82 FR 28719 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of a Proposed Rule Change To Adopt Rule 996A
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 120 (June 23, 2017)
Federal Register Volume 82, Issue 120 (June 23, 2017)
| Page Range | 28719-28722 | |
| FR Document | 2017-13098 |
[Federal Register Volume 82, Number 120 (Friday, June 23, 2017)] [Notices] [Pages 28719-28722] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-13098] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80967; File No. SR-PHLX-2017-47] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of a Proposed Rule Change To Adopt Rule 996A June 19, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on June 8, 2017, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') 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 proposes to proposal to adopt Rule 996A (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 on the Exchange's Web site at http://nasdaqphlx.cchwallstreet .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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc. (``FINRA''), Investors' Exchange LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,\4\ NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE MKT LLC, NYSE Arca, Inc. and NYSE National, Inc.\5\ (collectively, the ``Participants'') filed with the Commission, pursuant to Section 11A of the Exchange Act \6\ and Rule 608 of Regulation NMS thereunder,\7\ the National Market [[Page 28720]] 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 Exchange members to pay the CAT Fees determined by the Operating Committee.\14\ The Exchange submits this rule filing to adopt Rule 996A (Consolidated Audit Trail--Fee Dispute Resolution) to establish the procedures for resolving potential disputes related to CAT Fees charged to Industry Members. The proposed rules are 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 Release No. 80248 (March 15, 2017), 82 FR 14547 (March 21, 2017); Securities Exchange Act Release No. 80326 (March 29, 2017), 82 FR 16460 (April 4, 2017); and Securities Exchange Act Release No. 80325 (March 29, 2017), 82 FR 16445 (April 4, 2017). \5\ National Stock Exchange, Inc. has been renamed NYSE National, Inc. See Securities Exchange Act Release No. 79902 (January 30, 2017), 82 FR 9258 (February 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 Release No. 77724 (April 27, 2016), 81 FR 30614 (May 17, 2016). \10\ Securities Exchange Act Rel. No. 79318 (November 15, 2016), 81 FR 84696 (November 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. 80725 (May 18, 2017), 82 FR 23935 (May 24, 2017) (SR-PHLX-2017-37). --------------------------------------------------------------------------- (1) Definitions Paragraph (a) of Proposed Rule 996A sets forth the definitions for Proposed Rule 996A. Paragraph (a)(1) of Proposed Rule 996A states that, for purposes of Rule 996A, the terms ``CAT NMS Plan'', ``Industry Member'', ``Operating Committee'', and ``Participant'' are defined as set forth in the Rule 910A (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 996A. 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 996A. Paragraph (b) of Proposed Rule 996A 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 996A. 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 996A. 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 [[Page 28721]] 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 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 requires, among other things, that the 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 [sic], and Section 6(b)(4) 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. 78f(b)(4). --------------------------------------------------------------------------- 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\ requires 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 impose any burden on competition not necessary or [[Page 28722]] 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 No written comments were either solicited or 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-PHLX-2017-47 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-PHLX-2017-47. 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-PHLX-2017-47, and should be submitted on or before July 14, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-13098 Filed 6-22-17; 8:45 am] BILLING CODE 8011-01-P
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and thus believes the waiver of the provisions of 5 U.S.C. 552, will be The text of the proposed rule change
operative delay is consistent with the available for Web site viewing and is available on the Exchange’s Web site
protection of investors and the public printing in the Commission’s Public at http://nasdaqphlx.cchwallstreet
interest. Therefore, the Commission Reference Room, on official business .com/, at the principal office of the
hereby waives the operative delay and days between the hours of 10:00 a.m. Exchange, and at the Commission’s
designates the proposal operative upon and 3:00 p.m., located at 100 F Street Public Reference Room.
filing.9 NE., Washington, DC 20549. Copies of
At any time within 60 days of the II. Self-Regulatory Organization’s
such filing also will be available for
filing of the proposed rule change, the Statement of the Purpose of, and
inspection and copying at the principal
Commission summarily may Statutory Basis for, the Proposed Rule
office of the Exchange. All comments
temporarily suspend such rule change if Change
received will be posted without change;
it appears to the Commission that such the Commission does not edit personal In its filing with the Commission, the
action is necessary or appropriate in the identifying information from Exchange included statements
public interest, for the protection of submissions. You should submit only concerning the purpose of and basis for
investors, or otherwise in furtherance of information that you wish to make the proposed rule change and discussed
the purposes of the Act. If the available publicly. All submissions any comments it received on the
Commission takes such action, the should refer to File Number SR–BOX– proposed rule change. The text of these
Commission shall institute proceedings 2017–21 and should be submitted on or statements may be examined at the
to determine whether the proposed rule before July 14, 2017. places specified in Item IV below. The
change should be approved or Exchange has prepared summaries, set
For the Commission, by the Division of
disapproved. Trading and Markets, pursuant to delegated forth in sections A, B, and C below, of
IV. Solicitation of Comments authority.10 the most significant aspects of such
Eduardo A. Aleman, statements.
