81_FR_76850 81 FR 76637 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change To Amend Phlx Rule 748, Supervision

81 FR 76637 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change To Amend Phlx Rule 748, Supervision

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 213 (November 3, 2016)

Page Range76637-76639
FR Document2016-26511

Federal Register, Volume 81 Issue 213 (Thursday, November 3, 2016)
[Federal Register Volume 81, Number 213 (Thursday, November 3, 2016)]
[Notices]
[Pages 76637-76639]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26511]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79185; File No. SR-Phlx-2016-104]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
of Proposed Rule Change To Amend Phlx Rule 748, Supervision

October 28, 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 October 14, 2016, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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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 proposes to a proposal [sic] to amend Phlx Rule 748, 
Supervision, as explained further below.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend several provisions of Rule 748. 
The proposed rule change is intended to modernize, upgrade and 
strengthen the Exchange's rules pertaining to supervisory obligations 
of its members and member organizations.
Rule 748(a)
    Rule 748(a) currently provides in the first paragraph that each 
office, location, department, or business activity of a member or 
member organization (including foreign incorporated branch offices) 
shall be under the supervision and control of the member or member 
organization establishing it and of an appropriately qualified 
supervisor. The Exchange is amending the first paragraph of Rule 748(a) 
to clarify and state clearly that each trading system and internal 
surveillance system of a member or member organization (including 
foreign incorporated branch offices) shall, inasmuch as they are 
aspects of their business activity, be under the supervision and 
control of the member or member organization establishing it and of an 
appropriately qualified supervisor.
Rule 748(b)
    Rule 748(b), Designation of Supervisor by Member Organizations, 
currently provides in relevant part that the general partners or 
directors of each member organization shall provide for appropriate 
supervisory control and shall designate a general partner or principal 
executive officer to assume overall authority and responsibility for 
internal supervision and control of the organization and compliance 
with securities' (sic) laws and regulations, including the By-Laws and 
Rules of the Exchange. It provides that the designated person shall 
delegate to qualified principals or qualified employees responsibility 
and authority for supervision and control of each office, location, 
department, or business activity, (including foreign incorporated 
branch offices), and provide for

[[Page 76638]]

