83 FR 11256 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Eliminate the Fee for an Explained Decision
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 50 (March 14, 2018)
Federal Register Volume 83, Issue 50 (March 14, 2018)
| Page Range | 11256-11259 | |
| FR Document | 2018-05075 |
[Federal Register Volume 83, Number 50 (Wednesday, March 14, 2018)] [Notices] [Pages 11256-11259] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-05075] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82829; File No. SR-FINRA-2018-012] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Eliminate the Fee for an Explained Decision March 8, 2018. 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 February 21, 2018, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. FINRA has designated the proposed rule change as ``establishing or changing a due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal effective upon receipt of this filing by the Commission. 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. \3\ 15 U.S.C. 78s(b)(3)(A)(ii). \4\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rules 12214(e)(1) and 12904(g)(5) of the Code of Arbitration Procedure for Customer Disputes (``Customer Code'') and FINRA Rules 13214(e)(1) and 13904(g)(5) of the Code of Arbitration Procedure for Industry Disputes (``Industry Code'') (together, ``Codes'') to eliminate the $400 fee for an explained decision. Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets. * * * * * 12214. Payment of Arbitrators (a)-(d) No change. (e) Payment for Explained Decisions (1) The chairperson who is responsible for writing an explained decision pursuant to Rule 12904(g) will receive an additional honorarium of $400. [The panel will allocate the cost of the honorarium under Rule 12904(g) to the parties.] [[Page 11257]] (2) No change. 12904. Awards (a)-(f) No change. (g) Explained Decisions (1)-(4) No change. (5) The chairperson will receive an additional honorarium of $400 for writing the explained decision, as required by this paragraph (g). [The panel will allocate the cost of the chairperson's honorarium to the parties as part of the final award.] (6) No change. (h)-(j) No change. 13214. Payment of Arbitrators (a)-(d) No change. (e) Payment for Explained Decisions (1) The chairperson who is responsible for writing an explained decision pursuant to Rule 13904(g) will receive an additional honorarium of $400. [The panel will allocate the cost of the honorarium under Rule 13904(g) to the parties.] (2) No change. 13904. Awards (a)-(f) No change. (g) Explained Decisions (1)-(4) No change. (5) The chairperson will receive an additional honorarium of $400 for writing the explained decision, as required by this paragraph (g). [The panel will allocate the cost of the chairperson's honorarium to the parties as part of the final award.] (6) No change. (h)-(j) No change. * * * * * II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA 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. FINRA 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 In 2009, the Commission approved amendments to the Codes that required arbitrators to provide an explained decision at the parties' joint request.\5\ An explained decision is a fact-based award stating the general reasons for the arbitrators' decision; it is not required to include legal authorities or damage calculations.\6\ The chairperson of the panel is responsible for drafting the explained decision and receives an additional $400 honorarium for doing so.\7\ Under the Codes, the arbitrators allocate the $400 cost to the parties as part of the award.\8\ FINRA began waiving the $400 fee for an explained decision as of January 2017.\9\ In order to remove a potential obstacle to parties requesting an explained decision, FINRA is proposing to eliminate the $400 fee for an explained decision. FINRA will continue to pay the $400 honorarium to the chairperson. --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 59358 (Feb. 4, 2009), 74 FR 6,928 (Feb. 11, 2009) (Approval Order for SR-FINRA 2008-51). \6\ See FINRA Rules 12904(g)(2) and 13904(g)(2). \7\ See FINRA Rules 12904(g)(4) and 12904(g)(5); see also FINRA Rules 13904(g)(4) and 13904(g)(5). \8\ See FINRA Rules 12214(e)(1) and 12904(g)(5); see also FINRA Rules 13214(e)(1) and 13904(g)(5). \9\ Pursuant to FINRA Rules 12408 and 13412 (Director's Discretionary Authority), FINRA began waiving the $400 fee for an explained decision beginning on January 3, 2017. From January 3, 2017 through February 14, 2018, there have been two joint requests for explained decisions. --------------------------------------------------------------------------- The proposed rule change would amend FINRA Rules 12214(e)(1) and 13214(e)(1) (Payment of Arbitrators) and FINRA Rules 12904(g)(5) and 13904(g)(5) (Explained Decisions) to remove the provision that gives arbitrators express authority to allocate the $400 fee to the parties for an explained decision. By proposing to remove this provision, if parties jointly request an explained decision, the chairperson drafting the decision would receive $400 as currently provided in the rules; \10\ the fee, however, would not be assessed to the parties. FINRA believes the proposed rule change would remove a potential barrier to parties making joint requests for explained decisions.