Interested persons are invited to
submit written data, views and Assistant Secretary. A. Self-Regulatory Organization’s
arguments concerning the foregoing, [FR Doc. 2017–13100 Filed 6–22–17; 8:45 am] Statement of the Purpose of, and
including whether the proposed rule BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
change is consistent with the Act. Change
Comments may be submitted by any of 1. Purpose
the following methods: SECURITIES AND EXCHANGE
COMMISSION Bats BYX Exchange, Inc., Bats BZX
Electronic Comments Exchange, Inc., Bats EDGA Exchange,
[Release No. 34–80967; File No. SR–PHLX–
• Use the Commission’s Internet 2017–47] Inc., Bats EDGX Exchange, Inc., BOX
comment form (http://www.sec.gov/ Options Exchange LLC, C2 Options
rules/sro.shtml); or Self-Regulatory Organizations; Exchange, Incorporated, Chicago Board
• Send an email to rule-comments@ NASDAQ PHLX LLC; Notice of Filing of Options Exchange, Incorporated,
sec.gov. Please include File Number SR– a Proposed Rule Change To Adopt Chicago Stock Exchange, Inc., Financial
BOX–2017–21 on the subject line. Rule 996A Industry Regulatory Authority, Inc.
Paper Comments (‘‘FINRA’’), Investors’ Exchange LLC,
June 19, 2017. Miami International Securities
• Send paper comments in triplicate Pursuant to Section 19(b)(1) of the Exchange, LLC, MIAX PEARL, LLC,
to Secretary, Securities and Exchange Securities Exchange Act of 1934 (‘‘Act’’ NASDAQ BX, Inc., Nasdaq GEMX, LLC,
Commission, 100 F Street NE., or ‘‘Exchange Act’’),1 and Rule 19b–4 Nasdaq ISE, LLC, Nasdaq MRX, LLC,4
Washington, DC 20549–1090. thereunder,2 notice is hereby given that NASDAQ PHLX LLC, The NASDAQ
All submissions should refer to File on June 8, 2017, NASDAQ PHLX LLC Stock Market LLC, New York Stock
Number SR–BOX–2017–21. This file (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Exchange LLC, NYSE MKT LLC, NYSE
number should be included on the Securities and Exchange Commission Arca, Inc. and NYSE National, Inc.5
subject line if email is used. To help the (‘‘SEC’’ or ‘‘Commission’’) the proposed (collectively, the ‘‘Participants’’) filed
Commission process and review your rule change as described in Items I and with the Commission, pursuant to
comments more efficiently, please use II, below, which Items have been Section 11A of the Exchange Act 6 and
only one method. The Commission will prepared by the Exchange. The Rule 608 of Regulation NMS
post all comments on the Commission’s Commission is publishing this notice to thereunder,7 the National Market
Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule
rules/sro.shtml). Copies of the change from interested persons. herein, or in the Consolidated Audit Trail Funding
submission, all subsequent I. Self-Regulatory Organization’s Fees Rule, the CAT Compliance Rule Series or in
amendments, all written statements Statement of the Terms of Substance of
the CAT NMS Plan.
4 ISE Gemini, LLC, ISE Mercury, LLC and
with respect to the proposed rule the Proposed Rule Change International Securities Exchange, LLC have been
change that are filed with the renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
Commission, and all written The Exchange proposes to proposal to
and Nasdaq ISE, LLC, respectively. See Securities
communications relating to the adopt Rule 996A (Consolidated Audit Exchange Act Release No. 80248 (March 15, 2017),
proposed rule change between the Trail—Fee Dispute Resolution) to 82 FR 14547 (March 21, 2017); Securities Exchange
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Commission and any person, other than establish the procedures for resolving Act Release No. 80326 (March 29, 2017), 82 FR
potential disputes related to CAT Fees 16460 (April 4, 2017); and Securities Exchange Act
those that may be withheld from the Release No. 80325 (March 29, 2017), 82 FR 16445
public in accordance with the charged to Industry Members.3 (April 4, 2017).
