82 FR 16245 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Private Placement Filer Form Under FINRA Rules 5122 and 5123
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 62 (April 3, 2017)
Federal Register Volume 82, Issue 62 (April 3, 2017)
| Page Range | 16245-16247 | |
| FR Document | 2017-06442 |
[Federal Register Volume 82, Number 62 (Monday, April 3, 2017)] [Notices] [Pages 16245-16247] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-06442] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80321; File No. SR-FINRA-2017-008] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Private Placement Filer Form Under FINRA Rules 5122 and 5123 March 28, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on March 17, 2017, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as constituting a ``non- controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under the Act,\3\ which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.\4\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 17 CFR 240.19b-4(f)(6). FINRA has given the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. \4\ The text of the proposed rule change is available at the principal office of FINRA, on FINRA's Web site at http://www.finra.org, and at the Commission's Public Reference Room. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing changes to the Private Placement Filer Form (``Filer Form'') that members complete when submitting private placement filings under FINRA Rules 5122 (Private Placements of Securities Issued by Members) or 5123 (Private Placements of Securities). The proposal does not make any changes to the text of FINRA rules. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Rules 5122 and 5123 require a FINRA member to file information regarding private placements in which the member participates.\5\ When Rule 5123 became effective on December 3, 2012,\6\ FINRA required members to use the Filer Form for filings under both rules.\7\ Members submit the Filer Form and relevant offering documents to FINRA through the FINRA Firm Gateway.\8\ On July 1, 2013, FINRA amended Rule 5123 to require members to file the requisite information ``in a manner prescribed by FINRA'' and also began using an updated version of the Filer Form.\9\ The changes proposed herein would further update the version of the Filer Form that has been in use since 2013 for filings made pursuant to Rule 5122 and Rule 5123. --------------------------------------------------------------------------- \5\ Both Rules 5122 and 5123 provide exemptions from the filing requirement when certain types of securities are sold or securities are sold to certain types of investors. See Rules 5122(c) and 5123(b). \6\ See Securities Exchange Act Release No. 67157 (June 7, 2012), 77 FR 35457 (June 13, 2012) (Notice of Filing of Amendments No. 2 and No. 3 and Order Granting Accelerated Approval of File No. SR-FINRA-2011-057); Regulatory Notice 12-40 (September 2012). \7\ See Regulatory Notice 12-40 (September 2012). See also Regulatory Notice 13-26 (August 2013); Securities Exchange Act Release No. 69843 (June 25, 2013), 78 FR 39367 (July 1, 2013) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Members' Filing Obligations under FINRA Rule 5123 (Private Placements of Securities) File No. SR-FINRA-2013-026). \8\ FINRA Firm Gateway is an online compliance tool that provides consolidated access to FINRA applications and allows members to submit required filings electronically to meet their compliance and regulatory obligations. \9\ See Securities Exchange Act Release No. 69843 (June 25, 2013), 78 FR 39367 (July 1, 2013) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Members' Filing Obligations under FINRA Rule 5123 (Private Placements of Securities) File No. SR-FINRA-2013-026). --------------------------------------------------------------------------- The Filer Form has three main components: (1) The ``Participating Member Information'' section, which seeks information about the members that are selling the private placement; (2) the ``Issuer Information'' section, which captures basic information about the issuer; and (3) the ``Offering Information'' section, which seeks information about the offering. FINRA proposes changes to the Filer Form that will add, clarify and eliminate questions or other information requested in each section. Members may respond ``unknown'' for all new requests for information. Therefore, the Filer Form, as proposed to be modified, would not impose any new obligation on broker-dealers to seek out information that they do not already have. FINRA describes these proposed changes below. The Participating Member section of the Filer Form would add questions regarding whether the member making the filing (``filing member'') is the exclusive selling agent in the private placement and whether there is any affiliation between the issuer or sponsor of the private placement with any member participating in the offering upon whose behalf the filing member is submitting the Filer Form. This section would no longer require the title and email address for the contact person of the filing member or the contact name, title and telephone number for other members identified in the filing. The Issuer