82 FR 26529 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Adopt Rule 4.17, Consolidated Audit Trail-Fee Dispute Resolution

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 108 (June 7, 2017)

Page Range		26529-26532
FR Document		2017-11744
Federal Register, Volume 82 Issue 108 (Wednesday, June 7, 2017)
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26529-26532]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11744]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80833; File No. SR-BatsEDGX-2017-24]


Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice 
of Filing of a Proposed Rule Change To Adopt Rule 4.17, Consolidated 
Audit Trail--Fee Dispute Resolution

June 1, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on May 23, 2017, Bats EDGX Exchange, Inc. 
(the ``Exchange'' or ``EDGX'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to adopt Rule 4.17 (Consolidated 
Audit Trail--Fee Dispute Resolution) to establish the procedures for 
resolving potential disputes related to CAT Fees charged to Industry 
Members.\3\
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    \3\ Unless otherwise specified, capitalized terms used in this 
rule filing are defined as set forth herein, or in the Consolidated 
Audit Trail Funding Fees Rule, the CAT Compliance Rule Series or in 
the CAT NMS Plan.
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    The text of the proposed rule change is available at the Exchange's 
Web site at www.bats.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

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

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

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

1. Purpose
    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\ the National Market System Plan Governing the 
Consolidated Audit Trail (the ``CAT NMS Plan'' or ``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 consolidated audit trail (``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. The Plan accomplishes 
this by creating CAT NMS, LLC (the ``Company''), of which each 
Participant is a member, to operate the CAT.\11\ Under the CAT NMS 
Plan, the Operating Committee of the Company (``Operating Committee'') 
has discretion to establish funding for the Company to operate the CAT, 
including establishing fees that the Participants will pay, and 
establishing fees for Industry Members that will be implemented by the 
Participants (``CAT Fees'').\12\ The Participants are required to file 
with the SEC under Section 19(b) of the Exchange Act any such CAT Fees 
applicable to Industry Members that the Operating Committee 
approves.\13\ Accordingly, the Exchange has filed a proposed rule 
change with the SEC to adopt the Consolidated Audit Trail Funding Fees, 
which will require Industry Members that are Members of the Exchange to 
pay the CAT Fees

[[Page 26530]]

