81 FR 88308 - Robert W. Baird & Co. Incorporated; Notice of Application
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 235 (December 7, 2016)
Federal Register Volume 81, Issue 235 (December 7, 2016)
| Page Range | 88308-88311 | |
| FR Document | 2016-29298 |
[Federal Register Volume 81, Number 235 (Wednesday, December 7, 2016)] [Notices] [Pages 88308-88311] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-29298] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. IA-4579; File No. 803-00237] Robert W. Baird & Co. Incorporated; Notice of Application December 1, 2016. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice of application for an exemptive order under section 206A of the Investment Advisers Act of 1940 (``Advisers Act'') providing an exemption from the written disclosure and consent requirements of section 206(3). ----------------------------------------------------------------------- Applicant: Robert W. Baird & Co. Incorporated (``Applicant''). Relevant Advisers Act Sections: Exemption requested under section 206A from the written disclosure and consent requirements of section 206(3). Summary of Application: Applicant requests that the Commission issue an order under section 206A exempting it and Future Advisers (as defined below) from the written disclosure and consent requirements of section 206(3) with respect to principal transactions with nondiscretionary advisory client accounts. Filing Dates: The application was filed on October 14, 2016 and amended on November 23, 2016. Hearing or Notification of Hearing: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving Applicant with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on December 27, 2016, and should be accompanied by proof of service on Applicant, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0-5 under the Advisers Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. Applicant, Charles M. Weber, Managing Director, Robert W. Baird & Co. Incorporated, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 and Monica Lea Parry, Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Ave. NW., Washington, DC 20004. FOR FURTHER INFORMATION CONTACT: Robert Shapiro, Senior Counsel, at (202) 551-7758 (Chief Counsel's Office, Division of Investment Management) or Melissa Harke, Senior Special Counsel, at (202) 551-6787 (Investment Adviser Regulation Office, Division of Investment Management). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission's Web site at http://www.sec.gov/rules/iareleases.shtml or by calling (202) 551-8090. Applicant seeks relief from the written disclosure and consent requirements of section 206(3) of the Advisers Act that would be similar to relief currently provided by Advisers Act rule 206(3)-3T (the ``Rule''), which will expire by its terms on December 31, 2016. The relief sought by Applicant, if granted, would be subject to conditions similar to those under the Rule, as well as certain revised or additional conditions. Applicant's Representations 1. The Applicant is registered as an investment adviser with the Commission and is a registered broker-dealer. The Applicant is an employee-owned wealth management, capital markets, asset management, and private equity firm with operations in the United States, Europe, and Asia. The Applicant offers a number of advisory programs, including the Advisory [[Page 88309]] Choice Program (the ``Program''), a nondiscretionary advisory program. 2. The Applicant created the Program in 2007 to accommodate the conversion of many of the Applicant's fee-based brokerage accounts to nondiscretionary advisory accounts following the invalidation of former Rule 202(a)(11)-1 under the Advisers Act. When these accounts had been fee-based brokerage accounts, the Applicant, in its capacity as a broker-dealer, engaged in principal transactions with its customers in accordance with applicable law. The Applicant currently relies on the Rule to engage in principal transactions with its client accounts in the Program. 3. The Applicant currently has approximately 34,000 client accounts enrolled in the Program. Those accounts have approximately $14 billion in assets under management as of June 30, 2016. In the period January 1, 2015 through December 31, 2015, 890 trades were effected in reliance on the Rule in the Program. Approximately 81% percent of the trades done in reliance on the Rule in this period were purchases by client accounts; the average purchase was approximately $48,000. Approximately 19% percent of the trades done in reliance on the Rule in this period were sales from client accounts; the average sale was approximately $51,000. 4. For the 12-month periods ended December 31, 2014, and December 31, 2015, the Applicant did not rely on the Rule to engage in principal trades in investment-grade fixed income securities it underwrote. 5. The Applicant acknowledges that the Order, if granted, would not be construed as relieving in any way the Applicant from acting in the best interests of an advisory client, including fulfilling the duty to seek the best execution for the particular transaction for the advisory client; nor shall it relieve the Applicant from any obligation that may be imposed by sections 206(1) or (2) of the Advisers Act or by other applicable provisions of the federal securities laws or applicable FINRA rules. Applicant's Legal Analysis 1. Section 206(3) provides that it is unlawful for any investment adviser, directly or indirectly, acting as principal for its own account, knowingly to sell any security to or purchase any security from a client, without disclosing to the client in writing before the completion of the transaction the capacity in which the adviser is acting and obtaining the client's consent to the transaction. Rule 206(3)-3T deems an investment adviser to be in compliance with the provisions of section 206(3) of the Advisers Act when the investment adviser, or a person controlling, controlled by, or under common control with the investment adviser, acting as principal for