82 FR 26539 - Self-Regulatory Organizations; Bats BYX 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)
Federal Register Volume 82, Issue 108 (June 7, 2017)
| Page Range | 26539-26542 | |
| FR Document | 2017-11747 |
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)] [Notices] [Pages 26539-26542] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-11747] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80836; File No. SR-BatsBYX-2017-13] Self-Regulatory Organizations; Bats BYX 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 BYX Exchange, Inc. (the ``Exchange'' or ``BYX'') 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. --------------------------------------------------------------------------- \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 filed a proposal to adopt Rule 4.17 (Consolidated Audit Trail--Fee Dispute Resolution) to establish the procedures for resolving [[Page 26540]] potential disputes related to CAT Fees charged to Industry Members.\3\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 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. --------------------------------------------------------------------------- \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-BatsBYX-2017-02) [sic]. --------------------------------------------------------------------------- (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 [[Page 26541]] 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\ --------------------------------------------------------------------------- \15\ See, e.g., Chapter X of Bats BYX Exchange, Inc. (Adverse Action); and Chapter X of NYSE National, Inc. (Adverse Action). \16\ The CAT NMS Plan Web site is www.catnmsplan.com. --------------------------------------------------------------------------- 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 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 [[Page 26542]] 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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b)(5). \18\ 15 U.S.C. 78o-3(b)(5) [sic]. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \19\ Approval Order at 84697. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \20\ 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 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 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-BatsBYX-2017-13 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BatsBYX-2017-13. 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-BatsBYX-2017-13, and should be submitted on or before June 28, 2017. --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-11747 Filed 6-6-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 26539
Act,17 which require, among other between and among the exchanges and those that may be withheld from the
things, that the SRO rules must be FINRA. public in accordance with the
designed to prevent fraudulent and provisions of 5 U.S.C. 552, will be
C. Self-Regulatory Organization’s
manipulative acts and practices, to available for Web site viewing and
Statement on Comments on the
promote just and equitable principles of printing in the Commission’s Public
Proposed Rule Change Received From Reference Room, 100 F Street NE.,
trade, and, in general, to protect
investors and the public interest, and Members, Participants, or Others Washington, DC 20549, on official
not designed to permit unfair The Exchange has neither solicited business days between the hours of
discrimination between customers, nor received comments on the proposed 10:00 a.m. and 3:00 p.m. Copies of the
issuers, brokers and dealer, and Section rule change. filing also will be available for
15A(b)(5) [sic] of the Act,18 which III. Date of Effectiveness of the inspection and copying at the principal
requires that SRO rules provide for the office of the Exchange. All comments
Proposed Rule Change and Timing for
equitable allocation of reasonable dues, received will be posted without change;
Commission Action
fees, and other charges among members the Commission does not edit personal
and issuers and other persons using its Within 45 days of the date of identifying information from
facilities. publication of this notice in the Federal submissions. You should submit only
The Exchange believes that this Register or within such longer period information that you wish to make
proposal is consistent with the Act up to 90 days (i) as the Commission may available publicly. All submissions
because it implements, interprets or designate if it finds such longer period should refer to File Number SR–BOX–
clarifies Section 11.5 of the Plan, and is to be appropriate and publishes its 2017–19, and should be submitted on or
designed to assist the Exchange and its reasons for so finding or (ii) as to which before June 28, 2017.
Industry Members in meeting regulatory the Exchange consents, the Commission For the Commission, by the Division of
obligations pursuant to the Plan. In will: Trading and Markets, pursuant to delegated
approving the Plan, the SEC noted that (A) By order approve or disapprove authority.21
the Plan ‘‘is necessary and appropriate such proposed rule change, or Eduardo A. Aleman,
in the public interest, for the protection (B) institute proceedings to determine Assistant Secretary.
of investors and the maintenance of fair whether the proposed rule change
[FR Doc. 2017–11742 Filed 6–6–17; 8:45 am]
and orderly markets, to remove should be disapproved.