determined by the Operating Committee.\14\ The Exchange submits this 
rule filing to adopt Rule 4.17 (Consolidated Audit Trail--Fee Dispute 
Resolution) to establish the procedures for resolving potential 
disputes related to CAT Fees charged to Industry Members. Proposed Rule 
4.17 is described below.
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    \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\ The Plan also serves as the limited liability company 
agreement for the Company.
    \12\ Section 11.1(b) of the CAT NMS Plan.
    \13\ Id.
    \14\ See Securities Exchange Act Release No. 80256 (March 15, 
2017), 82 FR 10101 (March 21, 2017) (SR-BatsEDGX-2017-08) [sic].
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(1) Definitions
    Paragraph (a) of Proposed Rule 4.17 sets forth the definitions for 
Proposed Rule 4.17. Paragraph (a)(1) of Proposed Rule 4.17 states that, 
for purposes of Rule 4.17, the terms ``CAT NMS Plan'', ``Industry 
Member'', ``Operating Committee'', and ``Participant'' are defined as 
set forth in the Rule 4.5 (Consolidated Audit Trail--Definitions), and 
the term ``CAT Fee'' is defined as set forth in the Consolidated Audit 
Trail Funding Fees. In addition, the Exchange proposes to add paragraph 
(a)(2) to Proposed Rule 4.17. New paragraph (a)(2) would define the 
term ``Subcommittee'' to mean a subcommittee designated by the 
Operating Committee pursuant to the CAT NMS Plan. This definition is 
the same substantive definition as set forth in Section 1.1 of the CAT 
NMS Plan.
(2) Fee Dispute Resolution
    Section 11.5 of the CAT NMS Plan requires Participants to adopt 
rules requiring that disputes with respect to fees charged to Industry 
Members pursuant to the CAT NMS Plan be determined by the Operating 
Committee or Subcommittee. Section 11.5 of the CAT NMS Plan also states 
that decisions by the Operating Committee or Subcommittee on such 
matters shall be binding on Industry Members, without prejudice to the 
right of any Industry Member to seek redress from the SEC pursuant to 
SEC Rule 608 or in any other appropriate forum. The Exchange proposes 
to adopt paragraph (b) of Proposed Rule 4.17. Paragraph (b) of Proposed 
Rule 4.17 states that disputes initiated by an Industry Member with 
respect to CAT Fees charged to such Industry Member pursuant to the 
Consolidated Audit Trail Funding Fees, including disputes related to 
the designated tier and the fee calculated pursuant to such tier, shall 
be resolved by the Operating Committee, or a Subcommittee designated by 
the Operating Committee, of the CAT NMS Plan, pursuant to the Fee 
Dispute Resolution Procedures adopted pursuant to the CAT NMS Plan and 
set forth in paragraph (c) of Proposed Rule 4.17. Decisions on such 
matters shall be binding on Industry Members, without prejudice to the 
rights of any such Industry Member to seek redress from the SEC or in 
any other appropriate forum.
    The Operating Committee has adopted ``Fee Dispute Resolution 
Procedures'' governing the manner in which disputes regarding CAT Fees 
charged pursuant to the Consolidated Audit Trail Funding Fees will be 
addressed. These Fee Dispute Resolution Procedures, as they relate to 
Industry Members, are set forth in paragraph (c) of Proposed Rule 4.17. 
Specifically, the Fee Dispute Resolution Procedures provide the 
procedure for Industry Members that dispute CAT Fees charged to such 
Industry Member pursuant to one or more of the Participants' 
Consolidated Audit Trail Funding Fees Rules, including disputes related 
to the designated tier and the fee calculated pursuant to such tier, to 
apply for an opportunity to be heard and to have the CAT Fees charged 
to such Industry Member reviewed. The Procedures are modeled after the 
adverse action procedures adopted by various exchanges,\15\ and will be 
posted on the Web site for the CAT NMS Plan Web site.\16\
