82 FR 25492 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change To Eliminate Requirements That Will Be Duplicative of CAT
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 104 (June 1, 2017)
Federal Register Volume 82, Issue 104 (June 1, 2017)
| Page Range | 25492-25495 | |
| FR Document | 2017-11365 |
[Federal Register Volume 82, Number 104 (Thursday, June 1, 2017)] [Notices] [Pages 25492-25495] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-11365] [[Page 25492]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80789; File No. SR-BOX-2017-17] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change To Eliminate Requirements That Will Be Duplicative of CAT May 26, 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 May 15, 2017, BOX Options Exchange LLC (the ``Exchange'' or ``SRO'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rules 7120, 8060 and 10040 to the extent these rules collect information that is duplicative of the data collection requirements of the consolidated audit trail (``CAT'') adopted pursuant to the National Market System Plan Governing the Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan'').\3\ The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at http://boxexchange.com. --------------------------------------------------------------------------- \3\ Unless otherwise specified, capitalized terms used in this rule filing are defined as set forth herein, or in the CAT Compliance Rule Series or in the CAT NMS Plan. --------------------------------------------------------------------------- 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 self-regulatory organization 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 self-regulatory organization 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 Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc. (``FINRA''), Investors' Exchange LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,\4\ NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE MKT LLC, NYSE Arca, Inc. and NYSE National, Inc.\5\ (collectively, the ``Participants'') filed with the Commission, pursuant to Section 11A of the Exchange Act \6\ and Rule 608 of Regulation NMS thereunder,\7\ CAT NMS Plan.\8\ The Participants filed the Plan to comply with Rule 613 of Regulation NMS under the Exchange Act. The Plan was published for comment in the Federal Register on May 17, 2016,\9\ and approved by the Commission, as modified, on November 15, 2016.\10\ The Plan is designed to create, implement and maintain a CAT that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. Pursuant to Appendix C of the CAT NMS Plan, each Participant is required to conduct analyses of which of its existing trade and order data rules and systems require the collection of information that is duplicative of information collected for the CAT.\11\ In addition, among other things, Section C.9 of Appendix C to the Plan, as modified by the Commission, requires each Participant to ``file with the SEC the relevant rule change filing to eliminate or modify its duplicative rules within six (6) months of the SEC's approval of the CAT NMS Plan.'' \12\ The Plan notes that ``the elimination of such rules and the retirement of such systems [will] be effective at such time as CAT Data meets minimum standards of accuracy and reliability.'' \13\ --------------------------------------------------------------------------- \4\ ISE Gemini, LLC, ISE Mercury, LLC and International Securities Exchange, LLC have been renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC, and Nasdaq ISE, LLC, respectively. See Securities Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR 14547 (Mar. 21, 2017); Securities Exchange Act Rel. No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4, 2017); and Securities Exchange Act Rel. No. 80325 (Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017). \5\ National Stock Exchange, Inc. has been renamed NYSE National, Inc. See Securities Exchange Act Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3, 2017). \6\ 15 U.S.C. 78k-1. \7\ 17 CFR 242.608. \8\ See Letter from the Participants to Brent J. Fields, Secretary, Commission, dated September 30, 2014; and Letter from Participants to Brent J. Fields, Secretary, Commission, dated February 27, 2015. On December 24, 2015, the Participants submitted an amendment to the CAT NMS Plan. See Letter from Participants to Brent J. Fields, Secretary, Commission, dated December 23, 2015. \9\ Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81 FR 30614 (May 17, 2016). \10\ Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016) (``Approval Order''). \11\ Appendix C of CAT NMS Plan, Approval Order at 85010. \12\ Id. \13\ Id. --------------------------------------------------------------------------- After conducting its analysis of its rules in accordance with the CAT NMS Plan, SRO determined that certain audit trail information collected under the BOX Rules is intended to be collected by the CAT. Therefore, SRO believes that these rules may no longer be necessary once the CAT is operational. Accordingly, SRO submits this proposed rule change to amend Rules 7120, 8060 and 10040 once certain accuracy and reliability standards are met. Discussed below is a description of the duplicative rule requirements as well as the timeline for eliminating the duplicative rule. (1) Duplicative COATS Requirements The options exchanges utilize the consolidated options audit trail system (``COATS'') to collect and review data