5(c).
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    On the other hand, current Exchange Rule 22.3(c) is non-
discretionary and its enforcement can lead to potentially arbitrary 
results, as it does not permit the Exchange to consider the facts and 
circumstances of each case in enforcing the rule. While as a general 
matter an Options Market Maker should enter quotations in a series in 
which it is registered as soon as practicable, experience has shown 
that many factors can affect when a newly registered Options Market 
Maker will be in a position to begin entering quotations. Further, as 
discussed above [sic], Exchange Rule 22.6(d) contemplates certain 
acceptable periods of inactivity. Just as the Exchange is provided 
discretion to enforce all Options Market Maker obligations under 
Exchange Rule 22.2(b), the Exchange believes that it should be afforded 
the same discretion to evaluate the facts and circumstances of each 
case in which an Options

[[Page 70199]]

Market Maker is not active in a series within the first five days of 
registration and determine the appropriate remedy.
    Finally, other national options exchanges do not require automatic 
deregistration of a registered Options Market Maker from an options 
series when the Options Market Maker fails to submit a quote within the 
first five days of registration. Other exchanges allow considerably 
more discretion in determining the appropriate remedy for a registered 
Options Market Maker that fails its quoting obligations. For example, 
neither the Chicago Board Options Exchange (``CBOE''), nor the Miami 
International Securities Exchange (``MIAX''), nor NYSE Arca, Inc. 
Options (``NYSE Arca''), has a requirement to automatically deregister 
an options market maker if it fails in its quoting or other obligations 
within five days of registration. Instead, each of the above exchanges 
appears to rely on a rule substantively identical to Exchange Rule 
22.2(b) that gives the respective exchange discretion as to the 
appropriate remedy for Options Market Makers that do not meet their 
obligations.\5\
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    \5\ See CBOE Rule 8.2(b) (``The registration of a Market-Maker 
may be suspended or terminated by the Exchange upon a determination 
that the Market-Maker has failed to properly perform as a Market-
Maker.''); MIAX Rule 600(c) (``The registration of any Member as a 
Lead Market Maker, Primary Lead Market Maker, or as a Registered 
Market Maker may be suspended or terminated by the Exchange upon a 
determination that such Member has failed to properly perform as a 
Market Maker''); NYSE Arca Options Rule 6.33 (``The registration of 
any person as a Market Maker may be suspended or terminated by the 
Exchange upon a determination of any substantial or continued 
failure by such Market Maker to engage in dealings in accordance 
with [Market Maker Obligations].'').
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    The Exchange, therefore, proposes to amend Exchange Rule 22.3 to 
remove subparagraph (c) and to enforce its Options Market Maker 
``active market'' obligations with the remedies permitted in Exchange 
Rule 22.2(b) and Exchange Rule 22.5(c).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and the rules and regulations thereunder that 
are applicable to a national securities exchange, and, in particular, 
with the requirements of Section 6(b) of the Act.\6\
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    \6\ 15 U.S.C. 78f(b).
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    In particular, the proposal is consistent with Section 6(b)(1) \7\ 
in that it enables the Exchange to be so organized as to have the 
capacity to be able to carry out the purposes of the Exchange Act and 
to comply, and to enforce compliance by its exchange members and 
persons associated with its exchange members, with the provisions of 
the Exchange Act, the rules and regulations thereunder, and the rules 
of the Exchange. The proposal allows the Exchange the discretion so 
that it may appropriately and equitably enforce compliance by its 
members with the rules of the Exchange--in particular, the Exchange's 
Options Market Maker obligations.
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    \7\ 15 U.S.C. 78f(b)(1).
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    Additionally, the proposal is consistent with Section 6(b)(5) of 
the Act \8\ because 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. The proposed amendment to remove Exchange Rule 
22.3(c) will permit the Exchange to consider all facts and 
circumstances in instances where it appears that a registered Options 
Market Maker does not meet its obligations and to exercise discretion 
in applying the appropriate remedy for such failure.
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    \8\ 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
does not introduce any burden on competition, but rather, removes the 
automatic deregistration requirement of Exchange Rule 22.3(c) to allow 
the Exchange to apply the obligation to maintain active markets to all 
registered Options Market Makers equally.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments on this proposed rule change. The Exchange has not received 
any written comments from members or other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (A) 
Significantly affect the protection of investors or the public 
interest; (B) impose any significant burden on competition; and (C) by 
its terms, become operative for 30 days from the date on which it was 
filed or such shorter time as the Commission may designate it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and 
paragraph (f)(6) of Rule 19b-4 thereunder,\10\ the Exchange has 
designated this rule filing as non-controversial. The Exchange has 
given the Commission written notice of its intent to file the proposed 
rule change, along with a brief description and 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4.
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    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: (1) 
Necessary or appropriate in the public interest; (2) for the protection 
of investors; or (3) 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 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 SR-BatsEDGX-2016-53 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-BatsEDGX-2016-53. 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