appropriate written procedures of supervision and control. The Exchange 
proposes to amend Rule 748(b) to provide that the delegated person 
shall likewise delegate to qualified principals or qualified employees 
responsibility and authority for supervision and control of each 
trading system and internal surveillance system.\3\
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    \3\ The Exchange is also deleting the extraneous apostrophe 
following the word ``securities''.
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Rule 748(c)
    Rule 748(c) currently provides that each person with supervisory 
control, as described in paragraphs (a) and (b) of Rule 748, must meet 
the Exchange's qualification requirements for supervisors, including 
successful completion of the appropriate examination. The Exchange 
proposes to add to Rule 748(c) a new requirement that each member or 
member organization must make reasonable efforts to determine that each 
person with supervisory control, as described in paragraphs (a) and (b) 
of Rule 748, is qualified by virtue of experience or training to carry 
out his or her assigned responsibilities.
Rule 748(g)
    Rule 748(g), Office Inspections, currently provides that each 
member or member organization for which the Exchange is the DEA shall 
inspect each office or location (including foreign incorporated branch 
offices) of the member or member organization according to a cycle that 
shall be established in its written supervisory procedures. In 
establishing such inspection cycle, the member or member organization 
shall give consideration to the nature and complexity of the securities 
activities for which the office or location is responsible, the volume 
of business done, and the number of registered representatives, 
employees, and associated persons at each office or location. Rule 
748(g) is proposed to be amended to provide that an inspection may not 
be conducted by any person within that office or location who has 
supervisory responsibilities or by any individual who is directly or 
indirectly supervised by such person. The Exchange also proposes to add 
language requiring the examination schedule and an explanation of the 
factors considered in determining the frequency of the examinations in 
the cycle to be set forth in the member or member organization's 
written supervisory procedures. It also proposes to require that the 
inspection be reasonably designed to assist in preventing and detecting 
violations of, and achieving compliance with, applicable securities 
laws and regulations, and with applicable Exchange rules.
Rule 748(h)
    Rule 748(h) in the first paragraph currently requires each member 
or member organization to establish, maintain, and enforce written 
supervisory procedures, and a system for applying such procedures, to 
supervise the types of business(es) in which the member or member 
organization engages and to supervise the activities of all registered 
representatives, employees, and associated persons. The written 
supervisory procedures and the system for applying such procedures 
shall reasonably be expected to prevent and detect, insofar as 
practicable, violations of the applicable securities laws and 
regulations, including the By-Laws and Rules of the Exchange. The 
Exchange proposes to substitute the word ``designed'' for the word 
``expected.''
    Rule 748(h) in the second paragraph currently requires that the 
written supervisory procedures set forth the supervisory system 
established by the member or member organization and include the name, 
title, registration status, and location of all supervisory personnel 
required by this rule, the dates for which supervisory designations 
were or are effective, and the responsibilities of supervisory 
personnel as these relate to the types of business(es) the member or 
member organization engages in, and securities laws and regulations, 
including the By-Laws and Rules of the Exchange. The Exchange proposes 
to add a requirement that this record be preserved for a period of not 
less than three years, the first two in an easily accessible place.
    Rule 748(h) in the third paragraph currently requires a copy of the 
written supervisory procedures to be kept and maintained at each 
location where supervisory activities are conducted on behalf of the 
member or member organization. It requires each member or member 
organization to amend its written supervisory procedures as appropriate 
within a reasonable time after changes occur in supervisory personnel 
or supervisory procedures, and to communicate such changes throughout 
its organization within a reasonable time. The Exchange proposes to 
amend Rule 748(h) to likewise amend and communicate changes to its 
written supervisory procedures as appropriate within a reasonable time 
after changes occur in applicable securities laws and regulations and 
Exchange rules.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\5\ in particular, in that it is designed to promote 
just and equitable principles of trade, 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, 
by enhancing its rules relating to supervision as set forth in Rule 
748. Requiring increased comprehensive supervision by members and 
member organizations of their activities should promote the Exchange's 
ability to enforce compliance by members and member organizations with 
the Act and the regulations thereunder.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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    Amending Rules 748(a) and (b) to require trading systems and 
internal surveillance systems to be under the supervision and control 
of the member or member organization establishing them and of an 
appropriately qualified supervisor, and requiring the general partner 
or principal executive officer with overall authority and 
responsibility for internal supervision and control of the organization 
and compliance with securities laws and regulations to delegate 
responsibility and authority for supervision and control of each 
trading system and internal surveillance system to qualified principals 
or qualified employees, should protect investors and the public 
interest by specifically requiring supervision and control of these 
aspects of the member or member organization's business by an 
appropriately qualified individual.
    The proposed amendment to Rule 748(c) should protect investors and 
the public interest by requiring that each person with supervisory 
control as described in Rules 748(a) and (b) to be qualified by virtue 
of experience or training to carry out his or her assigned 
responsibilities, such that the individual has the actual capacity to 
fulfill those responsibilities.
    The proposed amendments to Rule 748(g) regarding office inspections 
should protect investors and the public interest by minimizing the 
potential for conflicts of interest in the conduct of office 
inspections. The amendments would prohibit the required inspections 
from being conducted by any person within that office or location who 
has supervisory responsibilities or by any individual who is directly 
or indirectly supervised by such a person who may

