81_FR_84881 81 FR 84655 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of an Amendment to Rule 8.11, Effective Date of Judgement and the Adoption of Rule 8.18, Release of Disciplinary Complaints, Decisions and Other Information

81 FR 84655 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of an Amendment to Rule 8.11, Effective Date of Judgement and the Adoption of Rule 8.18, Release of Disciplinary Complaints, Decisions and Other Information

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 226 (November 23, 2016)

Page Range84655-84659
FR Document2016-28185

Federal Register, Volume 81 Issue 226 (Wednesday, November 23, 2016)
[Federal Register Volume 81, Number 226 (Wednesday, November 23, 2016)]
[Notices]
[Pages 84655-84659]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-28185]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79341; File No. SR-BatsBYX-2016-32]


Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of an Amendment to Rule 8.11, 
Effective Date of Judgement and the Adoption of Rule 8.18, Release of 
Disciplinary Complaints, Decisions and Other Information

November 17, 2016
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 3, 2016, Bats BYX Exchange, Inc. (the ``Exchange'' or 
``BYX'') filed with the

[[Page 84656]]

Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which Items have been 
prepared by the Exchange. The Exchange has designated this proposal as 
a ``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)(iii) thereunder,\4\ 
which renders it effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to add proposed Rule 8.18 to require 
the publication of the Exchange's disciplinary complaints and 
disciplinary decisions issued and to remove the part of Interpretation 
and Policy .01 to Rule 8.11 that currently governs the publication of 
disciplinary complaints and information related to disciplinary 
complaints.
    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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
Proposed Rule Change
Reorganization of Exchange Rules Governing Release of Disciplinary 
Complaints, Decisions and Other Information Based on FINRA Rule 8313
    Interpretation and Policy .01 to Rule 8.11 currently provides, in 
part, that the Exchange shall cause details regarding all formal 
disciplinary actions where a final decision has been issued, except as 
provided in Rule 8.15(a), to be published on its Web site. 
Interpretation and Policy .01 also provides that the Exchange shall not 
issue any press release or other statement to the press concerning any 
formal or informal disciplinary matter unless the Chief Regulatory 
Officer recommends a press release to the Executive Committee or the 
Board of the Exchange and either body determines that such a press 
release is warranted. The Exchange proposes to remove parts of 
Interpretation and Policy .01 to Rule 8.11 described above and to add 
proposed Rule 8.18 modeled after FINRA Rule 8313,\5\ as described 
below, to govern the publication of disciplinary information. The scope 
of proposed Rule 8.18 would be limited to publication of materials 
relating to the disciplinary process set forth in Chapter VIII because 
the Exchange seeks to provide prompt access to more information 
regarding its disciplinary actions to Members and associated persons. 
By providing more information regarding the Exchange's disciplinary 
process, including publishing disciplinary complaints at the time they 
are filed, Members and associated persons will be able to sooner 
identify conduct that the Exchange views as problematic and have will 
[sic] the ability to take corrective steps sooner than they can under 
the current rules that provide only for the publication of disciplinary 
decisions after they become final. In that regard, the Exchange has 
determined not to adopt FINRA Rule 8313 in all respects at this 
time.\6\
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    \5\ New York Stock Exchange, LLC (``NYSE'') similarly adopted 
rules modeled after FINRA Rule 8313. See Securities Exchange Act 
Release No. 78664 (August 24, 2016), 81 FR 59678, 59679 (August 30, 
2016) (SR-NYSE-2016-40).
    \6\ NYSE similarly declined to adopt all provisions of FINRA 
Rule 8313 insofar as the FINRA rule related to information beyond 
the formal disciplinary process. See id. at 59679.
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General Standards
    The Exchange proposes Rule 8.18(a) to be entitled ``General 
Standards.'' The text would set forth general standards for the release 
to the public of disciplinary complaints, decisions, or information.
    Proposed Rule 8.18(a)(1) would, in part, essentially replace the 
part of Interpretation and Policy .01 to Rule 8.11 that addresses the 
publication of disciplinary decisions and conform [sic] to FINRA Rule 
8313. The proposed rule would provide that the Exchange shall release 
to the public a copy of and, at the Exchange's discretion, information 
with respect to, any disciplinary decision issued by the Exchange, as 
defined in proposed Rule 8.18(e). Additionally, the proposed rule would 
provide that the Exchange would release to the public copies of 
disciplinary complaints as defined in proposed Rule 8.18(e). Also, the 
decision to issue other related information, including a press release, 
under proposed Rule 8.18(a)(1) would be in the discretion of the 
Exchange generally instead of requiring Executive Committee or Exchange 
Board approval as currently required in Interpretation and Policy .01 
to Rule 8.11. Proposed Rule 8.18(a)(1) would also provide that, in 
response to a request, the Exchange shall also release to the 
requesting party a copy of any identified disciplinary complaint or 
disciplinary decision issued by the Exchange, as defined in proposed 
Rule 8.18(e). These proposed amendments are modeled after FINRA Rule 
8313(a)(1) and would be substantially similar to the FINRA rule.
    The Exchange does not propose to incorporate subsections (2), (3), 
(4) and (6) of FINRA Rule 8313(a) because the Exchange proposes to 
limit the scope of proposed Rule 8.18 to the publication of materials 
relating to the disciplinary process set forth in Chapter VIII at this 
time.\7\ The Exchange, however, notes

[[Page 84657]]