[[Page 70200]]

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 such 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-BatsEDGX-2016-53, and should 
be submitted on or before November 1, 2016.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24426 Filed 10-7-16; 8:45 am]
 BILLING CODE 8011-01-P
70198 Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices

SECURITIES AND EXCHANGE the most significant parts of such two-sided quotes under Rule 22.6(d).3
COMMISSION statements. Removing Exchange Rule 22.3(c) would
simply remove the non-discretionary
[Release No. 34–79041; File No. SR– A. Self-Regulatory Organization’s requirement that the Exchange must
BatsEDGX–2016–53] Statement of the Purpose of, and the deregister an Options Market Maker’s
Statutory Basis for, the Proposed Rule registration in a series if it does not
Self-Regulatory Organizations; Bats Change
EDGX Exchange, Inc.; Notice of Filing enter quotations in the series within five
and Immediate Effectiveness of a 1. Purpose business days of registration.
Proposed Rule Change to Rule 22.3, The Exchange currently conducts
Continuing Options Market Maker The Exchange proposes to amend surveillance to monitor and enforce
Registration, of Bats EDGX Exchange, Exchange Rule 22.3 to remove compliance with the ‘‘active markets’’
Inc. subparagraph (c), which currently provision of Exchange Rule 22.5(a)(6)
requires the Exchange to terminate a for all Options Market Makers. A
October 4, 2016. firm’s Options Market Maker registered Options Market Maker is
Pursuant to Section 19(b)(1) of the registration if it does not enter subject to the Exchange Rule 22.5(a)(6)
Securities Exchange Act of 1934 quotations in an option series in which surveillance for the entire time the
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 it is registered within five business days Options Market Maker is registered,
notice is hereby given that on after the Options Market Maker’s including the first five days covered by
September 28, 2016, Bats EDGX registration in the series becomes Exchange Rule 22.3(c). If a registered
Exchange, Inc. (‘‘EDGX’’ or the effective. Currently, the Exchange Options Market Maker is found by
‘‘Exchange’’) filed with the Securities surveils whether a newly registered surveillance not to be maintaining
and Exchange Commission Options Market Maker enters quotations active markets in the option series in
(‘‘Commission’’) the proposed rule in the series within five business days which it is registered, the Exchange will
change as described in Items I, II, and of registration. If an Options Market determine the appropriate course of
III below, which Items have been Maker does not, the Exchange is action against such Options Market
prepared by the Exchange. The required by Exchange Rule 22.3(c) to Maker. The Exchange may take actions
Commission is publishing this notice to automatically deregister the Options of escalating severity against the
solicit comments on the proposed rule Market Maker in that series. The offending Options Market Maker from
change from interested persons. an informal warning up to deregistering
Exchange views Exchange Rule 22.3(c)
the Options Market Maker in the
I. Self-Regulatory Organization’s as largely duplicative of other Exchange
options in which it fails to maintain
Statement of the Terms of Substance of Rules and excessively rigid in view of
active markets or bringing formal
the Proposed Rule Change other Exchange Rules that allow the
action.4 The Exchange has found that
Exchange discretion and flexibility in
The Exchange is proposing to make a this discretion has allowed for effective
determining an appropriate remedy. enforcement of Options Market Maker
modification to Exchange Rule 22.3,
Continuing Options Market Maker Exchange Rule 22.5(a)(6) provides obligations while allowing the Exchange
Registration, to remove the provision of that Options Market Makers are to consider the facts and circumstances
the rule that requires termination of a expected to ‘‘maintain active markets’’ of each case in determining the
Member’s Options Market Maker in all series in which they are registered. appropriate remedy.
registration in an option series if the Both Rule 22.3(c) and Rule 22.5(a)(6) On the other hand, current Exchange
Options Market Maker fails to enter impose an obligation upon registered Rule 22.3(c) is non-discretionary and its
quotations in the series within five Options Market Maker to maintain enforcement can lead to potentially
business days after the Options Market active markets. The main difference is arbitrary results, as it does not permit
Maker’s registration in the series that Exchange Rule 22.3(c) applies only the Exchange to consider the facts and
becomes effective. to the first five days that an Options circumstances of each case in enforcing
The text of the proposed rule change Market Maker is registered, whereas the rule. While as a general matter an
is available at the Exchange’s Web site Exchange Rule 22.5(a)(6) applies during Options Market Maker should enter
at www.batstrading.com, at the the first five days and continues for as quotations in a series in which it is
principal office of the Exchange, and at long as the Options Market Maker is registered as soon as practicable,
the Commission’s Public Reference registered in a series. The Exchange experience has shown that many factors
Room. believes that there is no benefit to can affect when a newly registered
imposing stricter quoting obligations on Options Market Maker will be in a
II. Self-Regulatory Organization’s position to begin entering quotations.
Statement of the Purpose of, and a newly registered Options Market
Maker than those imposed on existing Further, as discussed above [sic],
Statutory Basis for, the Proposed Rule Exchange Rule 22.6(d) contemplates
Change registered Options Market Makers.
Instead, in the Exchange’s view, the certain acceptable periods of inactivity.
In its filing with the Commission, the requirement to maintain active markets Just as the Exchange is provided
Exchange included statements should be the same from when an discretion to enforce all Options Market
concerning the purpose of and basis for Options Market Maker first registers as Maker obligations under Exchange Rule
the proposed rule change and discussed any time after registration. 22.2(b), the Exchange believes that it
should be afforded the same discretion
asabaliauskas on DSK3SPTVN1PROD with NOTICES