[[Page 76639]]

be incentivized to minimize any compliance issues identified in the 
inspection. The proposed amendments to Rule 748(g) concerning the 
examination schedule and specifically requiring that the inspection be 
reasonably designed to assist in preventing and detecting violations 
of, and achieving compliance with, applicable securities laws and 
regulations and with applicable Exchange rules should assure that 
inspections take place with a predictable and adequate frequency and 
are reasonably designed to identify violations of applicable law and 
rules.
    The proposed amendments to Rule 748(h) are also designed to protect 
investors and the public interest, by requiring the written supervisory 
procedures to be preserved for a period of not less than three years, 
the first two in an easily accessible place, in order to facilitate 
identification of instances where the procedures were not followed. 
Stating that the written supervisory procedures and the system for 
applying such procedures shall reasonably be ``designed'' rather than 
``expected'' to prevent and detect violations clarifies the affirmative 
nature of the member or member organization's obligations under the 
rule when creating such procedures.
    Finally, the Rule 748(h) amendment requiring members or member 
organizations to update their written supervisory procedures following 
changes in applicable securities laws and regulations, and Exchange 
rules should promote the continued usefulness of the procedures in the 
context of ongoing changes in the regulatory environment in which 
members and member organizations conduct their business.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The amendments will apply to 
all members and member organizations subject to Rule 748.

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

    No written comments were either solicited or received.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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 rule-comments@sec.gov. Please include 
File Number SR-Phlx-2016-104 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-Phlx-2016-104. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.
    All submissions should refer to File Number SR-Phlx-2016-104 and 
should be submitted on or before November 25, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-26511 Filed 11-2-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Notices                                              76637