its own account, sells to or purchases from an advisory client any security, provided that the investment adviser complies with the conditions of the Rule. 2. Rule 206(3)-3T requires, among other things, that the investment adviser obtain a client's written, revocable consent prospectively authorizing the adviser, directly or indirectly, acting as principal for its own account, to sell any security to or purchase any security from the client. The consent must be obtained after the adviser provides the client with written disclosure about: (i) The circumstances under which the investment adviser may engage in principal transactions with the client; (ii) the nature and significance of the conflicts the investment adviser has with its client's interests as a result of those transactions; and (iii) how the investment adviser addresses those conflicts. The investment adviser also must provide trade-by-trade disclosure to the client, before the execution of each principal transaction, of the capacity in which the adviser may act with respect to the transaction, and obtain the client's consent (which may be written or oral) to the transaction. The Rule is available only to an investment adviser that is also a broker- dealer registered under section 15 of the Securities Exchange Act of 1934 (``Exchange Act'') and may only be relied upon with respect to a nondiscretionary account that is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self- regulatory organization(s) of which it is a member. Rule 206(3)-3T is not available for principal transactions if the investment adviser or a person who controls, is controlled by, or is under common control with the adviser (``control person'') is the issuer or is an underwriter of the security, except that an adviser may rely on the Rule for trades in which the adviser or a control person is an underwriter of non- convertible investment-grade debt securities. 3. The investment adviser also must provide to the client a trade confirmation that, in addition to the requirements of rule 10b-10 under the Exchange Act, includes a conspicuous, plain English statement informing the client that the investment adviser disclosed to the client before the execution of the transaction that the investment adviser may act as principal in connection with the transaction, that the client authorized the transaction, and that the investment adviser sold the security to or bought the security from the client for its own account. The investment adviser also must deliver to the client, at least annually, a written statement listing all transactions that were executed in the account in reliance on the Rule, including the date and price of each transaction. 4. Rule 206(3)-3T is scheduled to expire on December 31, 2016. Upon expiration, the Applicant would be required to provide trade-by-trade written disclosure to each nondiscretionary advisory client with whom the Applicant sought to engage in a principal transaction in accordance with section 206(3). The Applicant submits that its nondiscretionary clients, through the Applicant's current reliance on the Rule, have had access to the Applicant's inventory through principal transactions for a number of years, and expect to continue to have such access in the future. The Applicant believes that engaging in principal transactions with its clients provides certain benefits to its clients, including access to securities of limited availability, such as municipal bonds, and that the written disclosure and client consent requirements of section 206(3) act as an operational barrier to its ability to engage in principal trades with its clients, especially when the transaction involves securities of limited availability. 5. Unless the Applicant is provided an exemption from the written disclosure and client consent requirements of section 206(3), Applicant believes that it will be unable to provide the same range of services and access to the same types of securities to its nondiscretionary advisory clients as it currently is able to provide to clients under the Rule. 6. The Applicant notes that, if the requested relief is granted, it will remain subject to the fiduciary duties that are generally enforceable under sections 206(1) and 206(2) of the Advisers Act, which, in general terms, require the Applicant to: (i) Disclose material facts about the advisory relationship to its clients; (ii) treat each client fairly; and (iii) act only in the best interests of its client, disclosing conflicts of interest when present and obtaining client consent to arrangements that present such conflicts. 7. The Applicant further notes that, in its capacity as a broker- dealer with respect to these accounts, it will remain subject to a comprehensive set of Commission and FINRA regulations that apply to the relationship between a broker-dealer and its customer in [[Page 88310]] addition to the fiduciary duties an adviser owes a client. These rules require, among other things, that the Applicant deal fairly with its customers, seek to obtain best execution of customer orders, and make only suitable recommendations. These obligations are designed to promote business conduct that protects customers from abusive practices that may not necessarily be fraudulent, and to protect against unfair prices and excessive commissions. Specifically, these provisions, among other things, require that the prices charged by the Applicant be reasonably related to the prevailing market, and limit the commissions and mark-ups the Applicant can charge. Additionally, these obligations require that the Applicant have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on information obtained through reasonable diligence. 8. The Applicant requests that the Commission issue an Order pursuant to section 206A exempting it from the written disclosure and consent requirements of section 206(3) only with respect to client accounts in the Program and any similar nondiscretionary program to be created in the future. The Applicant also requests that the Commission's Order apply to future investment advisers controlling, controlled by, or under common control with the Applicant (``Future Advisers''). Any Future Adviser relying on any Order granted pursuant to the application will comply with the terms and conditions stated in the application.