\11\ --------------------------------------------------------------------------- \10\ Since the explained decision amendments went into effect in 2009 until the end of 2016, parties have made 40 joint requests for explained decisions. Of the 40 requests, there have been 32 explained decisions issued; explained decisions were not issued for the remaining eight requests because either the cases settled or closed by other means. Parties also made two joint requests from January 3, 2017 through February 14, 2018. \11\ See supra note 10. --------------------------------------------------------------------------- As noted in Item 2 of this filing, FINRA has filed the proposed rule change for immediate effectiveness. The operative date will be February 21, 2018. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(5) of the Act,\12\ which requires, among other things, that FINRA rules provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system that FINRA operates or controls. FINRA believes that the elimination of the fee will decrease its revenue by a de minimis amount because currently there are few explained decisions: over the past year, eliminating the fee would have decreased FINRA's program revenues by $800.\13\ Moreover, not charging for explained decisions removes a potential obstacle to explained decisions, promoting transparency of decisions. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78o-3(b)(5). \13\ Since 2009, there have been approximately four joint requests for explained decisions on average per year. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition FINRA 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. A discussion of the economic impacts of the proposed amendments follows. (a) Need for the Rule FINRA began waiving the $400 fee for an explained decision as of January 2017. The proposal codifies and thereby makes permanent the elimination of the explained decision fee. (b) Economic Baseline The economic baseline for the proposal includes the current rules under the Codes that address the allocation of fees by arbitrators. The economic baseline for the proposal also includes the current practice of FINRA waiving the explained decision fee. The proposal is expected to affect parties to an arbitration including customers, member firms, and associated persons. Parties must make a joint request for an explained decision prior to the first scheduled hearing. Parties can benefit from an explained decision through a better understanding of the arbitrators' rationale for the award decision. An explained decision, however, could increase the time to resolution by providing parties with an additional basis to file a motion to vacate.\14\ An explained decision could also result in the public disclosure of information describing the potential wrongdoing of [[Page 11258]] a member firm or an associated person. This may cause a negative reputational effect and could lead to additional claims against the member firm or the associated person and a loss of business.\15\ --------------------------------------------------------------------------- \14\ Since 2009, there were seven motions to vacate out of 32 awards that included an explained decision. Three of the motions to vacate relate to industry cases, and four of the motions to vacate relate to cases with customers as claimants. \15\ Among the 32 cases with an explained decision issued since 2009, approximately two-thirds resulted in a monetary award in favor of the claimants, and therefore could have resulted in additional negative disclosure of wrongdoing by industry parties as respondents. Explained decisions in intra-industry arbitration cases could result in additional negative disclosure of wrongdoing by either industry party. --------------------------------------------------------------------------- In order for parties to agree to a joint request, both parties would need to determine that the benefits of an explained decision are greater than its costs. In general, joint requests for an explained decision have been few. Since the explained decision rule became effective in 2009 until the end of 2016, there have been 40 joint requests for explained decisions with 32 explained decisions issued. There have been two additional joint requests after FINRA began waiving the explained decision fee in January 2017.\16\ Together, this evidence suggests that non-monetary costs of an explained decision are more important determinants to making a joint request. Otherwise, the waiving of the fee would have resulted in a relative increase in the number of joint requests. --------------------------------------------------------------------------- \16\ Over 7,600 cases have been filed and closed by hearing or by papers since the beginning of 2009. --------------------------------------------------------------------------- FINRA began waiving the explained decision fee in January 2017. Parties, however, could again be subject to a fee if FINRA were to decide to no longer waive the fee. The potential that FINRA may no longer waive the explained decision fee could be a constraint and thereby reduce the number of parties that make a joint request. (c) Economic Impact The primary benefit of the proposal is the permanent removal of the fee that could be a barrier to jointly requesting an explained decision. To the extent that a potential fee is a constraint, its removal from the Codes could increase the number of joint requests made by parties. The parties that would be more likely to file a joint request are the parties for which the benefits of an explained decision are greater than its costs not including the potential fee. Other than the permanent elimination of the fee, the benefits and costs of an explained decision would remain the same. Whether the proposed rule change would result