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    \15\ See, e.g., Chapter X of Bats EDGX Exchange, Inc. (Adverse 
Action); and Chapter X of NYSE National, Inc. (Adverse Action).
    \16\ The CAT NMS Plan Web site is www.catnmsplan.com.
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    Under these Procedures, an Industry Member that disputes CAT Fees 
charged to such Industry Member and that desires to have an opportunity 
to be heard with respect to such disputed CAT Fees must file a written 
application with the Company within 15 business days after being 
notified of such disputed CAT Fees. The application must identify the 
disputed CAT Fees, state the specific reasons why the applicant takes 
exception to such CAT Fees, and set forth the relief sought. In 
addition, if the applicant intends to submit any additional documents, 
statements, arguments or other material in support of the application, 
the same should be so stated and identified.
    The Company will refer applications for hearing and review promptly 
to the Subcommittee designated by the Operating Committee pursuant to 
Section 4.12 of the CAT NMS Plan with responsibility for conducting the 
reviews of CAT Fee disputes pursuant to these Procedures. This 
Subcommittee will be referred to as the Fee Review Subcommittee. The 
members of the Fee Review Subcommittee will be subject to the 
provisions of Section 4.3(d) of the CAT NMS Plan regarding recusal and 
Conflicts of Interest. The Fee Review Subcommittee will keep a record 
of the proceedings.
    The Fee Review Subcommittee will hold hearings promptly. The Fee 
Review Subcommittee will set a hearing date. The parties to the hearing 
shall furnish the Fee Review Subcommittee with all materials relevant 
to the proceedings at least 72 hours prior to the date of the hearing. 
Each party will have the right to inspect and copy the other party's 
materials prior to the hearing.
    The parties to the hearing will consist of the applicant and a 
representative of the Company who shall present the reasons for the 
action taken by the Company that allegedly aggrieved the applicant. The 
applicant is entitled to be accompanied, represented and advised by 
counsel at all stages of the proceedings.
    The Fee Review Subcommittee will determine all questions concerning 
the admissibility of evidence and will otherwise regulate the conduct 
of the hearing. Each of the parties will be permitted to make an 
opening statement, present witnesses and documentary evidence, cross 
examine opposing witnesses and present closing arguments orally or in 
writing as determined by the Fee Review Subcommittee. The Fee Review 
Subcommittee also will have the right to question all parties and 
witnesses to the proceeding. The Fee Review Subcommittee must keep a 
record of the hearing. The formal rules of evidence will not apply.
    The Fee Review Subcommittee must set forth its decision in writing 
and send the written decision to the parties to the proceeding. Such 
decisions will contain the reasons supporting the conclusions of the 
Fee Review Subcommittee.
    The decision of the Fee Review Subcommittee will be subject to 
review by the Operating Committee either on its own motion within 20 
business days after issuance of the decision or upon written request 
submitted by the applicant within 15 business days after issuance of 
the decision. The applicant's petition must be in writing and must 
specify the findings and conclusions to which the applicant objects, 
together with the reasons for such objections. Any objection to a 
decision not specified in writing will be considered to have been 
abandoned and may be disregarded. Parties may petition to submit a 
written argument to the Operating Committee and may request an 
opportunity to make an oral argument before the Operating