\1\ --------------------------------------------------------------------------- \1\ All entities that currently intend to rely on any order granted pursuant to the application are named as Applicants. --------------------------------------------------------------------------- Applicant's Conditions The Applicant agrees that any Order granting the requested relief will be subject to the following conditions: 1. The Applicant will exercise no ``investment discretion'' (as such term is defined in section 3(a)(35) of the Exchange Act), except investment discretion granted by the advisory client on a temporary or limited basis,\2\ with respect to the client's account. --------------------------------------------------------------------------- \2\ Discretion is considered to be temporary or limited for purposes of this condition when the investment adviser is given discretion: (i) As to the price at which or the time to execute an order given by a client for the purchase or sale of a definite amount or quantity of a specified security; (ii) on an isolated or infrequent basis, to purchase or sell a security or type of security when a client is unavailable for a limited period of time not to exceed a few months; (iii) as to cash management, such as to exchange a position in a money market fund for another money market fund or cash equivalent; (iv) to purchase or sell securities to satisfy margin requirements; (v) to sell specific bonds and purchase similar bonds in order to permit a client to take a tax loss on the original position; (vi) to purchase a bond with a specified credit rating and maturity; and (vii) to purchase or sell a security or type of security limited by specific parameters established by the client. See, e.g., Temporary Rule Regarding Principal Trades with Certain Advisory Clients, Investment Advisers Act Release No. 2653 (Sept. 24, 2007) at n. 31. --------------------------------------------------------------------------- 2. The Applicant will not trade in reliance on this Order any security for which the Applicant or any person controlling, controlled by, or under common control with the Applicant is the issuer, or, at the time of the sale, an underwriter (as defined in section 202(a)(20) of the Advisers Act). 3. The Applicant will not directly or indirectly require the client to consent to principal trading as a condition to opening or maintaining an account with the Applicant. 4. The advisory client has executed a written revocable consent prospectively authorizing the Applicant directly or indirectly to act as principal for its own account in selling any security to or purchasing any security from the advisory client. The advisory client's written consent must be obtained through a signature or other positive manifestation of consent that is separate from or in addition to the signature indicating the client's consent to the advisory agreement. The separate or additional signature line or alternative means of expressing consent must be preceded immediately by prominent, plain English disclosure containing either: (a) An explanation of: (i) The circumstances under which the Applicant directly or indirectly may engage in principal transactions; (ii) the nature and significance of conflicts with its client's interests as a result of the transactions; and (iii) how the Applicant addresses those conflicts; or (b) a statement explaining that the client is consenting to principal transactions, followed by a cross-reference to a specific document provided to the client containing the disclosure in (a)(i)-(iii) above and to the specific page or pages on which such disclosure is located; provided, however, that if the Applicant requires time to modify its electronic systems to provide the specific page cross-reference required by clause (b), the Applicant may, while updating such electronic systems, and for no more than 90 days from the date of the Order, instead provide a cross-reference to a specific document provided to the client containing the disclosure in (a)(i)-(iii) above and to the specific section in such document in which such disclosure is located. Transition provision: To the extent that the Applicant obtained fully informed written revocable consent from an advisory client for purposes of rule 206(3)-3T(a)(3) prior to December 31, 2016, the Applicant may rely on this Order with respect to such client without obtaining additional prospective consent from such client. 5. The Applicant, prior to the execution of each transaction in reliance on this Order, will: (a) Inform the advisory client, orally or in writing, of the capacity in which it may act with respect to such transaction; and (b) obtain consent from the advisory client, orally or in writing, to act as principal for its own account with respect to such transaction. 6. The Applicant will send a written confirmation at or before completion of each such transaction that includes, in addition to the information required by rule 10b-10 under the Exchange Act, a conspicuous, plain English statement informing the advisory client that the Applicant: (a) Disclosed to the client prior to the execution of the transaction that the Applicant may be acting in a principal capacity in connection with the transaction and the client authorized the transaction; and (b) sold the security to, or bought the security from, the client for its own account. 7. The Applicant will send to the client, no less frequently than annually, written disclosure containing a list of all transactions that were executed in the client's account in reliance upon this Order, and the date and price of each such transaction. 