                                                  affecting threatened and endangered                     the benefit of present and future                       the proposed rule change and discussed
                                                  species and migratory birds.                            generations. The NOC will review the                    any comments it received on the
                                                     The specific manner and mechanism                    Mid-Atlantic Regional Ocean Action                      proposed rule change. The text of these
                                                  each Federal agency will use to                         Plan for consistency with the National                  statements may be examined at the
                                                  implement the Mid-Atlantic Regional                     Ocean Policy, Final Recommendations                     places specified in Item IV below. The
                                                  Ocean Action Plan will depend on that                   of the Interagency Ocean Policy Task                    Exchange has prepared summaries, set
                                                  agency’s mission, authorities, and                      Force, and the Marine Planning                          forth in sections A, B, and C below, of
                                                  activities. If the NOC certifies that the               Handbook and make its determination                     the most significant aspects of such
                                                  Mid-Atlantic Regional Ocean Action                      no sooner than 30 days from the                         statements.
                                                  Plan is consistent with the National                    publication of this Notice.
                                                  Ocean Policy, the Final                                                                                         A. Self-Regulatory Organization’s
                                                                                                             Authority: Executive Order 13547,                    Statement of the Purpose of, and
                                                  Recommendations, and the Handbook,                      ‘‘Stewardship of the Ocean, Our Coasts and
                                                  each Federal MidA RPB member will                                                                               Statutory Basis for, the Proposed Rule
                                                                                                          the Great Lakes’’ (July 19, 2010).                      Change
                                                  use the Mid-Atlantic Regional Ocean
                                                  Action Plan to inform and guide its                     Ted Wackler,                                            1. Purpose
                                                  planning activities and decision-making                 Deputy Chief of Staff and Assistant Director.
                                                  actions, including permitting,                          [FR Doc. 2016–26623 Filed 11–2–16; 8:45 am]
                                                                                                                                                                    The Exchange is proposing to amend
                                                  authorizing, and leasing decisions that                                                                         several provisions of Rule 748. The
                                                                                                          BILLING CODE 3270–F7–P
                                                  involve or affect the Mid-Atlantic                                                                              proposed rule change is intended to
                                                  regional ocean planning area.                                                                                   modernize, upgrade and strengthen the
                                                     Specifically, consistent with                                                                                Exchange’s rules pertaining to
                                                                                                          SECURITIES AND EXCHANGE                                 supervisory obligations of its members
                                                  applicable statutory authorities,                       COMMISSION
                                                  Executive Order 13547 and the Final                                                                             and member organizations.
                                                  Recommendations, the Federal Agencies                   [Release No. 34–79185; File No. SR–Phlx–
                                                                                                          2016–104]
                                                                                                                                                                  Rule 748(a)
                                                  represented on the MidA RPB, and their
                                                  relevant components, expressly                                                                                     Rule 748(a) currently provides in the
                                                                                                          Self-Regulatory Organizations;                          first paragraph that each office, location,
                                                  including the U.S. Army Corps of
                                                                                                          NASDAQ PHLX LLC; Notice of Filing of                    department, or business activity of a
                                                  Engineers in its ex officio status for
                                                  responsibilities beyond those in Title                  Proposed Rule Change To Amend Phlx                      member or member organization
                                                  10, U.S. Code, will: (1) Identify,                      Rule 748, Supervision                                   (including foreign incorporated branch
                                                  develop, and make publicly available                    October 28, 2016.
                                                                                                                                                                  offices) shall be under the supervision
                                                  implementing instructions, such as                                                                              and control of the member or member
                                                                                                             Pursuant to Section 19(b)(1) of the
                                                  internal agency guidance, directives, or                                                                        organization establishing it and of an
                                                                                                          Securities Exchange Act of 1934