regarding options orders, quotes and transactions. The Participants have provided COATS technical specifications to the Plan Processor for the CAT for use in developing the Technical Specifications for the CAT, and the Participants are working with the Plan Processor to include the necessary COATS data elements in the CAT Technical Specifications. Accordingly, although the Technical Specifications for the CAT have not yet been finalized, SRO and the other options exchanges propose to eliminate COATS in accordance with the proposed timeline discussed below. The proposed rule change proposes to add new Interpretive Materials to Rules 7120,- [sic] 8060 and 10040 to clarify how SRO will request data under these rules after members are reporting to the CAT. Specifically, the proposed Interpretive Materials will note that SRO will request information only if the information is not available in the CAT [[Page 25493]] because, for example, the transactions in question occurred before the firm was reporting information to the CAT or involved securities that are not reportable to the CAT. In essence, under the new Interpretive Materials, SRO will make requests under these rules if and only if the information is not otherwise available through the CAT. (2) The EBS Rule The EBS Rule is SRO's rule regarding the automated submission of specific trading data to SRO upon request using the Electronic Blue Sheet (``EBS'') system. Once broker-dealer reporting to the CAT has begun, the CAT will contain the data the Participants would otherwise have requested via the EBS system for purposes of NMS Securities and OTC Equity Securities. Consequently, SRO will not need to use the EBS system or request information pursuant to the EBS Rule for NMS Securities for time periods after CAT reporting has begun if the appropriate accuracy and reliability thresholds are achieved, including an acceptable accuracy rate for customer and account information. However, the EBS Rule cannot be completely eliminated immediately upon the CAT achieving the appropriate thresholds because SRO staff may still need to request information pursuant to the EBS Rule for trading activity occurring before a member was reporting to the CAT.\14\ --------------------------------------------------------------------------- \14\ Firms are required to maintain the trade information for pre-CAT transactions in equities and options pursuant to applicable rules, such as books and records retention requirements, for the relevant time period, which is generally three or six years depending upon the record. See 17 CFR 240.17a-3(a), 240.17a-4. --------------------------------------------------------------------------- The proposed rule change proposes to add new Interpretive Material to Rule 10040 to clarify how SRO will request data under these rules after members are reporting to the CAT. Specifically, the proposed Interpretive Material will note that SRO will request information only if the information is not available in the CAT because, for example, the transactions in question occurred before the firm was reporting information to the CAT or involved securities that are not reportable to the CAT. In essence, under the new Interpretive Material, SRO will make requests under these rules if and only if the information is not otherwise available through the CAT. (3) Timeline for Elimination of Duplicative Rule The CAT NMS Plan states that the elimination of rules that are duplicative of the requirements of the CAT and the retirement of the related systems should be effective at such time as CAT Data meets minimum standards of accuracy and reliability.\15\ As discussed in more detail below, SRO and the other options exchanges believe that COATS and EBS may be retired at a date after all Industry Members are reporting to the CAT when the proposed error rate thresholds have been met, and SRO has determined that its usage of the CAT Data has not revealed material issues that have not been corrected, confirmed that the CAT includes all data necessary to allow SRO to continue to meet its surveillance obligations, and confirmed that the Plan Processor is sufficiently meeting all of its obligations under the CAT NMS Plan. --------------------------------------------------------------------------- \15\ Id. [sic]. --------------------------------------------------------------------------- SRO believes COATS and EBS should not be retired until all Participants and Industry Members that report data to COATS and EBS are reporting comparable data to the CAT. In this way, SRO will continue to have access to the necessary data to perform its regulatory duties. The CAT NMS Plan requires that a rule filing to eliminate a duplicative rule address whether ``the availability of certain data from Small Industry Members two years after the Effective Date would facilitate a more expeditious retirement of duplicative systems.'' \16\ SRO believes COATS and EBS should not be retired until all Participants and Industry Members that report data to COATS are reporting comparable data to the CAT. While the early submission of options data to the CAT by Small Industry Members could expedite the retirement of COATS, SRO believes that it premature to consider such a change and that additional analysis would be necessary to determine whether such early reporting by Small Industry Members would be feasible. --------------------------------------------------------------------------- \16\ Id. --------------------------------------------------------------------------- The CAT NMS Plan requires that this rule filing address ``whether individual Industry Members can be exempted from reporting to duplicative systems once their CAT reporting meets specified accuracy and reliability standards, including, but not limited to, ways in which establishing cross-system regulatory functionality or integrating data from existing systems and the CAT would facilitate such Individual Industry Member exemptions.'' \17\ SRO believes that a single cut-over from COATS and EBS to CAT is highly preferable to a firm-by-firm approach and is not proposing to exempt members from the COATS and EBS requirements on a firm-by-firm basis. SRO and the other options exchanges believe that providing such individual exemptions to Industry Members would be inefficient, more costly, and less reliable than the single cut-over. Providing individual exemptions would require the options exchanges to create, for a brief temporary period, a cross- system regulatory function and to integrate data from COATS and EBS and the CAT to avoid creating any regulatory gaps as a result of such exemptions. Such a function would be costly to create and would give rise to a greater likelihood of data errors or other issues. Given the limited time in which such exemptions would be necessary, SRO and the other options exchanges do not believe that such exemptions would be an appropriate use of limited resources. --------------------------------------------------------------------------- \17\ Id. --------------------------------------------------------------------------- The CAT NMS Plan also requires that a rule filing to eliminate a duplicative rule to provide ``specific accuracy and reliability standards that will determine when duplicative systems will be retired, including, but not limited to, whether the attainment of a certain Error Rate should determine when a system duplicative of the CAT can be retired.'' \18\ SRO believes that it is critical that the CAT Data be sufficiently accurate and reliable for SRO to perform the regulatory functions that it now performs via COATS and EBS. Accordingly, SRO believes that the CAT Data should meet specific quantitative error rates, as well as certain qualitative requirements. --------------------------------------------------------------------------- \18\ Id. --------------------------------------------------------------------------- SRO and the other options exchanges believe that, before COATS may be retired, the CAT would need to achieve a sustained error rate for a period of at least 180 days of 5% or lower measured on a pre-correction or as-submitted basis, and 2% or lower on a post-correction basis (measured at T+5).\19\ SRO proposes to measure the 5% pre-correction and 2% post-correction thresholds by averaging the error rate across the period, not require a 5% pre-correction and 2% post-correction maximum each day for 180 consecutive days. SRO believes that measuring each of the thresholds over the course of 180 days will ensure that the CAT consistently meets minimum accuracy and reliability thresholds while also ensuring that single-day measurements do not unduly affect the overall measurements. SRO proposes to measure the appropriate error rates in the aggregate, rather than firm-by-firm. In addition, SRO proposes to measure the error rates for options only, not [[Page 25494]] equity securities, as only options are subject to COATS. The 2% and 5% error rates are in line with the proposed retirement threshold for FINRA's Order Audit Trail System (``OATS''). --------------------------------------------------------------------------- \19\ The Plan requires that the Plan Processor must ensure that regulators have access to corrected and linked order and Customer data by 8:00 a.m. Eastern Time on T+5. See CAT NMS Plan, at C-15. --------------------------------------------------------------------------- In addition to these minimum error rates before COATS can be retired, SRO believes that during the minimum 180-day period during which the thresholds are calculated, SRO's use of the data in the CAT must confirm that (i) usage over that time period has not revealed material issues that have not been corrected, (ii) the CAT includes all data necessary to allow SRO to continue to meet its surveillance obligations, and (iii) the Plan Processor is sufficiently meeting all of its obligations under the CAT NMS Plan. SRO believes this time period to use the CAT Data is necessary to reveal any errors that may manifest themselves only after surveillance patterns and other queries have been run and to confirm that the Plan Processor is meeting its obligations and performing its functions adequately. If the Commission approves the proposed rule change, SRO will announce the date for the retirement of COATS and the implementation date of the proposed rule change in a Regulatory Circular that will be published once the options exchanges determine that the thresholds for accuracy and reliability described above have been met and that the Plan Processor is sufficiently meeting all of its obligations under the CAT NMS Plan. 2. Statutory Basis SRO believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Exchange Act,\20\ which require, among other things, that the SRO 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, and not designed to permit unfair discrimination between customers, issuers, brokers and dealer. SRO believes that this proposal is consistent with the Exchange Act because it fulfills the obligation in the CAT NMS Plan for SRO to submit a proposed rule change to eliminate or modify duplicative rules. In approving the Plan, the SEC noted that the Plan ``is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.'' \21\ As this proposal implements the Plan, SRO believes that this proposal furthers the objectives of the Plan, as identified by the SEC, and is therefore consistent with the Exchange Act. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78f(b)(5). \21\ Approval Order at 84697. --------------------------------------------------------------------------- Moreover, the purpose of the proposed rule change is to clarify how SRO will treat rules that require the submission of duplicative data to the exchange. The elimination of such duplicative requirements will reduce unnecessary costs and other compliance burdens for SRO and its members, and therefore, will enhance the efficiency of the securities markets. Furthermore, SRO believes that the approach set forth in the proposed rule change strikes the appropriate balance between ensuring that SRO is able to continue to fulfill its statutory obligation to protect investors and the public interest by ensuring its surveillance of market activity remains accurate and effective while also establishing a reasonable timeframe for elimination or modification of its rules that will be rendered duplicative after implementation of the CAT. B. Self-Regulatory Organization's Statement on Burden on Competition Section 6(b)(8) of the Exchange Act \22\ requires that SRO rules not impose any burden on competition that is not necessary or appropriate. SRO does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. SRO notes that the proposed rule change implements the requirements of the CAT NMS Plan approved by the Commission regarding the elimination of rules and systems that are duplicative the CAT, and is designed to assist SRO in meeting its regulatory obligations pursuant to the Plan. Similarly, all options exchanges are proposing the elimination of COATS and EBS and their rules related to COATS and EBS to implement the requirements of the CAT NMS Plan. Therefore, this is not a competitive rule filing and, therefore, it does not raise competition issues between and among the options exchanges and/or their members. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse 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-BOX-2017-17 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-BOX-2017-17. 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, on business days between the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE., [[Page 25495]] Washington, DC 20549. 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-BOX-2017-17 and should be submitted on or before June 22, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-11365 Filed 5-31-17; 8:45 am] BILLING CODE 8011-01-P
![25492 Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s required to conduct analyses of which
COMMISSION Statement of the Purpose of, and of its existing trade and order data rules
Statutory Basis for, the Proposed Rule and systems require the collection of
[Release No. 34–80789; File No. SR–BOX– Change information that is duplicative of
2017–17] information collected for the CAT.11 In
1. Purpose
Self-Regulatory Organizations; BOX addition, among other things, Section
Bats BYX Exchange, Inc., Bats BZX C.9 of Appendix C to the Plan, as
Options Exchange LLC; Notice of Exchange, Inc., Bats EDGA Exchange,
Filing of Proposed Rule Change To modified by the Commission, requires
Inc., Bats EDGX Exchange, Inc., BOX each Participant to ‘‘file with the SEC
Eliminate Requirements That Will Be Options Exchange LLC, C2 Options
Duplicative of CAT the relevant rule change filing to
Exchange, Incorporated, Chicago Board eliminate or modify its duplicative rules
May 26, 2017. Options Exchange, Incorporated, within six (6) months of the SEC’s
Pursuant to Section 19(b)(1) of the Chicago Stock Exchange, Inc., Financial approval of the CAT NMS Plan.’’ 12 The
Securities Exchange Act of 1934 Industry Regulatory Authority, Inc. Plan notes that ‘‘the elimination of such
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 (‘‘FINRA’’), Investors’ Exchange LLC, rules and the retirement of such systems
notice is hereby given that on May 15, Miami International Securities [will] be effective at such time as CAT
2017, BOX Options Exchange LLC (the Exchange, LLC, MIAX PEARL, LLC, Data meets minimum standards of
‘‘Exchange’’ or ‘‘SRO’’) filed with the NASDAQ BX, Inc., Nasdaq GEMX, LLC, accuracy and reliability.’’ 13
Nasdaq ISE, LLC, Nasdaq MRX, LLC,4 After conducting its analysis of its
Securities and Exchange Commission
NASDAQ PHLX LLC, The NASDAQ rules in accordance with the CAT NMS
(‘‘Commission’’) the proposed rule
Stock Market LLC, New York Stock Plan, SRO determined that certain audit
change as described in Items I, II, and
Exchange LLC, NYSE MKT LLC, NYSE trail information collected under the
III below, which Items have been
Arca, Inc. and NYSE National, Inc.5 BOX Rules is intended to be collected
prepared by the Exchange. The
(collectively, the ‘‘Participants’’) filed by the CAT. Therefore, SRO believes
Commission is publishing this notice to
with the Commission, pursuant to that these rules may no longer be
solicit comments on the proposed rule
Section 11A of the Exchange Act 6 and necessary once the CAT is operational.
change from interested persons.