that although Exchange Rules do not provide for temporary cease and 
desist orders as provided for in FINRA Rule 9800, the Exchange's Client 
Suspension Rule--Rule 8.17--is similar in its procedure and purpose. 
The Exchange proposes to include a client suspension order issued 
pursuant to Rule 8.17 in the definition of ``disciplinary decision'' 
under proposed Rule 8.18(e)(2) consistent with FINRA's inclusion of its 
temporary cease and desist orders for publication because the Exchange 
views client suspension proceedings as disciplinary in nature. For the 
same reason, the Exchange proposes to include a notice of the 
initiation of a client suspension proceeding in the definition of 
``disciplinary complaint'' under proposed Rule 8.18(e)(1).
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    \7\ Subsection (2) of FINRA Rule 8313(a) provides for the 
publication of statutory disqualification decisions and temporary 
cease and desist orders.
     Subsection (3) provides for the publication of any suspension, 
cancellation, expulsion, or bar for: Failing to keep information 
current; failing to pay dues; failing to comply with an arbitration 
award or related settlement or an order of restitution or settlement 
providing for restitution; failing to meet the eligibility or 
qualification standards or prerequisites for access to services; or 
experiencing financial or operational difficulties. Additionally, 
subsection (3) provides for the publication of any suspension, 
cancellation, expulsion, or bar imposed as the result of a summary 
proceeding for actions authorized by Section 15A(h)(3) of the Act.
     Subsection (4) addresses procedures for membership proceedings.
     The Exchange does not propose to adopt subsections (2), (3), 
and (4) because, as discussed above, the Exchange's proposal is 
intended to provide more information regarding the Exchange's 
disciplinary process to the public so that Members and associated 
persons will be able to identify conduct that the Exchange views as 
problematic and will have the ability to take corrective steps 
sooner. Subsections (2), (3), and (4) to the FINRA rule would not 
further that purpose because those subsections would require the 
publication of information generally relating to membership 
eligibility or failure to satisfy one's membership obligations 
rather than discipline. Subsection (2) additionally addresses 
temporary cease and desist proceedings, which the Exchange does not 
have, and Subsection (3) additionally addresses Section 15A(h)(3) of 
the Act, which applies only to registered securities associations.
     Subsection (6) permits discretionary release of a complaint, 
decision, order, notification, or notice issued under FINRA rules, 
where the release of such information is deemed by FINRA's Chief 
Executive Officer (or such other senior officer as the Chief 
Executive Officer may designate) to be in the public interest. The 
Exchange does not propose to adopt this open-ended subsection 
because [sic] Exchange intends for the proposed rule to instead be 
limited to disciplinary information for the reasons discussed above.
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    The Exchange does not propose to incorporate subsection (5) of 
FINRA Rule 8313(a) because the Exchange does not have at this time 
provisions analogous to FINRA Rule 6490 \8\ and the FINRA Rule 9700 
Series.\9\ Additionally, the Exchange does not propose to include its 
procedures for exemptive relief analogous to the FINRA Rule 9600 Series 
because the Exchange proposes to limit scope of proposed Rule 8.18 to 
the publication of disciplinary materials.
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    \8\ ``Processing of Company-Related Actions.''
    \9\ ``Procedure For Grievances Concerning the Automated 
Systems.''
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Release Specifications
    The Exchange proposes to include subsection (b) to proposed Rule 
8.18 entitled ``Release Specifications'' modeled after FINRA Rule 
8313(b). Proposed Rule 8.18(b)(1) provides that copies of, and 
information with respect to, any disciplinary complaint released to the 
public pursuant to paragraph (a) of the proposed rule shall indicate 
that a disciplinary complaint represents the initiation of a formal 
proceeding by the Exchange in which findings as to the allegations in 
the complaint have not been made and does not represent a decision as 
to any of the allegations contained in the complaint. The proposed rule 
would be the same as FINRA Rule 8313(b)(1) except that the proposed 
rule would substitute the term ``Exchange'' for ``FINRA.''
    Proposed Rule 8.18(b)(2) provides that copies of, and information 
with respect to, any disciplinary decision released to the public 
pursuant to paragraph (a) of the proposed rule prior to the expiration 
of the time period provided for an appeal or call for review as 
permitted under Exchange Rules or the Act, or while such an appeal or 
call for review is pending, shall indicate that the findings and 
sanctions imposed therein are subject to review and modification by the 
Exchange or the Commission. The proposed rule would be substantially 
similar to FINRA Rule 8313(b)(2). The proposed rule would substitute 
the term ``Exchange'' for ``FINRA'' and would not include a provision 
relating to the release specifications for an ``other decision, order, 
notification, or notice'' because, as noted above, the Exchange 
proposes to limit the rule only to disciplinary complaints and 
disciplinary decisions.
Discretion To Redact Certain Information or Waive Publication
    The Exchange has determined that, subject to limited exceptions, 
disciplinary information should be released to the public in unredacted 
form. To provide the standard for such limited exceptions, the Exchange 
proposes subsection (c) of proposed Rule 8.18 entitled ``Discretion to 
Redact Certain Information or Waive Publication,'' modeled after FINRA 
Rule 8313(c).
    Proposed Rule 8.18(c)(1) would provide that the Exchange reserves 
the right to redact, on a case-by-case basis, information that contains 
confidential customer information, including customer identities, or 
information that raises significant identity theft, personal safety, or 