[[Page 26531]]

Committee. The Operating Committee will have sole discretion to grant 
or deny either request.
    The Operating Committee will conduct the review. The review will be 
made upon the record and will be made after such further proceedings, 
if any, as the Operating Committee may order. Based upon such record, 
the Operating Committee may affirm, reverse or modify, in whole or in 
part, the decision of the Fee Review Subcommittee. The decision of the 
Operating Committee will be in writing, will be sent to the parties to 
the proceeding and will be final.
    The Procedures state that a final decision regarding the disputed 
CAT Fees by the Operating Committee, or the Fee Review Subcommittee (if 
there is no review by the Operating Committee), must be provided within 
90 days of the date on which the Industry Member filed a written 
application regarding disputed CAT Fees with the Company. The Operating 
Committee may extend the 90-day time limit at its discretion.
    In addition, the Procedures state that any notices or other 
documents may be served upon the applicant either personally or by 
leaving the same at its, his or her place of business or by deposit in 
the United States post office, postage prepaid, by registered or 
certified mail, addressed to the applicant at its, his or her last 
known business or residence address. The Procedures also state that any 
time limits imposed under the Procedures for the submission of answers, 
petitions or other materials may be extended by permission of the 
Operating Committee. All papers and documents relating to review by the 
Fee Review Subcommittee or the Operating Committee must be submitted to 
the Fee Review Subcommittee or Operating Committee, as applicable.
    The Procedures also note that decisions on such CAT Fee disputes 
made pursuant to these Procedures will be binding on Industry Members, 
without prejudice to the rights of any such Industry Member to seek 
redress from the SEC or in any other appropriate forum.
    Finally, an Industry Member that files a written application with 
the Company regarding disputed CAT Fees in accordance with these 
Procedures is not required to pay such disputed CAT Fees until the 
dispute is resolved in accordance with these Procedures, including any 
review by the SEC or in any other appropriate forum. For these 
purposes, the disputed CAT Fees means the amount of the invoiced CAT 
Fees that the Industry Member has asserted pursuant to these Procedures 
that such Industry Member does not owe to the Company. The Industry 
Member must pay any invoiced CAT Fees that are not disputed CAT Fees 
when due as set forth in the original invoice.
    Once the dispute regarding CAT Fees is resolved pursuant to these 
Procedures, if it is determined that the Industry Member owes any of 
the disputed CAT Fees, then the Industry Member must pay such disputed 
CAT Fees that are owed as well as interest on such disputed CAT Fees 
from the original due date (that is, 30 days after receipt of the 
original invoice of such CAT Fees) until such disputed CAT Fees are 
paid at a per annum rate equal to the lesser of (i) the Prime Rate plus 
300 basis points, or (ii) the maximum rate permitted by applicable law.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b)(5) of the Act,\17\ which require, 
among other things, that Exchange 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, and 
Section 15A(b)(5) [sic] of the Act,\18\ which requires that Exchange 
rules provide for the equitable allocation of reasonable dues, fees, 
and other charges among members and issuers and other persons using its 
facilities.
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    \17\ 15 U.S.C. 78f(b)(5).
    \18\ 15 U.S.C. 78o-3(b)(5) [sic].
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    The Exchange believes that this proposal is consistent with the Act 
because it implements, interprets or clarifies Section 11.5 of the 
Plan, and is designed to assist the Exchange and its Industry Members 
in meeting regulatory obligations pursuant to the Plan. 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.'' \19\ To the extent that this 
proposal implements, interprets or clarifies the Plan and applies 
specific requirements to Industry Members, the Exchange believes that 
this proposal furthers the objectives of the Plan, as identified by the 
SEC, and is therefore consistent with the Act.
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    \19\ Approval Order at 84697.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 6(b)(8) of the Act \20\ require [sic] that Exchange rules 
not impose any burden on competition that is not necessary or 
appropriate. The Exchange 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 Act. The Exchange 
notes that the proposed rule change implements Section 11.5 of the CAT 
NMS Plan approved by the Commission, and is designed to assist the 
Exchange in meeting its regulatory obligations pursuant to the Plan. 
Similarly, all national securities exchanges and FINRA are proposing 
this proposed rule 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 exchanges and 
FINRA.
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    \20\ 15 U.S.C. 78f(b)(8).
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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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or