Rule 608 of Regulation NMS Accordingly, SRO submits this
I. Self-Regulatory Organization’s thereunder,7 CAT NMS Plan.8 The proposed rule change to amend Rules
Statement of the Terms of Substance of Participants filed the Plan to comply 7120, 8060 and 10040 once certain
the Proposed Rule Change with Rule 613 of Regulation NMS under accuracy and reliability standards are
the Exchange Act. The Plan was met. Discussed below is a description of
The Exchange proposes to amend
published for comment in the Federal the duplicative rule requirements as
Rules 7120, 8060 and 10040 to the
Register on May 17, 2016,9 and well as the timeline for eliminating the
extent these rules collect information
approved by the Commission, as duplicative rule.
that is duplicative of the data collection
modified, on November 15, 2016.10 The
requirements of the consolidated audit (1) Duplicative COATS Requirements
Plan is designed to create, implement
trail (‘‘CAT’’) adopted pursuant to the
and maintain a CAT that would capture The options exchanges utilize the
National Market System Plan Governing
customer and order event information consolidated options audit trail system
the Consolidated Audit Trail (the ‘‘CAT
for orders in NMS Securities and OTC (‘‘COATS’’) to collect and review data
NMS Plan’’ or ‘‘Plan’’).3 The text of the Equity Securities, across all markets,
proposed rule change is available from regarding options orders, quotes and
from the time of order inception through transactions. The Participants have
the principal office of the Exchange, at routing, cancellation, modification, or
the Commission’s Public Reference provided COATS technical
execution in a single consolidated data specifications to the Plan Processor for
Room and also on the Exchange’s source. Pursuant to Appendix C of the
Internet Web site at http:// the CAT for use in developing the
CAT NMS Plan, each Participant is Technical Specifications for the CAT,
boxexchange.com.
4 ISE Gemini, LLC, ISE Mercury, LLC and
and the Participants are working with
II. Self-Regulatory Organization’s the Plan Processor to include the
International Securities Exchange, LLC have been
Statement of the Purpose of, and renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC, necessary COATS data elements in the
Statutory Basis for, the Proposed Rule and Nasdaq ISE, LLC, respectively. See Securities CAT Technical Specifications.
Change Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR Accordingly, although the Technical
14547 (Mar. 21, 2017); Securities Exchange Act Rel.
In its filing with the Commission, the No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4, Specifications for the CAT have not yet
self-regulatory organization included 2017); and Securities Exchange Act Rel. No. 80325 been finalized, SRO and the other
statements concerning the purpose of, (Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017). options exchanges propose to eliminate
5 National Stock Exchange, Inc. has been renamed
and basis for, the proposed rule change COATS in accordance with the
NYSE National, Inc. See Securities Exchange Act
and discussed any comments it received Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3, proposed timeline discussed below.
on the proposed rule change. The text 2017). The proposed rule change proposes to
of these statements may be examined at 6 15 U.S.C. 78k–1. add new Interpretive Materials to Rules
the places specified in Item IV below.
7 17 CFR 242.608. 7120,- [sic] 8060 and 10040 to clarify
The self-regulatory organization has
8 See Letter from the Participants to Brent J.
how SRO will request data under these
Fields, Secretary, Commission, dated September 30, rules after members are reporting to the
prepared summaries, set forth in 2014; and Letter from Participants to Brent J. Fields,
Sections A, B, and C below, of the most Secretary, Commission, dated February 27, 2015. CAT. Specifically, the proposed
mstockstill on DSK30JT082PROD with NOTICES
significant aspects of such statements. On December 24, 2015, the Participants submitted Interpretive Materials will note that
an amendment to the CAT NMS Plan. See Letter SRO will request information only if the
from Participants to Brent J. Fields, Secretary,
1 15U.S.C. 78s(b)(1). Commission, dated December 23, 2015.
information is not available in the CAT
2 17CFR 240.19b–4. 9 Securities Exchange Act Rel. No. 77724 (Apr.