8. The Applicant is a broker-dealer registered under section 15 of the Exchange Act and each account for which the Applicant relies on this Order is a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member. 9. Each written disclosure required as a condition to this Order will include a conspicuous, plain English statement that the client may revoke the written consent referred to in Condition 4 above without penalty at any time by written notice to the Applicant in accordance with reasonable procedures established by the Applicant, but in all cases such revocation must be given effect within 5 business days of the Applicant's receipt thereof. 10. The Applicant will maintain records sufficient to enable verification of compliance with the conditions of this Order. Such records will include, without limitation: (a) Documentation sufficient to demonstrate compliance with each disclosure and consent requirement under this Order; (b) in particular, documentation sufficient to demonstrate that, prior to the execution of each transaction in reliance on this [[Page 88311]] Order, the Applicant informed the advisory client of the capacity in which it may act with respect to the transaction and that it received the advisory client's consent (if the Applicant informs the client orally of the capacity in which it may act with respect to such transaction or obtains oral consent, such records may, for example, include recordings of telephone conversations or contemporaneous written notations); and (c) documentation sufficient to enable assessment of compliance by the Applicant with sections 206(1) and (2) of the Advisers Act in connection with its reliance on this Order.\3\ In each case, such records will be maintained and preserved in an easily accessible place for a period of not less than five years, the first two years in an appropriate office of the Applicant, and be available for inspection by the staff of the Commission. --------------------------------------------------------------------------- \3\ For example, under sections 206(1) and (2), an adviser may not engage in any transaction on a principal basis with a client that is not consistent with the best interests of the client or that subrogates the client's interests to the adviser's own. Cf. Investment Advisers Act Release No. 2106 (Jan. 31, 2003) (adopting Rule 206(4)-6). --------------------------------------------------------------------------- 11. The Applicant will adopt written compliance policies and procedures reasonably designed to ensure, and the Applicant's chief compliance officer will monitor, the Applicant's compliance with the conditions of this Order. The Applicant's chief compliance officer will, on at least a quarterly basis, conduct testing reasonably sufficient to verify such compliance. Such written policies and procedures, monitoring and testing will address, without limitation: (a) Compliance by the Applicant with its disclosure and consent requirements under this Order; (b) the integrity and operation of electronic systems employed by the Applicant in connection with its reliance on this Order; (c) compliance by the Applicant with its recordkeeping obligations under this Order; and (d) whether there is any evidence of the Applicant engaging in ``dumping'' in connection with its reliance on this Order.\4\ The Applicant's chief compliance officer will document the frequency and results of such monitoring and testing, and the Applicant will maintain and preserve such documentation in an easily accessible place for a period of not less than five years, the first two years in an appropriate office of the Applicant, and be available for inspection by the staff of the Commission. --------------------------------------------------------------------------- \4\ See Report of the Securities and Exchange Commission, Investment Trusts and Investment Companies, H.R. Doc. No. 279, 76th Cong., 2d Sess., pt. 3, at 2581, 2589 (1939); Hearings on S.3580 Before a Subcommittee of the Commission on Banking and Currency, 76th Cong., 3d Sess. 209, 212-23 (1940); Hearings on S. 3580 Before the Subcomm. of the Comm. on Banking and Currency, 76th Cong., 3d Sess. 322 (1940). By the Commission. Brent J. Fields, Secretary. [FR Doc. 2016-29298 Filed 12-6-16; 8:45 am] BILLING CODE 8011-01-P
![88308 Federal Register / Vol. 81, No. 235 / Wednesday, December 7, 2016 / Notices
waives the 30-day operative delay and available for Web site viewing and a hearing. Interested persons may
designates the proposed rule change to printing in the Commission’s Public request a hearing by writing to the
be operative upon filing with the Reference Room, 100 F Street NE., Commission’s Secretary and serving
Commission.13 Washington, DC 20549 on official Applicant with a copy of the request,
At any time within 60 days of the business days between the hours of personally or by mail. Hearing requests
filing of such proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the should be received by the Commission
Commission summarily may filing also will be available for by 5:30 p.m. on December 27, 2016, and
temporarily suspend such rule change if inspection and copying at the principal should be accompanied by proof of
it appears to the Commission that such office of the Exchange. All comments service on Applicant, in the form of an
action is necessary or appropriate in the received will be posted without change; affidavit or, for lawyers, a certificate of
public interest, for the protection of the Commission does not edit personal service. Pursuant to rule 0–5 under the
investors, or otherwise in furtherance of identifying information from Advisers Act, hearing requests should
the purposes of the Act. If the submissions. You should submit only state the nature of the writer’s interest,
Commission takes such action, the information that you wish to make any facts bearing upon the desirability
Commission shall institute proceedings available publicly. All submissions of a hearing on the matter, the reason for
under Section 19(b)(2)(B) 14 of the Act to should refer to File Number SR–NYSE– the request, and the issues contested.
