83 FR 23956 - Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Supplementary Material .03 to Rule 804 To Enhance Anti-Internalization Functionality
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 100 (May 23, 2018)
Federal Register Volume 83, Issue 100 (May 23, 2018)
| Page Range | 23956-23959 | |
| FR Document | 2018-10975 |
[Federal Register Volume 83, Number 100 (Wednesday, May 23, 2018)] [Notices] [Pages 23956-23959] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-10975] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83274; File No. SR-MRX-2018-15] Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Supplementary Material .03 to Rule 804 To Enhance Anti-Internalization Functionality May 17, 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 May 2, 2018, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III, 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 amend Supplementary Material .03 to Rule 804 to enhance anti-internalization functionality. The text of the proposed rule change is available on the Exchange's website at http://nasdaqmrx.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 [[Page 23957]] 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 The purpose of the proposed rule change is to enhance the anti- internalization (``AIQ'') functionality provided to Market Makers on the Exchange by giving members the flexibility to choose to have this protection apply at the market participant identifier level (i.e., existing functionality),\3\ at the Exchange account level, or at the member firm level. The Exchange believes that this enhancement will provide helpful flexibility for Market Makers that wish to prevent trading against all quotes and orders entered by their firm, or Exchange account, instead of just quotes and orders that are entered under the same market participant identifier. Similar functionality was also recently introduced on the Exchange's affiliated exchanges, Nasdaq PHLX LLC (``Phlx'') and NOM.\4\ The Exchange believes that introducing this functionality now on MRX will ensure that MRX Market Makers on will benefit from similar flexibility in applying this protection. --------------------------------------------------------------------------- \3\ Currently, the rule uses the term ``member identifier'' for this concept. The Exchange proposes to rename ``member identifier'' to ``market participant identifier'' to be consistent with terminology used on the Nasdaq Options Market (``NOM'') and to avoid member confusion that could result in using the similar terms ``member identifier'' and ``member firm identifier'' in this rule. \4\ See Phlx Rule 1080(p)(2); NOM Chapter VI, Sec. 10. See also Securities Exchange Act Release Nos. 82012 (November 3, 3017), 82 FR 52082 (November 9, 2017) (SR-Phlx-2017-93); 81171 (July 19, 2017), 82 FR 34557 (July 25, 2017) (SR-Nasdaq-2017-069). --------------------------------------------------------------------------- Currently, the Exchange provides mandatory AIQ functionality whereby quotes and orders entered by Market Makers using the same market participant identifier will not be executed against quotes and orders entered on the opposite side of the market by the same Market Maker using the same market participant identifier.\5\ When a quote or order entered by a Market Maker would trade with other quotes or orders from the same market participant identifier, the trading system cancels the resting quote or order back to the entering party prior to execution.\6\ This functionality shall not apply in any auction or with respect to complex order transactions. AIQ assists Market Makers in reducing trading costs from unwanted executions potentially resulting from the interaction of executable buy and sell trading interest from the same firm when performing the same market making function. --------------------------------------------------------------------------- \5\ See Supplementary Material .03 to Rule 804. This functionality shall not apply in any auction. \6\ Id. A quote or order entered by a Market Maker only triggers AIQ when it would trade with other quotes or orders from the same Market Maker. Thus, an incoming quote or order entered by a Market Maker may interact with other interest with priority on the book prior to triggering AIQ. After AIQ is triggered, the incoming quote or order may continue to trade with resting interest from other participants. --------------------------------------------------------------------------- Today, this protection prevents Market Makers from trading against their own quotes and orders at the market participant identifier level. The proposed enhancement to this functionality would allow members to choose to have this protection applied at the market participant identifier level as implemented today, at the Exchange account level, or at the member firm level. If members choose to have this protection applied at the Exchange account level, AIQ would prohibit quotes and orders from different market participant identifiers associated with the same Exchange account from trading against one another. Similarly, if the members choose to have this protection applied at the member firm level, AIQ would