                                                  similar organizational or administrative                                                                        appropriately qualified supervisor. The
                                                                                                          (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                  documents, that describe the way the                                                                            Exchange is amending the first
                                                                                                          notice is hereby given that on October
                                                  agency will use the Plan to inform and                                                                          paragraph of Rule 748(a) to clarify and
                                                                                                          14, 2016, NASDAQ PHLX LLC (‘‘Phlx’’
                                                  guide its actions and decisions in or                                                                           state clearly that each trading system
                                                                                                          or ‘‘Exchange’’) filed with the Securities
                                                  affecting the Mid-Atlantic regional                                                                             and internal surveillance system of a
                                                                                                          and Exchange Commission (‘‘SEC’’ or
                                                  ocean planning area; (2) ensure that the                                                                        member or member organization
                                                                                                          ‘‘Commission’’) the proposed rule
                                                  agency, through such internal                                                                                   (including foreign incorporated branch
                                                                                                          change as described in Items I, II, and
                                                  administrative instructions, will                                                                               offices) shall, inasmuch as they are
                                                                                                          III, below, which Items have been
                                                  consider the data products available                                                                            aspects of their business activity, be
                                                                                                          prepared by the Exchange. The
                                                  from the Data Portal in its decision                                                                            under the supervision and control of the
                                                                                                          Commission is publishing this notice to
                                                  making and as it carries out its actions                                                                        member or member organization
                                                                                                          solicit comments on the proposed rule
                                                  in or affecting the Mid-Atlantic regional                                                                       establishing it and of an appropriately
                                                                                                          change from interested persons.
                                                  ocean planning area; and (3) explain its                                                                        qualified supervisor.
                                                  use of the Plan and Data Portal in its                  I. Self-Regulatory Organization’s
                                                                                                                                                                  Rule 748(b)
                                                  decisions, activities, or planning                      Statement of the Terms of Substance of
                                                  processes that involve or affect the Mid-               the Proposed Rule Change                                  Rule 748(b), Designation of
                                                  Atlantic regional ocean planning area.                     The Exchange proposes to a proposal                  Supervisor by Member Organizations,
                                                                                                          [sic] to amend Phlx Rule 748,                           currently provides in relevant part that
                                                  IV. Conclusion                                                                                                  the general partners or directors of each
                                                                                                          Supervision, as explained further below.
                                                     The National Ocean Policy provides a                    The text of the proposed rule change                 member organization shall provide for
                                                  path for Federal Agencies, states and                   is available on the Exchange’s Web site                 appropriate supervisory control and
                                                  tribes to work collaboratively and                      at http://nasdaqphlx.cchwallstreet.com/                 shall designate a general partner or
                                                  proactively to manage the many existing                 , at the principal office of the Exchange,              principal executive officer to assume
                                                  and future uses of the Nation’s oceans,                 and at the Commission’s Public                          overall authority and responsibility for
                                                  coasts and Great Lakes. If the NOC                      Reference Room.                                         internal supervision and control of the
                                                  certifies the Mid-Atlantic Regional                                                                             organization and compliance with
                                                  Ocean Action plan, MidA RPB members                     II. Self-Regulatory Organization’s                      securities’ (sic) laws and regulations,
                                                  intend to use the Plan to align their                   Statement of the Purpose of, and                        including the By-Laws and Rules of the
                                                  priorities and share data and technical                 Statutory Basis for, the Proposed Rule                  Exchange. It provides that the
mstockstill on DSK3G9T082PROD with NOTICES