privacy concerns that are not outweighed by investor protection 
concerns. The proposed rule would be the same as FINRA Rule 8313(c)(1) 
except that the proposed rule would substitute the term ``Exchange'' 
for ``FINRA.''
    Similarly, proposed Rule 8.18(c)(2) provides that, notwithstanding 
paragraph (a) of the proposed rule, the Exchange may determine, in its 
discretion, to waive the requirement to release a copy of, or 
information with respect to, any disciplinary complaint or disciplinary 
decision under those extraordinary circumstances where the release of 
such information would violate fundamental notions of fairness or work 
an injustice. The proposed rule would be the same as FINRA Rule 
8313(c)(2) except that the proposed rule would substitute the term 
``Exchange'' for ``FINRA'' and would not include a provision relating 
to the waiver of the release of an ``other decision, order, 
notification, or notice'' because, as noted above, the Exchange 
proposes to limit the rule only to disciplinary complaints and 
disciplinary decisions.
Notice of Appeals of Exchange Decisions
    The Exchange proposes to include subsection (d) to proposed Rule 
8.18 entitled ``Notice of Appeals of Exchange Decisions to the SEC'' 
modeled on FINRA Rule 8313(d). Proposed Rule 8.18(d) provides that the 
Exchange must provide notice to the public when a disciplinary decision 
of the Exchange is appealed to the Commission and the notice shall 
state whether the effectiveness of the decision has been stayed pending 
the outcome of proceedings before the Commission. The proposed rule 
would be the same as FINRA Rule 8313(d) except that the proposed Rule 
would substitute the term ``Exchange'' for ``FINRA.''
Definitions
    Finally, the Exchange proposes subsection (e) of proposed Rule 8.18 
entitled ``Definitions.'' Proposed Rule 8.18(e) would set forth 
definitions of the terms ``disciplinary complaint'' and ``disciplinary 
decision'' as used in the rule, modeled after the definitions contained 
in FINRA Rule 8313(e).
    First, proposed Rule 8.18(e)(1) would define the term 
``disciplinary complaint'' to mean any statement of charges issued 
pursuant to Rule 8.4 or any notice served pursuant to Rule 8.17. This 
proposed rule is based on FINRA Rule 8313(e)(1) except that it replaces 
the term ``complaint pursuant to the Rule 9200 Series'' with 
``statement of charges pursuant to Rule 8.4'' and it includes a notice 
of the initiation of a client suspension proceeding issued pursuant to 
Rule 8.17 in the definition of ``disciplinary complaint.''
    Second, proposed Rule 8.18(e)(2) would define the term 
``disciplinary decision'' to mean any decision issued pursuant to the 
Chapter VIII, including, decisions issued by a Hearing Panel or the 
Appeals Committee and accepted offers of settlement. The Exchange 
additionally proposes to include suspension orders issued pursuant to 
Rule 8.17 in the definition of ``disciplinary decision.'' The Exchange 
does not propose to adopt the part of FINRA Rule 8313(e)(2) that 
discusses decisions issued pursuant to the FINRA Rule 9550 Series, 
FINRA Rule 9600 Series, FINRA Rule 9700 Series, or FINRA Rule 9800 
Series, or decisions, notifications, or notices issued pursuant to the 
FINRA Rule 9520 Series because, as explained above, the Exchange does 
not propose to adopt the provisions of the FINRA Rule providing for the 
publication of such information. Finally, proposed Rule 8.18(e)(2) 
would provide that minor rule violation plan

[[Page 84658]]

letters issued pursuant to Rules 8.15 and 25.3 are not subject to the 
proposed rule.
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.\10\ In particular, 
the proposal is consistent with Section 6(b)(1) \11\ 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 Act and to comply, and to enforce 
compliance by its exchange members and persons associated with its 
exchange members, with the provisions of the Act, the rules and 
regulations thereunder, and the rules of the Exchange. In particular, 
the Exchange believes that the proposed addition of Rule 8.18 regarding 
release of disciplinary complaints, decisions and other information are 
[sic] consistent with Section 6(b)(1) of the Act because it would 
establish general standards for the release of disciplinary information 
to the public to provide greater access to information regarding the 
Exchange's disciplinary actions.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

    For the same reasons, the Exchange believes that proposed Rule 8.18 
furthers the objectives of Section 6(b)(5) of the Act \12\ because the 
proposed rule is designed to promote just and equitable principles of 
trade, to foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system. In particular, proposed Rule 8.18 furthers the 
objectives of Section 6(b)(5) of the Act by providing greater clarity, 
consistency, and transparency regarding the release of disciplinary 
complaints, decisions and other information to the public. By adopting 
the proposed Rule 8.18 modeled after FINRA Rule 8313, the Exchange 
would establish standards for the release of disciplinary information 
to the public in line with those in effect at FINRA that provide 
greater access to information regarding the Exchange's disciplinary 
actions and describe the scope of information subject to proposed Rule 
8.18. The Exchange believes that this proposed rule change promotes 
greater transparency to the Exchange's disciplinary process, and that 
the proposed rule change provides greater access to information 
regarding its disciplinary actions, and also provides valuable guidance 
and information to Members, associated persons, other regulators, and 
the investing public.
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    \12\ 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 is 
not intended to address competitive issues, but rather it is designed 
to enhance the Exchange's rules governing the release of disciplinary 
complaints, decisions and other information to the public, thereby 
providing greater clarity and consistency and resulting in less 
burdensome and more efficient regulatory compliance and facilitating 
performance of regulatory functions.