prohibit quotes and orders from different market participant identifiers within the member firm from trading against one another. Members that do not select to have this protection applied at the Exchange account level or member firm level will have their AIQ protection defaulted to the market participant identifier level protection applied today. The Exchange believes that the proposed AIQ enhancement will provide members with more tailored self-trade functionality that allows them to manage their trading as appropriate based on the members' business needs. While the Exchange believes that some firms will want to restrict AIQ to trading against interest from the same market participant identifier--i.e., as implemented today--the Exchange believes that other firms will find it helpful to be able to configure AIQ to apply at the Exchange account level or at the member firm level so that they are protected regardless of which market participant identifier the order or quote originated from. Similar flexibility is offered on the Exchange's affiliates, Phlx and NOM, and also on the CBOE BZX Exchange, Inc. (``BZX''), which provides members the ability to apply Match Trade Prevention (``MTP'') modifiers--i.e., BZX's version of self-trade protection--based on market participant, Exchange Member, trading group, or Exchange Sponsored Participant identifiers.\7\ --------------------------------------------------------------------------- \7\ See BZX Rule 21.1(g). --------------------------------------------------------------------------- The examples below illustrate how AIQ would operate based on the market participant identifier level protection, the Exchange account level, or for members that choose to apply AIQ at the member firm level: Example 1 1. Member ABC (market participant identifier 123A & 555B) with AIQ configured at the market participant identifier level. 2. 123A Quote: $1.00 (5) x $1.10 (20). 3. 555B Buy Order entered for 10 contracts at $1.10. 4. 555B Buy Order executes 10 contracts against 123A Quote. 123A and 555B are not prevented by the system from trading against one another because Member ABC has configured AIQ to apply at the market participant identifier level. This is the same as existing functionality. Example 2 1. Member ABC (Account 999 with market participant identifiers 123A and 555B, and Account 888 with market participant identifier 789A) with AIQ configured at the Exchange account level. 2. 123A Quote: $1.00 (5) x $1.10 (20). 3. 789A Quote: $1.05(10) x $1.10 (20). 4. 555B Buy Order entered for 30 contracts at $1.10. 5. 555B Buy Order executes against 789A Quote but 555B Buy Order does not execute against 123A Quote. AIQ purges the 123A Quote and the remaining contracts of the 555B Buy Order rests on the book at $1.10. 123A and 555B are not permitted trade against one another because Member ABC has configured AIQ to apply at the Exchange account level. This is new functionality as the member has opted to have AIQ operate at the Exchange account level. Example 3 1. Same as Example 2 above but Member ABC has AIQ configured at the member level. 2. AIQ purges the 123A Quote and the 789A Quote and the 555B Buy Order rests on the book at $1.10. This is new functionality as the member has opted to have AIQ operate at the member level. [[Page 23958]] Implementation The Exchange proposes to launch the AIQ functionality described in this proposed rule change in either Q2 or Q4 2018. The Exchange will announce the implementation date of this functionality in an Options Trader Alert issued to members prior to the launch date. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6(b) of the Act.\8\ In particular, the proposal is consistent with Section 6(b)(5) of the Act,\9\ because it is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f(b). \9\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Exchange believes that the proposed rule change is consistent with the protection of investors and the public interest as it is designed to provide Market Makers with additional flexibility with respect to how to implement self-trade protections provided by AIQ. Currently, all Market Makers are provided functionality that prevents quotes and orders from one market participant identifier from trading with quotes and orders from the same market participant identifier. This allows Market Makers to better manage their order flow and prevent undesirable executions where the Market Maker, using the same market participant identifier, would be on both sides of the trade. While this functionality is helpful to our members, some members would prefer not to trade with quotes and orders entered by different market participant identifiers within the same Exchange account or member. Thus, the Exchange is proposing to provide members with flexibility with respect to how AIQ is implemented. While members that like the current functionality can continue to use it, members who would prefer to prevent self-trades across different market participant identifiers within the same Exchange account or at the member level will now be provided with functionality that lets them do this. Similar flexibility is offered on Phlx and NOM, as well as BZX.