                                                  information to minimize conflicts                       Change                                                  designated person shall delegate to
                                                  among uses, take actions to promote the                    In its filing with the Commission, the               qualified principals or qualified
                                                  productivity of marine resources,                       Exchange included statements                            employees responsibility and authority
                                                  sustain healthy ecosystems, and                         concerning the purpose of and basis for                 for supervision and control of each
                                                  promote the prosperity and security of                                                                          office, location, department, or business
                                                  the Nation’s ocean and coastal                            1 15   U.S.C. 78s(b)(1).                              activity, (including foreign incorporated
                                                  communities and their economies for                       2 17   CFR 240.19b–4.                                 branch offices), and provide for


                                             VerDate Sep<11>2014   17:54 Nov 02, 2016   Jkt 241001   PO 00000   Frm 00085     Fmt 4703   Sfmt 4703   E:\FR\FM\03NON1.SGM   03NON1


                                                  76638                      Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Notices

                                                  appropriate written procedures of                       and achieving compliance with,                        2. Statutory Basis
                                                  supervision and control. The Exchange                   applicable securities laws and                           The Exchange believes that its
                                                  proposes to amend Rule 748(b) to                        regulations, and with applicable                      proposal is consistent with Section 6(b)
                                                  provide that the delegated person shall                 Exchange rules.                                       of the Act,4 in general, and furthers the
                                                  likewise delegate to qualified principals                                                                     objectives of Section 6(b)(5) of the Act,5
                                                                                                          Rule 748(h)
                                                  or qualified employees responsibility                                                                         in particular, in that it is designed to
                                                  and authority for supervision and                          Rule 748(h) in the first paragraph                 promote just and equitable principles of
                                                  control of each trading system and                      currently requires each member or                     trade, to remove impediments to and
                                                  internal surveillance system.3                          member organization to establish,                     perfect the mechanism of a free and
                                                  Rule 748(c)                                             maintain, and enforce written                         open market and a national market
                                                                                                          supervisory procedures, and a system                  system, and, in general to protect
                                                     Rule 748(c) currently provides that                  for applying such procedures, to
                                                  each person with supervisory control, as                                                                      investors and the public interest, by
                                                                                                          supervise the types of business(es) in                enhancing its rules relating to
                                                  described in paragraphs (a) and (b) of                  which the member or member
                                                  Rule 748, must meet the Exchange’s                                                                            supervision as set forth in Rule 748.
                                                                                                          organization engages and to supervise                 Requiring increased comprehensive
                                                  qualification requirements for                          the activities of all registered
                                                  supervisors, including successful                                                                             supervision by members and member
                                                                                                          representatives, employees, and                       organizations of their activities should
                                                  completion of the appropriate                           associated persons. The written
                                                  examination. The Exchange proposes to                                                                         promote the Exchange’s ability to
                                                                                                          supervisory procedures and the system                 enforce compliance by members and
                                                  add to Rule 748(c) a new requirement                    for applying such procedures shall
                                                  that each member or member                                                                                    member organizations with the Act and
                                                                                                          reasonably be expected to prevent and                 the regulations thereunder.
                                                  organization must make reasonable                       detect, insofar as practicable, violations
                                                  efforts to determine that each person                                                                            Amending Rules 748(a) and (b) to
                                                                                                          of the applicable securities laws and                 require trading systems and internal
                                                  with supervisory control, as described                  regulations, including the By-Laws and
                                                  in paragraphs (a) and (b) of Rule 748, is                                                                     surveillance systems to be under the
                                                                                                          Rules of the Exchange. The Exchange                   supervision and control of the member
                                                  qualified by virtue of experience or                    proposes to substitute the word
                                                  training to carry out his or her assigned                                                                     or member organization establishing
                                                                                                          ‘‘designed’’ for the word ‘‘expected.’’               them and of an appropriately qualified
                                                  responsibilities.                                          Rule 748(h) in the second paragraph                supervisor, and requiring the general
                                                  Rule 748(g)                                             currently requires that the written                   partner or principal executive officer
                                                    Rule 748(g), Office Inspections,                      supervisory procedures set forth the                  with overall authority and responsibility
                                                  currently provides that each member or                  supervisory system established by the                 for internal supervision and control of
                                                  member organization for which the                       member or member organization and                     the organization and compliance with
                                                  Exchange is the DEA shall inspect each                  include the name, title, registration                 securities laws and regulations to
                                                  office or location (including foreign                   status, and location of all supervisory               delegate responsibility and authority for
                                                  incorporated branch offices) of the                     personnel required by this rule, the                  supervision and control of each trading
                                                  member or member organization                           dates for which supervisory                           system and internal surveillance system
                                                  according to a cycle that shall be                      designations were or are effective, and               to qualified principals or qualified
                                                  established in its written supervisory                  the responsibilities of supervisory                   employees, should protect investors and
                                                  procedures. In establishing such                        personnel as these relate to the types of             the public interest by specifically
                                                  inspection cycle, the member or                         business(es) the member or member                     requiring supervision and control of
                                                  member organization shall give                          organization engages in, and securities               these aspects of the member or member
                                                  consideration to the nature and                         laws and regulations, including the By-               organization’s business by an
                                                  complexity of the securities activities                 Laws and Rules of the Exchange. The                   appropriately qualified individual.
                                                  for which the office or location is                     Exchange proposes to add a requirement                   The proposed amendment to Rule
                                                  responsible, the volume of business                     that this record be preserved for a                   748(c) should protect investors and the
                                                  done, and the number of registered                      period of not less than three years, the              public interest by requiring that each
                                                  representatives, employees, and                         first two in an easily accessible place.              person with supervisory control as
                                                  associated persons at each office or                       Rule 748(h) in the third paragraph                 described in Rules 748(a) and (b) to be
                                                  location. Rule 748(g) is proposed to be                 currently requires a copy of the written              qualified by virtue of experience or
                                                  amended to provide that an inspection                   supervisory procedures to be kept and                 training to carry out his or her assigned
                                                  may not be conducted by any person                      maintained at each location where                     responsibilities, such that the individual
                                                  within that office or location who has                  supervisory activities are conducted on               has the actual capacity to fulfill those
                                                  supervisory responsibilities or by any                  behalf of the member or member                        responsibilities.
                                                  individual who is directly or indirectly                organization. It requires each member or                 The proposed amendments to Rule
                                                  supervised by such person. The                          member organization to amend its                      748(g) regarding office inspections
                                                  Exchange also proposes to add language                  written supervisory procedures as                     should protect investors and the public
                                                  requiring the examination schedule and                  appropriate within a reasonable time                  interest by minimizing the potential for
                                                  an explanation of the factors considered                after changes occur in supervisory                    conflicts of interest in the conduct of
                                                  in determining the frequency of the                     personnel or supervisory procedures,                  office inspections. The amendments
                                                  examinations in the cycle to be set forth               and to communicate such changes                       would prohibit the required inspections
                                                                                                          throughout its organization within a
mstockstill on DSK3G9T082PROD with NOTICES