determine whether the proposed rule 2016–81 and should be submitted on or Persons who wish to be notified of a
change should be approved or before December 28, 2016. hearing may request notification by
disapproved. writing to the Commission’s Secretary.
For the Commission, by the Division of
IV. Solicitation of Comments Trading and Markets, pursuant to delegated ADDRESSES: Secretary, U.S. Securities
Interested persons are invited to authority.15 and Exchange Commission, 100 F Street
submit written data, views, and Brent J. Fields, NE., Washington, DC 20549–1090.
arguments concerning the foregoing, Secretary. Applicant, Charles M. Weber, Managing
including whether the proposed rule [FR Doc. 2016–29289 Filed 12–6–16; 8:45 am] Director, Robert W. Baird & Co.
change is consistent with the Act. BILLING CODE 8011–01–P
Incorporated, 777 East Wisconsin
Comments may be submitted by any of Avenue, Milwaukee, Wisconsin 53202
the following methods: and Monica Lea Parry, Morgan, Lewis &
SECURITIES AND EXCHANGE Bockius LLP, 1111 Pennsylvania Ave.
Electronic Comments COMMISSION NW., Washington, DC 20004.
• Use the Commission’s Internet FOR FURTHER INFORMATION CONTACT:
[Release No. IA–4579; File No. 803–00237]
comment form (http://www.sec.gov/ Robert Shapiro, Senior Counsel, at (202)
rules/sro.shtml); or Robert W. Baird & Co. Incorporated; 551–7758 (Chief Counsel’s Office,
• Send an email to rule-comments@ Notice of Application Division of Investment Management) or
sec.gov. Please include File Number SR– Melissa Harke, Senior Special Counsel,
NYSE–2016–81 on the subject line. December 1, 2016. at (202) 551–6787 (Investment Adviser
Paper Comments AGENCY: Securities and Exchange Regulation Office, Division of
Commission (‘‘Commission’’). Investment Management).
• Send paper comments in triplicate SUPPLEMENTARY INFORMATION: The
ACTION: Notice of application for an
to Brent J. Fields, Secretary, Securities following is a summary of the
exemptive order under section 206A of
and Exchange Commission, 100 F Street application. The complete application
the Investment Advisers Act of 1940
NE., Washington, DC 20549–1090. may be obtained via the Commission’s
(‘‘Advisers Act’’) providing an
All submissions should refer to File exemption from the written disclosure Web site at http://www.sec.gov/rules/
Number SR–NYSE–2016–81. This file and consent requirements of section iareleases.shtml or by calling (202) 551–
number should be included on the 206(3). 8090.
subject line if email is used. To help the Applicant seeks relief from the
Commission process and review your Applicant: Robert W. Baird & Co. written disclosure and consent
comments more efficiently, please use Incorporated (‘‘Applicant’’). requirements of section 206(3) of the
only one method. The Commission will Relevant Advisers Act Sections: Advisers Act that would be similar to
post all comments on the Commission’s Exemption requested under section relief currently provided by Advisers
Internet Web site (http://www.sec.gov/ 206A from the written disclosure and Act rule 206(3)–3T (the ‘‘Rule’’), which
rules/sro.shtml). Copies of the consent requirements of section 206(3). will expire by its terms on December 31,
submission, all subsequent Summary of Application: Applicant 2016. The relief sought by Applicant, if
amendments, all written statements requests that the Commission issue an granted, would be subject to conditions
with respect to the proposed rule order under section 206A exempting it similar to those under the Rule, as well
change that are filed with the and Future Advisers (as defined below) as certain revised or additional
Commission, and all written from the written disclosure and consent conditions.