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: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and paragraph 
(f)(6) of Rule 19b-4 thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. In its filing with the Commission, 
the Exchange requests that the Commission waive the 30-day operative 
delay. The Exchange states that FINRA performs services for it under a 
Regulatory Services Agreement (``RSA''), including the filing and 
prosecution of disciplinary complaints on the Exchange's behalf. FINRA 
also files and prosecutes disciplinary complaints on its own behalf, 
sometimes on cases involving identical or similar conduct to the cases 
it brings on the Exchange's behalf. Without the waiver, the Exchange is 
concerned that FINRA might publish a complaint during the 30-day 
operative delay, and that the Exchange would not be permitted to 
publish its own complaint, prepared by FINRA, regarding the same 
conduct. According to the Exchange, this would supply the public with 
an incomplete picture of the disciplinary proceedings, the full nature 
of which could not be disclosed until much later when a final 
disciplinary decision is issued. The Exchange, therefore, believes that 
waiver of the operative delay is consistent with the protection of 
investors and the public interest, as it will allow the Exchange to 
immediately publish any disciplinary complaints or decisions that are 
filed or issued after the proposal is filed. The Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest because it will allow 
BYX to publish disciplinary complaints or decisions that have been 
filed or issued without delay. Therefore, the Commission designates the 
proposed rule change to be operative upon filing.\16\
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    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (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:

[[Page 84659]]

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-BatsBYX-2016-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsBYX-2016-32. 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 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-BatsBYX-2016-32 and should 
be submitted on or before December 14, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-28185 Filed 11-22-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                           Federal Register / Vol. 81, No. 226 / Wednesday, November 23, 2016 / Notices                                                84655

                                                  address competitive issues, but rather it               supply the public with an incomplete                  comments more efficiently, please use
                                                  is designed to enhance the Exchange’s                   picture of the disciplinary proceedings,              only one method. The Commission will
                                                  rules governing the release of                          the full nature of which could not be                 post all comments on the Commission’s
                                                  disciplinary complaints, decisions and                  disclosed until much later when a final               Internet Web site (http://www.sec.gov/
                                                  other information to the public, thereby                disciplinary decision is issued. The                  rules/sro.shtml). Copies of the
                                                  providing greater clarity and                           Exchange, therefore, believes that                    submission, all subsequent
                                                  consistency and resulting in less                       waiver of the operative delay is                      amendments, all written statements
                                                  burdensome and more efficient                           consistent with the protection of                     with respect to the proposed rule
                                                  regulatory compliance and facilitating                  investors and the public interest, as it              change that are filed with the
                                                  performance of regulatory functions.                    will allow the Exchange to immediately                Commission, and all written
                                                                                                          publish any disciplinary complaints or                communications relating to the
                                                  C. Self-Regulatory Organization’s
                                                                                                          decisions that are filed or issued after              proposed rule change between the
                                                  Statement on Comments on the
                                                                                                          the proposal is filed. The Commission                 Commission and any person, other than
                                                  Proposed Rule Change Received From
                                                                                                          believes that waiver of the 30-day                    those that may be withheld from the
                                                  Members, Participants or Others                         operative delay is consistent with the                public in accordance with the
                                                    The Exchange has not solicited, and                   protection of investors and the public                provisions of 5 U.S.C. 552, will be
                                                  does not intend to solicit, comments on                 interest because it will allow EDGX to                available for Web site viewing and
                                                  this proposed rule change. The                          publish disciplinary complaints or                    printing in the Commission’s Public
                                                  Exchange has not received any written                   decisions that have been filed or issued              Reference Room, 100 F Street NE.,
                                                  comments from members or other                          without delay. Therefore, the                         Washington, DC 20549 on official
                                                  interested parties.                                     Commission designates the proposed                    business days between the hours of
                                                  III. Date of Effectiveness of the                       rule change to be operative upon                      10:00 a.m. and 3:00 p.m. Copies of such
                                                  Proposed Rule Change and Timing for                     filing.16                                             filing also will be available for
                                                                                                             At any time within 60 days of the                  inspection and copying at the principal
                                                  Commission Action
                                                                                                          filing of the proposed rule change, the               office of the Exchange. All comments
                                                     Because the foregoing proposed rule                  Commission summarily may                              received will be posted without change;
                                                  change does not: (i) Significantly affect               temporarily suspend such rule change if               the Commission does not edit personal
                                                  the protection of investors or the public               it appears to the Commission that such                identifying information from
                                                  interest; (ii) impose any significant                   action is: (1) Necessary or appropriate in            submissions. You should submit only
                                                  burden on competition; and (iii) become                 the public interest; (2) for the protection           information that you wish to make
                                                  operative for 30 days from the date on                  of investors; or (3) otherwise in                     available publicly. All submissions
                                                  which it was filed or such shorter time                 furtherance of the purposes of the Act.               should refer to File Number SR–
                                                  as the Commission may designate, it has                 If the Commission takes such action, the              BatsEDGX–2016–64 and should be
                                                  become effective pursuant to Section                    Commission shall institute proceedings                submitted on or before December 14,
                                                  19(b)(3)(A) of the Act 13 and paragraph                 to determine whether the proposed rule                2016.
                                                  (f)(6) of Rule 19b–4 thereunder.14                      should be approved or disapproved.                      For the Commission, by the Division of
                                                     A proposed rule change filed under                                                                         Trading and Markets, pursuant to delegated
                                                  Rule 19b–4(f)(6) normally does not                      IV. Solicitation of Comments
                                                                                                                                                                authority.17
                                                  become operative prior to 30 days after                   Interested persons are invited to                   Brent J. Fields,
                                                  the date of filing. However, Rule 19b–                  submit written data, views and
                                                                                                                                                                Secretary.
                                                  4(f)(6)(iii)15 permits the Commission to                arguments concerning the foregoing,
                                                                                                                                                                [FR Doc. 2016–28188 Filed 11–22–16; 8:45 am]
                                                  designate a shorter time if such action                 including whether the proposed rule
                                                                                                                                                                BILLING CODE 8011–01–P
                                                  is consistent with the protection of                    change is consistent with the Act.
                                                  investors and the public interest. In its               Comments may be submitted by any of
                                                  filing with the Commission, the                         the following methods:                                SECURITIES AND EXCHANGE
                                                  Exchange requests that the Commission                   Electronic Comments                                   COMMISSION
                                                  waive the 30-day operative delay. The
                                                  Exchange states that FINRA performs                       • Use the Commission’s Internet                     [Release No. 34–79341; File No. SR–
                                                  services for it under a Regulatory                      comment form (http://www.sec.gov/                     BatsBYX–2016–32]
                                                  Services Agreement (‘‘RSA’’), including                 rules/sro.shtml); or
                                                  the filing and prosecution of                             • Send an email to rule-comments@                   Self-Regulatory Organizations; Bats
                                                                                                          sec.gov. Please include File Number SR–               BYX Exchange, Inc.; Notice of Filing
                                                  disciplinary complaints on the
                                                                                                          BatsEDGX–2016–64 on the subject line.                 and Immediate Effectiveness of an
                                                  Exchange’s behalf. FINRA also files and
                                                                                                                                                                Amendment to Rule 8.11, Effective
                                                  prosecutes disciplinary complaints on                   Paper Comments                                        Date of Judgement and the Adoption
                                                  its own behalf, sometimes on cases
                                                                                                             • Send paper comments in triplicate                of Rule 8.18, Release of Disciplinary
                                                  involving identical or similar conduct to                                                                     Complaints, Decisions and Other
                                                                                                          to Secretary, Securities and Exchange
                                                  the cases it brings on the Exchange’s                                                                         Information
                                                                                                          Commission, 100 F Street NE.,
                                                  behalf. Without the waiver, the
                                                                                                          Washington, DC 20549–1090.
                                                  Exchange is concerned that FINRA                                                                              November 17, 2016
                                                  might publish a complaint during the                    All submissions should refer to File                     Pursuant to Section 19(b)(1) of the
                                                  30-day operative delay, and that the                    Number SR–BatsEDGX–2016–64. This                      Securities Exchange Act of 1934 (the
                                                                                                          file number should be included on the
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                                                  Exchange would not be permitted to                                                                            ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                  publish its own complaint, prepared by                  subject line if email is used. To help the            notice is hereby given that on November
                                                  FINRA, regarding the same conduct.                      Commission process and review your                    3, 2016, Bats BYX Exchange, Inc. (the
                                                  According to the Exchange, this would                      16 For purposes only of waiving the 30-day
                                                                                                                                                                ‘‘Exchange’’ or ‘‘BYX’’) filed with the
                                                                                                          operative delay, the Commission also has
                                                    13 15 U.S.C. 78s(b)(3)(A).                                                                                    17 17 CFR 200.30–3(a)(12).
                                                                                                          considered the proposed rule’s impact on
                                                    14 17 CFR 240.19b–4(f)(6).                                                                                    1 15 U.S.C. 78s(b)(1).
                                                                                                          efficiency, competition, and capital formation. See
                                                    15 17 CFR 240.19b–4(f)(6)(iii).                       15 U.S.C. 78c(f).                                       2 17 CFR 240.19b–4.