                                                  in the member or member organization’s                                                                        from being conducted by any person
                                                  written supervisory procedures. It also                 reasonable time. The Exchange proposes                within that office or location who has
                                                  proposes to require that the inspection                 to amend Rule 748(h) to likewise amend                supervisory responsibilities or by any
                                                  be reasonably designed to assist in                     and communicate changes to its written                individual who is directly or indirectly
                                                  preventing and detecting violations of,                 supervisory procedures as appropriate                 supervised by such a person who may
                                                                                                          within a reasonable time after changes
                                                    3 The Exchange is also deleting the extraneous        occur in applicable securities laws and                 4 15   U.S.C. 78f(b).
                                                  apostrophe following the word ‘‘securities’’.           regulations and Exchange rules.                         5 15   U.S.C. 78f(b)(5).



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                                                                             Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Notices                                                 76639

                                                  be incentivized to minimize any                         III. Date of Effectiveness of the                     office of the Exchange. All comments
                                                  compliance issues identified in the                     Proposed Rule Change and Timing for                   received will be posted without change;
                                                  inspection. The proposed amendments                     Commission Action                                     the Commission does not edit personal
                                                  to Rule 748(g) concerning the                              Within 45 days of the date of                      identifying information from
                                                  examination schedule and specifically                   publication of this notice in the Federal             submissions. You should submit only
                                                  requiring that the inspection be                        Register or within such longer period (i)             information that you wish to make
                                                  reasonably designed to assist in                        as the Commission may designate up to                 available publicly.
                                                  preventing and detecting violations of,                                                                         All submissions should refer to File
                                                                                                          90 days of such date if it finds such
                                                                                                                                                                Number SR–Phlx–2016–104 and should
                                                  and achieving compliance with,                          longer period to be appropriate and
                                                                                                                                                                be submitted on or before November 25,
                                                  applicable securities laws and                          publishes its reasons for so finding or               2016.
                                                  regulations and with applicable                         (ii) as to which the Exchange consents,
                                                  Exchange rules should assure that                       the Commission shall: (a) By order                      For the Commission, by the Division of
                                                                                                                                                                Trading and Markets, pursuant to delegated
                                                  inspections take place with a                           approve or disapprove such proposed
                                                                                                                                                                authority.6
                                                  predictable and adequate frequency and                  rule change, or (b) institute proceedings
                                                                                                                                                                Brent J. Fields,
                                                  are reasonably designed to identify                     to determine whether the proposed rule
                                                                                                          change should be disapproved.                         Secretary.
                                                  violations of applicable law and rules.
                                                                                                                                                                [FR Doc. 2016–26511 Filed 11–2–16; 8:45 am]
                                                     The proposed amendments to Rule                      IV. Solicitation of Comments                          BILLING CODE 8011–01–P
                                                  748(h) are also designed to protect                       Interested persons are invited to
                                                  investors and the public interest, by                   submit written data, views, and
                                                  requiring the written supervisory                       arguments concerning the foregoing,                   SECURITIES AND EXCHANGE
                                                  procedures to be preserved for a period                 including whether the proposed rule                   COMMISSION
                                                  of not less than three years, the first two             change is consistent with the Act.                    [Release No. 34–79182; File No. SR–MIAX–
                                                  in an easily accessible place, in order to              Comments may be submitted by any of                   2016–40]
                                                  facilitate identification of instances                  the following methods:
                                                  where the procedures were not                                                                                 Self-Regulatory Organizations; Miami
                                                                                                          Electronic Comments                                   International Securities Exchange LLC;
                                                  followed. Stating that the written
                                                  supervisory procedures and the system                     • Use the Commission’s Internet                     Notice of Filing and Immediate
                                                  for applying such procedures shall                      comment form (http://www.sec.gov/                     Effectiveness of a Proposed Rule
                                                  reasonably be ‘‘designed’’ rather than                  rules/sro.shtml); or                                  Change To Adopt Exchange Rule 322,