any comments it received on the
proposed rule change. The text of these The Exchange notes that it will to evaluate the facts and circumstances
statements may be examined at the continue to be permitted to deregister a of each case in which an Options
places specified in Item IV below. The registered Options Market Maker under
Exchange has prepared summaries, set Exchange Rule 22.2(b) if it is found that 3 See Exchange Rule 22.2(b) (‘‘The registration of

forth in Sections A, B, and C below, of the Options Market Maker has failed in any Member as a Market Maker may be suspended
its obligation to maintain active markets or terminated by the Exchange upon a
determination that such Member has failed to
1 15 U.S.C. 78s(b)(1). under Exchange Rule 22.5(a)(6) or fails properly perform as a Market Maker.’’).
2 17 CFR 240.19b–4. its obligation to provide continuous 4 See Exchange Rules 22.2(b) and 22.5(c).

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Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices 70199

Market Maker is not active in a series members and persons associated with burden on competition; and (C) by its
within the first five days of registration its exchange members, with the terms, become operative for 30 days
and determine the appropriate remedy. provisions of the Exchange Act, the from the date on which it was filed or
Finally, other national options rules and regulations thereunder, and such shorter time as the Commission
exchanges do not require automatic the rules of the Exchange. The proposal may designate it has become effective
deregistration of a registered Options allows the Exchange the discretion so pursuant to Section 19(b)(3)(A) of the
Market Maker from an options series that it may appropriately and equitably Act 9 and paragraph (f)(6) of Rule 19b–
when the Options Market Maker fails to enforce compliance by its members with 4 thereunder,10 the Exchange has
submit a quote within the first five days the rules of the Exchange—in particular, designated this rule filing as non-
of registration. Other exchanges allow the Exchange’s Options Market Maker controversial. The Exchange has given
considerably more discretion in obligations. the Commission written notice of its
determining the appropriate remedy for Additionally, the proposal is intent to file the proposed rule change,
a registered Options Market Maker that consistent with Section 6(b)(5) of the along with a brief description and text
fails its quoting obligations. For Act 8 because it is designed to prevent of the proposed rule change at least five
example, neither the Chicago Board fraudulent and manipulative acts and business days prior to the date of filing
Options Exchange (‘‘CBOE’’), nor the practices, to promote just and equitable of the proposed rule change, or such
Miami International Securities principles of trade, to foster cooperation shorter time as designated by the
Exchange (‘‘MIAX’’), nor NYSE Arca, and coordination with persons engaged Commission.
Inc. Options (‘‘NYSE Arca’’), has a in facilitating transactions in securities, At any time within 60 days of the
requirement to automatically deregister to remove impediments to, and perfect filing of the proposed rule change, the
an options market maker if it fails in its the mechanism of, a free and open Commission summarily may
quoting or other obligations within five market and a national market system temporarily suspend such rule change if
days of registration. Instead, each of the and, in general, to protect investors and it appears to the Commission that such
above exchanges appears to rely on a the public interest. The proposed action is: (1) Necessary or appropriate in
rule substantively identical to Exchange amendment to remove Exchange Rule the public interest; (2) for the protection
Rule 22.2(b) that gives the respective 22.3(c) will permit the Exchange to of investors; or (3) otherwise in
exchange discretion as to the consider all facts and circumstances in furtherance of the purposes of the Act.
appropriate remedy for Options Market instances where it appears that a If the Commission takes such action, the
Makers that do not meet their registered Options Market Maker does Commission shall institute proceedings
obligations.5 not meet its obligations and to exercise to determine whether the proposed rule
The Exchange, therefore, proposes to discretion in applying the appropriate should be approved or disapproved.
amend Exchange Rule 22.3 to remove remedy for such failure.
subparagraph (c) and to enforce its IV. Solicitation of Comments
Options Market Maker ‘‘active market’’ B. Self-Regulatory Organization’s Interested persons are invited to
obligations with the remedies permitted Statement on Burden on Competition submit written data, views, and
in Exchange Rule 22.2(b) and Exchange The Exchange does not believe that arguments concerning the foregoing,
Rule 22.5(c). the proposed rule change will impose including whether the proposed rule
any burden on competition that is not change is consistent with the Act.
2. Statutory Basis necessary or appropriate in furtherance Comments may be submitted by any of
The Exchange believes that its of the purposes of the Act. The the following methods:
proposal is consistent with the proposed rule change does not
requirements of the Act and the rules Electronic Comments
introduce any burden on competition,
and regulations thereunder that are but rather, removes the automatic • Use the Commission’s Internet
applicable to a national securities deregistration requirement of Exchange comment form (http://www.sec.gov/
exchange, and, in particular, with the Rule 22.3(c) to allow the Exchange to rules/sro.shtml); or
requirements of Section 6(b) of the Act.6 apply the obligation to maintain active • Send an email to rule-comments@
In particular, the proposal is markets to all registered Options Market sec.gov. Please include File Number SR–
consistent with Section 6(b)(1) 7 in that Makers equally. BatsEDGX–2016–53 on the subject line.
it enables the Exchange to be so
C. Self-Regulatory Organization’s Paper Comments
organized as to have the capacity to be
able to carry out the purposes of the Statement on Comments on the • Send paper comments in triplicate
Exchange Act and to comply, and to Proposed Rule Change Received From to Brent J. Fields, Secretary, Securities
enforce compliance by its exchange Members, Participants, or Others and Exchange Commission, 100 F Street
The Exchange has not solicited, and NE., Washington, DC 20549–1090.
5 See CBOE Rule 8.2(b) (‘‘The registration of a
does not intend to solicit, comments on All submissions should refer to File
Market-Maker may be suspended or terminated by this proposed rule change. The Number SR–BatsEDGX–2016–53. This
the Exchange upon a determination that the Market-
Maker has failed to properly perform as a Market- Exchange has not received any written file number should be included on the
Maker.’’); MIAX Rule 600(c) (‘‘The registration of comments from members or other subject line if email is used. To help the
any Member as a Lead Market Maker, Primary Lead interested parties. Commission process and review your
Market Maker, or as a Registered Market Maker may comments more efficiently, please use
be suspended or terminated by the Exchange upon III. Date of Effectiveness of the
asabaliauskas on DSK3SPTVN1PROD with NOTICES