BILLING CODE 8011–01–P
impediments to, and perfect the IV. Solicitation of Comments
mechanism of a national market system,
or is otherwise in furtherance of the Interested persons are invited to
submit written data, views, and SECURITIES AND EXCHANGE
purposes of the Act.’’ 19 To the extent COMMISSION
that this proposal implements, arguments concerning the foregoing,
interprets or clarifies the Plan and including whether the proposed rule [Release No. 34–80836; File No. SR–
applies specific requirements to change is consistent with the Act. BatsBYX–2017–13]
Industry Members, the Exchange Comments may be submitted by any of
the following methods: Self-Regulatory Organizations; Bats
believes that this proposal furthers the BYX Exchange, Inc.; Notice of Filing of
objectives of the Plan, as identified by Electronic Comments a Proposed Rule Change To Adopt
the SEC, and is therefore consistent with
• Use the Commission’s Internet Rule 4.17, Consolidated Audit Trail—
the Act. Fee Dispute Resolution
comment form (http://www.sec.gov/
B. Self-Regulatory Organization’s rules/sro.shtml); or June 1, 2017.
Statement on Burden on Competition • Send an email to rule-comments@
Pursuant to Section 19(b)(1) of the
Section 6(b)(8) of the Act 20 require sec.gov. Please include File Number SR–
Securities Exchange Act of 1934 (the
[sic] that Exchange rules not impose any BOX–2017–19 on the subject line.
‘‘Act’’ or ‘‘Exchange Act’’),1 and Rule
burden on competition that is not Paper Comments 19b–4 thereunder,2 notice is hereby
necessary or appropriate. The Exchange given that on May 23, 2017, Bats BYX
• Send paper comments in triplicate
does not believe that the proposed rule Exchange, Inc. (the ‘‘Exchange’’ or
to Secretary, Securities and Exchange
change will result in any burden on ‘‘BYX’’) filed with the Securities and
Commission, 100 F Street NE.,
competition that is not necessary or Exchange Commission (‘‘Commission’’
Washington, DC 20549–1090.
appropriate in furtherance of the or ‘‘SEC’’) the proposed rule change as
purposes of the Act. The Exchange notes All submissions should refer to File
described in Items I and II below, which
that the proposed rule change Number SR–BOX–2017–19. This file
Items have been prepared by the
implements Section 11.5 of the CAT number should be included on the
Exchange. The Commission is
NMS Plan approved by the Commission, subject line if email is used. To help the
publishing this notice to solicit
and is designed to assist the Exchange Commission process and review your
comments on the proposed rule change
in meeting its regulatory obligations comments more efficiently, please use
from interested persons.
pursuant to the Plan. Similarly, all only one method. The Commission will
national securities exchanges and post all comments on the Commission’s I. Self-Regulatory Organization’s
FINRA are proposing this proposed rule Internet Web site (http://www.sec.gov/ Statement of the Terms of Substance of
to implement the requirements of the rules/sro.shtml). Copies of the the Proposed Rule Change
submission, all subsequent
sradovich on DSK3GMQ082PROD with NOTICES
CAT NMS Plan. Therefore, this is not a The Exchange filed a proposal to
competitive rule filing and, therefore, it amendments, all written statements adopt Rule 4.17 (Consolidated Audit
does not raise competition issues with respect to the proposed rule Trail—Fee Dispute Resolution) to
change that are filed with the establish the procedures for resolving
17 15 U.S.C. 78f(b)(5). Commission, and all written
18 15 U.S.C. 78o–3(b)(5) [sic]. communications relating to the 21 17 CFR 200.30–3(a)(12).
19 Approval Order at 84697. proposed rule change between the 1 15 U.S.C. 78s(b)(1).
20 5 U.S.C. 78f(b)(8) Commission and any person, other than 2 17 CFR 240.19b–4.
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![26540 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
potential disputes related to CAT Fees thereunder,7 the National Market Members. Proposed Rule 4.17 is
charged to Industry Members.3 System Plan Governing the described below.