                                                  ‘‘expected’’ to prevent and detect                        • Send an email to rule-comments@                   Disruptive Quoting and Trading
                                                  violations clarifies the affirmative                    sec.gov. Please include File Number SR–               Activity Prohibited and Exchange Rule
                                                                                                          Phlx–2016–104 on the subject line.                    1018, Expedited Suspension
                                                  nature of the member or member
                                                                                                                                                                Proceeding
                                                  organization’s obligations under the rule               Paper Comments
                                                  when creating such procedures.                             • Send paper comments in triplicate                October 28, 2016.
                                                     Finally, the Rule 748(h) amendment                   to Brent J. Fields, Secretary, Securities                Pursuant to Section 19(b)(1) of the
                                                  requiring members or member                             and Exchange Commission, 100 F Street                 Securities Exchange Act of 1934
                                                  organizations to update their written                   NE., Washington, DC 20549–1090.                       (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                  supervisory procedures following                                                                              notice is hereby given that on October
                                                                                                          All submissions should refer to File                  20, 2016, Miami International Securities
                                                  changes in applicable securities laws                   Number SR–Phlx–2016–104. This file                    Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’)
                                                  and regulations, and Exchange rules                     number should be included on the                      filed with the Securities and Exchange
                                                  should promote the continued                            subject line if email is used. To help the            Commission (‘‘SEC’’ or ‘‘Commission’’)
                                                  usefulness of the procedures in the                     Commission process and review your                    the proposed rule change as described
                                                  context of ongoing changes in the                       comments more efficiently, please use                 in Items I and II below, which Items
                                                  regulatory environment in which                         only one method. The Commission will                  have been prepared by the Exchange.
                                                  members and member organizations                        post all comments on the Commission’s                 The Commission is publishing this
                                                  conduct their business.                                 Internet Web site (http://www.sec.gov/                notice to solicit comments on the
                                                                                                          rules/sro.shtml).                                     proposed rule change from interested
                                                  B. Self-Regulatory Organization’s                          Copies of the submission, all
                                                  Statement on Burden on Competition                                                                            persons.
                                                                                                          subsequent amendments, all written
                                                                                                          statements with respect to the proposed               I. Self-Regulatory Organization’s
                                                    The Exchange does not believe that                                                                          Statement of the Terms of Substance of
                                                                                                          rule change that are filed with the
                                                  the proposed rule change will impose                                                                          the Proposed Rule Change
                                                                                                          Commission, and all written
                                                  any burden on competition not                           communications relating to the
                                                  necessary or appropriate in furtherance                                                                          The Exchange is filing a proposal to
                                                                                                          proposed rule change between the                      adopt Exchange Rule 322, Disruptive
                                                  of the purposes of the Act. The                         Commission and any person, other than                 Quoting and Trading Activity
                                                  amendments will apply to all members                    those that may be withheld from the                   Prohibited, to clearly prohibit disruptive
                                                  and member organizations subject to                     public in accordance with the                         quoting and trading activity on the
                                                  Rule 748.                                               provisions of 5 U.S.C. 552, will be                   Exchange as described below. The
                                                                                                          available for Web site viewing and
mstockstill on DSK3G9T082PROD with NOTICES




                                                  C. Self-Regulatory Organization’s                                                                             Exchange also proposes to adopt new
                                                  Statement on Comments on the                            printing in the Commission’s Public                   Exchange Rule 1018, Expedited
                                                  Proposed Rule Change Received From                      Reference Room, 100 F Street NE.,                     Suspension Proceeding, to permit the
                                                                                                          Washington, DC 20549, on official                     Exchange to take prompt action to
                                                  Members, Participants, or Others
                                                                                                          business days between the hours of
                                                    No written comments were either                       10:00 a.m. and 3:00 p.m. Copies of the                  6 17 CFR 200.30–3(a)(12).
                                                  solicited or received.                                  filing also will be available for                       1 15 U.S.C. 78s(b)(1).
                                                                                                          inspection and copying at the principal                 2 17 CFR 240.19b–4.




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Document Created: 2016-11-03 03:24:02
Document Modified: 2016-11-03 03:24:02
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation81 FR 76637 

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