5 National Stock Exchange, Inc. has been renamed
10 17 CFR 200.30–3(a)(12).
9 For purposes only of waiving the 30-day NYSE National, Inc. See Securities Exchange Act
1 15 U.S.C. 78s(b)(1). Release No. 79902 (January 30, 2017), 82 FR 9258
operative delay, the Commission has also
considered the proposed rule’s impact on 2 17 CFR 240.19b–4. (February 3, 2017).
6 15 U.S.C. 78k–1.
efficiency, competition, and capital formation. See 3 Unless otherwise specified, capitalized terms
15 U.S.C. 78c(f). used in this rule filing are defined as set forth 7 17 CFR 242.608.
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proceedings at least 72 hours prior to of the Fee Review Subcommittee. The Fees that are owed as well as interest on
the date of the hearing. Each party will decision of the Operating Committee such disputed CAT Fees from the
have the right to inspect and copy the will be in writing, will be sent to the original due date (that is, 30 days after
other party’s materials prior to the parties to the proceeding and will be receipt of the original invoice of such
hearing. final. CAT Fees) until such disputed CAT
The parties to the hearing will consist The Procedures state that a final Fees are paid at a per annum rate equal
of the applicant and a representative of decision regarding the disputed CAT to the lesser of (i) the Prime Rate plus
the Company who shall present the Fees by the Operating Committee, or the 300 basis points, or (ii) the maximum
reasons for the action taken by the Fee Review Subcommittee (if there is no rate permitted by applicable law.
Company that allegedly aggrieved the review by the Operating Committee),
applicant. The applicant is entitled to be must be provided within 90 days of the 2. Statutory Basis
accompanied, represented and advised date on which the Industry Member The Exchange believes that the
by counsel at all stages of the filed a written application regarding proposed rule change is consistent with
proceedings. disputed CAT Fees with the Company. the provisions of Section 6(b)(5) of the
The Fee Review Subcommittee will The Operating Committee may extend Act,17 which requires, among other
determine all questions concerning the the 90-day time limit at its discretion. things, that the Exchange rules must be
admissibility of evidence and will In addition, the Procedures state that designed to prevent fraudulent and
otherwise regulate the conduct of the any notices or other documents may be manipulative acts and practices, to
hearing. Each of the parties will be served upon the applicant either promote just and equitable principles of
permitted to make an opening personally or by leaving the same at its, trade, and, in general, to protect
statement, present witnesses and his or her place of business or by investors and the public interest, and
documentary evidence, cross examine deposit in the United States post office, not designed to permit unfair
opposing witnesses and present closing postage prepaid, by registered or discrimination between customers,
arguments orally or in writing as certified mail, addressed to the issuers, brokers and dealer [sic], and
determined by the Fee Review applicant at its, his or her last known Section 6(b)(4) of the Act,18 which
Subcommittee. The Fee Review business or residence address. The requires that Exchange rules provide for
Subcommittee also will have the right to Procedures also state that any time the equitable allocation of reasonable
question all parties and witnesses to the limits imposed under the Procedures for dues, fees, and other charges among
proceeding. The Fee Review the submission of answers, petitions or members and issuers and other persons
Subcommittee must keep a record of the other materials may be extended by using its facilities.
hearing. The formal rules of evidence permission of the Operating Committee. The Exchange believes that this
will not apply. All papers and documents relating to proposal is consistent with the Act
The Fee Review Subcommittee must review by the Fee Review Subcommittee because it implements, interprets or
set forth its decision in writing and send or the Operating Committee must be clarifies Section 11.5 of the Plan, and is
the written decision to the parties to the submitted to the Fee Review designed to assist the Exchange and its
proceeding. Such decisions will contain Subcommittee or Operating Committee, Industry Members in meeting regulatory
the reasons supporting the conclusions as applicable. obligations pursuant to the Plan. In
of the Fee Review Subcommittee. The Procedures also note that approving the Plan, the SEC noted that
The decision of the Fee Review decisions on such CAT Fee disputes the Plan ‘‘is necessary and appropriate
Subcommittee will be subject to review made pursuant to these Procedures will in the public interest, for the protection
by the Operating Committee either on be binding on Industry Members, of investors and the maintenance of fair
its own motion within 20 business days without prejudice to the rights of any and orderly markets, to remove
after issuance of the decision or upon such Industry Member to seek redress impediments to, and perfect the
written request submitted by the from the SEC or in any other mechanism of a national market system,
applicant within 15 business days after appropriate forum. or is otherwise in furtherance of the
issuance of the decision. The applicant’s Finally, an Industry Member that files
purposes of the Act.’’ 19 To the extent
petition must be in writing and must a written application with the Company
that this proposal implements,
specify the findings and conclusions to regarding disputed CAT Fees in
interprets or clarifies the Plan and
which the applicant objects, together accordance with these Procedures is not
applies specific requirements to
with the reasons for such objections. required to pay such disputed CAT Fees
Industry Members, the Exchange
Any objection to a decision not until the dispute is resolved in
believes that this proposal furthers the
specified in writing will be considered accordance with these Procedures,
objectives of the Plan, as identified by
to have been abandoned and may be including any review by the SEC or in
the SEC, and is therefore consistent with
disregarded. Parties may petition to any other appropriate forum. For these
the Act.