The text of the proposed rule change Consolidated Audit Trail (the ‘‘CAT
(1) Definitions
is available at the Exchange’s Web site NMS Plan’’ or ‘‘Plan’’).8 The
at www.bats.com, at the principal office Participants filed the Plan to comply Paragraph (a) of Proposed Rule 4.17
of the Exchange, and at the with Rule 613 of Regulation NMS under sets forth the definitions for Proposed
Commission’s Public Reference Room. the Exchange Act. The Plan was Rule 4.17. Paragraph (a)(1) of Proposed
published for comment in the Federal Rule 4.17 states that, for purposes of
II. Self-Regulatory Organization’s Register on May 17, 2016,9 and Rule 4.17, the terms ‘‘CAT NMS Plan’’,
Statement of the Purpose of, and approved by the Commission, as ‘‘Industry Member’’, ‘‘Operating
Statutory Basis for, the Proposed Rule modified, on November 15, 2016.10 The Committee’’, and ‘‘Participant’’ are
Change Plan is designed to create, implement defined as set forth in the Rule 4.5
In its filing with the Commission, the and maintain a consolidated audit trail (Consolidated Audit Trail—Definitions),
Exchange included statements (‘‘CAT’’) that would capture customer and the term ‘‘CAT Fee’’ is defined as
concerning the purpose of and basis for and order event information for orders set forth in the Consolidated Audit Trail
the proposed rule change and discussed in NMS Securities and OTC Equity Funding Fees. In addition, the Exchange
any comments it received on the Securities, across all markets, from the proposes to add paragraph (a)(2) to
proposed rule change. The text of these time of order inception through routing, Proposed Rule 4.17. New paragraph
statements may be examined at the cancellation, modification, or execution (a)(2) would define the term
places specified in Item IV below. The in a single consolidated data source. ‘‘Subcommittee’’ to mean a
Exchange has prepared summaries, set The Plan accomplishes this by creating subcommittee designated by the
forth in Sections A, B, and C below, of CAT NMS, LLC (the ‘‘Company’’), of Operating Committee pursuant to the
the most significant parts of such which each Participant is a member, to CAT NMS Plan. This definition is the
statements. operate the CAT.11 Under the CAT NMS same substantive definition as set forth
Plan, the Operating Committee of the in Section 1.1 of the CAT NMS Plan.
A. Self-Regulatory Organization’s Company (‘‘Operating Committee’’) has
Statement of the Purpose of, and (2) Fee Dispute Resolution
discretion to establish funding for the
Statutory Basis for, the Proposed Rule Company to operate the CAT, including Section 11.5 of the CAT NMS Plan
Change establishing fees that the Participants requires Participants to adopt rules
will pay, and establishing fees for requiring that disputes with respect to
1. Purpose fees charged to Industry Members
Industry Members that will be
Bats BYX Exchange, Inc., Bats BZX implemented by the Participants (‘‘CAT pursuant to the CAT NMS Plan be
Exchange, Inc., Bats EDGA Exchange, Fees’’).12 The Participants are required determined by the Operating Committee
Inc., Bats EDGX Exchange, Inc., BOX to file with the SEC under Section 19(b) or Subcommittee. Section 11.5 of the
Options Exchange LLC, C2 Options of the Exchange Act any such CAT Fees CAT NMS Plan also states that decisions
Exchange, Incorporated, Chicago Board applicable to Industry Members that the by the Operating Committee or
Options Exchange, Incorporated, Operating Committee approves.13 Subcommittee on such matters shall be
Chicago Stock Exchange, Inc., Financial Accordingly, the Exchange has filed a binding on Industry Members, without
Industry Regulatory Authority, Inc. proposed rule change with the SEC to prejudice to the right of any Industry
(‘‘FINRA’’), Investors’ Exchange LLC, adopt the Consolidated Audit Trail Member to seek redress from the SEC
Miami International Securities Funding Fees, which will require pursuant to SEC Rule 608 or in any
Exchange, LLC, MIAX PEARL, LLC, Industry Members that are Members of other appropriate forum. The Exchange
NASDAQ BX, Inc., Nasdaq GEMX, LLC, the Exchange to pay the CAT Fees proposes to adopt paragraph (b) of
Nasdaq ISE, LLC, Nasdaq MRX, LLC,4 determined by the Operating Proposed Rule 4.17. Paragraph (b) of
NASDAQ PHLX LLC, The NASDAQ Committee.14 The Exchange submits Proposed Rule 4.17 states that disputes
Stock Market LLC, New York Stock this rule filing to adopt Rule 4.17 initiated by an Industry Member with
Exchange LLC, NYSE MKT LLC, NYSE (Consolidated Audit Trail—Fee Dispute respect to CAT Fees charged to such
Arca, Inc. and NYSE National, Inc.5 Resolution) to establish the procedures Industry Member pursuant to the
(collectively, the ‘‘Participants’’) filed for resolving potential disputes related Consolidated Audit Trail Funding Fees,
with the Commission, pursuant to to CAT Fees charged to Industry including disputes related to the
Section 11A of the Exchange Act 6 and designated tier and the fee calculated
Rule 608 of Regulation NMS 7 17 CFR 242.608. pursuant to such tier, shall be resolved
8 See Letter from the Participants to Brent J. by the Operating Committee, or a
3 Unless otherwise specified, capitalized terms Fields, Secretary, Commission, dated September 30, Subcommittee designated by the
used in this rule filing are defined as set forth 2014; and Letter from Participants to Brent J. Fields, Operating Committee, of the CAT NMS
herein, or in the Consolidated Audit Trail Funding Secretary, Commission, dated February 27, 2015.