only one method. The Commission will
a determination that such Member has failed to Proposed Rule Change and Timing for post all comments on the Commission’s
properly perform as a Market Maker’’); NYSE Arca Commission Action
Options Rule 6.33 (‘‘The registration of any person Internet Web site (http://www.sec.gov/
as a Market Maker may be suspended or terminated Because the foregoing proposed rule rules/sro.shtml). Copies of the
by the Exchange upon a determination of any change does not: (A) Significantly affect
substantial or continued failure by such Market
submission, all subsequent
Maker to engage in dealings in accordance with the protection of investors or the public amendments, all written statements
[Market Maker Obligations].’’). interest; (B) impose any significant
6 15 U.S.C. 78f(b). 9 15 U.S.C. 78s(b)(3)(A).
7 15 U.S.C. 78f(b)(1). 8 15 U.S.C. 78f(b)(5). 10 17 CFR 240.19b–4.

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70200 Federal Register / Vol. 81, No. 196 / Tuesday, October 11, 2016 / Notices

with respect to the proposed rule Commission is publishing this notice to Provisional Net Credit (‘‘LPNC’’) risk
change that are filed with the solicit comments on the proposed rule management control; (iii) provide that
Commission, and all written change from interested persons. the IPA must acknowledge its funding
communications relating to the obligations for Presentments and that
I. Clearing Agency’s Statement of the
proposed rule change between the Receivers of Issuances must approve
Terms of Substance of the Proposed
Commission and any person, other than their receipt of those Issuances in DTC’s
Rule Change
those that may be withheld from the Receiver Authorized Delivery (‘‘RAD’’)
public in accordance with the The proposed rule change would system before DTC would process MMI
provisions of 5 U.S.C. 552, will be establish a change in the processing of Presentments; (iv) implement an
available for Web site viewing and transactions in money market enhanced process to test risk
printing in the Commission’s Public instruments (‘‘MMI’’) that are processed management controls under certain
Reference Room, 100 F Street NE., in DTC’s MMI Program (‘‘MMI conditions with respect to an Acronym
Washington, DC 20549 on official Securities’’) by modifying (i) the DTC (to be referred to as MMI Optimization,
business days between the hours of Rules, By-laws and Organization as defined below); (v) make updates and
10:00 a.m. and 3:00 p.m. Copies of such Certificate (‘‘Rules’’),4 (ii) the DTC revisions to the Settlement Processing
filing also will be available for Settlement Service Guide (‘‘Settlement Schedule in the Settlement Guide
inspection and copying at the principal Guide’’),5 and (iii) the DTC Distributions (‘‘Processing Schedule’’), as described
office of the Exchange. All comments Service Guide (‘‘Distributions Guide’’),6 below, (vi) eliminate the ‘‘receive versus
received will be posted without change; as described below.7 The proposed rule payment NA’’ control (‘‘RVPNA’’), as
the Commission does not edit personal change would affect DTC’s processing of described below, and (vii) make other
identifying information from issuances of MMI Securities technical and clarifying changes to the
submissions. You should submit only (‘‘Issuances’’) by issuers of MMI text, as more fully described below. In
information that you wish to make Securities (‘‘Issuers’’) as well as addition, the proposed rule change
available publicly. All submissions Maturity Presentments, Income would amend the Distributions Guide to
should refer to File Number SR– Presentments, Principal Presentments, make changes to text relating to the
BatsEDGX–2016–53, and should be and Reorganization Presentments processing of Income Presentments so
submitted on or before November 1, (collectively, ‘‘Presentments’’) that it is consistent with the changes
2016. (Issuances and Presentments, proposed in the Settlement Guide in
collectively ‘‘MMI Obligations’’). The that regard, as more fully described
For the Commission, by the Division of proposed rule change would amend the
Trading and Markets, pursuant to delegated below.9
authority.11
Rules and Settlement Guide to (i)
eliminate intra-day reversals of II. Clearing Agency’s Statement of the
Robert W. Errett, Purpose of, and Statutory Basis for, the
processed but not yet settled MMI
Deputy Secretary. Proposed Rule Change
Obligations resulting from an Issuing
[FR Doc. 2016–24426 Filed 10–7–16; 8:45 am] and Paying Agent (‘‘IPA’’) notifying DTC In its filing with the Commission, the
BILLING CODE 8011–01–P of its refusal to pay (‘‘RTP’’) for clearing agency included statements
Presentments of an Issuer’s maturing concerning the purpose of and basis for
MMI Securities for a designated the proposed rule change and discussed
SECURITIES AND EXCHANGE Acronym; 8 (ii) eliminate the Largest any comments it received on the
COMMISSION
proposed rule change. The text of these
[Release No. 34–79046; File No. SR–DTC– Act, 17 CFR 240.19b–4(n)(1)(i). A copy of the statements may be examined at the
2016–008] advance notice is available at http://www.dtcc.com/ places specified in Item IV below. The
legal/sec-rule-filings.aspx.
4 Available at http://www.dtcc.com/legal/rules- clearing agency has prepared
Self-Regulatory Organizations; The summaries, set forth in sections A, B,
and-procedures.aspx.
Depository Trust Company; Notice of 5 Available at http://www.dtcc.com/∼/media/ and C below, of the most significant
Filing of Proposed Rule Change Files/Downloads/legal/service-guides/ aspects of such statements.
Relating to Processing of Transactions Settlement.pdf.
in Money Market Instruments 6 Available at http://www.dtcc.com/∼/media/ (A) Clearing Agency’s Statement of the
Files/Downloads/legal/service-guides/ Purpose of, and Statutory Basis for, the
October 5, 2016. Distributions%20Service%20Guide%20FINAL%20 Proposed Rule Change
Pursuant to Section 19(b)(1) of the November%202014.pdf.
Securities Exchange Act of 1934
7 Eligibility for inclusion in the MMI Program
1. Purpose
covers MMI, which are short-term debt Securities
(‘‘Act’’) 1 and Rule 19b–4,2 notice is that generally mature 1 to 270 days from their The purpose of this proposed rule
hereby given that on September 23, original issuance date. MMI include, but are not change is to (i) mitigate risk to DTC and
2016, The Depository Trust Company limited to, commercial paper, banker’s acceptances Participants relating to intra-day
(‘‘DTC’’) filed with the Securities and and short-term bank notes and are issued by
financial institutions, large corporations, or state
reversals of processed MMI Obligations
Exchange Commission (‘‘Commission’’) and local governments. Most MMI trade in large in the event of an IPA’s RTP with
the proposed rule change as described denominations (typically, $250,000 to $50 million) respect to maturing obligations
in Items I and II below, which Items and are purchased by institutional investors. (‘‘Maturing Obligations’’) 10 for an
have been prepared by DTC.3 The Eligibility for inclusion in the MMI Program also
covers medium term notes that mature over a longer
Acronym and/or income payments 11
term.
asabaliauskas on DSK3SPTVN1PROD with NOTICES

