82 FR 39473 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Extend the Implementation Date For Certain Changes to Exchange Rules 14.11 and 14.12

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 159 (August 18, 2017)

[Federal Register Volume 82, Number 159 (Friday, August 18, 2017)]
[Notices]
[Pages 39473-39475]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-17432]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81387; File No. SR-BatsBZX-2017-50]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Extend the Implementation Date For 
Certain Changes to Exchange Rules 14.11 and 14.12

August 14, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 31, 2017, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to extend the date on which certain 
changes to Exchange Rules 14.11 and 14.12 would be implemented.
    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.

[[Page 39474]]

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
    On November 18, 2016 the Exchange filed a proposed rule change, as 
subsequently amended by Amendments No. 1 and 2 thereto (as amended, the 
``Proposed Rule Change''), to adopt certain changes to Exchange Rules 
14.11 and 14.12 to add additional continued listing standards for 
exchange-traded products (``ETP'') as well as clarify the procedures 
that the Exchange will undertake when an ETP is noncompliant with 
applicable rules. Given the scope of the amendments specified in the 
Proposed Rule Change, the Exchange proposed that such amendments not be 
implemented until October 1, 2017. On March 7, 2017, the Commission 
granted approval of the Proposed Rule Change, including the October 1, 
2017 implementation date. The Exchange now proposes to extend the 
implementation date of the amendments specified in the Proposed Rule 
Change to July 1, 2018.\3\
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    \3\ See Securities Exchange Act Release No. 80169 (March 7, 
2017), 82 FR 13536 (March 13, 2017) (SR-BatsBZX-2016-80).
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    Since the Proposed Rule Change was approved, the Exchange has 
engaged in extensive conversations with issuers of listed ETPs, 
industry advocacy groups and index providers to discuss the new rule 
requirements and offer guidance on rule interpretation and application. 
As a result of these conversations, ETP issuers have expressed concern 
about their ability to have in place systems and procedures to ensure 
compliance by the current October 1, 2017 implementation date. In 
particular, listed ETP issuers, and industry advocacy groups on their 
behalf, have explained that issuers will require time to design and 
test new compliance systems as well as engage in discussions with 
third-party providers to source and track new data elements required 
for rule compliance.\4\
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    \4\ See, for example, Letter, dated July 11, 2017, from Dorothy 
Donohue, Acting General Counsel, Investment Company Institute to 
Brent J. Fields, Secretary, Securities and Exchange Commission, 
available at https://www.sec.gov/comments/sr-nasdaq-2016-135/nasdaq2016135-1846208-155175.pdf.
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    The Exchange believes it is appropriate to extend the 
implementation date of the Proposed Rule Change to July 1, 2018 to 
provide listed ETP issuers with the time needed to develop and test 
their compliance procedures. In support of its proposal, the Exchange 
notes that the Proposed Rule Change imposes significant new compliance 
requirements on issuers that they have not been subject to previously. 
To meet these new compliance requirements, issuers must develop 
internal systems as well as coordinate with third-party service 
providers, such as index providers, to develop procedures by which they 
can obtain essential data. Listed issuers have informed the Exchange 
that they are unable to complete this extensive project by the pending 
October 1, 2017 implementation date. The Exchange believes that it is 
critical for listed ETP issuers to have the appropriate procedures and 
systems in place to monitor and evidence ETP compliance with the new 
continued listing rules before such rules are implemented. Therefore, 
the Exchange proposes to extend the implementation date for the 
Proposed Rule Change until July 1, 2018.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \5\ in general and Section 6(b)(5) of the Act \6\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
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    \5\ 15 U.S.C. 78f [sic].
    \6\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed amendment is consistent 
with the protection of investors because it will enable listed issuers 
to have the systems and procedures needed to monitor and evidence 
compliance with the Proposed Rule Change prior to such rule being 
implemented. Providing listed issuers with additional time to ensure 
that they have adequate compliance systems in place furthers the 
protection of investors and the public interest because it will enhance 
investor confidence that listed issuers are complying with Exchange 
rules.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate listed ETP issuers' ability to 
monitor and evidence compliance with approved continued listing rules 
by providing issuers with additional time to develop and test their 
internal systems and procedures prior to the implementation date.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    The Exchange received a copy of a letter from the Investment 
Company Institute, on behalf of listed ETP issuers, to the Securities 
Exchange [sic] Commission.\7\ As described in Item 3 [sic], above, the 
Investment Company Institute detailed challenges that listed ETP 
issuers are facing in developing compliance systems to address the 
amendments contained in the Proposed Rule Change and have requested 
that the implementation date for such amendments be extended to July 1, 
2018.
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    \7\ See Footnote 4, infra. [sic]
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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 self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

[[Page 39475]]

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-BatsBZX-2017-50 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 No. SR-BatsBZX-2017-50. 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 such filing will also 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 No. SR-BatsBZX-2017-50 and should be 
submitted on or before September 8, 2017.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-17432 Filed 8-17-17; 8:45 am]
BILLING CODE 8011-01-P