[[Page 26532]]

     Send an email to [email protected]. Please include 
File Number SR-BatsEDGX-2017-24 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-BatsEDGX-2017-24. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BatsEDGX-2017-24, and should 
be submitted on or before June 28, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11744 Filed 6-6-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 26529

rules/sro.shtml). Copies of the comments on the proposed rule change Arca, Inc. and NYSE National, Inc.5
submission, all subsequent from interested persons. (collectively, the ‘‘Participants’’) filed
amendments, all written statements with the Commission, pursuant to
I. Self-Regulatory Organization’s
with respect to the proposed rule Section 11A of the Exchange Act 6 and
Statement of the Terms of Substance of
change that are filed with the Rule 608 of Regulation NMS
the Proposed Rule Change
Commission, and all written thereunder,7 the National Market
communications relating to the The Exchange filed a proposal to System Plan Governing the
proposed rule change between the adopt Rule 4.17 (Consolidated Audit Consolidated Audit Trail (the ‘‘CAT
Commission and any person, other than Trail—Fee Dispute Resolution) to NMS Plan’’ or ‘‘Plan’’).8 The
those that may be withheld from the establish the procedures for resolving Participants filed the Plan to comply
public in accordance with the potential disputes related to CAT Fees with Rule 613 of Regulation NMS under
provisions of 5 U.S.C. 552, will be charged to Industry Members.3 the Exchange Act. The Plan was
available for Web site viewing and The text of the proposed rule change published for comment in the Federal
printing in the Commission’s Public is available at the Exchange’s Web site Register on May 17, 2016,9 and
Reference Room, 100 F Street NE., at www.bats.com, at the principal office approved by the Commission, as
Washington, DC 20549, on official of the Exchange, and at the modified, on November 15, 2016.10 The
business days between the hours of Commission’s Public Reference Room. Plan is designed to create, implement
10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s and maintain a consolidated audit trail
filing also will be available for Statement of the Purpose of, and (‘‘CAT’’) that would capture customer
inspection and copying at the principal Statutory Basis for, the Proposed Rule and order event information for orders
office of the Exchange. All comments Change in NMS Securities and OTC Equity
received will be posted without change; Securities, across all markets, from the
In its filing with the Commission, the time of order inception through routing,
the Commission does not edit personal
Exchange included statements cancellation, modification, or execution
identifying information from
concerning the purpose of and basis for in a single consolidated data source.
submissions. You should submit only
the proposed rule change and discussed The Plan accomplishes this by creating
information that you wish to make
any comments it received on the CAT NMS, LLC (the ‘‘Company’’), of
available publicly. All submissions
proposed rule change. The text of these which each Participant is a member, to
should refer to File Number SR–MIAX–
statements may be examined at the operate the CAT.11 Under the CAT NMS
2017–24, and should be submitted on or
places specified in Item IV below. The Plan, the Operating Committee of the
before June 28, 2017.
Exchange has prepared summaries, set Company (‘‘Operating Committee’’) has
For the Commission, by the Division of forth in Sections A, B, and C below, of
Trading and Markets, pursuant to delegated discretion to establish funding for the
the most significant parts of such Company to operate the CAT, including
authority.21 statements.
Eduardo A. Aleman, establishing fees that the Participants
A. Self-Regulatory Organization’s will pay, and establishing fees for
Assistant Secretary.
Statement of the Purpose of, and Industry Members that will be
[FR Doc. 2017–11748 Filed 6–6–17; 8:45 am]
Statutory Basis for, the Proposed Rule implemented by the Participants (‘‘CAT
BILLING CODE 8011–01–P
Change Fees’’).12 The Participants are required
to file with the SEC under Section 19(b)
1. Purpose of the Exchange Act any such CAT Fees
SECURITIES AND EXCHANGE Bats BYX Exchange, Inc., Bats BZX applicable to Industry Members that the
COMMISSION Exchange, Inc., Bats EDGA Exchange, Operating Committee approves.13
[Release No. 34–80833; File No. SR– Inc., Bats EDGX Exchange, Inc., BOX Accordingly, the Exchange has filed a
BatsEDGX–2017–24] Options Exchange LLC, C2 Options proposed rule change with the SEC to
Exchange, Incorporated, Chicago Board adopt the Consolidated Audit Trail
Self-Regulatory Organizations; Bats Options Exchange, Incorporated, Funding Fees, which will require
EDGX Exchange, Inc.; Notice of Filing Chicago Stock Exchange, Inc., Financial Industry Members that are Members of
of a Proposed Rule Change To Adopt Industry Regulatory Authority, Inc. the Exchange to pay the CAT Fees
Rule 4.17, Consolidated Audit Trail— (‘‘FINRA’’), Investors’ Exchange LLC,
Fee Dispute Resolution Miami International Securities 5 National Stock Exchange, Inc. has been renamed