submit a written argument to the purposes, the disputed CAT Fees means
Operating Committee and may request the amount of the invoiced CAT Fees B. Self-Regulatory Organization’s
an opportunity to make an oral that the Industry Member has asserted Statement on Burden on Competition
argument before the Operating pursuant to these Procedures that such Section 6(b)(8) of the Act 20 requires
Committee. The Operating Committee Industry Member does not owe to the that Exchange rules not impose any
will have sole discretion to grant or Company. The Industry Member must burden on competition that is not
asabaliauskas on DSKBBXCHB2PROD with NOTICES
deny either request. pay any invoiced CAT Fees that are not necessary or appropriate. The Exchange
The Operating Committee will disputed CAT Fees when due as set does not believe that the proposed rule
conduct the review. The review will be forth in the original invoice. change will impose any burden on
made upon the record and will be made Once the dispute regarding CAT Fees competition not necessary or
after such further proceedings, if any, as is resolved pursuant to these
the Operating Committee may order. Procedures, if it is determined that the 17 15 U.S.C. 78f(b)(5).
Based upon such record, the Operating Industry Member owes any of the 18 15 U.S.C. 78f(b)(4).
Committee may affirm, reverse or disputed CAT Fees, then the Industry 19 Approval Order at 84697.
modify, in whole or in part, the decision Member must pay such disputed CAT 20 15 U.S.C. 78f(b)(8).
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![28722 Federal Register / Vol. 82, No. 120 / Friday, June 23, 2017 / Notices
appropriate in furtherance of the comments more efficiently, please use prepared by the Exchange. The
purposes of the Act. The Exchange notes only one method. The Commission will Commission is publishing this notice to
that the proposed rule change post all comments on the Commission’s solicit comments on the proposed rule
implements Section 11.5 of the CAT Internet Web site (http://www.sec.gov/ change from interested persons.
NMS Plan approved by the Commission, rules/sro.shtml). Copies of the
I. Self-Regulatory Organization’s
and is designed to assist the Exchange submission, all subsequent
Statement of the Terms of Substance of
in meeting its regulatory obligations amendments, all written statements
the Proposed Rule Change
pursuant to the Plan. Similarly, all with respect to the proposed rule
national securities exchanges and change that are filed with the The Exchange proposes to amend
FINRA are proposing this proposed rule Commission, and all written MRX Rule 804(h), regarding quote
to implement the requirements of the communications relating to the mitigation.
CAT NMS Plan. Therefore, this is not a proposed rule change between the The text of the proposed rule change
competitive rule filing and, therefore, it Commission and any person, other than is available on the Exchange’s Web site
does not raise competition issues those that may be withheld from the at www.ise.com, at the principal office
between and among the exchanges and public in accordance with the of the Exchange, and at the
FINRA. provisions of 5 U.S.C. 552, will be Commission’s Public Reference Room.