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                                                  84656                      Federal Register / Vol. 81, No. 226 / Wednesday, November 23, 2016 / Notices

                                                  Securities and Exchange Commission                         all formal disciplinary actions where a               with respect to, any disciplinary
                                                  (‘‘Commission’’) the proposed rule                         final decision has been issued, except as             decision issued by the Exchange, as
                                                  change as described in Items I and II                      provided in Rule 8.15(a), to be                       defined in proposed Rule 8.18(e).
                                                  below, which Items have been prepared                      published on its Web site. Interpretation             Additionally, the proposed rule would
                                                  by the Exchange. The Exchange has                          and Policy .01 also provides that the                 provide that the Exchange would release
                                                  designated this proposal as a ‘‘non-                       Exchange shall not issue any press                    to the public copies of disciplinary
                                                  controversial’’ proposed rule change                       release or other statement to the press               complaints as defined in proposed Rule
                                                  pursuant to Section 19(b)(3)(A) of the                     concerning any formal or informal                     8.18(e). Also, the decision to issue other
                                                  Act 3 and Rule 19b–4(f)(6)(iii)                            disciplinary matter unless the Chief                  related information, including a press
                                                  thereunder,4 which renders it effective                    Regulatory Officer recommends a press                 release, under proposed Rule 8.18(a)(1)
                                                  upon filing with the Commission. The                       release to the Executive Committee or                 would be in the discretion of the
                                                  Commission is publishing this notice to                    the Board of the Exchange and either                  Exchange generally instead of requiring
                                                  solicit comments on the proposed rule                      body determines that such a press                     Executive Committee or Exchange Board
                                                  change from interested persons.                            release is warranted. The Exchange                    approval as currently required in
                                                  I. Self-Regulatory Organization’s                          proposes to remove parts of                           Interpretation and Policy .01 to Rule
                                                  Statement of the Terms of Substance of                     Interpretation and Policy .01 to Rule                 8.11. Proposed Rule 8.18(a)(1) would
                                                  the Proposed Rule Change                                   8.11 described above and to add                       also provide that, in response to a
                                                                                                             proposed Rule 8.18 modeled after                      request, the Exchange shall also release
                                                     The Exchange filed a proposal to add                    FINRA Rule 8313,5 as described below,                 to the requesting party a copy of any
                                                  proposed Rule 8.18 to require the                          to govern the publication of disciplinary             identified disciplinary complaint or
                                                  publication of the Exchange’s                              information. The scope of proposed                    disciplinary decision issued by the
                                                  disciplinary complaints and                                Rule 8.18 would be limited to                         Exchange, as defined in proposed Rule
                                                  disciplinary decisions issued and to                       publication of materials relating to the              8.18(e). These proposed amendments
                                                  remove the part of Interpretation and                      disciplinary process set forth in Chapter             are modeled after FINRA Rule
                                                  Policy .01 to Rule 8.11 that currently                     VIII because the Exchange seeks to                    8313(a)(1) and would be substantially
                                                  governs the publication of disciplinary                    provide prompt access to more                         similar to the FINRA rule.
                                                  complaints and information related to                      information regarding its disciplinary                  The Exchange does not propose to
                                                  disciplinary complaints.                                   actions to Members and associated                     incorporate subsections (2), (3), (4) and
                                                     The text of the proposed rule change                                                                          (6) of FINRA Rule 8313(a) because the
                                                                                                             persons. By providing more information
                                                  is available at the Exchange’s Web site                                                                          Exchange proposes to limit the scope of
                                                                                                             regarding the Exchange’s disciplinary
                                                  at www.batstrading.com, at the                                                                                   proposed Rule 8.18 to the publication of
                                                                                                             process, including publishing
                                                  principal office of the Exchange, and at                                                                         materials relating to the disciplinary
                                                                                                             disciplinary complaints at the time they
                                                  the Commission’s Public Reference                                                                                process set forth in Chapter VIII at this
                                                                                                             are filed, Members and associated
                                                  Room.                                                                                                            time.7 The Exchange, however, notes
                                                                                                             persons will be able to sooner identify
                                                  II. Self-Regulatory Organization’s                         conduct that the Exchange views as
                                                                                                                                                                      7 Subsection (2) of FINRA Rule 8313(a) provides
                                                  Statement of the Purpose of, and                           problematic and have will [sic] the
                                                                                                                                                                   for the publication of statutory disqualification
                                                  Statutory Basis for, the Proposed Rule                     ability to take corrective steps sooner               decisions and temporary cease and desist orders.
                                                  Change                                                     than they can under the current rules                    Subsection (3) provides for the publication of any
                                                     In its filing with the Commission, the                  that provide only for the publication of              suspension, cancellation, expulsion, or bar for:
                                                  Exchange included statements                               disciplinary decisions after they become              Failing to keep information current; failing to pay
                                                                                                             final. In that regard, the Exchange has               dues; failing to comply with an arbitration award
                                                  concerning the purpose of and basis for                                                                          or related settlement or an order of restitution or
                                                  the proposed rule change and discussed                     determined not to adopt FINRA Rule                    settlement providing for restitution; failing to meet
                                                  any comments it received on the                            8313 in all respects at this time.6                   the eligibility or qualification standards or
                                                                                                                                                                   prerequisites for access to services; or experiencing
                                                  proposed rule change. The text of these                    General Standards                                     financial or operational difficulties. Additionally,
                                                  statements may be examined at the                                                                                subsection (3) provides for the publication of any
                                                                                                               The Exchange proposes Rule 8.18(a)
                                                  places specified in Item IV below. The                                                                           suspension, cancellation, expulsion, or bar imposed
                                                                                                             to be entitled ‘‘General Standards.’’ The             as the result of a summary proceeding for actions
                                                  Exchange has prepared summaries, set
                                                                                                             text would set forth general standards                authorized by Section 15A(h)(3) of the Act.
                                                  forth in Sections A, B, and C below, of
                                                                                                             for the release to the public of                         Subsection (4) addresses procedures for
                                                  the most significant parts of such                                                                               membership proceedings.
                                                                                                             disciplinary complaints, decisions, or
                                                  statements.                                                                                                         The Exchange does not propose to adopt
                                                                                                             information.
                                                                                                                                                                   subsections (2), (3), and (4) because, as discussed
                                                  A. Self-Regulatory Organization’s                            Proposed Rule 8.18(a)(1) would, in                  above, the Exchange’s proposal is intended to
                                                  Statement of the Purpose of, and                           part, essentially replace the part of                 provide more information regarding the Exchange’s
                                                  Statutory Basis for, the Proposed Rule                     Interpretation and Policy .01 to Rule                 disciplinary process to the public so that Members
                                                  Change                                                     8.11 that addresses the publication of                and associated persons will be able to identify
                                                                                                                                                                   conduct that the Exchange views as problematic
                                                                                                             disciplinary decisions and conform [sic]              and will have the ability to take corrective steps
                                                  1. Purpose
                                                                                                             to FINRA Rule 8313. The proposed rule                 sooner. Subsections (2), (3), and (4) to the FINRA
                                                  Proposed Rule Change                                       would provide that the Exchange shall                 rule would not further that purpose because those
                                                                                                             release to the public a copy of and, at               subsections would require the publication of
                                                  Reorganization of Exchange Rules                                                                                 information generally relating to membership
                                                  Governing Release of Disciplinary                          the Exchange’s discretion, information                eligibility or failure to satisfy one’s membership
                                                  Complaints, Decisions and Other                                                                                  obligations rather than discipline. Subsection (2)
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                                                                                                               5 New York Stock Exchange, LLC (‘‘NYSE’’)           additionally addresses temporary cease and desist
                                                  Information Based on FINRA Rule 8313
                                                                                                             similarly adopted rules modeled after FINRA Rule      proceedings, which the Exchange does not have,
                                                    Interpretation and Policy .01 to Rule                    8313. See Securities Exchange Act Release No.         and Subsection (3) additionally addresses Section
                                                  8.11 currently provides, in part, that the                 78664 (August 24, 2016), 81 FR 59678, 59679           15A(h)(3) of the Act, which applies only to
                                                                                                             (August 30, 2016) (SR–NYSE–2016–40).                  registered securities associations.
                                                  Exchange shall cause details regarding                       6 NYSE similarly declined to adopt all provisions      Subsection (6) permits discretionary release of a
                                                                                                             of FINRA Rule 8313 insofar as the FINRA rule          complaint, decision, order, notification, or notice
                                                    3 15   U.S.C. 78s(b)(3)(A).                              related to information beyond the formal              issued under FINRA rules, where the release of
                                                    4 17   CFR 240.19b–4(f)(6)(iii).                         disciplinary process. See id. at 59679.               such information is deemed by FINRA’s Chief