Exchange, LLC, MIAX PEARL, LLC, NYSE National, Inc. See Securities Exchange Act
June 1, 2017. Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3,
NASDAQ BX, Inc., Nasdaq GEMX, LLC,
Pursuant to Section 19(b)(1) of the Nasdaq ISE, LLC, Nasdaq MRX, LLC,4
2017).
6 15 U.S.C. 78k–1.
Securities Exchange Act of 1934 (the NASDAQ PHLX LLC, The NASDAQ 7 17 CFR 242.608.
‘‘Act’’ or ‘‘Exchange Act’’),1 and Rule Stock Market LLC, New York Stock 8 See Letter from the Participants to Brent J.
19b–4 thereunder,2 notice is hereby Exchange LLC, NYSE MKT LLC, NYSE Fields, Secretary, Commission, dated September 30,
given that on May 23, 2017, Bats EDGX 2014; and Letter from Participants to Brent J. Fields,
Exchange, Inc. (the ‘‘Exchange’’ or 3 Unless otherwise specified, capitalized terms Secretary, Commission, dated February 27, 2015.
‘‘EDGX’’) filed with the Securities and On December 24, 2015, the Participants submitted
used in this rule filing are defined as set forth
an amendment to the CAT NMS Plan. See Letter
Exchange Commission (‘‘Commission’’ herein, or in the Consolidated Audit Trail Funding
from Participants to Brent J. Fields, Secretary,
or ‘‘SEC’’) the proposed rule change as Fees Rule, the CAT Compliance Rule Series or in
Commission, dated December 23, 2015.
the CAT NMS Plan.
sradovich on DSK3GMQ082PROD with NOTICES

described in Items I and II below, which 4 ISE Gemini, LLC, ISE Mercury, LLC and
9 Securities Exchange Act Rel. No. 77724 (Apr.

Items have been prepared by the International Securities Exchange, LLC have been
27, 2016), 81 FR 30614 (May 17, 2016).
10 Securities Exchange Act Rel. No. 79318 (Nov.
Exchange. The Commission is renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
publishing this notice to solicit and Nasdaq ISE, LLC, respectively. See Securities
Order’’).
Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR
11 The Plan also serves as the limited liability
14547 (Mar. 21, 2017); Securities Exchange Act Rel.
21 17 CFR 200.30–3(a)(12). company agreement for the Company.
No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4,
1 15 U.S.C. 78s(b)(1). 12 Section 11.1(b) of the CAT NMS Plan.
2017); and Securities Exchange Act Rel. No. 80325
2 17 CFR 240.19b–4. (Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017). 13 Id.