On December 24, 2015, the Participants submitted Plan, pursuant to the Fee Dispute
Fees Rule, the CAT Compliance Rule Series or in
the CAT NMS Plan. an amendment to the CAT NMS Plan. See Letter Resolution Procedures adopted
4 ISE Gemini, LLC, ISE Mercury, LLC and from Participants to Brent J. Fields, Secretary, pursuant to the CAT NMS Plan and set
Commission, dated December 23, 2015. forth in paragraph (c) of Proposed Rule
International Securities Exchange, LLC have been 9 Securities Exchange Act Rel. No. 77724 (Apr.
renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
27, 2016), 81 FR 30614 (May 17, 2016).
4.17. Decisions on such matters shall be
and Nasdaq ISE, LLC, respectively. See Securities binding on Industry Members, without
10 Securities Exchange Act Rel. No. 79318 (Nov.
Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR
sradovich on DSK3GMQ082PROD with NOTICES
14547 (Mar. 21, 2017); Securities Exchange Act Rel. 15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval prejudice to the rights of any such
No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4, Order’’). Industry Member to seek redress from
11 The Plan also serves as the limited liability
2017); and Securities Exchange Act Rel. No. 80325 the SEC or in any other appropriate
(Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017). company agreement for the Company.
5 National Stock Exchange, Inc. has been renamed 12 Section 11.1(b) of the CAT NMS Plan.
forum.
The Operating Committee has
NYSE National, Inc. See Securities Exchange Act 13 Id.
Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3, 14 See Securities Exchange Act Release No. 80256 adopted ‘‘Fee Dispute Resolution
2017). (March 15, 2017), 82 FR 10101(March 21, 2017) Procedures’’ governing the manner in
6 15 U.S.C. 78k–1. (SR–BatsBYX–2017–02) [sic]. which disputes regarding CAT Fees
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![26542 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
Fees that are owed as well as interest on appropriate in furtherance of the comments more efficiently, please use
such disputed CAT Fees from the purposes of the Act. The Exchange notes only one method. The Commission will
original due date (that is, 30 days after that the proposed rule change post all comments on the Commission’s
receipt of the original invoice of such implements Section 11.5 of the CAT Internet Web site (http://www.sec.gov/
CAT Fees) until such disputed CAT NMS Plan approved by the Commission, rules/sro.shtml). Copies of the
Fees are paid at a per annum rate equal and is designed to assist the Exchange submission, all subsequent
to the lesser of (i) the Prime Rate plus in meeting its regulatory obligations amendments, all written statements
300 basis points, or (ii) the maximum pursuant to the Plan. Similarly, all with respect to the proposed rule
rate permitted by applicable law. national securities exchanges and change that are filed with the
FINRA are proposing this proposed rule Commission, and all written
2. Statutory Basis communications relating to the
to implement the requirements of the
The Exchange believes that the CAT NMS Plan. Therefore, this is not a proposed rule change between the
proposed rule change is consistent with competitive rule filing and, therefore, it Commission and any person, other than
the provisions of Section 6(b)(5) of the does not raise competition issues those that may be withheld from the
Act,17 which require, among other between and among the exchanges and public in accordance with the
things, that Exchange rules must be FINRA. provisions of 5 U.S.C. 552, will be
designed to prevent fraudulent and available for Web site viewing and
manipulative acts and practices, to C. Self-Regulatory Organization’s printing in the Commission’s Public
promote just and equitable principles of Statement on Comments on the Reference Room, 100 F Street NE.,
trade, and, in general, to protect Proposed Rule Change Received From Washington, DC 20549, on official
investors and the public interest, and Members, Participants or Others business days between the hours of
not designed to permit unfair Written comments were neither 10:00 a.m. and 3:00 p.m. Copies of the
discrimination between customers, solicited nor received. filing also will be available for
issuers, brokers and dealer, and Section inspection and copying at the principal
III. Date of Effectiveness of the office of the Exchange. All comments
15A(b)(5) [sic] of the Act,18 which
Proposed Rule Change and Timing for received will be posted without change;
requires that Exchange rules provide for
Commission Action the Commission does not edit personal
the equitable allocation of reasonable
dues, fees, and other charges among Within 45 days of the date of identifying information from
members and issuers and other persons publication of this notice in the Federal submissions. You should submit only
using its facilities. Register or within such longer period information that you wish to make
The Exchange believes that this up to 90 days (i) as the Commission may available publicly. All submissions
proposal is consistent with the Act designate if it finds such longer period should refer to File Number SR–
because it implements, interprets or to be appropriate and publishes its BatsBYX–2017–13, and should be
clarifies Section 11.5 of the Plan, and is reasons for so finding or (ii) as to which submitted on or before June 28, 2017.