\10\ The Exchange believes that flexibility to apply AIQ at the Exchange account or member firm level would be useful for the Exchange's members too. The Exchange believes that the proposed rule change is designed to promote just and equitable principles of trade and will remove impediments to and perfect the mechanisms of a free and open market as it will further enhance self-trade protections provided to Market Makers similar to those protections provided on other markets. This functionality does not relieve or otherwise modify the duty of best execution owed to orders received from public customers. --------------------------------------------------------------------------- \10\ See supra notes 4 and 7. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,\11\ the Exchange does not believe that the proposed rule change will impose any burden on intermarket or intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is designed to enhance AIQ functionality provided to Exchange Market Makers, and will benefit members that wish to protect their quotes and orders against trading with other quotes and orders within the same Exchange account or member, rather than the more limited market participant identifier standard applied today. The new functionality, which provides similar flexibility to that offered on Phlx, NOM, and BZX, is also completely voluntary, and members that wish to use the current functionality can also continue to do so. The Exchange does not believe that providing more flexibility to members will have any significant impact on competition. In fact, the Exchange believes that the proposed rule change is evidence of the competitive environment in the options industry where exchanges must continually improve their offerings to maintain competitive standing. --------------------------------------------------------------------------- \11\ 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 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\13\ --------------------------------------------------------------------------- \12\ 15 U.S.C. 78s(b)(3)(A)(iii). \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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. 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-MRX-2018-15 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-MRX-2018-15. 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 [[Page 23959]] 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 10:00 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. 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-MRX- 2018-15 and should be submitted on or before June 13, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-10975 Filed 5-22-18; 8:45 am] BILLING CODE 8011-01-P
![23956 Federal Register / Vol. 83, No. 100 / Wednesday, May 23, 2018 / Notices
to the operation of the Exchange and its temporarily suspend such rule change if that you wish to make available
use of market data feeds. it appears to the Commission that such publicly. All submissions should refer
action is necessary or appropriate in the to File Number SR–IEX–2018–10 and
C. Self-Regulatory Organization’s
public interest, for the protection of should be submitted on or before June
Statement on Comments on the
investors, or otherwise in furtherance of 13, 2018.
Proposed Rule Change Received From
the purposes of the Act. If the For the Commission, by the Division of
Members, Participants, or Others
Commission takes such action, the Trading and Markets, pursuant to delegated
Written comments were neither Commission shall institute proceedings authority.23
solicited nor received. to determine whether the proposed rule Eduardo A. Aleman,
III. Date of Effectiveness of the change should be approved or Assistant Secretary.
Proposed Rule Change and Timing for disapproved. [FR Doc. 2018–10976 Filed 5–22–18; 8:45 am]
Commission Action IV. Solicitation of Comments BILLING CODE 8011–01–P
Because the proposed rule change Interested persons are invited to
does not (i) significantly affect the submit written data, views and
protection of investors or the public SECURITIES AND EXCHANGE
arguments concerning the foregoing,
interest; (ii) impose any significant COMMISSION
including whether the proposed rule
burden on competition; and (iii) become change is consistent with the Act. [Release No. 34–83274; File No. SR–MRX–
operative for 30 days from the date on Comments may be submitted by any of 2018–15]
which it was filed, or such shorter time the following methods:
as the Commission may designate, it has Self-Regulatory Organizations; Nasdaq
become effective pursuant to Section Electronic Comments MRX, LLC; Notice of Filing and
19(b)(3)(A) of the Act 18 and Rule 19b– • Use the Commission’s internet Immediate Effectiveness of Proposed
4(f)(6) thereunder.19 comment form (http://www.sec.gov/ Rule Change To Amend
A proposed rule change filed rules/sro.shtml); or Supplementary Material .03 to Rule 804
pursuant to Rule 19b–4(f)(6) under the • Send an email to rule-comments@ To Enhance Anti-Internalization
Act 20 normally does not become sec.gov. Please include File Number SR– Functionality
operative for 30 days after the date of its IEX–2018–10 on the subject line.