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26530 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices

determined by the Operating forth in paragraph (c) of Proposed Rule the provisions of Section 4.3(d) of the
Committee.14 The Exchange submits 4.17. Decisions on such matters shall be CAT NMS Plan regarding recusal and
this rule filing to adopt Rule 4.17 binding on Industry Members, without Conflicts of Interest. The Fee Review
(Consolidated Audit Trail—Fee Dispute prejudice to the rights of any such Subcommittee will keep a record of the
Resolution) to establish the procedures Industry Member to seek redress from proceedings.
for resolving potential disputes related the SEC or in any other appropriate The Fee Review Subcommittee will
to CAT Fees charged to Industry forum. hold hearings promptly. The Fee
Members. Proposed Rule 4.17 is The Operating Committee has Review Subcommittee will set a hearing
described below. adopted ‘‘Fee Dispute Resolution date. The parties to the hearing shall
Procedures’’ governing the manner in furnish the Fee Review Subcommittee
(1) Definitions with all materials relevant to the
which disputes regarding CAT Fees
Paragraph (a) of Proposed Rule 4.17 charged pursuant to the Consolidated proceedings at least 72 hours prior to
sets forth the definitions for Proposed Audit Trail Funding Fees will be the date of the hearing. Each party will
Rule 4.17. Paragraph (a)(1) of Proposed addressed. These Fee Dispute have the right to inspect and copy the
Rule 4.17 states that, for purposes of Resolution Procedures, as they relate to other party’s materials prior to the
Rule 4.17, the terms ‘‘CAT NMS Plan’’, Industry Members, are set forth in hearing.
‘‘Industry Member’’, ‘‘Operating paragraph (c) of Proposed Rule 4.17. The parties to the hearing will consist
Committee’’, and ‘‘Participant’’ are Specifically, the Fee Dispute Resolution of the applicant and a representative of
defined as set forth in the Rule 4.5 Procedures provide the procedure for the Company who shall present the
(Consolidated Audit Trail—Definitions), Industry Members that dispute CAT reasons for the action taken by the
and the term ‘‘CAT Fee’’ is defined as Fees charged to such Industry Member Company that allegedly aggrieved the
set forth in the Consolidated Audit Trail pursuant to one or more of the applicant. The applicant is entitled to be
Funding Fees. In addition, the Exchange Participants’ Consolidated Audit Trail accompanied, represented and advised
proposes to add paragraph (a)(2) to Funding Fees Rules, including disputes by counsel at all stages of the
Proposed Rule 4.17. New paragraph related to the designated tier and the fee proceedings.
(a)(2) would define the term The Fee Review Subcommittee will
calculated pursuant to such tier, to
‘‘Subcommittee’’ to mean a determine all questions concerning the
apply for an opportunity to be heard
subcommittee designated by the admissibility of evidence and will
and to have the CAT Fees charged to
Operating Committee pursuant to the otherwise regulate the conduct of the
such Industry Member reviewed. The
CAT NMS Plan. This definition is the hearing. Each of the parties will be
Procedures are modeled after the
same substantive definition as set forth permitted to make an opening
adverse action procedures adopted by
in Section 1.1 of the CAT NMS Plan. statement, present witnesses and
various exchanges,15 and will be posted
documentary evidence, cross examine
(2) Fee Dispute Resolution on the Web site for the CAT NMS Plan
opposing witnesses and present closing
Web site.16 arguments orally or in writing as
Section 11.5 of the CAT NMS Plan Under these Procedures, an Industry
requires Participants to adopt rules determined by the Fee Review
Member that disputes CAT Fees charged Subcommittee. The Fee Review
requiring that disputes with respect to to such Industry Member and that
fees charged to Industry Members Subcommittee also will have the right to
desires to have an opportunity to be question all parties and witnesses to the
pursuant to the CAT NMS Plan be heard with respect to such disputed
determined by the Operating Committee proceeding. The Fee Review
CAT Fees must file a written application Subcommittee must keep a record of the
or Subcommittee. Section 11.5 of the with the Company within 15 business
CAT NMS Plan also states that decisions hearing. The formal rules of evidence
days after being notified of such will not apply.
by the Operating Committee or disputed CAT Fees. The application
Subcommittee on such matters shall be The Fee Review Subcommittee must
must identify the disputed CAT Fees, set forth its decision in writing and send
binding on Industry Members, without state the specific reasons why the
prejudice to the right of any Industry the written decision to the parties to the
applicant takes exception to such CAT proceeding. Such decisions will contain
Member to seek redress from the SEC Fees, and set forth the relief sought. In
pursuant to SEC Rule 608 or in any the reasons supporting the conclusions
addition, if the applicant intends to of the Fee Review Subcommittee.
other appropriate forum. The Exchange submit any additional documents, The decision of the Fee Review
proposes to adopt paragraph (b) of statements, arguments or other material Subcommittee will be subject to review
Proposed Rule 4.17. Paragraph (b) of in support of the application, the same by the Operating Committee either on
Proposed Rule 4.17 states that disputes should be so stated and identified. its own motion within 20 business days
initiated by an Industry Member with The Company will refer applications after issuance of the decision or upon
respect to CAT Fees charged to such for hearing and review promptly to the written request submitted by the
Industry Member pursuant to the Subcommittee designated by the applicant within 15 business days after
Consolidated Audit Trail Funding Fees, Operating Committee pursuant to issuance of the decision. The applicant’s
including disputes related to the Section 4.12 of the CAT NMS Plan with petition must be in writing and must
designated tier and the fee calculated responsibility for conducting the specify the findings and conclusions to
pursuant to such tier, shall be resolved reviews of CAT Fee disputes pursuant which the applicant objects, together
by the Operating Committee, or a to these Procedures. This Subcommittee with the reasons for such objections.
Subcommittee designated by the will be referred to as the Fee Review Any objection to a decision not
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Operating Committee, of the CAT NMS Subcommittee. The members of the Fee specified in writing will be considered
Plan, pursuant to the Fee Dispute Review Subcommittee will be subject to to have been abandoned and may be
Resolution Procedures adopted
disregarded. Parties may petition to
pursuant to the CAT NMS Plan and set 15 See, e.g., Chapter X of Bats EDGX Exchange,
submit a written argument to the
Inc. (Adverse Action); and Chapter X of NYSE
14 See Securities Exchange Act Release No. 80256 National, Inc. (Adverse Action). Operating Committee and may request
(March 15, 2017), 82 FR 10101 (March 21, 2017) 16 The CAT NMS Plan Web site is an opportunity to make an oral
(SR–BatsEDGX–2017–08) [sic]. www.catnmsplan.com. argument before the Operating

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Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 26531

Committee. The Operating Committee Industry Member does not owe to the the SEC, and is therefore consistent with
will have sole discretion to grant or Company. The Industry Member must the Act.
deny either request. pay any invoiced CAT Fees that are not
The Operating Committee will B. Self-Regulatory Organization’s
disputed CAT Fees when due as set
conduct the review. The review will be Statement on Burden on Competition
forth in the original invoice.
made upon the record and will be made Section 6(b)(8) of the Act 20 require
Once the dispute regarding CAT Fees
after such further proceedings, if any, as [sic] that Exchange rules not impose any
is resolved pursuant to these
the Operating Committee may order. burden on competition that is not
Procedures, if it is determined that the
Based upon such record, the Operating necessary or appropriate. The Exchange
Industry Member owes any of the
Committee may affirm, reverse or does not believe that the proposed rule
modify, in whole or in part, the decision disputed CAT Fees, then the Industry
change will result in any burden on
of the Fee Review Subcommittee. The Member must pay such disputed CAT
competition that is not necessary or
decision of the Operating Committee Fees that are owed as well as interest on appropriate in furtherance of the
will be in writing, will be sent to the such disputed CAT Fees from the purposes of the Act. The Exchange notes
parties to the proceeding and will be original due date (that is, 30 days after that the proposed rule change
final. receipt of the original invoice of such implements Section 11.5 of the CAT
The Procedures state that a final CAT Fees) until such disputed CAT NMS Plan approved by the Commission,
decision regarding the disputed CAT Fees are paid at a per annum rate equal and is designed to assist the Exchange
Fees by the Operating Committee, or the to the lesser of (i) the Prime Rate plus in meeting its regulatory obligations
Fee Review Subcommittee (if there is no 300 basis points, or (ii) the maximum pursuant to the Plan. Similarly, all
review by the Operating Committee), rate permitted by applicable law. national securities exchanges and
must be provided within 90 days of the 2. Statutory Basis FINRA are proposing this proposed rule
date on which the Industry Member to implement the requirements of the
filed a written application regarding The Exchange believes that the CAT NMS Plan. Therefore, this is not a
disputed CAT Fees with the Company. proposed rule change is consistent with competitive rule filing and, therefore, it
The Operating Committee may extend the provisions of Section 6(b)(5) of the does not raise competition issues
the 90-day time limit at its discretion. Act,17 which require, among other between and among the exchanges and
In addition, the Procedures state that things, that Exchange rules must be FINRA.
any notices or other documents may be designed to prevent fraudulent and
served upon the applicant either C. Self-Regulatory Organization’s
manipulative acts and practices, to
personally or by leaving the same at its, Statement on Comments on the
promote just and equitable principles of
his or her place of business or by Proposed Rule Change Received From
trade, and, in general, to protect
deposit in the United States post office, Members, Participants or Others
investors and the public interest, and
postage prepaid, by registered or not designed to permit unfair Written comments were neither
certified mail, addressed to the solicited nor received.
discrimination between customers,
applicant at its, his or her last known
issuers, brokers and dealer, and Section III. Date of Effectiveness of the
business or residence address. The
15A(b)(5) [sic] of the Act,18 which Proposed Rule Change and Timing for
Procedures also state that any time
requires that Exchange rules provide for Commission Action
limits imposed under the Procedures for
the submission of answers, petitions or the equitable allocation of reasonable
dues, fees, and other charges among Within 45 days of the date of
other materials may be extended by publication of this notice in the Federal
permission of the Operating Committee. members and issuers and other persons
using its facilities. Register or within such longer period
All papers and documents relating to up to 90 days (i) as the Commission may
review by the Fee Review Subcommittee The Exchange believes that this designate if it finds such longer period
or the Operating Committee must be proposal is consistent with the Act to be appropriate and publishes its
submitted to the Fee Review because it implements, interprets or reasons for so finding or (ii) as to which
Subcommittee or Operating Committee, clarifies Section 11.5 of the Plan, and is the Exchange consents, the Commission
as applicable. designed to assist the Exchange and its will:
The Procedures also note that Industry Members in meeting regulatory (A) By order approve or disapprove
decisions on such CAT Fee disputes obligations pursuant to the Plan. In such proposed rule change, or
made pursuant to these Procedures will approving the Plan, the SEC noted that (B) institute proceedings to determine
be binding on Industry Members, the Plan ‘‘is necessary and appropriate whether the proposed rule change
without prejudice to the rights of any in the public interest, for the protection should be disapproved.
such Industry Member to seek redress of investors and the maintenance of fair
from the SEC or in any other and orderly markets, to remove IV. Solicitation of Comments
appropriate forum. impediments to, and perfect the Interested persons are invited to
Finally, an Industry Member that files mechanism of a national market system, submit written data, views, and
a written application with the Company or is otherwise in furtherance of the arguments concerning the foregoing,
regarding disputed CAT Fees in purposes of the Act.’’ 19 To the extent including whether the proposed rule
accordance with these Procedures is not that this proposal implements, change is consistent with the Act.
required to pay such disputed CAT Fees interprets or clarifies the Plan and Comments may be submitted by any of
until the dispute is resolved in
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applies specific requirements to the following methods:
accordance with these Procedures, Industry Members, the Exchange
including any review by the SEC or in believes that this proposal furthers the Electronic Comments
any other appropriate forum. For these objectives of the Plan, as identified by • Use the Commission’s Internet
purposes, the disputed CAT Fees means comment form (http://www.sec.gov/
the amount of the invoiced CAT Fees 17 15U.S.C. 78f(b)(5). rules/sro.shtml); or
that the Industry Member has asserted 18 15U.S.C. 78o–3(b)(5) [sic].
pursuant to these Procedures that such 19 Approval Order at 84697. 20 15 U.S.C. 78f(b)(8).

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Document Created: 2017-06-07 02:01:13
Document Modified: 2017-06-07 02:01:13
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 26529