Information section of the Filer Form would add a question asking whether the issuer is a reporting company. This section would no longer require the filing member to enter the name, title and email address of the issuer's contact person. The Offering Information section would add questions regarding:The type of security the issuer is offering; whether the issuer raised capital within the preceding 12 months from any source (excluding loans or investments by affiliates); minimum investment amount that the issuer will accept and whether the issuer can waive that minimum; whether the filing member sold or will sell the offering to any non-accredited investors; the exemption from the Securities Act of 1933 that the issuer is relying upon; \10\ and --------------------------------------------------------------------------- \10\ FINRA notes that one of the exemptions listed on the Filer Form is Rule 505 of Regulation D. The SEC has recently repealed Rule 505, with a stated effective date of May 22, 2017, in connection with its amendments to exemptions to facilitate intrastate and regional securities offerings. See Securities Exchange Act Release No. 79161, 81 FR 83494 (November 21, 2016). FINRA will modify the Filer Form to remove the reference to Rule 505 following the effective date of the repeal of that rule. --------------------------------------------------------------------------- [[Page 16246]] for contingency offerings, whether a contingency has been met as of the date of the filing. The Offering Information section would also request the date on which the filing member first offered or sold the private placement and allow the filing member to indicate that sales have yet to commence. The Offering Information section would no longer include the requirements to provide the aggregate amount of non-commission compensation and the offering's conclusion date. This section also would no longer include the questions asking whether the member used a term sheet, whether the issuer has any independently audited financial statements and whether the issuer's directors are independent. In addition, the Offering Information section would clarify that the requirement to provide the stated or target rate of return is relevant, only if an offering document provides an actual or target rate of return to investors. Finally, this section also would clarify that the question regarding general solicitation only seeks information regarding whether the filing member or the issuer has, in fact, engaged in general solicitation in connection with the private placement at or before the time of filing. FINRA believes that these revisions will assist it in fulfilling its regulatory responsibilities by improving the information about the nature of the private placement and members' role in offering the securities. Specifically, FINRA proposes to eliminate questions or data fields that were not as useful as anticipated, clarify questions that may have raised questions with members, and add other questions that, with the benefit of experience, FINRA believes will help it better understand the issues and potential risks associated with a private placement (e.g., an offering with an unmet contingency).\11\ --------------------------------------------------------------------------- \11\ FINRA published Regulatory Notice 16-08 (February 2016) to highlight issues that FINRA has observed concerning members' compliance with SEA Rules 10b-9 and 15c2-4. --------------------------------------------------------------------------- FINRA has filed the proposed changes for immediate effectiveness. FINRA anticipates that the implementation date will be May 22, 2017. 2. Statutory Basis FINRA believes that the proposed changes to the Filer Form are consistent with the provisions of Section 15A(b)(6) of the Act,\12\ which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest, in that it will assist in FINRA's efforts to detect and prevent fraud in connection with specified private placements. In addition, the proposed changes will assist FINRA in evaluating the specified private placement activities of members and assess whether members are conducting a reasonable investigation for specified private placement offerings in which they participate. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition FINRA does not believe that the proposed changes to the Filer Form will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. FINRA notes that all members that participate in specified private placements will have to file electronically (or have another member that is participating in the specified private placement file on its behalf) a Filer Form in connection with the rules. In addition, all of the new questions proposed herein permit members to respond ``unknown.'' Because the proposed Filer Form does not impose an affirmative duty on members to obtain answers, but only requires the member to provide the information on the Filer Form if known, FINRA believes that the proposed changes present no new burden upon filing members. In light of the role of the rules and the accompanying Filer Form in assisting FINRA in its efforts to detect and prevent fraudulent and manipulative acts and practices and enhance the protection of investors, FINRA does not believe that the proposed changes will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. 