May 17, 2018.
filing. However, Rule 19b–4(f)(6)(iii) 21
Paper Comments Pursuant to Section 19(b)(1) of the
permits the Commission to designate a
shorter time if such action is consistent • Send paper comments in triplicate Securities Exchange Act of 1934
with the protection of investors and the to Brent J. Fields, Secretary, Securities (‘‘Act’’),1 and Rule 19b–4 thereunder,2
public interest. The Exchange has asked and Exchange Commission, 100 F Street notice is hereby given that on May 2,
the Commission to waive the 30-day NE, Washington, DC 20549–1090. 2018, Nasdaq MRX, LLC (‘‘MRX’’ or
operative delay so that the proposal may All submissions should refer to File ‘‘Exchange’’) filed with the Securities
become operative immediately upon Number SR–IEX–2018–10. This file and Exchange Commission
filing, thus allowing IEX’s proposed rule number should be included in the (‘‘Commission’’) the proposed rule
change to reflect in its rules, prior to the subject line if email is used. To help the change as described in Items I, II, and
planned re-launch of XCIS, the source of Commission process and review your III, below, which Items have been
market data that the Exchange will comments more efficiently, please use prepared by the Exchange. The
utilize for determining XCIS Top of only one method. The Commission will Commission is publishing this notice to
Book quotes. The Commission does not post all comments on the Commission’s solicit comments on the proposed rule
believe that any new or novel issues are internet website (http://www.sec.gov/ change from interested persons.
raised by the proposal. For these rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s
reasons, the Commission believes the submission, all subsequent Statement of the Terms of Substance of
waiver of the operative delay is amendments, all written statements the Proposed Rule Change
consistent with the protection of with respect to the proposed rule
investors and the public interest. The Exchange proposes to amend
change that are filed with the
Therefore, the Commission hereby Supplementary Material .03 to Rule 804
Commission, and all written
waives the operative delay and to enhance anti-internalization
communications relating to the
designates the proposal operative upon functionality.
proposed rule change between the The text of the proposed rule change
filing.22 Commission and any person, other than
At any time within 60 days of the is available on the Exchange’s website at
those that may be withheld from the http://nasdaqmrx.cchwallstreet.com/, at
filing of the proposed rule change, the public in accordance with the
Commission summarily may the principal office of the Exchange, and
provisions of 5 U.S.C. 552, will be at the Commission’s Public Reference
available for website viewing and Room.
18 15 U.S.C. 78s(b)(3)(A).
19 17
printing in the Commission’s Public
CFR 240.19b–4(f)(6). As required under Rule II. Self-Regulatory Organization’s
19b–4(f)(6)(iii), the Exchange provided the
Reference Section, 100 F Street NE,
Commission with written notice of its intent to file Washington, DC 20549–1090. Copies of Statement of the Purpose of, and
the proposed rule change, along with a brief the filing will also be available for Statutory Basis for, the Proposed Rule
description and the text of the proposed rule inspection and copying at the IEX’s Change
change, at least five business days prior to the date
principal office and on its internet In its filing with the Commission, the
daltland on DSKBBV9HB2PROD with NOTICES
of filing of the proposed rule change, or such
shorter time as designated by the Commission. website at www.iextrading.com. All Exchange included statements
20 17 CFR 240.19b–4(f)(6). comments received will be posted concerning the purpose of and basis for
21 17 CFR 240.19b–4(f)(6)(iii).
without change. Persons submitting the proposed rule change and discussed
22 For purposes only of waiving the 30-day
comments are cautioned that we do not
operative delay, the Commission has also
considered the proposed rule’s impact on
redact or edit personal identifying 23 17 CFR 200.30–3(a)(12).
efficiency, competition, and capital formation. See information from comment submissions. 1 15 U.S.C. 78s(b)(1).