in any additional requests for an explained decision could be dependent on whether the fee is a factor in their decision to make a joint request. As noted above, few parties jointly requested an explained decision prior to FINRA waiving the fee, and there have been only two joint requests for an explained decision since the waiver. This evidence suggests that non-monetary costs, other than the $400 fee, are more significant determinants of whether parties make a joint request. The removal of the fee from the Codes, therefore, is likely to have little effect on the frequency of requests made. The benefits and costs of the proposal are therefore also likely to be negligible. (d) Alternatives Considered A plausible alternative to the proposed amendments is an explained decision fee that is greater than zero but less than the $400 currently stated in the Codes. Similar to the current proposed amendments, this alternative would permanently establish the fee amount if parties jointly request an explained decision. A fee greater than zero but less than $400, however, would increase the costs to parties relative to the current proposal that seeks to eliminate the fee, thereby potentially reducing their incentives to make a joint request. As discussed above, the evidence suggests that the other potential costs of an explained decision are more significant determinants of whether parties make a joint request. This alternative, therefore, would increase the costs to parties that make a joint request but would have little effect on the frequency of requests made. 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \17\ and paragraph (f)(2) of Rule 19b-4 thereunder.\18\ At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- 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-FINRA-2018-012 on the subject line. Paper Comments Send paper comments in triplicate to Robert W. Errett, Deputy Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-FINRA-2018-012. 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 website (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 website 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 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR- FINRA-2018-012 and should be submitted on or before April 4, 2018. [[Page 11259]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-05075 Filed 3-13-18; 8:45 am] BILLING CODE 8011-01-P
![11256 Federal Register / Vol. 83, No. 50 / Wednesday, March 14, 2018 / Notices
provided to such an order. In sum, the Electronic Comments SECURITIES AND EXCHANGE
proposed changes to the ATR protection COMMISSION
will protect investors and the public • Use the Commission’s internet
comment form (http://www.sec.gov/ [Release No. 34–82829; File No. SR–FINRA–
interest by providing additional 2018–012]
protections designed to ensure that rules/sro.shtml); or
quotes and orders entered on the • Send an email to rule-comments@ Self-Regulatory Organizations;
Exchange are executed at reasonable sec.gov. Please include File Number SR– Financial Industry Regulatory
prices, and thereby perfect the ISE–2018–16 on the subject line. Authority, Inc.; Notice of Filing and
mechanism of a free and open market Immediate Effectiveness of a Proposed
and a national market system. Paper Comments
Rule Change Relating To Eliminate the
B. Self-Regulatory Organization’s • Send paper comments in triplicate Fee for an Explained Decision
Statement on Burden on Competition to Secretary, Securities and Exchange March 8, 2018.
Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the
The Exchange does not believe that Washington, DC 20549–1090. Securities Exchange Act of 1934
the proposed rule change will impose
All submissions should refer to File (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
any burden on competition that is not
Number SR–ISE–2018–16. This file notice is hereby given that on February
necessary or appropriate in furtherance 21, 2018, Financial Industry Regulatory
of the purposes of the Act. The number should be included on the
subject line if email is used. To help the Authority, Inc. (‘‘FINRA’’) filed with the
proposed rule change is designed to Securities and Exchange Commission
enhance the Exchange’s ATR protection Commission process and review your
(‘‘SEC’’ or ‘‘Commission’’) the proposed
by extending that protection to orders comments more efficiently, please use
rule change as described in Items I, II,
that are routed to away markets that did only one method. The Commission will
and III below, which Items have been
not first trade on the Exchange. The post all comments on the Commission’s
prepared by FINRA. FINRA has
proposed protection will apply equally internet website (http://www.sec.gov/ designated the proposed rule change as
to all orders that are routed to away rules/sro.shtml). Copies of the ‘‘establishing or changing a due, fee or
markets pursuant to the Linkage Plan. submission, all subsequent other charge’’ under Section
The Exchange believes that this change amendments, all written statements 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–
is the result of a competitive market with respect to the proposed rule 4(f)(2) thereunder,4 which renders the
where exchanges must continually change that are filed with the proposal effective upon receipt of this
improve the functionality offered to Commission, and all written filing by the Commission. The
market participants in order to remain communications relating to the Commission is publishing this notice to
competitive. proposed rule change between the solicit comments on the proposed rule
C. Self-Regulatory Organization’s Commission and any person, other than change from interested persons.
Statement on Comments on the those that may be withheld from the
I. Self-Regulatory Organization’s
Proposed Rule Change Received From public in accordance with the
Statement of the Terms of Substance of
Members, Participants, or Others provisions of 5 U.S.C. 552, will be the Proposed Rule Change
available for website viewing and
No written comments were either printing in the Commission’s Public FINRA is proposing to amend FINRA
solicited or received. Reference Room, 100 F Street NE, Rules 12214(e)(1) and 12904(g)(5) of the
Washington, DC 20549, on official Code of Arbitration Procedure for
III. Date of Effectiveness of the Customer Disputes (‘‘Customer Code’’)
Proposed Rule Change and Timing for business days between the hours of
and FINRA Rules 13214(e)(1) and
Commission Action 10:00 a.m. and 3:00 p.m. Copies of the
13904(g)(5) of the Code of Arbitration
filing also will be available for
Procedure for Industry Disputes
Within 45 days of the date of inspection and copying at the principal (‘‘Industry Code’’) (together, ‘‘Codes’’) to
publication of this notice in the Federal office of the Exchange. All comments eliminate the $400 fee for an explained
Register or within such longer period received will be posted without change. decision.
up to 90 days (i) as the Commission may Persons submitting comments are Below is the text of the proposed rule
designate if it finds such longer period cautioned that we do not redact or edit change. Proposed new language is in
to be appropriate and publishes its personal identifying information from italics; proposed deletions are in
reasons for so finding or (ii) as to which comment submissions. You should brackets.
the self-regulatory organization submit only information that you wish
consents, the Commission will: * * * * *
to make available publicly. All
(A) By order approve or disapprove submissions should refer to File 12214. Payment of Arbitrators
such proposed rule change, or Number SR–ISE–2018–16 and should be (a)–(d) No change.
(B) institute proceedings to determine submitted on or before April 4, 2018. (e) Payment for Explained Decisions
whether the proposed rule change (1) The chairperson who is
For the Commission, by the Division of
should be disapproved. responsible for writing an explained
Trading and Markets, pursuant to delegated
decision pursuant to Rule 12904(g) will
authority.8
IV. Solicitation of Comments receive an additional honorarium of
Eduardo A. Aleman, $400. [The panel will allocate the cost
daltland on DSKBBV9HB2PROD with NOTICES
Interested persons are invited to Assistant Secretary. of the honorarium under Rule 12904(g)
submit written data, views, and [FR Doc. 2018–05163 Filed 3–13–18; 8:45 am] to the parties.]
arguments concerning the foregoing,
BILLING CODE 8011–01–P
including whether the proposed rule 1 15 U.S.C. 78s(b)(1).
change is consistent with the Act. 2 17 CFR 240.19b–4.
Comments may be submitted by any of 3 15 U.S.C. 78s(b)(3)(A)(ii).
the following methods: 8 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(2).
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![Federal Register / Vol. 83, No. 50 / Wednesday, March 14, 2018 / Notices 11257
(2) No change. decision at the parties’ joint request.5 of Section 15A(b)(5) of the Act,12 which
An explained decision is a fact-based requires, among other things, that
12904. Awards
award stating the general reasons for the FINRA rules provide for the equitable
(a)–(f) No change. arbitrators’ decision; it is not required to allocation of reasonable dues, fees and
(g) Explained Decisions include legal authorities or damage other charges among members and
(1)–(4) No change. calculations.6 The chairperson of the issuers and other persons using any
(5) The chairperson will receive an panel is responsible for drafting the facility or system that FINRA operates
additional honorarium of $400 for explained decision and receives an or controls. FINRA believes that the
writing the explained decision, as additional $400 honorarium for doing elimination of the fee will decrease its
required by this paragraph (g). [The so.7 Under the Codes, the arbitrators revenue by a de minimis amount
panel will allocate the cost of the allocate the $400 cost to the parties as because currently there are few
chairperson’s honorarium to the parties part of the award.8 FINRA began explained decisions: over the past year,
as part of the final award.] waiving the $400 fee for an explained eliminating the fee would have
(6) No change. decision as of January 2017.9 In order to decreased FINRA’s program revenues by
(h)–(j) No change. remove a potential obstacle to parties $800.13 Moreover, not charging for
requesting an explained decision, explained decisions removes a potential
13214. Payment of Arbitrators FINRA is proposing to eliminate the obstacle to explained decisions,
(a)–(d) No change. $400 fee for an explained decision. promoting transparency of decisions.
(e) Payment for Explained Decisions FINRA will continue to pay the $400
honorarium to the chairperson. B. Self-Regulatory Organization’s
(1) The chairperson who is Statement on Burden on Competition
The proposed rule change would
responsible for writing an explained
amend FINRA Rules 12214(e)(1) and FINRA does not believe that the
decision pursuant to Rule 13904(g) will
13214(e)(1) (Payment of Arbitrators) and proposed rule change will result in any
receive an additional honorarium of
FINRA Rules 12904(g)(5) and burden on competition that is not
$400. [The panel will allocate the cost 13904(g)(5) (Explained Decisions) to
of the honorarium under Rule 13904(g) necessary or appropriate in furtherance
remove the provision that gives of the purposes of the Act. A discussion
to the parties.] arbitrators express authority to allocate
(2) No change. of the economic impacts of the proposed
the $400 fee to the parties for an amendments follows.
13904. Awards explained decision. By proposing to
remove this provision, if parties jointly (a) Need for the Rule
(a)–(f) No change. request an explained decision, the FINRA began waiving the $400 fee for
(g) Explained Decisions chairperson drafting the decision would an explained decision as of January
(1)–(4) No change. receive $400 as currently provided in 2017. The proposal codifies and thereby
(5) The chairperson will receive an the rules; 10 the fee, however, would not makes permanent the elimination of the
additional honorarium of $400 for be assessed to the parties. FINRA explained decision fee.
writing the explained decision, as believes the proposed rule change
required by this paragraph (g). [The would remove a potential barrier to (b) Economic Baseline
panel will allocate the cost of the parties making joint requests for The economic baseline for the
chairperson’s honorarium to the parties explained decisions.11 proposal includes the current rules
as part of the final award.] As noted in Item 2 of this filing, under the Codes that address the
(6) No change. FINRA has filed the proposed rule allocation of fees by arbitrators. The
(h)–(j) No change. change for immediate effectiveness. The economic baseline for the proposal also
* * * * * operative date will be February 21, includes the current practice of FINRA
2018. waiving the explained decision fee. The
II. Self-Regulatory Organization’s
Statement of the Purpose of, and 2. Statutory Basis proposal is expected to affect parties to
Statutory Basis for, the Proposed Rule an arbitration including customers,
FINRA believes that the proposed rule
Change member firms, and associated persons.
change is consistent with the provisions
Parties must make a joint request for
In its filing with the Commission, 5 See Securities Exchange Act Release No. 59358
an explained decision prior to the first
FINRA included statements concerning (Feb. 4, 2009), 74 FR 6,928 (Feb. 11, 2009) scheduled hearing. Parties can benefit
the purpose of and basis for the (Approval Order for SR–FINRA 2008–51). from an explained decision through a
proposed rule change and discussed any 6 See FINRA Rules 12904(g)(2) and 13904(g)(2). better understanding of the arbitrators’
comments it received on the proposed 7 See FINRA Rules 12904(g)(4) and 12904(g)(5);
rationale for the award decision. An
rule change. The text of these statements see also FINRA Rules 13904(g)(4) and 13904(g)(5). explained decision, however, could
8 See FINRA Rules 12214(e)(1) and 12904(g)(5);
may be examined at the places specified increase the time to resolution by
see also FINRA Rules 13214(e)(1) and 13904(g)(5).