communications relating to the requirements of section 206(3) with
proposed rule change between the respect to principal transactions with Applicant’s Representations
Commission and any person, other than nondiscretionary advisory client 1. The Applicant is registered as an
those that may be withheld from the accounts. investment adviser with the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
public in accordance with the Filing Dates: The application was Commission and is a registered broker-
provisions of 5 U.S.C. 552, will be filed on October 14, 2016 and amended dealer. The Applicant is an employee-
on November 23, 2016. owned wealth management, capital
13 For purposes only of waiving the operative
Hearing or Notification of Hearing: An markets, asset management, and private
delay for this proposal, the Commission has equity firm with operations in the
considered the proposed rule’s impact on
order granting the requested relief will
efficiency, competition, and capital formation. See be issued unless the Commission orders United States, Europe, and Asia. The
15 U.S.C. 78c(f). Applicant offers a number of advisory
14 15 U.S.C. 78s(b)(2)(B). 15 17 CFR 200.30–3(a)(12). programs, including the Advisory
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![Federal Register / Vol. 81, No. 235 / Wednesday, December 7, 2016 / Notices 88311
Order, the Applicant informed the than five years, the first two years in an any comments it received on the
advisory client of the capacity in which appropriate office of the Applicant, and proposed rule change. The text of these
it may act with respect to the be available for inspection by the staff statements may be examined at the
transaction and that it received the of the Commission. places specified in Item IV below. The
advisory client’s consent (if the By the Commission. Exchange has prepared summaries, set
Applicant informs the client orally of Brent J. Fields, forth in sections A, B, and C below, of
the capacity in which it may act with the most significant aspects of such
Secretary.
respect to such transaction or obtains statements.
[FR Doc. 2016–29298 Filed 12–6–16; 8:45 am]
oral consent, such records may, for
example, include recordings of BILLING CODE 8011–01–P A. Self-Regulatory Organization’s
telephone conversations or Statement of the Purpose of, and
contemporaneous written notations); Statutory Basis for, the Proposed Rule
SECURITIES AND EXCHANGE Change
and (c) documentation sufficient to
COMMISSION
enable assessment of compliance by the 1. Purpose
Applicant with sections 206(1) and (2) [Release No. 34–79447; File No. SR–
The purpose of the proposed rule
of the Advisers Act in connection with NASDAQ–2016–163]
change is to rename related text in Rule
its reliance on this Order.3 In each case,
Self-Regulatory Organizations; The 7015 and Chapter XV, Section 3, to
such records will be maintained and
NASDAQ Stock Market LLC; Notice of more accurately reflect the services
preserved in an easily accessible place
Filing and Immediate Effectiveness of being provided and eliminate an
for a period of not less than five years,
Proposed Rule Change To Change the outdated term. Both Rule 7015 and
the first two years in an appropriate
Titles of Equities Rule 7015 and Chapter XV, Section 3, include
office of the Applicant, and be available
Options Chapter XV, Section 3, and To connectivity to services that are not
for inspection by the staff of the
Make Related Changes related to connecting to the Exchange
Commission.
11. The Applicant will adopt written trading system, such as TradeInfo,3
December 1, 2016. Specialized Services Related to FINRA/
compliance policies and procedures Pursuant to Section 19(b)(1) of the
reasonably designed to ensure, and the NASDAQ Trade Reporting Facility,4 and
Securities Exchange Act of 1934 the NASDAQ IPO Workstation.5 As a
Applicant’s chief compliance officer (‘‘Act’’),1 and Rule 19b–4 thereunder,2
will monitor, the Applicant’s consequence, the Exchange believes that
notice is hereby given that on November it is appropriate to rename the title of
compliance with the conditions of this 28, 2016, The NASDAQ Stock Market
Order. The Applicant’s chief Rule 7015 as ‘‘Ports and other Services’’
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed and rename the title of Chapter XV,
compliance officer will, on at least a with the Securities and Exchange
quarterly basis, conduct testing Section 3, as ‘‘NASDAQ Options
Commission (‘‘SEC’’ or ‘‘Commission’’) Market—Ports and other Services,’’
reasonably sufficient to verify such the proposed rule change as described
compliance. Such written policies and which the Exchange believes more
in Items I and II below, which Items accurately describe the depth and
procedures, monitoring and testing will have been prepared by the Exchange.
address, without limitation: (a) breadth of services provided to members
The Commission is publishing this under those rules.