11 Appendix C of CAT NMS Plan, Approval Order
3 Unless otherwise specified, capitalized terms 27, 2016), 81 FR 30614 (May 17, 2016).
used in this rule filing are defined as set forth 10 Securities Exchange Act Rel. No. 79318 (Nov. at 85010.
12 Id.
herein, or in the CAT Compliance Rule Series or in 15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
the CAT NMS Plan. Order’’). 13 Id.
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![Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices 25493
because, for example, the transactions in be effective at such time as CAT Data believe that providing such individual
question occurred before the firm was meets minimum standards of accuracy exemptions to Industry Members would
reporting information to the CAT or and reliability.15 As discussed in more be inefficient, more costly, and less
involved securities that are not detail below, SRO and the other options reliable than the single cut-over.
reportable to the CAT. In essence, under exchanges believe that COATS and EBS Providing individual exemptions would
the new Interpretive Materials, SRO will may be retired at a date after all Industry require the options exchanges to create,
make requests under these rules if and Members are reporting to the CAT when for a brief temporary period, a cross-
only if the information is not otherwise the proposed error rate thresholds have system regulatory function and to
available through the CAT. been met, and SRO has determined that integrate data from COATS and EBS and
its usage of the CAT Data has not the CAT to avoid creating any regulatory
(2) The EBS Rule
revealed material issues that have not gaps as a result of such exemptions.
The EBS Rule is SRO’s rule regarding been corrected, confirmed that the CAT Such a function would be costly to
the automated submission of specific includes all data necessary to allow SRO create and would give rise to a greater
trading data to SRO upon request using to continue to meet its surveillance likelihood of data errors or other issues.
the Electronic Blue Sheet (‘‘EBS’’) obligations, and confirmed that the Plan Given the limited time in which such
system. Once broker-dealer reporting to Processor is sufficiently meeting all of exemptions would be necessary, SRO
the CAT has begun, the CAT will its obligations under the CAT NMS and the other options exchanges do not
contain the data the Participants would Plan. believe that such exemptions would be
otherwise have requested via the EBS SRO believes COATS and EBS should an appropriate use of limited resources.
system for purposes of NMS Securities not be retired until all Participants and The CAT NMS Plan also requires that
and OTC Equity Securities. Industry Members that report data to a rule filing to eliminate a duplicative
Consequently, SRO will not need to use COATS and EBS are reporting rule to provide ‘‘specific accuracy and
the EBS system or request information comparable data to the CAT. In this reliability standards that will determine
pursuant to the EBS Rule for NMS way, SRO will continue to have access when duplicative systems will be
Securities for time periods after CAT to the necessary data to perform its retired, including, but not limited to,
reporting has begun if the appropriate regulatory duties. whether the attainment of a certain
accuracy and reliability thresholds are The CAT NMS Plan requires that a Error Rate should determine when a
achieved, including an acceptable rule filing to eliminate a duplicative system duplicative of the CAT can be
accuracy rate for customer and account rule address whether ‘‘the availability of retired.’’ 18 SRO believes that it is
information. However, the EBS Rule certain data from Small Industry critical that the CAT Data be sufficiently
cannot be completely eliminated Members two years after the Effective accurate and reliable for SRO to perform
immediately upon the CAT achieving Date would facilitate a more expeditious
the regulatory functions that it now
the appropriate thresholds because SRO retirement of duplicative systems.’’ 16
performs via COATS and EBS.
staff may still need to request SRO believes COATS and EBS should
Accordingly, SRO believes that the CAT
information pursuant to the EBS Rule not be retired until all Participants and
Data should meet specific quantitative
for trading activity occurring before a Industry Members that report data to
error rates, as well as certain qualitative
member was reporting to the CAT.14 COATS are reporting comparable data to
requirements.
The proposed rule change proposes to the CAT. While the early submission of
SRO and the other options exchanges
add new Interpretive Material to Rule options data to the CAT by Small
believe that, before COATS may be
10040 to clarify how SRO will request Industry Members could expedite the
retired, the CAT would need to achieve
data under these rules after members are retirement of COATS, SRO believes that
a sustained error rate for a period of at
reporting to the CAT. Specifically, the it premature to consider such a change
least 180 days of 5% or lower measured
proposed Interpretive Material will note and that additional analysis would be
on a pre-correction or as-submitted
that SRO will request information only necessary to determine whether such
basis, and 2% or lower on a post-
if the information is not available in the early reporting by Small Industry
correction basis (measured at T+5).19
CAT because, for example, the Members would be feasible.
The CAT NMS Plan requires that this SRO proposes to measure the 5% pre-
transactions in question occurred before correction and 2% post-correction
the firm was reporting information to rule filing address ‘‘whether individual
Industry Members can be exempted thresholds by averaging the error rate
the CAT or involved securities that are across the period, not require a 5% pre-
not reportable to the CAT. In essence, from reporting to duplicative systems
once their CAT reporting meets correction and 2% post-correction
under the new Interpretive Material, maximum each day for 180 consecutive
SRO will make requests under these specified accuracy and reliability
standards, including, but not limited to, days. SRO believes that measuring each
rules if and only if the information is of the thresholds over the course of 180
not otherwise available through the ways in which establishing cross-system
regulatory functionality or integrating days will ensure that the CAT
CAT. consistently meets minimum accuracy
data from existing systems and the CAT
(3) Timeline for Elimination of would facilitate such Individual and reliability thresholds while also
Duplicative Rule Industry Member exemptions.’’ 17 SRO ensuring that single-day measurements
The CAT NMS Plan states that the do not unduly affect the overall
believes that a single cut-over from
elimination of rules that are duplicative measurements. SRO proposes to
COATS and EBS to CAT is highly
of the requirements of the CAT and the measure the appropriate error rates in
preferable to a firm-by-firm approach
the aggregate, rather than firm-by-firm.
mstockstill on DSK30JT082PROD with NOTICES
retirement of the related systems should and is not proposing to exempt
In addition, SRO proposes to measure
members from the COATS and EBS
the error rates for options only, not
14 Firms are required to maintain the trade
requirements on a firm-by-firm basis.
information for pre-CAT transactions in equities SRO and the other options exchanges 18 Id.
and options pursuant to applicable rules, such as
books and records retention requirements, for the 19 The Plan requires that the Plan Processor must
15 Id. [sic].
relevant time period, which is generally three or six ensure that regulators have access to corrected and
16 Id.
years depending upon the record. See 17 CFR linked order and Customer data by 8:00 a.m.
240.17a–3(a), 240.17a–4. 17 Id. Eastern Time on T+5. See CAT NMS Plan, at C–15.
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![Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices 25495
Washington, DC 20549. Copies of such The following areas have been The National Commission may be
filing also will be available for determined to be adversely affected by contacted via email at DCUNESCO@
inspection and copying at the principal the disaster: state.gov or telephone (202) 663–2407.
office of the Exchange. All comments
Primary Counties: Adams, Calhoun, Paul Mungai,
received will be posted without change;
Carroll, Claiborne, Holmes, Jefferson, Acting Executive Director, U.S. National
the Commission does not edit personal
Montgomery, Webster, Yazoo. Commission for UNESCO, Department of
identifying information from
submissions. You should submit only The Interest Rates are: State.
information that you wish to make [FR Doc. 2017–11265 Filed 5–31–17; 8:45 am]
available publicly. All submissions Percent BILLING CODE 4710–19–P
should refer to File Number SR–BOX–
2017–17 and should be submitted on or For Physical Damage:
before June 22, 2017. Non–Profit Organizations With DEPARTMENT OF STATE
Credit Available Elsewhere ... 2.500
For the Commission, by the Division of Non–Profit Organizations With-
Trading and Markets, pursuant to delegated out Credit Available Else- [Public Notice: 10013]
authority.23 where ..................................... 2.500
Eduardo A. Aleman, For Economic Injury: Notice of Environmental Impact
Assistant Secretary. Non–Profit Organizations With- Statement; Withdrawal
[FR Doc. 2017–11365 Filed 5–31–17; 8:45 am]
out Credit Available Else-
where ..................................... 2.500 AGENCY: Department of State.
BILLING CODE 8011–01–P
ACTION: Notice of withdrawal of intent
The number assigned to this disaster to prepare an environmental impact
SMALL BUSINESS ADMINISTRATION for physical damage is 151406 and for statement.
economic injury is 151416.
[Disaster Declaration #15140 and #15141;
MISSISSIPPI Disaster #MS–00101] (Catalog of Federal Domestic Assistance SUMMARY: The U.S. Department of State
Number 59008) (Department) is withdrawing the April
Presidential Declaration of a Major James E. Rivera, 15, 2016, Federal Register Notice,
Disaster for Public Assistance Only for Associate Administrator for Disaster which announced its intent to prepare
the State of Mississippi Assistance. an Environmental Impact Statement
AGENCY: U.S. Small Business [FR Doc. 2017–11176 Filed 5–31–17; 8:45 am] (EIS), consistent with the National
Administration. BILLING CODE 8025–01–P
Environmental Policy Act (NEPA) of
ACTION: Notice. 1969 (as implemented by the Council on
Environmental Quality regulations
SUMMARY: This is a Notice of the found at 40 CFR 1500–1508), to evaluate
Presidential declaration of a major DEPARTMENT OF STATE potential impacts from the construction,
disaster for Public Assistance Only for connection, operation, and maintenance
the State of Mississippi (FEMA–4314– [Public Notice: 10014] of a proposed new 20-inch diameter
DR), dated 05/22/2017. pipeline and associated infrastructure in
Incident: Severe Storms, Tornadoes, U.S. National Commission for UNESCO North Dakota that would export crude
Straight-line Winds, and Flooding. Notice of New Date for Teleconference oil from the United States to Canada. On
Incident Period: 04/30/2017. Meeting May 16, 2017, the applicant, Upland
DATES: Effective 05/22/2017.
Pipeline, LLC, requested that the
Physical Loan Application Deadline The U.S. National Commission for Department pause its review of the
Date: 07/21/2017. UNESCO conference call that was
Economic Injury (EIDL) Loan company’s application for a Presidential
announced to occur on Friday, June 9, permit until further notice.
Application Deadline Date: 02/22/2018. 2017 from 11:00 a.m. until 12:00 p.m.
ADDRESSES: Submit completed loan Eastern Daylight Time, has been DATES: The withdrawal of the Notice of
applications to: U.S. Small Business rescheduled to Monday, June 19 from Intent published April 15, 2016 at 81 FR
Administration, Processing and 11:00 a.m. to 12:00 p.m. Eastern 22359 is effective on the date of this
Disbursement Center, 14925 Kingsport Daylight Time. This will be a single publication in the Federal Register.
Road, Fort Worth, TX 76155. issue, technical teleconference meeting
FOR FURTHER INFORMATION CONTACT: A.
ADDRESSES: Upland Project Manager,
to consider the recommendations of the
Escobar, Office of Disaster Assistance, Commission’s National Committee for Office of Environmental Quality and
U.S. Small Business Administration, the Intergovernmental Oceanographic Transboundary Issues, Room 2726, U.S.
409 3rd Street SW., Suite 6050, Commission (IOC). There will be no Department of State, 2201 C Street NW.,
Washington, DC 20416, (202) 205–6734. other items on the agenda. The Washington, DC 20520.
SUPPLEMENTARY INFORMATION: Notice is Commission will accept brief oral FOR FURTHER INFORMATION CONTACT: Jill
hereby given that as a result of the comments during a portion of this Reilly at the address listed in
President’s major disaster declaration on conference call. The public comment ADDRESSES, or by email at
05/22/2017, Private Non-Profit period will be limited to approximately
mstockstill on DSK30JT082PROD with NOTICES
UplandReview@state.gov.
organizations that provide essential 10 minutes in total, with two minutes
services of governmental nature may file allowed per speaker. For more Barton J. Putney,
disaster loan applications at the address information, or to arrange to participate Director, Office of Environmental Quality and
listed above or other locally announced in the conference call, individuals must Transboundary Issues, Department of State.
locations. make arrangements with the Executive [FR Doc. 2017–11264 Filed 5–31–17; 8:45 am]
Director of the National Commission by BILLING CODE 4710–19–P
23 17 CFR 200.30–3(a)(12). June 16, 2017.
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Document Created: 2017-06-01 03:05:13
Document Modified: 2017-06-01 03:05:13
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 25492 |
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