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                                                                           Federal Register / Vol. 81, No. 226 / Wednesday, November 23, 2016 / Notices                                           84657

                                                  that although Exchange Rules do not                      of the time period provided for an                   Notice of Appeals of Exchange
                                                  provide for temporary cease and desist                   appeal or call for review as permitted               Decisions
                                                  orders as provided for in FINRA Rule                     under Exchange Rules or the Act, or                     The Exchange proposes to include
                                                  9800, the Exchange’s Client Suspension                   while such an appeal or call for review              subsection (d) to proposed Rule 8.18
                                                  Rule—Rule 8.17—is similar in its                         is pending, shall indicate that the                  entitled ‘‘Notice of Appeals of Exchange
                                                  procedure and purpose. The Exchange                      findings and sanctions imposed therein               Decisions to the SEC’’ modeled on
                                                  proposes to include a client suspension                  are subject to review and modification               FINRA Rule 8313(d). Proposed Rule
                                                  order issued pursuant to Rule 8.17 in                    by the Exchange or the Commission.                   8.18(d) provides that the Exchange must
                                                  the definition of ‘‘disciplinary decision’’              The proposed rule would be                           provide notice to the public when a
                                                  under proposed Rule 8.18(e)(2)                           substantially similar to FINRA Rule
                                                                                                                                                                disciplinary decision of the Exchange is
                                                  consistent with FINRA’s inclusion of its                 8313(b)(2). The proposed rule would
                                                                                                                                                                appealed to the Commission and the
                                                  temporary cease and desist orders for                    substitute the term ‘‘Exchange’’ for
                                                                                                                                                                notice shall state whether the
                                                  publication because the Exchange views                   ‘‘FINRA’’ and would not include a
                                                                                                                                                                effectiveness of the decision has been
                                                  client suspension proceedings as                         provision relating to the release
                                                                                                                                                                stayed pending the outcome of
                                                  disciplinary in nature. For the same                     specifications for an ‘‘other decision,
                                                                                                                                                                proceedings before the Commission.
                                                  reason, the Exchange proposes to                         order, notification, or notice’’ because,
                                                                                                                                                                The proposed rule would be the same as
                                                  include a notice of the initiation of a                  as noted above, the Exchange proposes
                                                                                                                                                                FINRA Rule 8313(d) except that the
                                                  client suspension proceeding in the                      to limit the rule only to disciplinary
                                                                                                                                                                proposed Rule would substitute the
                                                  definition of ‘‘disciplinary complaint’’                 complaints and disciplinary decisions.
                                                                                                                                                                term ‘‘Exchange’’ for ‘‘FINRA.’’
                                                  under proposed Rule 8.18(e)(1).                          Discretion To Redact Certain
                                                     The Exchange does not propose to                      Information or Waive Publication                     Definitions
                                                  incorporate subsection (5) of FINRA                                                                              Finally, the Exchange proposes
                                                  Rule 8313(a) because the Exchange does                      The Exchange has determined that,
                                                                                                           subject to limited exceptions,                       subsection (e) of proposed Rule 8.18
                                                  not have at this time provisions                                                                              entitled ‘‘Definitions.’’ Proposed Rule
                                                  analogous to FINRA Rule 6490 8 and the                   disciplinary information should be
                                                                                                           released to the public in unredacted                 8.18(e) would set forth definitions of the
                                                  FINRA Rule 9700 Series.9 Additionally,                                                                        terms ‘‘disciplinary complaint’’ and
                                                  the Exchange does not propose to                         form. To provide the standard for such
                                                                                                           limited exceptions, the Exchange                     ‘‘disciplinary decision’’ as used in the
                                                  include its procedures for exemptive                                                                          rule, modeled after the definitions
                                                                                                           proposes subsection (c) of proposed
                                                  relief analogous to the FINRA Rule 9600                                                                       contained in FINRA Rule 8313(e).
                                                                                                           Rule 8.18 entitled ‘‘Discretion to Redact
                                                  Series because the Exchange proposes to                                                                          First, proposed Rule 8.18(e)(1) would
                                                                                                           Certain Information or Waive
                                                  limit scope of proposed Rule 8.18 to the                                                                      define the term ‘‘disciplinary
                                                                                                           Publication,’’ modeled after FINRA Rule
                                                  publication of disciplinary materials.                                                                        complaint’’ to mean any statement of
                                                                                                           8313(c).
                                                  Release Specifications                                      Proposed Rule 8.18(c)(1) would                    charges issued pursuant to Rule 8.4 or
                                                                                                           provide that the Exchange reserves the               any notice served pursuant to Rule 8.17.
                                                     The Exchange proposes to include                                                                           This proposed rule is based on FINRA
                                                                                                           right to redact, on a case-by-case basis,
                                                  subsection (b) to proposed Rule 8.18                                                                          Rule 8313(e)(1) except that it replaces
                                                                                                           information that contains confidential
                                                  entitled ‘‘Release Specifications’’                                                                           the term ‘‘complaint pursuant to the
                                                                                                           customer information, including
                                                  modeled after FINRA Rule 8313(b).                                                                             Rule 9200 Series’’ with ‘‘statement of
                                                                                                           customer identities, or information that
                                                  Proposed Rule 8.18(b)(1) provides that                                                                        charges pursuant to Rule 8.4’’ and it
                                                                                                           raises significant identity theft, personal
                                                  copies of, and information with respect                                                                       includes a notice of the initiation of a
                                                                                                           safety, or privacy concerns that are not
                                                  to, any disciplinary complaint released                  outweighed by investor protection                    client suspension proceeding issued
                                                  to the public pursuant to paragraph (a)                  concerns. The proposed rule would be                 pursuant to Rule 8.17 in the definition
                                                  of the proposed rule shall indicate that                 the same as FINRA Rule 8313(c)(1)                    of ‘‘disciplinary complaint.’’
                                                  a disciplinary complaint represents the                  except that the proposed rule would                     Second, proposed Rule 8.18(e)(2)
                                                  initiation of a formal proceeding by the                 substitute the term ‘‘Exchange’’ for                 would define the term ‘‘disciplinary
                                                  Exchange in which findings as to the                     ‘‘FINRA.’’                                           decision’’ to mean any decision issued
                                                  allegations in the complaint have not                       Similarly, proposed Rule 8.18(c)(2)               pursuant to the Chapter VIII, including,
                                                  been made and does not represent a                       provides that, notwithstanding                       decisions issued by a Hearing Panel or
                                                  decision as to any of the allegations                    paragraph (a) of the proposed rule, the              the Appeals Committee and accepted
                                                  contained in the complaint. The                          Exchange may determine, in its                       offers of settlement. The Exchange
                                                  proposed rule would be the same as                       discretion, to waive the requirement to              additionally proposes to include
                                                  FINRA Rule 8313(b)(1) except that the                    release a copy of, or information with               suspension orders issued pursuant to
                                                  proposed rule would substitute the term                  respect to, any disciplinary complaint or            Rule 8.17 in the definition of
                                                  ‘‘Exchange’’ for ‘‘FINRA.’’                              disciplinary decision under those                    ‘‘disciplinary decision.’’ The Exchange
                                                     Proposed Rule 8.18(b)(2) provides that                extraordinary circumstances where the                does not propose to adopt the part of
                                                  copies of, and information with respect                  release of such information would                    FINRA Rule 8313(e)(2) that discusses
                                                  to, any disciplinary decision released to                violate fundamental notions of fairness              decisions issued pursuant to the FINRA
                                                  the public pursuant to paragraph (a) of                  or work an injustice. The proposed rule              Rule 9550 Series, FINRA Rule 9600
                                                  the proposed rule prior to the expiration                would be the same as FINRA Rule                      Series, FINRA Rule 9700 Series, or
                                                                                                           8313(c)(2) except that the proposed rule             FINRA Rule 9800 Series, or decisions,
                                                  Executive Officer (or such other senior officer as the
                                                                                                           would substitute the term ‘‘Exchange’’               notifications, or notices issued pursuant
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                                                  Chief Executive Officer may designate) to be in the
                                                  public interest. The Exchange does not propose to        for ‘‘FINRA’’ and would not include a                to the FINRA Rule 9520 Series because,
                                                  adopt this open-ended subsection because [sic]           provision relating to the waiver of the              as explained above, the Exchange does
                                                  Exchange intends for the proposed rule to instead        release of an ‘‘other decision, order,               not propose to adopt the provisions of
                                                  be limited to disciplinary information for the
                                                  reasons discussed above.
                                                                                                           notification, or notice’’ because, as                the FINRA Rule providing for the
                                                    8 ‘‘Processing of Company-Related Actions.’’           noted above, the Exchange proposes to                publication of such information.
                                                    9 ‘‘Procedure For Grievances Concerning the            limit the rule only to disciplinary                  Finally, proposed Rule 8.18(e)(2) would
                                                  Automated Systems.’’                                     complaints and disciplinary decisions.               provide that minor rule violation plan


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                                                  84658                       Federal Register / Vol. 81, No. 226 / Wednesday, November 23, 2016 / Notices

                                                  letters issued pursuant to Rules 8.15 and                disciplinary process, and that the                    Services Agreement (‘‘RSA’’), including
                                                  25.3 are not subject to the proposed                     proposed rule change provides greater                 the filing and prosecution of
                                                  rule.                                                    access to information regarding its                   disciplinary complaints on the
                                                                                                           disciplinary actions, and also provides               Exchange’s behalf. FINRA also files and
                                                  2. Statutory Basis
                                                                                                           valuable guidance and information to                  prosecutes disciplinary complaints on
                                                     The Exchange believes that its                        Members, associated persons, other                    its own behalf, sometimes on cases
                                                  proposal is consistent with the                          regulators, and the investing public.                 involving identical or similar conduct to
                                                  requirements of the Act and the rules                                                                          the cases it brings on the Exchange’s
                                                  and regulations thereunder that are                      B. Self-Regulatory Organization’s
                                                                                                           Statement on Burden on Competition                    behalf. Without the waiver, the
                                                  applicable to a national securities
                                                                                                                                                                 Exchange is concerned that FINRA
                                                  exchange, and, in particular, with the                      The Exchange does not believe that
                                                  requirements of Section 6(b) of the                                                                            might publish a complaint during the
                                                                                                           the proposed rule change will impose
                                                  Act.10 In particular, the proposal is                                                                          30-day operative delay, and that the
                                                                                                           any burden on competition that is not
                                                  consistent with Section 6(b)(1) 11 in that                                                                     Exchange would not be permitted to
                                                                                                           necessary or appropriate in furtherance
                                                  it enables the Exchange to be so                         of the purposes of the Act. The                       publish its own complaint, prepared by
                                                  organized as to have the capacity to be                  proposed rule change is not intended to               FINRA, regarding the same conduct.
                                                  able to carry out the purposes of the Act                address competitive issues, but rather it             According to the Exchange, this would
                                                  and to comply, and to enforce                            is designed to enhance the Exchange’s                 supply the public with an incomplete
                                                  compliance by its exchange members                       rules governing the release of                        picture of the disciplinary proceedings,
                                                  and persons associated with its                          disciplinary complaints, decisions and                the full nature of which could not be
                                                  exchange members, with the provisions                    other information to the public, thereby              disclosed until much later when a final
                                                  of the Act, the rules and regulations                    providing greater clarity and                         disciplinary decision is issued. The
                                                  thereunder, and the rules of the                         consistency and resulting in less                     Exchange, therefore, believes that
                                                  Exchange. In particular, the Exchange                    burdensome and more efficient                         waiver of the operative delay is
                                                  believes that the proposed addition of                   regulatory compliance and facilitating                consistent with the protection of
                                                  Rule 8.18 regarding release of                           performance of regulatory functions.                  investors and the public interest, as it
                                                  disciplinary complaints, decisions and                                                                         will allow the Exchange to immediately
                                                  other information are [sic] consistent                   C. Self-Regulatory Organization’s                     publish any disciplinary complaints or
                                                  with Section 6(b)(1) of the Act because                  Statement on Comments on the                          decisions that are filed or issued after
                                                  it would establish general standards for                 Proposed Rule Change Received From                    the proposal is filed. The Commission
                                                  the release of disciplinary information                  Members, Participants or Others                       believes that waiver of the 30-day
                                                  to the public to provide greater access                    The Exchange has not solicited, and                 operative delay is consistent with the
                                                  to information regarding the Exchange’s                  does not intend to solicit, comments on               protection of investors and the public
                                                  disciplinary actions.                                    this proposed rule change. The                        interest because it will allow BYX to
                                                     For the same reasons, the Exchange                    Exchange has not received any written                 publish disciplinary complaints or
                                                  believes that proposed Rule 8.18                         comments from members or other                        decisions that have been filed or issued
                                                  furthers the objectives of Section 6(b)(5)               interested parties.                                   without delay. Therefore, the
                                                  of the Act 12 because the proposed rule                                                                        Commission designates the proposed
                                                  is designed to promote just and                          III. Date of Effectiveness of the
                                                                                                           Proposed Rule Change and Timing for                   rule change to be operative upon
                                                  equitable principles of trade, to foster
                                                                                                           Commission Action                                     filing.16
                                                  cooperation and coordination with
                                                  persons engaged in facilitating                             Because the foregoing proposed rule                   At any time within 60 days of the
                                                  transactions in securities, and to remove                change does not: (i) Significantly affect             filing of the proposed rule change, the
                                                  impediments to and perfect the                           the protection of investors or the public             Commission summarily may
                                                  mechanism of a free and open market                      interest; (ii) impose any significant                 temporarily suspend such rule change if
                                                  and a national market system. In                         burden on competition; and (iii) become               it appears to the Commission that such
                                                  particular, proposed Rule 8.18 furthers                  operative for 30 days from the date on                action is: (1) Necessary or appropriate in
                                                  the objectives of Section 6(b)(5) of the                 which it was filed or such shorter time               the public interest; (2) for the protection
                                                  Act by providing greater clarity,                        as the Commission may designate, it has               of investors; or (3) otherwise in
                                                  consistency, and transparency regarding                  become effective pursuant to Section                  furtherance of the purposes of the Act.
                                                  the release of disciplinary complaints,                  19(b)(3)(A) of the Act 13 and paragraph               If the Commission takes such action, the
                                                  decisions and other information to the                   (f)(6) of Rule 19b–4 thereunder.14                    Commission shall institute proceedings
                                                  public. By adopting the proposed Rule                       A proposed rule change filed under                 to determine whether the proposed rule
                                                  8.18 modeled after FINRA Rule 8313,                      Rule 19b–4(f)(6) normally does not                    should be approved or disapproved.
                                                  the Exchange would establish standards                   become operative prior to 30 days after
                                                  for the release of disciplinary                          the date of filing. However, Rule 19b–                IV. Solicitation of Comments
                                                  information to the public in line with                   4(f)(6)(iii) 15 permits the Commission to               Interested persons are invited to
                                                  those in effect at FINRA that provide                    designate a shorter time if such action               submit written data, views and
                                                  greater access to information regarding                  is consistent with the protection of                  arguments concerning the foregoing,
                                                  the Exchange’s disciplinary actions and                  investors and the public interest. In its             including whether the proposed rule
                                                  describe the scope of information                        filing with the Commission, the                       change is consistent with the Act.
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                                                  subject to proposed Rule 8.18. The                       Exchange requests that the Commission                 Comments may be submitted by any of
                                                  Exchange believes that this proposed                     waive the 30-day operative delay. The                 the following methods:
                                                  rule change promotes greater                             Exchange states that FINRA performs
                                                  transparency to the Exchange’s                           services for it under a Regulatory                       16 For purposes only of waiving the 30-day

                                                                                                                                                                 operative delay, the Commission also has
                                                    10 15 U.S.C. 78f(b).                                     13 15 U.S.C. 78s(b)(3)(A).                          considered the proposed rule’s impact on
                                                    11 15 U.S.C. 78f(b)(1).                                  14 17 CFR 240.19b–4(f)(6).                          efficiency, competition, and capital formation. See
                                                    12 15 U.S.C. 78f(b)(5).                                  15 17 CFR 240.19b–4(f)(6)(iii).                     15 U.S.C. 78c(f).



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                                                                            Federal Register / Vol. 81, No. 226 / Wednesday, November 23, 2016 / Notices                                                        84659

                                                  Electronic Comments                                       SECURITIES AND EXCHANGE                                 September 28, 2016, pursuant to Section
                                                                                                            COMMISSION                                              19(b)(2) of the Act,5 the Commission
                                                    • Use the Commission’s Internet                                                                                 designated a longer period within which
                                                  comment form (http://www.sec.gov/                         [Release No. 34–79346; File No. SR–FINRA–
                                                                                                                                                                    to either approve the proposed rule
                                                  rules/sro.shtml); or                                      2016–032]
                                                                                                                                                                    change, disapprove the proposed rule
                                                    • Send an email to rule-comments@                       Self-Regulatory Organizations;                          change, or institute proceedings to
                                                  sec.gov. Please include File Number SR–                   Financial Industry Regulatory                           determine whether to disapprove the
                                                  BatsBYX–2016–32 on the subject line.                      Authority, Inc.; Notice of Filing of                    proposed rule change.6 The Commission
                                                                                                            Amendment No. 1 and Order Granting                      then received a letter from the SEC
                                                  Paper Comments                                            Accelerated Approval of a Proposed                      Office of the Investor Advocate,
                                                                                                            Rule Change, as Modified by                             submitted to the public comment file,
                                                    • Send paper comments in triplicate                                                                             recommending approval of the proposed
                                                  to Secretary, Securities and Exchange                     Amendment No. 1, Relating to FINRA
                                                                                                            Rule 2232 (Customer Confirmations)                      rule change.7 On November 14, 2016,
                                                  Commission, 100 F Street NE.,                                                                                     FINRA responded to the comments 8
                                                  Washington, DC 20549–1090.                                To Require Members To Disclose
                                                                                                            Additional Pricing Information on                       and filed Amendment No. 1 to the
                                                  All submissions should refer to File                      Retail Customer Confirmations                           proposal.9 The Commission is
                                                  Number SR–BatsBYX–2016–32. This                           Relating to Transactions in Certain                     publishing this notice to solicit
                                                  file number should be included on the                     Fixed Income Securities                                 comment on Amendment No. 1 to the
                                                  subject line if email is used. To help the                                                                        proposal from interested persons and is
                                                                                                            November 17, 2016.                                      approving the proposed rule change, as
                                                  Commission process and review your
                                                                                                                                                                    modified by Amendment No. 1, on an
                                                  comments more efficiently, please use                     I. Introduction
                                                                                                                                                                    accelerated basis.
                                                  only one method. The Commission will                         On August 12, 2016, the Financial
                                                  post all comments on the Commission’s                     Industry Regulatory Authority, Inc.                     II. Description of the Proposal, as
                                                  Internet Web site (http://www.sec.gov/                    (‘‘FINRA’’) filed with the Securities and               Modified by Amendment No. 1
                                                  rules/sro.shtml). Copies of the                           Exchange Commission (‘‘Commission’’                     A. Background
                                                  submission, all subsequent                                or ‘‘SEC’’), pursuant to Section 19(b)(1)
                                                                                                                                                                       FINRA proposes to amend FINRA
                                                  amendments, all written statements                        of the Securities Exchange Act of 1934                  Rule 2232 (Customer Confirmations) to
                                                  with respect to the proposed rule                         (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a               require a member effecting certain
                                                  change that are filed with the                            proposed rule change to amend FINRA                     transactions as principal with non-
                                                  Commission, and all written                               Rule 2232 to require FINRA members to                   institutional customers in a corporate
                                                  communications relating to the                            disclose additional pricing information                 debt or agency debt security to disclose
                                                  proposed rule change between the                          on retail customer confirmations                        the member’s mark-up/mark-down from
                                                  Commission and any person, other than                     relating to certain transactions in fixed               the prevailing market price (‘‘PMP’’) for
                                                  those that may be withheld from the                       income securities. The proposed rule                    the security on the customer
                                                  public in accordance with the                             change was published for comment in                     confirmation.10 FINRA also proposes to
                                                  provisions of 5 U.S.C. 552, will be                       the Federal Register on August 19,                      require for all transactions in corporate
                                                  available for Web site viewing and                        2016.3 The Commission received nine                     or agency debt securities with non-
                                                  printing in the Commission’s Public                       comment letters from eight commenters                   institutional customers, irrespective of
                                                                                                            in response to the proposal.4 On                        whether mark-up/mark-down disclosure
                                                  Reference Room, 100 F Street NE.,
                                                  Washington, DC 20549 on official                            1 15
                                                                                                                                                                    is required, that the member provide on
                                                                                                                    U.S.C. 78s(b)(1).
                                                  business days between the hours of                          2 17
                                                                                                                                                                    the confirmation (1) a reference, and
                                                                                                                    CFR 240.19b–4.
                                                  10:00 a.m. and 3:00 p.m. Copies of such                      3 See Securities Exchange Act Release No. 78573      hyperlink if the confirmation is
                                                  filing also will be available for                         (Aug. 15, 2016), 81 FR 55500 (Aug. 19, 2016)            electronic, to a Web page hosted by
                                                  inspection and copying at the principal                   (‘‘Notice’’).                                           FINRA that contains publicly available
                                                  office of the Exchange. All comments
                                                                                                               4 See Letter from Manisha Kimmel, Chief
                                                                                                                                                                    trading data from FINRA’s Trade
                                                                                                            Regulatory Officer, Wealth Management, Thomson          Reporting and Compliance Engine
                                                  received will be posted without change;                   Reuters, to Brent J. Fields, Secretary, Commission
                                                  the Commission does not edit personal                     (Sept. 19, 2016) (‘‘Thomson Reuters I’’); Letter from
                                                                                                            Mary Lou Von Kaenel, Managing Director, Financial       Regulatory Officer, Wealth Management, Thomson
                                                  identifying information from                              Information Forum, to Robert W. Errett, Deputy          Reuters, to Brent J. Fields, Secretary, Commission
                                                  submissions. You should submit only                       Secretary, Commission (Sept. 9, 2016) (‘‘FIF’’);        (Sept. 8, 2016) (‘‘Thomson Reuters II’’); and Letter
                                                                                                                                                                    from Hugh Berkson, President, PIABA, to Robert W.
                                                  information that you wish to make                         Letter from Sean Davy, Managing Director, Capital
                                                                                                                                                                    Errett, Deputy Secretary, Commission (Sept. 7,
                                                                                                            Markets Division, and Leslie M. Norwood,
                                                  available publicly. All submissions                       Managing Director and Associate General Counsel,        2016) (‘‘PIABA’’).
                                                  should refer to File Number SR–                           Municipal Securities Division, SIFMA, to Robert W.
                                                                                                                                                                       5 See 15 U.S.C. 78s(b)(2).
                                                                                                                                                                       6 See Securities Exchange Act Release No. 34–
                                                  BatsBYX–2016–32 and should be                             Errett, Deputy Secretary, Commission (Sept. 9,
                                                                                                            2016) (‘‘SIFMA’’); Letter from Norman L. Ashkenas,      78965 (Sept. 28, 2016), 81 FR 68492 (Oct. 4, 2016)
                                                  submitted on or before December 14,                                                                               (FINRA–2016–032).
                                                                                                            Chief Compliance Officer, Fidelity Brokerage
                                                  2016.                                                     Services, LLC, and Richard J. O’Brien, Chief               7 See Letter from Rick A. Fleming, Investor

                                                                                                            Compliance Officer, National Financial Services,        Advocate, Office of the Investor Advocate, to
                                                    For the Commission, by the Division of                                                                          Commission (Nov. 7, 2016) (‘‘Investor Advocate’’).
                                                                                                            LLC, to Brent J. Fields, Secretary, Commission
                                                  Trading and Markets, pursuant to delegated                (Sept. 9, 2016) (‘‘Fidelity’’); Letter from Mike           8 See Letter from Alexander Ellenberg, Associate
                                                  authority.17                                              Nicholas, Chief Executive Officer, Bond Dealers of      General Counsel, FINRA, to Brent J. Fields,
                                                                                                            America, to Brent J. Fields, Secretary, Commission      Secretary, Commission, dated November 14, 2016
mstockstill on DSK3G9T082PROD with NOTICES




                                                  Brent J. Fields,
                                                                                                            (Sept. 9, 2016) (‘‘BDA’’); Letter from Robert J.        (‘‘FINRA Response Letter’’).
                                                  Secretary.                                                McCarthy, Director of Regulatory Policy, Wells             9 Amendment No. 1 is available on the

                                                  [FR Doc. 2016–28185 Filed 11–22–16; 8:45 am]              Fargo Advisors, LLC, to Robert W. Errett, Deputy        Commission’s Web site at: https://www.sec.gov/
                                                                                                            Secretary, Commission (Sept. 9, 2016) (‘‘Wells          comments/sr-finra-2016-032/finra2016032-13.pdf.
                                                  BILLING CODE 8011–01–P
                                                                                                            Fargo’’); Letter from Scott A. Eichhorn, Practitioner      10 See Notice, supra note 3. For ease of reference,

                                                                                                            in Residence and Supervising Attorney, Investor         a ‘‘non-institutional customer’’ is also alternatively
                                                                                                            Rights Clinic, University of Miami, et al., to Brent    referred to as a ‘‘retail customer’’ or ‘‘retail
                                                                                                            Fields, Secretary, Commission (Sept. 8, 2016)           investor,’’ which, among others are not included in
                                                    17 17   CFR 200.30–3(a)(12).                            (‘‘UMiami’’); Letter from Manisha Kimmel, Chief         the definition of an institutional customer.



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Document Created: 2016-11-23 05:30:09
Document Modified: 2016-11-23 05:30:09
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 84655 

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