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 Rule 19b- 4(f)(6) thereunder.\14\ --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A). \14\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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 necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-FINRA-2017-008 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-FINRA-2017-008. 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 [[Page 16247]] 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 FINRA. 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-FINRA-2017-008 and should be submitted on or before April 24, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-06442 Filed 3-31-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 62 / Monday, April 3, 2017 / Notices 16245
For the Commission by the Division of II. Self-Regulatory Organization’s The Filer Form has three main
Trading and Markets, pursuant to delegated Statement of the Purpose of, and components: (1) The ‘‘Participating
authority.15 Statutory Basis for, the Proposed Rule Member Information’’ section, which
Brent J. Fields, Change seeks information about the members
Secretary. that are selling the private placement;
In its filing with the Commission,
[FR Doc. 2017–06440 Filed 3–31–17; 8:45 am]
FINRA included statements concerning (2) the ‘‘Issuer Information’’ section,
BILLING CODE 8011–01–P
the purpose of and basis for the which captures basic information about
proposed rule change and discussed any the issuer; and (3) the ‘‘Offering
comments it received on the proposed Information’’ section, which seeks
SECURITIES AND EXCHANGE information about the offering. FINRA
COMMISSION rule change. The text of these statements
may be examined at the places specified proposes changes to the Filer Form that
[Release No. 34–80321; File No. SR–FINRA– in Item IV below. FINRA has prepared will add, clarify and eliminate questions
2017–008] summaries, set forth in sections A, B, or other information requested in each
and C below, of the most significant section. Members may respond
Self-Regulatory Organizations; ‘‘unknown’’ for all new requests for
aspects of such statements.
Financial Industry Regulatory information. Therefore, the Filer Form,
Authority, Inc.; Notice of Filing and A. Self-Regulatory Organization’s as proposed to be modified, would not
Immediate Effectiveness of a Proposed Statement of the Purpose of, and impose any new obligation on broker-
Rule Change Relating to the Private Statutory Basis for, the Proposed Rule dealers to seek out information that they
Placement Filer Form Under FINRA Change do not already have. FINRA describes
Rules 5122 and 5123 these proposed changes below.
1. Purpose
The Participating Member section of
March 28, 2017. Rules 5122 and 5123 require a FINRA the Filer Form would add questions
Pursuant to Section 19(b)(1) of the member to file information regarding regarding whether the member making
Securities Exchange Act of 1934 private placements in which the the filing (‘‘filing member’’) is the
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 member participates.5 When Rule 5123 exclusive selling agent in the private
notice is hereby given that on March 17, became effective on December 3, 2012,6 placement and whether there is any
2017, Financial Industry Regulatory FINRA required members to use the affiliation between the issuer or sponsor
Authority, Inc. (‘‘FINRA’’) filed with the Filer Form for filings under both rules.7 of the private placement with any
Securities and Exchange Commission Members submit the Filer Form and member participating in the offering
(‘‘SEC’’ or ‘‘Commission’’) the proposed relevant offering documents to FINRA upon whose behalf the filing member is
rule change as described in Items I, II, through the FINRA Firm Gateway.8 On submitting the Filer Form. This section
and III below, which Items have been July 1, 2013, FINRA amended Rule 5123 would no longer require the title and
prepared by FINRA. FINRA has to require members to file the requisite email address for the contact person of
designated the proposed rule change as information ‘‘in a manner prescribed by the filing member or the contact name,
constituting a ‘‘non-controversial’’ rule FINRA’’ and also began using an title and telephone number for other
change under paragraph (f)(6) of Rule updated version of the Filer Form.9 The members identified in the filing.
19b–4 under the Act,3 which renders changes proposed herein would further The Issuer Information section of the
the proposal effective upon receipt of update the version of the Filer Form that Filer Form would add a question asking
this filing by the Commission. The has been in use since 2013 for filings whether the issuer is a reporting
Commission is publishing this notice to made pursuant to Rule 5122 and Rule company. This section would no longer
solicit comments on the proposed rule 5123. require the filing member to enter the
change from interested persons.4
name, title and email address of the
I. Self-Regulatory Organization’s 5 Both Rules 5122 and 5123 provide exemptions
issuer’s contact person.
Statement of the Terms of Substance of from the filing requirement when certain types of The Offering Information section
securities are sold or securities are sold to certain
the Proposed Rule Change types of investors. See Rules 5122(c) and 5123(b). would add questions regarding:
FINRA is proposing changes to the 6 See Securities Exchange Act Release No. 67157 • The type of security the issuer is
Private Placement Filer Form (‘‘Filer (June 7, 2012), 77 FR 35457 (June 13, 2012) (Notice offering;
of Filing of Amendments No. 2 and No. 3 and Order • whether the issuer raised capital
Form’’) that members complete when Granting Accelerated Approval of File No. SR– within the preceding 12 months from
submitting private placement filings FINRA–2011–057); Regulatory Notice 12–40
(September 2012). any source (excluding loans or
under FINRA Rules 5122 (Private
7 See Regulatory Notice 12–40 (September 2012). investments by affiliates);
Placements of Securities Issued by
See also Regulatory Notice 13–26 (August 2013); • minimum investment amount that
Members) or 5123 (Private Placements Securities Exchange Act Release No. 69843 (June the issuer will accept and whether the
of Securities). The proposal does not 25, 2013), 78 FR 39367 (July 1, 2013) (Notice of
issuer can waive that minimum;
make any changes to the text of FINRA Filing and Immediate Effectiveness of a Proposed
Rule Change Relating to Members’ Filing • whether the filing member sold or
rules.
Obligations under FINRA Rule 5123 (Private will sell the offering to any non-
15 17
Placements of Securities) File No. SR–FINRA– accredited investors;
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2013–026).
8 FINRA Firm Gateway is an online compliance
• the exemption from the Securities
2 17 CFR 240.19b–4.
tool that provides consolidated access to FINRA
Act of 1933 that the issuer is relying
3 17 CFR 240.19b–4(f)(6). FINRA has given the applications and allows members to submit upon; 10 and
mstockstill on DSK3G9T082PROD with NOTICES
Commission written notice of its intent to file the required filings electronically to meet their
proposed rule change at least five business days compliance and regulatory obligations. 10 FINRA notes that one of the exemptions listed
prior to the date of filing of the proposed rule 9 See Securities Exchange Act Release No. 69843 on the Filer Form is Rule 505 of Regulation D. The
change, or such shorter time as designated by the (June 25, 2013), 78 FR 39367 (July 1, 2013) (Notice SEC has recently repealed Rule 505, with a stated
Commission. of Filing and Immediate Effectiveness of a Proposed effective date of May 22, 2017, in connection with
4 The text of the proposed rule change is available Rule Change Relating to Members’ Filing its amendments to exemptions to facilitate
at the principal office of FINRA, on FINRA’s Web Obligations under FINRA Rule 5123 (Private intrastate and regional securities offerings. See
site at http://www.finra.org, and at the Placements of Securities) File No. SR–FINRA– Securities Exchange Act Release No. 79161, 81 FR
Commission’s Public Reference Room. 2013–026). Continued
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![Federal Register / Vol. 82, No. 62 / Monday, April 3, 2017 / Notices 16247
10:00 a.m. and 3:00 p.m. Copies of such makes such a filing,2 the Commission rule change to be consistent with the
filing also will be available for must determine whether the proposed Exchange Act.