available for Web site viewing and II. Self-Regulatory Organization’s
C. Self-Regulatory Organization’s printing in the Commission’s Public
Statement on Comments on the Statement of the Purpose of, and
Reference Room, 100 F Street NE., Statutory Basis for, the Proposed Rule
Proposed Rule Change Received From Washington, DC 20549, on official
Members, Participants, or Others Change
business days between the hours of
No written comments were either 10:00 a.m. and 3:00 p.m. Copies of the In its filing with the Commission, the
solicited or received. filing also will be available for Exchange included statements
inspection and copying at the principal concerning the purpose of and basis for
III. Date of Effectiveness of the office of the Exchange. All comments the proposed rule change and discussed
Proposed Rule Change and Timing for received will be posted without change; any comments it received on the
Commission Action the Commission does not edit personal proposed rule change. The text of these
Within 45 days of the date of identifying information from statements may be examined at the
publication of this notice in the Federal submissions. You should submit only places specified in Item IV below. The
Register or within such longer period information that you wish to make Exchange has prepared summaries, set
up to 90 days (i) as the Commission may available publicly. All submissions forth in sections A, B, and C below, of
designate if it finds such longer period should refer to File Number SR–PHLX– the most significant aspects of such
to be appropriate and publishes its 2017–47, and should be submitted on or statements.
reasons for so finding or (ii) as to which before July 14, 2017. A. Self-Regulatory Organization’s
the Exchange consents, the Commission For the Commission, by the Division of Statement of the Purpose of, and
will: Trading and Markets, pursuant to delegated Statutory Basis for, the Proposed Rule
(A) by order approve or disapprove authority.21 Change
such proposed rule change, or Eduardo A. Aleman,
(B) institute proceedings to determine 1. Purpose
Assistant Secretary.
whether the proposed rule change [FR Doc. 2017–13098 Filed 6–22–17; 8:45 am] The Exchange proposes to amend
should be disapproved. MRX Rule 804, entitled ‘‘Market Maker
BILLING CODE 8011–01–P
IV. Solicitation of Comments Quotations,’’ to specifically amend Rule
804(h) which addresses the Exchange’s
Interested persons are invited to quote traffic mitigation plan to adopt a
SECURITIES AND EXCHANGE
submit written data, views, and similar quote mitigation plan to that of
COMMISSION
arguments concerning the foregoing, NASDAQ PHLX LLC (‘‘Phlx’’).
including whether the proposed rule [Release No. 34–80974; File No. SR–MRX– ISE Mercury, LLC (now known as
change is consistent with the Act. 2017–09]
MRX) implemented its quote mitigation
Comments may be submitted by any of plan in 2013, at the time it filed its Form
the following methods: Self-Regulatory Organizations; Nasdaq
MRX, LLC; Notice of Filing and 1 application.3 At that time, MRX
Electronic Comments Immediate Effectiveness of Proposed adopted the same quote mitigation plan
Rule Change Regarding Quote that was in effect on ISE.4
• Use the Commission’s Internet MRX Rule 804(h) provides that MRX
comment form (http://www.sec.gov/ Mitigation
shall utilize a mechanism so that newly-
rules/sro.shtml); or June 19, 2017. received quotations and other changes
• Send an email to rule-comments@ Pursuant to Section 19(b)(1) of the to the Exchange’s best bid and offer are
sec.gov. Please include File Number SR– Securities Exchange Act of 1934 not disseminated for a period of up to,
PHLX–2017–47 on the subject line. (‘‘Act’’),1 and Rule 19b–4 thereunder,2
Paper Comments notice is hereby given that on June 15, 3 See Securities Exchange Release Act. No.76998
2017, Nasdaq MRX, LLC (‘‘MRX’’ or (January 29, 2016), 81 FR 6066 (February 4, 2016)
• Send paper comments in triplicate
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(File No. 10–221) (In the Matter of the Application
‘‘Exchange’’) filed with the Securities of ISE Mercury, LLC for Registration as a National
to Secretary, Securities and Exchange and Exchange Commission Securities Exchange; Findings, Opinion, and Order
Commission, 100 F Street NE., (‘‘Commission’’) the proposed rule of the Commission). This pilot has since been
Washington, DC 20549–1090. change as described in Items I, II, and extended several times.
All submissions should refer to File III, below, which Items have been 4 See Securities Exchange Release Act. No. 55161
Number SR–PHLX–2017–47. This file (February 1, 2007), 72 FR 4754 (January 24, 2007)
(SR–ISE–2006–62) (Order Granting Approval to
number should be included on the 21 17 CFR 200.30–3(a)(12). Proposed Rule Change as Modified by Amendment
subject line if email is used. To help the 1 15 U.S.C. 78s(b)(1). Nos. 1 and 2 Thereto, To Implement a Penny Pilot
Commission process and review your 2 17 CFR 240.19b–4. Program To Quote Certain Options in Pennies).
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Document Created: 2017-06-23 03:37:12
Document Modified: 2017-06-23 03:37:12
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| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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