in Item IV below. FINRA has prepared 9 Pursuant to FINRA Rules 12408 and 13412 providing parties with an additional
summaries, set forth in sections A, B, (Director’s Discretionary Authority), FINRA began basis to file a motion to vacate.14 An
and C below, of the most significant waiving the $400 fee for an explained decision explained decision could also result in
aspects of such statements. beginning on January 3, 2017. From January 3, 2017 the public disclosure of information
through February 14, 2018, there have been two
A. Self-Regulatory Organization’s joint requests for explained decisions. describing the potential wrongdoing of
10 Since the explained decision amendments went
Statement of the Purpose of, and
daltland on DSKBBV9HB2PROD with NOTICES
12 15 U.S.C. 78o–3(b)(5).
into effect in 2009 until the end of 2016, parties
Statutory Basis for, the Proposed Rule have made 40 joint requests for explained 13 Since 2009, there have been approximately four
Change decisions. Of the 40 requests, there have been 32 joint requests for explained decisions on average
explained decisions issued; explained decisions per year.
1. Purpose were not issued for the remaining eight requests 14 Since 2009, there were seven motions to vacate
In 2009, the Commission approved because either the cases settled or closed by other out of 32 awards that included an explained
means. Parties also made two joint requests from decision. Three of the motions to vacate relate to
amendments to the Codes that required January 3, 2017 through February 14, 2018. industry cases, and four of the motions to vacate
arbitrators to provide an explained 11 See supra note 10. relate to cases with customers as claimants.
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For the Commission, by the Division of forth in sections A, B, and C below, of language to a separate bullet under
Trading and Markets, pursuant to delegated the most significant aspects of such proposed Rule 714(a)(1)(ii). In addition,
authority.19 statements. proposed Rule 714(a)(1)(ii) will indicate
Eduardo A. Aleman, that the reference price is calculated
Assistant Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and upon receipt of a new order or quote,
[FR Doc. 2018–05075 Filed 3–13–18; 8:45 am]
Statutory Basis for, the Proposed Rule provided that if the applicable NBB or
BILLING CODE 8011–01–P
Change NBO price is improved at the time an
order is routed to an away market, a
1. Purpose new reference price is calculated based
SECURITIES AND EXCHANGE The Exchange offers an Acceptable on the NBB or NBO at that time.
COMMISSION Trade Range (‘‘ATR’’) protection that Although the Exchange will continue
prevents the execution of quotes and to use the NBB or NBO as the reference
[Release No. 34–82847; File No. SR–GEMX–
2018–09] orders on the regular order book outside price for the ATR protection, the
of set thresholds. The purpose of the Exchange believes that it is appropriate
Self-Regulatory Organizations; Nasdaq proposed rule change is to enhance this to update the reference price if the
GEMX, LLC; Notice of Filing of ATR protection for orders that are applicable NBB or NBO price is
Proposed Rule Change To Introduce routed to away markets pursuant to the improved at the time an order is routed
the ATR Protection for Orders That Are Options Order Protection and Locked/ to an away market. Orders that are
Routed to Away Markets Crossed Markets Plan (‘‘Linkage Plan’’) routed to away markets are eligible for
instead of being executed immediately the ‘‘Flash’’ auction process described
March 9, 2018. in Supplementary Material .02 to Rule
on the Exchange or resting on the
Pursuant to Section 19(b)(1) of the regular order book. 1901. When a Flash auction is initiated,
Securities Exchange Act of 1934 As codified in Rule 714(b)(1), the members are given an opportunity to
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Exchange’s trading system calculates an enter responses to trade with the order
notice is hereby given that on February Acceptable Trade Range to limit the for a time period established by the
26, 2018, Nasdaq GEMX, LLC (‘‘GEMX’’ range of prices at which an order or Exchange not to exceed one (1) second.5
or ‘‘Exchange’’) filed with the Securities quote will be allowed to execute.3 The Because the applicable NBB or NBO
and Exchange Commission Acceptable Trade Range is calculated by price may change during the Flash
(‘‘Commission’’) the proposed rule taking the reference price, plus or minus auction, the Exchange believes that it is