inspection and copying at the principal rule change is consistent with the
I. Description of the Proposal
office of FINRA. All comments received statutory provisions, and the rules and
will be posted without change; the regulations, that apply to national The Exchange proposes to list and
Commission does not edit personal securities exchanges.3 The Commission trade shares (‘‘Shares’’) of the SolidX
identifying information from must approve the filing if it finds that Bitcoin Trust (‘‘Trust’’) as Commodity-
submissions. You should submit only the proposed rule change is consistent Based Trust Shares under NYSE Arca
information that you wish to make with these legal requirements, and it Equities Rule 8.201.8
available publicly. must disapprove the filing if it does not The Trust would hold bitcoins as its
All submissions should refer to File make such a finding.4 primary asset,9 along with smaller
Number SR–FINRA–2017–008 and amounts of cash, and the bitcoins would
As discussed further below, the
should be submitted on or before April be in the custody of, and secured by, the
Commission is disapproving this
24, 2017. Trust’s bitcoin custodian, SolidX
proposed rule change because it does
For the Commission, by the Division of not find the proposal to be consistent Management LLC, which would also
Trading and Markets, pursuant to delegated with Section 6(b)(5) of the Exchange serve as the sponsor (‘‘Sponsor’’) of the
authority.15
Act, which requires, among other Trust.10 The Bank of New York Mellon
Eduardo A. Aleman, things, that the rules of a national would serve as the Trust’s cash
Assistant Secretary. securities exchange be designed to custodian and its administrator
[FR Doc. 2017–06442 Filed 3–31–17; 8:45 am] prevent fraudulent and manipulative (‘‘Administrator’’).11 According to the
BILLING CODE 8011–01–P acts and practices and to protect Exchange, the Sponsor has arranged for
investors and the public interest.5 The insurance coverage to protect investors
Commission believes that, in order to against loss or theft of the Trust’s
SECURITIES AND EXCHANGE meet this standard, an exchange that bitcoins.12
COMMISSION lists and trades shares of commodity- The investment objective of the Trust
trust exchange-traded products (‘‘ETPs’’) would be for the Shares to track the
[Release No. 34–80319; File No. SR–
NYSEArca–2016–101] must, in addition to other applicable price of bitcoins as measured by the
requirements, satisfy two requirements TradeBlock XBX Index (‘‘XBX
Self-Regulatory Organizations; NYSE that are dispositive in this matter.6 First, Index’’).13 The XBX Index is licensed by
Arca, Inc.; Order Disapproving a the exchange must have surveillance- the Sponsor from Schvey, Inc., d/b/a
Proposed Rule Change, as Modified by sharing agreements with significant TradeBlock, the index sponsor and
Amendment No. 1, Relating to the markets for trading the underlying calculation agent.14 As of January 15,
Listing and Trading of Shares of the commodity or derivatives on that
SolidX Bitcoin Trust Under NYSE Arca commodity. And second, those markets
8 See NYSE Arca Equities Rule 8.201 (permitting
Equities Rule 8.201 the listing and trading of ‘‘Commodity-Based Trust
must be regulated.7 Shares,’’ defined as a security (a) that is issued by
March 28, 2017. Based on the record before it, the a trust that holds a specified commodity deposited
with the trust; (b) that is issued by the trust in a
NYSE Arca (‘‘Exchange’’ or ‘‘NYSE Commission believes that the significant specified aggregate minimum number in return for
Arca’’) has filed a proposed rule change markets for bitcoin are unregulated. a deposit of a quantity of the underlying
to list and trade shares of the SolidX Therefore, as the Exchange has not commodity; and (c) that, when aggregated in the
Bitcoin Trust.1 When an exchange entered into, and would currently be same specified minimum number, may be
redeemed at a holder’s request by the trust, which
unable to enter into, the type of will deliver to the redeeming holder the quantity of
15 17 CFR 200.30–3(a)(12). surveillance-sharing agreement that has the underlying commodity). Other national
1 The Exchange filed the proposed rule change on been in place with respect to all securities exchanges that list and trade shares of
July 13, 2016, and the Commission published notice commodity-trust ETPs have similar rules. See, e.g.,
of the proposed rule change in the Federal Register
previously approved commodity-trust
BZX Rule 14.11(e)(4)(C) (permitting the listing and
on August 2, 2016. See Exchange Act Release No. ETPs—agreements that help address trading of Commodity-Based Trust Shares) and
78426 (July 27, 2016), 81 FR 50763 (Aug. 2, 2016) concerns about the potential for Nasdaq Rule 5711(d) (permitting the listing and
(‘‘Notice’’). On September 6, 2016, the Commission fraudulent or manipulative acts and trading of Commodity-Based Trust Shares).