15 U.S.C. 78c(f). You should submit only information 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 17:33 May 22, 2018 Jkt 244001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 E:\FR\FM\23MYN1.SGM 23MYN1](https://thefederalregister.org/doc/83_FR_24056/page/1.svg)
![Federal Register / Vol. 83, No. 100 / Wednesday, May 23, 2018 / Notices 23959
public in accordance with the Register on February 16, 2018.1 The involves a full hearing with a single
provisions of 5 U.S.C. 552, will be public comment period closed on March arbitrator. Under the Customer Code, a
available for website viewing and 9, 2018. On March 28, 2018, FINRA customer may request a hearing
printing in the Commission’s Public extended the time period in which the (regardless of whether the customer is a
Reference Room, 100 F Street NE, Commission must approve the proposed claimant or respondent),4 and under the
Washington, DC 20549, on official rule change, disapprove the proposed Industry Code, the claimant may request
business days between the hours of rule change, or institute proceedings to a hearing.5 If a hearing is requested, it
10:00 a.m. and 3:00 p.m. Copies of the determine whether to approve or is generally held in-person, and there
filing also will be available for disapprove the proposed rule change to are no limits on the number of hearing
inspection and copying at the principal May 17, 2018. The Commission received sessions that can take place.
office of the Exchange. All comments 12 comment letters in response to the FINRA believes that forum users with
received will be posted without change. Notice.2 On May 7, 2018, FINRA claims involving $50,000 or less would
Persons submitting comments are responded to the comment letters benefit by having an additional,
cautioned that we do not redact or edit received in response to the Notice.3 intermediate form of adjudication that
personal identifying information from This order approves the proposal. would provide them with an
comment submissions. You should II. Description of the Proposed Rule opportunity to argue their cases before
submit only information that you wish Change an arbitrator in a shorter, limited
to make available publicly. All telephonic hearing format. Therefore,
submissions should refer to File The Codes provide two methods for FINRA is proposing to amend the Codes
Number SR–MRX–2018–15 and should administering arbitration cases with to include a Special Proceeding for
be submitted on or before June 13, 2018. claims involving $50,000 or less, Simplified Arbitration (‘‘Special
excluding interest and expenses. The Proceeding’’). The Special Proceeding
For the Commission, by the Division of default method is a decision by a single
Trading and Markets, pursuant to delegated would be limited to two hearing
arbitrator based on the parties’
authority.14 sessions, exclusive of prehearing
pleadings and other materials submitted
Eduardo A. Aleman, conferences,6 with parties being given
by the parties. The alternative method
Assistant Secretary. time limits for their presentations. As
[FR Doc. 2018–10975 Filed 5–22–18; 8:45 am] 1 See Exchange Act Release No. 34–82693
discussed above, parties with claims
(February 12, 2018), 83 FR 7086 (February 16, 2018) involving $50,000 or less are currently
BILLING CODE 8011–01–P
(‘‘Notice’’). limited to a decision based on the
2 See Letters from Steven B. Caruso, Maddox
pleadings and other materials submitted
Hargett & Caruso, P.C., dated February 13, 2018 by the parties, or a full hearing that
SECURITIES AND EXCHANGE (‘‘Caruso Letter’’); Andrew Stoltmann, President,
COMMISSION Public Investors Arbitration Bar Association, dated typically takes place in-person and is
March 6, 2018 (‘‘PIABA Letter’’); Eric Duhon and not limited in duration. While a party
[Release No. 34–83276; File No. SR–FINRA– Paige Foley, Student Attorneys, Investor Protection might wish for an opportunity to
2018–003] Clinic, William S. Boyd School of Law, University present his or her case to an arbitrator,
of Nevada, Las Vegas, dated March 6, 2018 (‘‘UNLV
Letter’’); Katherine Kokotos, Amrita Maitlall, and the travel and expenses associated with
Self-Regulatory Organizations; Sumaya Restagno, Legal Interns, and Christine a full hearing might prevent that party
Financial Industry Regulatory Lazaro, Director of the Securities Arbitration Clinic from requesting one. In addition, the
Authority, Inc.; Order Granting and Professor of Clinical Legal Education, St. John’s
prospect of cross-examination by an
Approval of a Proposed Rule Change University School of Law, dated March 6, 2018
(‘‘SJU Letter’’); Daniel P. Guernsey, Student Intern opposing party might act as a deterrent
Relating to Simplified Arbitration and Teresa J. Verges, Director, University of Miami for parties seeking to avoid a direct
School of Law Investor Rights Clinic, dated March confrontation with their opponents.