designed to assist the Exchange and its the Exchange consents, the Commission For the Commission, by the Division of
Industry Members in meeting regulatory will: Trading and Markets, pursuant to delegated
obligations pursuant to the Plan. In (A) By order approve or disapprove authority.21
approving the Plan, the SEC noted that such proposed rule change, or Eduardo A. Aleman,
the Plan ‘‘is necessary and appropriate (B) institute proceedings to determine Assistant Secretary.
in the public interest, for the protection whether the proposed rule change [FR Doc. 2017–11747 Filed 6–6–17; 8:45 am]
of investors and the maintenance of fair should be disapproved.
BILLING CODE 8011–01–P
and orderly markets, to remove IV. Solicitation of Comments
impediments to, and perfect the
mechanism of a national market system, Interested persons are invited to
SECURITIES AND EXCHANGE
or is otherwise in furtherance of the submit written data, views, and
COMMISSION
purposes of the Act.’’ 19 To the extent arguments concerning the foregoing,
including whether the proposed rule [Release No. 34–80834; File No. SR–
that this proposal implements, BatsBZX–2017–39]
interprets or clarifies the Plan and change is consistent with the Act.
applies specific requirements to Comments may be submitted by any of
the following methods: Self-Regulatory Organizations; Bats
Industry Members, the Exchange BZX Exchange, Inc.; Notice of Filing of
believes that this proposal furthers the Electronic Comments a Proposed Rule Change To Adopt
objectives of the Plan, as identified by Rule 4.17, Consolidated Audit Trail—
• Use the Commission’s Internet
the SEC, and is therefore consistent with Fee Dispute Resolution
comment form (http://www.sec.gov/
the Act.
rules/sro.shtml); or June 1, 2017.
B. Self-Regulatory Organization’s • Send an email to rule-comments@ Pursuant to Section 19(b)(1) of the
Statement on Burden on Competition sec.gov. Please include File Number SR– Securities Exchange Act of 1934 (the
Section 6(b)(8) of the Act 20 require BatsBYX–2017–13 on the subject line. ‘‘Act’’ or ‘‘Exchange Act’’),1 and Rule
[sic] that Exchange rules not impose any Paper Comments 19b–4 thereunder,2 notice is hereby
burden on competition that is not given that on May 23, 2017, Bats BZX
• Send paper comments in triplicate Exchange, Inc. (the ‘‘Exchange’’ or
necessary or appropriate. The Exchange
to Secretary, Securities and Exchange
sradovich on DSK3GMQ082PROD with NOTICES
does not believe that the proposed rule ‘‘BZX’’) filed with the Securities and
Commission, 100 F Street NE., Exchange Commission (‘‘Commission’’
change will result in any burden on
Washington, DC 20549–1090. or ‘‘SEC’’) the proposed rule change as
competition that is not necessary or
All submissions should refer to File described in Items I and II below, which
17 15 U.S.C. 78f(b)(5). Number SR–BatsBYX–2017–13. This
18 15 U.S.C. 78o–3(b)(5) [sic]. file number should be included on the 21 17 CFR 200.30–3(a)(12).
19 Approval Order at 84697. subject line if email is used. To help the 1 15 U.S.C. 78s(b)(1).
20 15 U.S.C. 78f(b)(8). Commission process and review your 2 17 CFR 240.19b–4.
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Document Created: 2017-06-07 02:01:10
Document Modified: 2017-06-07 02:01:10
| 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 26539 |
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