designated a longer period within which to act on Commodity-trust ETPs differ from exchange-traded
the proposed rule change. See Exchange Act
practices in this market—the
funds (ETFs) in a number of ways, including that
Release No. 78770 (Sept. 6, 2016), 81 FR 62780 Commission does not find the proposed they hold as an asset a single commodity, rather
(Sept. 12, 2016). On October 27, 2016, the than a portfolio of multiple securities, and that they
Commission instituted proceedings under Section 2 Such filings are made under Section 19(b)(1) of are not regulated under the Investment Company
19(b)(2)(B) of the Securities Exchange Act of 1934 the Exchange Act, 15 U.S.C. 78s(b)(1), and Act of 1940.
(‘‘Exchange Act’’), 15 U.S.C. 78s(b)(2)(B), to Exchange Act Rule 19b–4, 17 CFR 240.19b–4. 9 According to the Exchange, bitcoin is ‘‘an asset
determine whether to approve or disapprove the 3 See Exchange Act Section 19(b)(2)(C), 15 U.S.C. that can be transferred among parties via the
proposed rule change. See Exchange Act Release Internet, but without the use of a central
78s(b)(2)(C).
No. 79171 (Oct. 27, 2016), 81 FR 76400 (Nov. 2, 4 See id. administrator or clearing agency.’’ Amendment No.
2016) (‘‘Order Instituting Proceedings’’). On January 1, supra note 1, 82 FR at 12254 n.14. The Exchange
5 15 U.S.C. 78f(b)(5).
3, 2017, the Commission designated a longer period also states that ‘‘[t]he Bitcoin Network (i.e., the
6 This approach is consistent with standards the
for Commission action on the proposed rule change. network of computers running the software protocol
See Exchange Act Release No. 79726 (Jan. 3, 2017), Commission has applied to previous commodity-
underlying bitcoin involved in maintaining the
82 FR 2426 (Jan. 9, 2017) (designating March 30, trust ETPs as well as the Commission’s recent
database of bitcoin ownership and facilitating the
2017, as the date by which the Commission must action disapproving the proposed rule change of
transfer of bitcoin among parties) and the asset,
either approve or disapprove the proposed rule Bats BZX Exchange to list and trade shares issued
mstockstill on DSK3G9T082PROD with NOTICES
bitcoin, are intrinsically linked and inseparable.’’
change). On February 15, 2017, the Exchange filed by the Winklevoss Bitcoin Trust. See, e.g., Exchange
Id. at 12255. For the purpose of considering this
Amendment No. 1 to the proposed rule change, Act Release No. 80206 (Mar. 10, 2017), 82 FR
proposal, this order describes bitcoin as a ‘‘digital
amending and replacing the original filing in its 14076, 14077 n.6 (Mar. 16, 2017) (‘‘Bats BZX
asset’’ and a ‘‘commodity.’’
entirety, and Amendment No. 1 was published for Order’’). 10 See id. at 12254.
comment in the Federal Register on March 1, 2017, 7 As discussed below, infra notes 125–126 and
11 See id.
with a 15-day comment period that ended on March accompanying text, the significant markets relating
12 See id. at 12261.
16, 2017. See Exchange Act Release No. 80099 (Feb. to the commodity-trust ETPs approved to date have
13 See id. at 12255.
24, 2017), 82 FR 12253 (Mar. 1, 2017) been well-established regulated futures markets for
(‘‘Amendment No. 1’’). the underlying commodity. 14 See id. at 12257.
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Document Created: 2017-04-01 09:36:30
Document Modified: 2017-04-01 09:36:30
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| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 82 FR 16245 |
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