Compliance by the Applicant with its notice to solicit comments on the
disclosure and consent requirements The Exchange is also proposing to
proposed rule change from interested amend reference to the title of Rule 7015
under this Order; (b) the integrity and persons.
operation of electronic systems in Rule 7007(a), which is titled
employed by the Applicant in I. Self-Regulatory Organization’s ‘‘Collection of Exchange Fees and Other
connection with its reliance on this Statement of the Terms of the Substance Claims and Billing Policy,’’ and is also
Order; (c) compliance by the Applicant of the Proposed Rule Change amending reference to the title of
with its recordkeeping obligations under The Exchange proposes to rename the Chapter XV, Section 3, found under
this Order; and (d) whether there is any title of rules that assess fees for Section 7(c)(2) of Chapter XV to reflect
evidence of the Applicant engaging in connectivity to systems operated by the the amended titles of Rule 7015 and
‘‘dumping’’ in connection with its Exchange or FINRA under Equities Rule Chapter XV, Section 3.
reliance on this Order.4 The Applicant’s 7015 and Options Chapter XV, Section 2. Statutory Basis
chief compliance officer will document 3, and to make related changes to other
the frequency and results of such The Exchange believes that its
rules that reference the renamed rules. proposal is consistent with Section 6(b)
monitoring and testing, and the The text of the proposed rule change
Applicant will maintain and preserve of the Act,6 in general, and furthers the
is available on the Exchange’s Web site
such documentation in an easily objectives of Section 6(b)(5) of the Act,7
at http://nasdaq.cchwallstreet.com, at
accessible place for a period of not less the principal office of the Exchange, and 3 TradeInfo is an Internet-based tool that, among
at the Commission’s Public Reference other things, allows users to view all of the
3 For example, under sections 206(1) and (2), an Room. NASDAQ order and execution information for their
adviser may not engage in any transaction on a entire firm for both equities and options through a
principal basis with a client that is not consistent II. Self-Regulatory Organization’s single interface. TradeInfo may be subscribed to
with the best interests of the client or that
subrogates the client’s interests to the adviser’s
Statement of the Purpose of, and under both Rule 7015 and Chapter XV Section 3.
Statutory Basis for, the Proposed Rule 4 Specialized Services Related to FINRA/
asabaliauskas on DSK3SPTVN1PROD with NOTICES
own. Cf. Investment Advisers Act Release No. 2106
(Jan. 31, 2003) (adopting Rule 206(4)–6). Change NASDAQ Trade Reporting Facility includes
4 See Report of the Securities and Exchange WebLink ACT or Nasdaq Workstation Post Trade,
Commission, Investment Trusts and Investment In its filing with the Commission, the and ACT Workstation. See Rule 7015(e).
5 The NASDAQ IPO Workstation provides
Companies, H.R. Doc. No. 279, 76th Cong., 2d Sess., Exchange included statements
subscribing member firms with the IPO Indicator
pt. 3, at 2581, 2589 (1939); Hearings on S.3580 concerning the purpose of and basis for service, which provides information on order
Before a Subcommittee of the Commission on the proposed rule change and discussed
Banking and Currency, 76th Cong., 3d Sess. 209, execution that would be received in an IPO during
212–23 (1940); Hearings on S. 3580 Before the the launch process.
1 15 U.S.C. 78s(b)(1). 6 15 U.S.C. 78f(b).
Subcomm. of the Comm. on Banking and Currency,
76th Cong., 3d Sess. 322 (1940). 2 17 CFR 240.19b–4. 7 15 U.S.C. 78f(b)(5).
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Document Created: 2016-12-07 05:31:35
Document Modified: 2016-12-07 05:31:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice of application for an exemptive order under section 206A of the Investment Advisers Act of 1940 (``Advisers Act'') providing an exemption from the written disclosure and consent requirements of section 206(3). | |
| Dates | The application was filed on October 14, 2016 and amended on November 23, 2016. | |
| Contact | Robert Shapiro, Senior Counsel, at (202) 551-7758 (Chief Counsel's Office, Division of Investment Management) or Melissa Harke, Senior Special Counsel, at (202) 551-6787 (Investment Adviser Regulation Office, Division of Investment Management). | |
| FR Citation | 81 FR 88308 |
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