82 FR 26542 - Self-Regulatory Organizations; Bats BZX 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 | 26542-26545 | |
| FR Document | 2017-11745 |
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)] [Notices] [Pages 26542-26545] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-11745] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80834; File No. SR-BatsBZX-2017-39] Self-Regulatory Organizations; Bats BZX 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (``Commission'' or ``SEC'') the proposed rule change as described in Items I and II below, which [[Page 26543]] 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 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 14526 (March 21, 2017) (SR-BatsBZX-2017-08) [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 [[Page 26544]] 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\ --------------------------------------------------------------------------- \15\ See, e.g., Chapter X of Bats BZX 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 [[Page 26545]] 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. --------------------------------------------------------------------------- \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-BatsBZX-2017-39 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-BatsBZX-2017-39. 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-BatsBZX-2017-39, 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. 2017-11745 Filed 6-6-17; 8:45 am] BILLING CODE 8011-01-P
![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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![Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 26543
Items have been prepared by the NASDAQ PHLX LLC, The NASDAQ Funding Fees, which will require
Exchange. The Commission is Stock Market LLC, New York Stock Industry Members that are Members of
publishing this notice to solicit Exchange LLC, NYSE MKT LLC, NYSE the Exchange to pay the CAT Fees
comments on the proposed rule change Arca, Inc. and NYSE National, Inc.5 determined by the Operating
from interested persons. (collectively, the ‘‘Participants’’) filed Committee.14 The Exchange submits
with the Commission, pursuant to this rule filing to adopt Rule 4.17
I. Self-Regulatory Organization’s
Section 11A of the Exchange Act 6 and (Consolidated Audit Trail—Fee Dispute
Statement of the Terms of Substance of
Rule 608 of Regulation NMS Resolution) to establish the procedures
the Proposed Rule Change
thereunder,7 the National Market for resolving potential disputes related
The Exchange filed a proposal to System Plan Governing the to CAT Fees charged to Industry
adopt Rule 4.17 (Consolidated Audit Consolidated Audit Trail (the ‘‘CAT Members. Proposed Rule 4.17 is
Trail—Fee Dispute Resolution) to NMS Plan’’ or ‘‘Plan’’).8 The described below.
establish the procedures for resolving Participants filed the Plan to comply
potential disputes related to CAT Fees with Rule 613 of Regulation NMS under (1) Definitions
charged to Industry Members.3 the Exchange Act. The Plan was Paragraph (a) of Proposed Rule 4.17
The text of the proposed rule change published for comment in the Federal sets forth the definitions for Proposed
is available at the Exchange’s Web site Register on May 17, 2016,9 and Rule 4.17. Paragraph (a)(1) of Proposed
at www.bats.com, at the principal office approved by the Commission, as Rule 4.17 states that, for purposes of
of the Exchange, and at the modified, on November 15, 2016.10 The Rule 4.17, the terms ‘‘CAT NMS Plan’’,
Commission’s Public Reference Room. Plan is designed to create, implement ‘‘Industry Member’’, ‘‘Operating
II. Self-Regulatory Organization’s and maintain a consolidated audit trail Committee’’, and ‘‘Participant’’ are
Statement of the Purpose of, and (‘‘CAT’’) that would capture customer defined as set forth in the Rule 4.5
Statutory Basis for, the Proposed Rule and order event information for orders (Consolidated Audit Trail—Definitions),
Change in NMS Securities and OTC Equity and the term ‘‘CAT Fee’’ is defined as
Securities, across all markets, from the set forth in the Consolidated Audit Trail
In its filing with the Commission, the time of order inception through routing, Funding Fees. In addition, the Exchange
Exchange included statements cancellation, modification, or execution proposes to add paragraph (a)(2) to
concerning the purpose of and basis for in a single consolidated data source. Proposed Rule 4.17. New paragraph
the proposed rule change and discussed The Plan accomplishes this by creating (a)(2) would define the term
any comments it received on the CAT NMS, LLC (the ‘‘Company’’), of ‘‘Subcommittee’’ to mean a
proposed rule change. The text of these which each Participant is a member, to subcommittee designated by the
statements may be examined at the operate the CAT.11 Under the CAT NMS Operating Committee pursuant to the
places specified in Item IV below. The Plan, the Operating Committee of the CAT NMS Plan. This definition is the
Exchange has prepared summaries, set Company (‘‘Operating Committee’’) has same substantive definition as set forth
forth in Sections A, B, and C below, of discretion to establish funding for the in Section 1.1 of the CAT NMS Plan.
the most significant parts of such Company to operate the CAT, including
statements. (2) Fee Dispute Resolution
establishing fees that the Participants
A. Self-Regulatory Organization’s will pay, and establishing fees for Section 11.5 of the CAT NMS Plan
Statement of the Purpose of, and Industry Members that will be requires Participants to adopt rules
Statutory Basis for, the Proposed Rule implemented by the Participants (‘‘CAT requiring that disputes with respect to
Change Fees’’).12 The Participants are required fees charged to Industry Members
to file with the SEC under Section 19(b) pursuant to the CAT NMS Plan be
1. Purpose of the Exchange Act any such CAT Fees determined by the Operating Committee
Bats BYX Exchange, Inc., Bats BZX applicable to Industry Members that the or Subcommittee. Section 11.5 of the
Exchange, Inc., Bats EDGA Exchange, Operating Committee approves.13 CAT NMS Plan also states that decisions
Inc., Bats EDGX Exchange, Inc., BOX Accordingly, the Exchange has filed a by the Operating Committee or
Options Exchange LLC, C2 Options proposed rule change with the SEC to Subcommittee on such matters shall be
Exchange, Incorporated, Chicago Board adopt the Consolidated Audit Trail binding on Industry Members, without
Options Exchange, Incorporated, prejudice to the right of any Industry
Chicago Stock Exchange, Inc., Financial 5 National Stock Exchange, Inc. has been renamed Member to seek redress from the SEC
Industry Regulatory Authority, Inc. NYSE National, Inc. See Securities Exchange Act pursuant to SEC Rule 608 or in any
Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3, other appropriate forum. The Exchange
(‘‘FINRA’’), Investors’ Exchange LLC, 2017).
Miami International Securities 6 15 U.S.C. 78k–1.
proposes to adopt paragraph (b) of
Exchange, LLC, MIAX PEARL, LLC, 7 17 CFR 242.608. Proposed Rule 4.17. Paragraph (b) of
NASDAQ BX, Inc., Nasdaq GEMX, LLC, 8 See Letter from the Participants to Brent J. Proposed Rule 4.17 states that disputes
Nasdaq ISE, LLC, Nasdaq MRX, LLC,4 Fields, Secretary, Commission, dated September 30, initiated by an Industry Member with
2014; and Letter from Participants to Brent J. Fields, respect to CAT Fees charged to such
Secretary, Commission, dated February 27, 2015.
3 Unless otherwise specified, capitalized terms
On December 24, 2015, the Participants submitted
Industry Member pursuant to the
used in this rule filing are defined as set forth Consolidated Audit Trail Funding Fees,
an amendment to the CAT NMS Plan. See Letter
herein, or in the Consolidated Audit Trail Funding
Fees Rule, the CAT Compliance Rule Series or in
from Participants to Brent J. Fields, Secretary, including disputes related to the
Commission, dated December 23, 2015. designated tier and the fee calculated
the CAT NMS Plan.
sradovich on DSK3GMQ082PROD with NOTICES
9 Securities Exchange Act Rel. No. 77724 (Apr.
4 ISE Gemini, LLC, ISE Mercury, LLC and pursuant to such tier, shall be resolved
27, 2016), 81 FR 30614 (May 17, 2016).
International Securities Exchange, LLC have been 10 Securities Exchange Act Rel. No. 79318 (Nov.
by the Operating Committee, or a
renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC, Subcommittee designated by the
and Nasdaq ISE, LLC, respectively. See Securities 15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR Order’’). Operating Committee, of the CAT NMS
11 The Plan also serves as the limited liability
14547 (Mar. 21, 2017); Securities Exchange Act Rel.
No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4, company agreement for the Company. 14 See Securities Exchange Act Release No. 80256
12 Section 11.1(b) of the CAT NMS Plan.
2017); and Securities Exchange Act Rel. No. 80325 (March 15, 2017), 82 FR 14526 (March 21, 2017)
(Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017). 13 Id. (SR–BatsBZX–2017–08) [sic].
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![Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 26545
the amount of the invoiced CAT Fees objectives of the Plan, as identified by • Send an email to rule-comments@
that the Industry Member has asserted the SEC, and is therefore consistent with sec.gov. Please include File Number SR–
pursuant to these Procedures that such the Act. BatsBZX–2017–39 on the subject line.
Industry Member does not owe to the
B. Self-Regulatory Organization’s Paper Comments
Company. The Industry Member must
Statement on Burden on Competition
pay any invoiced CAT Fees that are not • Send paper comments in triplicate
disputed CAT Fees when due as set Section 6(b)(8) of the Act 20 require
[sic] that Exchange rules not impose any to Secretary, Securities and Exchange
forth in the original invoice.
Once the dispute regarding CAT Fees burden on competition that is not Commission, 100 F Street NE.,
is resolved pursuant to these necessary or appropriate. The Exchange Washington, DC 20549–1090.
Procedures, if it is determined that the does not believe that the proposed rule All submissions should refer to File
Industry Member owes any of the change will result in any burden on Number SR–BatsBZX–2017–39. This file
disputed CAT Fees, then the Industry competition that is not necessary or number should be included on the
Member must pay such disputed CAT appropriate in furtherance of the subject line if email is used. To help the
Fees that are owed as well as interest on purposes of the Act. The Exchange notes
Commission process and review your
such disputed CAT Fees from the that the proposed rule change
implements Section 11.5 of the CAT comments more efficiently, please use
original due date (that is, 30 days after
NMS Plan approved by the Commission, only one method. The Commission will
receipt of the original invoice of such
CAT Fees) until such disputed CAT and is designed to assist the Exchange post all comments on the Commission’s
Fees are paid at a per annum rate equal in meeting its regulatory obligations Internet Web site (http://www.sec.gov/
to the lesser of (i) the Prime Rate plus pursuant to the Plan. Similarly, all rules/sro.shtml). Copies of the
300 basis points, or (ii) the maximum national securities exchanges and submission, all subsequent
rate permitted by applicable law. FINRA are proposing this proposed rule amendments, all written statements
to implement the requirements of the with respect to the proposed rule
2. Statutory Basis CAT NMS Plan. Therefore, this is not a change that are filed with the
The Exchange believes that the competitive rule filing and, therefore, it Commission, and all written
proposed rule change is consistent with does not raise competition issues communications relating to the
the provisions of Section 6(b)(5) of the between and among the exchanges and proposed rule change between the
Act,17 which require, among other FINRA. Commission and any person, other than
things, that Exchange rules must be those that may be withheld from the
C. Self-Regulatory Organization’s
designed to prevent fraudulent and public in accordance with the
Statement on Comments on the
manipulative acts and practices, to provisions of 5 U.S.C. 552, will be
Proposed Rule Change Received From
promote just and equitable principles of available for Web site viewing and
Members, Participants or Others
trade, and, in general, to protect printing in the Commission’s Public
investors and the public interest, and Written comments were neither
solicited nor received. Reference Room, 100 F Street NE.,
not designed to permit unfair
Washington, DC 20549, on official
discrimination between customers, III. Date of Effectiveness of the business days between the hours of
issuers, brokers and dealer, and Section Proposed Rule Change and Timing for 10:00 a.m. and 3:00 p.m. Copies of the
15A(b)(5) [sic] of the Act,18 which Commission Action
requires that Exchange rules provide for filing also will be available for
the equitable allocation of reasonable Within 45 days of the date of inspection and copying at the principal
dues, fees, and other charges among publication of this notice in the Federal office of the Exchange. All comments
Register or within such longer period received will be posted without change;
members and issuers and other persons
up to 90 days (i) as the Commission may the Commission does not edit personal
using its facilities.
The Exchange believes that this designate if it finds such longer period identifying information from
proposal is consistent with the Act to be appropriate and publishes its submissions. You should submit only
because it implements, interprets or reasons for so finding or (ii) as to which information that you wish to make
clarifies Section 11.5 of the Plan, and is the Exchange consents, the Commission available publicly. All submissions
designed to assist the Exchange and its will:
should refer to File Number SR–
(A) By order approve or disapprove
Industry Members in meeting regulatory BatsBZX–2017–39, and should be
such proposed rule change, or
obligations pursuant to the Plan. In (B) institute proceedings to determine submitted on or before June 28, 2017.
approving the Plan, the SEC noted that whether the proposed rule change For the Commission, by the Division of
the Plan ‘‘is necessary and appropriate should be disapproved. Trading and Markets, pursuant to delegated
in the public interest, for the protection authority.21
of investors and the maintenance of fair IV. Solicitation of Comments
and orderly markets, to remove Eduardo A. Aleman,
Interested persons are invited to
impediments to, and perfect the submit written data, views, and Assistant Secretary.
mechanism of a national market system, arguments concerning the foregoing, [FR Doc. 2017–11745 Filed 6–6–17; 8:45 am]
or is otherwise in furtherance of the including whether the proposed rule BILLING CODE 8011–01–P
purposes of the Act.’’ 19 To the extent change is consistent with the Act.
that this proposal implements, Comments may be submitted by any of
sradovich on DSK3GMQ082PROD with NOTICES
interprets or clarifies the Plan and the following methods:
applies specific requirements to
Industry Members, the Exchange Electronic Comments
believes that this proposal furthers the • Use the Commission’s Internet
comment form (http://www.sec.gov/
17 15U.S.C. 78f(b)(5). rules/sro.shtml); or
18 15U.S.C. 78o–3(b)(5) [sic].
19 Approval Order at 84697. 20 15 U.S.C. 78f(b)(8). 21 17 CFR 200.30–3(a)(12).
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Document Created: 2017-06-07 02:01:08
Document Modified: 2017-06-07 02:01:08
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 26542 |
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