11 17 CFR 200.30–3(a)(12). 9 Capitalized terms not otherwise defined herein
8 Rule 1, supra note 4. MMI of an Issuer are
1 15 U.S.C. 78s(b)(1). have the respective meanings set forth in the Rules,
designated by DTC using unique four-character
2 17 CFR 240.19b–4.
identifiers employed by DTC referred to as the Settlement Guide, and the Distributions Guide.
3 On September 23, 2016, DTC filed this proposed 10 A Maturing Obligation is a payment owed in
Acronyms. An MMI Issuer can have multiple
rule change as an advance notice (SR–DTC–2016– Acronyms representing its Securities. MMI settlement by the IPA to the Participant on whose
802) with the Commission pursuant to Section Transactions and other functions relating to MMI behalf DTC presents the matured MMI Securities.
806(e)(1) of the Dodd-Frank Wall Street Reform and (e.g., confirmations and RTP) instructed and/or 11 Principal and income for an Acronym are

Consumer Protection Act entitled the Payment, performed by IPAs, Participants and/or DTC as distributed by an IPA according to a cycle
Clearing, and Settlement Supervision Act of 2010, described herein are performed on an ‘‘Acronym- determined by the terms of the issue (e.g., monthly,
12 U.S.C. 5465(e)(1), and Rule 19b–4(n)(1)(i) of the by-Acronym’’ basis. quarterly, and semi-annually). Such distributions

VerDate Sep<11>2014 20:12 Oct 07, 2016 Jkt 241001 PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 E:\FR\FM\11OCN1.SGM 11OCN1
Document Created: 2018-02-13 16:33:35
Document Modified: 2018-02-13 16:33:35
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 70198