change as described in Items I and II, a value to be determined by the appropriate to consider the updated
below, which Items have been prepared Exchange (i.e., the reference price¥(x) NBB or NBO price at the time the order
by the Exchange. The Commission is for sell orders/quotes and the reference is actually routed to an away market, if
publishing this notice to solicit price + (x) for buy orders or quotes).4 doing so would provide additional
comments on the proposed rule change Upon receipt of a new order or quote, protection to the order—i.e., if the NBB
from interested persons. the reference price is the national best or NBO price used as the reference price
I. Self-Regulatory Organization’s bid (‘‘NBB’’) for sell orders/quotes and is improved at that time. If the NBB or
Statement of the Terms of Substance of the national best offer (‘‘NBO’’) for buy NBO price is not improved, the ATR
the Proposed Rule Change orders/quotes. If an order or quote protection will continue to use the NBB
reaches the outer limit of the Acceptable or NBO price on entry as the reference
The Exchange proposes to introduce Trade Range without being fully price, thereby providing the maximum
its Acceptable Trade Range protection executed then any unexecuted balance protection to the order. The following
for orders that are routed to away will be cancelled. examples illustrate how the ATR
markets pursuant to the Options Order Currently, the trading system protection will be applied to orders
Protection and Locked/Crossed Markets calculates an appropriate reference price routed to away markets:
Plan. for an incoming order or quote when Example 1
The text of the proposed rule change that order or quote rests or trades on the 1. ATR threshold set to $0.15 for non-penny
is available on the Exchange’s website at regular order book but not when orders symbols
http://nasdaqgemx.cchwallstreet.com/, are routed to an away market pursuant 2. NBBO is $0.90 (35) × $1.00 (25):
at the principal office of the Exchange, to the Linkage Plan without first trading a. BATS: $0.90 (10) × $1.00 (25)
and at the Commission’s Public b. CBOE: $0.90 (25) × $1.05 (25)
on the Exchange. The Exchange now c. MIAX: $0.85 (25) × $1.15 (25)
Reference Room. proposes to enhance its ATR protection d. GEMX: $0.85 (50) × $1.20 (50)
II. Self-Regulatory Organization’s by applying it to orders that are routed 3. Member enters a Limit Order to buy 200
Statement of the Purpose of, and to away markets without first trading on contracts at $1.20
Statutory Basis for, the Proposed Rule the Exchange. As proposed, Rule 4. Flash auction initiated at a price of $1.00
714(a)(1) will continue to provide that 5. CBOE quote improved establishing a new
Change
the reference price for the ATR NBBO of $0.90 (35) × $0.95 (25):
In its filing with the Commission, the protection is the NBB for sell orders/ a. BATS: $0.90 (10) × $1.00 (25)
Exchange included statements b. CBOE: $0.90 (25) × $0.95 (25)
quotes and the NBO for buy orders/
concerning the purpose of and basis for c. MIAX: $0.85 (25) × $1.15 (25)
quotes. For clarity, however, the d. GEMX: $0.85 (50) × $1.20 (50)
the proposed rule change and discussed Exchange proposes to move this
any comments it received on the 6. No responses entered and Flash auction
terminates and routes:
proposed rule change. The text of these
daltland on DSKBBV9HB2PROD with NOTICES
3 The ATR protection is not available for All-or-
a. 25 contracts to buy to CBOE at $0.95
statements may be examined at the None orders. b. 25 contracts to buy to BATS at $1.00
places specified in Item IV below. The 4 There are three categories of options for ATR: (1)
7. Because the NBO is improved at time of
Exchange has prepared summaries, set Penny Pilot Options trading in one cent increments
routing, the reference price is set to the
for options trading at less than $3.00 and
increments of five cents for options trading at $3.00 improved NBO price of $0.95,
19 17 CFR 200.30–3(a)(12). or more, (2) Penny Pilot Options trading in one-cent
1 15 U.S.C. 78s(b)(1). increments for all prices, and (3) Non-Penny Pilot 5 Currently, the exposure period for the Flash
2 17 CFR 240.19b–4. Options. auction is set to 150 milliseconds.
VerDate Sep<11>2014 18:17 Mar 13, 2018 Jkt 244001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\14MRN1.SGM 14MRN1](https://thefederalregister.org/doc/83_FR_11306/page/4.svg)
Document Created: 2018-03-14 01:06:40
Document Modified: 2018-03-14 01:06:40
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 11256 |
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