May 17, 2018. 6, 2018 (‘‘MIRC Letter’’); Jill I. Gross, Professor of
Law, Elisabeth Haub School of Law, Pace
FINRA noted that these concerns
I. Introduction University, dated march 8, 2018 (‘‘Gross Letter’’); particularly impact pro se, senior, and
On January 29, 2018, Financial William A. Jacobson, Clinical Professor of Law and seriously ill parties.
Director, Cornell Securities Law Clinic, and Sam The suggestion to propose an
Industry Regulatory Authority, Inc. Wildman, Cornell University Law School, dated
(‘‘FINRA’’) filed with the Securities and March 8, 2018 (‘‘Cornell Letter’’); Kevin M. Carroll, intermediate form of adjudication
Exchange Commission (‘‘Commission’’) Managing Director and Associate General Counsel, originated from the FINRA Dispute
pursuant to Section 19(b)(1) of the Securities Industry and Financial Markets Resolution Task Force (‘‘Task Force’’).7
Association, dated March 8, 2018 (‘‘SIFMA Letter’’); The Task Force observed that customers
Securities Exchange Act of 1934 Barbara Black, Professor of Law, University of
(‘‘Exchange Act’’) and Rule 19b–4 Cincinnati College of Law (Retired), dated March 8, whose cases were decided on the papers
thereunder, proposed amendments to 2018 (‘‘Black Letter’’); John Ripoli, Simon Halper, were the least satisfied of any group of
FINRA Rules 12600 and 12800 of the and Mark Sarno, Student Interns, and Elissa forum users. They also noted that, from
Germaine, Director, Investor Rights Clinic at the the arbitrator’s perspective, it is more
Code of Arbitration Procedure for Elisabeth Haub School of Law, Pace University,
Customer Disputes (‘‘Customer Code’’) dated March 8, 2018 (‘‘PIRC Letter’’); Abigail Howd,
4 See FINRA Rule 12800(c).
and 13600 and 13800 of the Code of Eric Peters, and Dowdy White, Student Interns, and
5 See FINRA Rule 13800(c).
Arbitration Procedure for Industry Nicole G. Iannarone, Assistant Clinical Professor,
Investor Advocacy Clinic, Georgia State University 6 See FINRA Rules 12100 and 13100 (Definitions).
Disputes (‘‘Industry Code,’’ and together College of Law, dated March 9, 2018 (‘‘GSU Under these rules, ‘‘hearing’’ means the hearing on
with the Customer Code, the ‘‘Codes’’), Letter’’); and Mark D. Norych, President and the merits of an arbitration and a ‘‘hearing session’’
to amend the hearing provisions to General Counsel, Arbitration Resolution Services, is defined as any meeting between the parties and
provide an additional hearing option for Inc., dated March 9, 2018 (‘‘ARS Letter’’). arbitrator(s) of four hours or less, including a
daltland on DSKBBV9HB2PROD with NOTICES
3 See Letter from Margo A. Hassan, Associate hearing or a prehearing conference.
parties in arbitration with claims of
Chief Counsel, FINRA Office of Dispute Resolution, 7 The Task Force was formed in 2014 to suggest
$50,000 or less, excluding interest and to the Commission, dated May 7, 2018 (‘‘FINRA strategies to enhance the transparency, impartiality,
expenses. Letter’’). The FINRA Letter is available on FINRA’s and efficiency of FINRA’s securities dispute
The proposed rule change was website at http://www.finra.org, at the principal resolution forum. On December 16, 2015, the Task
published for comment in the Federal office of FINRA, at the Commission’s website at Force issued its Final Report and
https://www.sec.gov/comments/sr-finra-2018-003/ Recommendations, available at http://
finra2018003-3590730-162342.pdf, and at the www.finra.org/sites/default/files/Final-DR-task-
14 17 CFR 200.30–3(a)(12). Commission’s Public Reference Room. force-report.pdf.
VerDate Sep<11>2014 18:08 May 22, 2018 Jkt 244001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\23MYN1.SGM 23MYN1](https://thefederalregister.org/doc/83_FR_24056/page/4.svg)
Document Created: 2018-05-22 23:49:16
Document Modified: 2018-05-22 23:49:16
| 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 23956 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR