83 FR 31804 - Self-Regulatory Organizations; National Futures Association; Notice of Filing and Immediate Effectiveness of Proposed Change to the Interpretive Notice to NFA Compliance Rule 2-30(b): Risk Disclosure Statement for Security Futures Contracts
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 131 (July 9, 2018)
Federal Register Volume 83, Issue 131 (July 9, 2018)
| Page Range | 31804-31806 | |
| FR Document | 2018-14669 |
[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)] [Notices] [Pages 31804-31806] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14669] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83589; File No. SR-NFA-2018-03] Self-Regulatory Organizations; National Futures Association; Notice of Filing and Immediate Effectiveness of Proposed Change to the Interpretive Notice to NFA Compliance Rule 2-30(b): Risk Disclosure Statement for Security Futures Contracts July 3, 2018. Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934 (``Exchange Act''),\1\ and Rule 19b-7 under the Exchange Act \2\ notice is hereby given that on June 19, 2018, National Futures Association (``NFA'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change described in Items I, II, and III below, which Items have been prepared by NFA. The Commission is publishing this notice to [[Page 31805]] solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(7). \2\ 17 CFR 240.19b-7. --------------------------------------------------------------------------- On June 7, 2018, NFA also filed this proposed rule change with the Commodity Futures Trading Commission (``CFTC'') and requested that the CFTC make a determination that review of the proposed rule change of NFA is not necessary. By letter dated June 18, 2018, the CFTC notified NFA of its determination not to review the proposed rule change.\3\ --------------------------------------------------------------------------- \3\ See letter from Matthew Kulkin, Director CFTC, to Carol A. Wooding, General Counsel, NFA (``Letter''). --------------------------------------------------------------------------- The text of the proposed rule change is available at the self- regulatory organization's office, on the NFA's website at www.nfa.futures.org, and at the SEC's Public Reference Room. I. Self-Regulatory Organization's Description and Text of the Proposed Rule Change NFA's Interpretive Notice 9050 entitled ``NFA Compliance Rule 2- 30(b): Risk Disclosure Statement for Security Futures Contracts'' (``Interpretive Notice 9050'') requires NFA Members and Associates (``Member'') who are registered as brokers or dealers under Section 15(b)(11) of the Exchange Act \4\ to provide a disclosure statement for security futures products (``SFPs'') to a customer at or before the time the Member approves the account to trade SFPs. This risk disclosure statement contains, among other things, a section on settlement by physical delivery, which indicates that the normal clearance and settlement cycle for securities transactions is three business days. NFA is amending Section 5.2 of Interpretive Notice 9050 to update the disclosure statement for SFPs to reflect the shortened settlement cycle from three business days to two business days. --------------------------------------------------------------------------- \4\ 15 U.S.C 78o(b)(11). --------------------------------------------------------------------------- NFA is also amending Section 6.1 of Interpretive Notice 9050 to reflect the current address for the Securities Investor Protection Corporation (``SIPC''). Further, NFA is amending Interpretive Notice 9050 to incorporate other non-substantive changes. The text of the proposed rule changes to Interpretive Notice 9050 is found in Exhibit 4. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for the Proposed Rule Change In its filing with the Commission, NFA 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. NFA 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 Section 15A(k) of the Exchange Act \5\ makes NFA a national securities association for the limited purpose of regulating the activities of NFA Members who are registered as brokers or dealers in security futures products under Section 15(b)(11) of the Exchange Act.\6\ NFA's Interpretive Notice 9050 applies to all NFA Members who meet the criteria outlined in Interpretive Notice 9050, including those that are registered as security futures brokers or dealers under Section 15(b)(11) of the Exchange Act.\7\ --------------------------------------------------------------------------- \5\ 15 U.S.C. 78o-3(k). \6\ 15 U.S.C. 78o(b)(11). \7\ Id. --------------------------------------------------------------------------- The risk disclosure statement for SFPs is a uniform statement that was jointly developed in 2002 by NFA, FINRA, and a number of securities and futures exchanges. The statement discusses the characteristics and risk of standardized security futures contracts traded on regulated U.S. exchanges and indicates that the settlement by physical delivery is three business days. On September 5, 2017, the securities industry moved from a T+3 settlement cycle to a T+2 settlement cycle for in-scope securities trades, including U.S. equity trades. Accordingly, NFA's amendment to Section 5.2 of Interpretive Notice 9050 is nothing more than a technical amendment to update the disclosure statement for SFPs to reflect the shortened settlement cycle from three business days to two business days. NFA is also amending Section 6.1 of Interpretive Notice 9050 to provide the current contact information for SIPC and to change the spelling of ``broker/dealer'' to ``broker-dealer''. To incorporate other non-substantive changes, NFA is amending Interpretive Notice 9050 in Section 2.4 to correct a cross-reference and in Section 8.2 to remove an extraneous word. FINRA has amended and submitted the proposed changes to the SEC for approval. Amendments to NFA Interpretive Notice 9050 were previously filed with the SEC in SR-NFA-2002-05, Exchange Act Release No. 34-46613 (Oct. 7, 2002), 67 FR 64176 (Oct. 17, 2002); SR-NFA-2002-06, Exchange Act Release No. 34-47150 (Jan. 9, 2003), 68 FR 2381 (Jan. 16, 2003); SR- NFA-2007-07, Exchange Act Release No. 34-57142 (Jan. 14, 2008), 73 FR 3502 (Jan. 18, 2008); SR-NFA-2010-02, Exchange Act Release No. 34-62624 (Aug. 2, 2010), 75 FR 47666 (Aug. 6, 2010); SR-NFA-2010-03, Exchange Act Release No. 34-62651 (Aug. 4, 2010), 75 FR 48393 (Aug. 10, 2010); and SR-NFA-2014-02, Exchange Act Release No. 34-71980 (Apr. 21, 2014), 79 FR 23027 (Apr. 25, 2014) . 2. Statutory Basis The proposed rule change is authorized by, and consistent with, Section 15A(k)(2)(B) of the Exchange Act.\8\ That Section requires NFA to have rules that are 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, including rules governing sales practices and advertising of security futures products. The proposed rule change accomplishes this by requiring Members to provide customers trading in SFPs with a risk disclosure statement which reflects the shortened settlement date of two days after the transaction. Accordingly, NFA is amending Interpretive Notice 9050 to update the disclosure statement for SFPs to reflect the shortened settlement cycle from T+3 to T+2. Further, NFA is amending Interpretive Notice 9050 to reflect the updated contact information for SIPC and other non-substantive stylistic changes. This proposal is not designed to regulate, by virtue of any authority conferred by the Exchange Act, matters not related to the purposes of the Exchange Act or the administration of the association. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78o-3(k). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition NFA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change would not impose any additional reporting requirements or costs on Members. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others NFA did not publish the rule change to the membership for comment. NFA [[Page 31806]] did not receive comment letters concerning the rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action On June 18, 2018, the CFTC notified NFA of its determination not to review the proposed rule change.\9\ The proposed rule change will become effective on July 18, 2018. --------------------------------------------------------------------------- \9\ See Letter, Supra note 3. --------------------------------------------------------------------------- At any time within 60 days of the date of effectiveness of the proposed rule change, the Commission, after consultation with the CFTC, may summarily abrogate the proposed rule change and require that the proposed rule change be refiled in accordance with the provisions of Section 19(b)(1) of the Exchange Act.\10\ --------------------------------------------------------------------------- \10\ 15 U.S.C. 78s(b)(1). --------------------------------------------------------------------------- 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 Exchange 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-NFA-2018-03 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-NFA-2018-03. 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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of NFA. 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 publicly available. All submissions should refer to File Number SR-NFA-2018-03 and should be submitted on or before July 30, 2018. --------------------------------------------------------------------------- \11\ 17 CFR 200.30-3(a)(73). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\11\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-14669 Filed 7-6-18; 8:45 am] BILLING CODE 8011-01-P
![31804 Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
to represent the then-current index A. Significantly affect the protection with respect to the proposed rule
value, but does not incorporate the of investors or the public interest; change that are filed with the
closing prices of the components that B. impose any significant burden on Commission, and all written
will be used to determine the settlement competition; and communications relating to the
value. This creates risk for Market- C. become operative for 30 days from proposed rule change between the
Makers and other liquidity providers, as the date on which it was filed, or such Commission and any person, other than
they have no data they can use to price shorter time as the Commission may those that may be withheld from the
the expiring options based on the designate, it has become effective public in accordance with the
ultimate settlement value. This may pursuant to Section 19(b)(3)(A) of the provisions of 5 U.S.C. 552, will be
result in trades at prices inconsistent Act 10 and Rule 19b–4(f)(6) 11 available for website viewing and
with the settlement value of those thereunder. printing in the Commission’s Public
options. The proposed rule change At any time within 60 days of the Reference Room, 100 F Street NE,
removes impediments to and perfects filing of the proposed rule change, the Washington, DC 20549 on official
the mechanism of a free and open Commission summarily may business days between the hours of
market by eliminating this pricing risk temporarily suspend such rule change if 10:00 a.m. and 3:00 p.m. Copies of the
for liquidity providers on the last it appears to the Commission that such filing also will be available for
trading day of expiring series in these action is necessary or appropriate in the inspection and copying at the principal
products. The Exchange believes this public interest, for the protection of office of the Exchange. All comments
may encourage additional liquidity investors, or otherwise in furtherance of received will be posted without change.
providers to participate on the last the purposes of the Act. If the Persons submitting comments are
trading of expiring series, which may Commission takes such action, the cautioned that we do not redact or edit
provide more competitive pricing and Commission shall institute proceedings personal identifying information from
additional trading opportunities for to determine whether the proposed rule comment submissions. You should
expiring series, and ultimately benefits change should be approved or submit only information that you wish
investors. disapproved. to make available publicly. All
Other options stop trading on the IV. Solicitation of Comments submissions should refer to File
business day preceding expiration. For Number SR–CBOE–2018–048 and
Interested persons are invited to
example, the last day of trading for non- should be submitted on or before July
submit written data, views, and
volatility a.m.-settled index options is 30, 2018.
arguments concerning the foregoing,
the business day preceding the
including whether the proposed rule For the Commission, by the Division of
expiration date.9 Trading and Markets, pursuant to delegated
change is consistent with the Act.
B. Self-Regulatory Organization’s Comments may be submitted by any of authority.12
Statement on Burden on Competition the following methods: Eduardo A. Aleman,
Cboe Options does not believe that Assistant Secretary.
Electronic Comments
the proposed rule change will impose [FR Doc. 2018–14548 Filed 7–6–18; 8:45 am]
• Use the Commission’s internet
any burden on competition that is not BILLING CODE P
comment form (http://www.sec.gov/
necessary or appropriate in furtherance
rules/sro.shtml); or
of the purposes of the Act. The • Send an email to rule-comments@
proposed rule change will apply to all SECURITIES AND EXCHANGE
sec.gov. Please include File Number SR– COMMISSION
market participants that trade EAFE and CBOE–2018–048 on the subject line.
EM options. As discussed above, the [Release No. 34–83589; File No. SR–NFA–
proposed rule change may eliminate a Paper Comments 2018–03]
pricing risk for Market-Makers and other • Send paper comments in triplicate
liquidity providers, which may provide to Secretary, Securities and Exchange Self-Regulatory Organizations;
more competitive pricing and additional Commission, 100 F Street NE, National Futures Association; Notice
trading opportunities for expiring series Washington, DC 20549–1090. of Filing and Immediate Effectiveness
and ultimately benefit investors. The All submissions should refer to File of Proposed Change to the Interpretive
proposed rule change applies to EAFE Number SR–CBOE–2018–048. This file Notice to NFA Compliance Rule 2–
and EM options, which only trade on number should be included on the 30(b): Risk Disclosure Statement for
Cboe Options. Other options stop subject line if email is used. To help the Security Futures Contracts
trading on the business day preceding Commission process and review your July 3, 2018.
expiration. comments more efficiently, please use Pursuant to Section 19(b)(7) of the
C. Self-Regulatory Organization’s only one method. The Commission will Securities Exchange Act of 1934
Statement on Comments on the post all comments on the Commission’s (‘‘Exchange Act’’),1 and Rule 19b–7
Proposed Rule Change Received From internet website (http://www.sec.gov/ under the Exchange Act 2 notice is
Members, Participants, or Others rules/sro.shtml). Copies of the hereby given that on June 19, 2018,
submission, all subsequent National Futures Association (‘‘NFA’’)
The Exchange neither solicited nor
amendments, all written statements filed with the Securities and Exchange
received comments on the proposed
rule change. 10 15
Commission (‘‘SEC’’ or ‘‘Commission’’)
U.S.C. 78s(b)(3)(A).
sradovich on DSK3GMQ082PROD with NOTICES
the proposed rule change described in
III. Date of Effectiveness of the 11 17
CFR 240.19b–4(f)(6). In addition, Rule 19b–
Items I, II, and III below, which Items
Proposed Rule Change and Timing for 4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent have been prepared by NFA. The
Commission Action to file the proposed rule change along with a brief Commission is publishing this notice to
Because the foregoing proposed rule description and the text of the proposed rule
change, at least five business days prior to the date
change does not: of filing of the proposed rule change, or such
12 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(7).
shorter time as designated by the Commission. The
9 Cboe Options Rule 24.9(a)(4). Exchange has satisfied this requirement. 2 17 CFR 240.19b–7.
VerDate Sep<11>2014 18:00 Jul 06, 2018 Jkt 244001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\09JYN1.SGM 09JYN1](https://thefederalregister.org/doc/83_FR_31935/page/1.svg)
![31806 Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
did not receive comment letters Reference Room, 100 F Street NE, with the Commission a proposed rule
concerning the rule change. Washington, DC 20549, on official change to amend Rule 11.420
business days between the hours of concerning the Order Audit Trail
III. Date of Effectiveness of the
10:00 a.m. and 3:00 p.m. Copies of such System (‘‘OATS’’) requirements to make
Proposed Rule Change and Timing for
filing also will be available for conforming and technical changes. The
Commission Action Exchange has designated this rule
inspection and copying at the principal
On June 18, 2018, the CFTC notified office of NFA. All comments received change as ‘‘non-controversial’’ under
NFA of its determination not to review will be posted without change. Persons Section 19(b)(3)(A) of the Act 6 and
the proposed rule change.9 The submitting comments are cautioned that provided the Commission with the
proposed rule change will become we do not redact or edit personal notice required by Rule 19b–4(f)(6)
effective on July 18, 2018. identifying information from comment thereunder.7
At any time within 60 days of the date submissions. You should submit only The text of the proposed rule change
of effectiveness of the proposed rule information that you wish to make is available at the Exchange’s website at
change, the Commission, after publicly available. All submissions www.iextrading.com, at the principal
consultation with the CFTC, may should refer to File Number SR–NFA– office of the Exchange, and at the
summarily abrogate the proposed rule 2018–03 and should be submitted on or Commission’s Public Reference Room.
change and require that the proposed before July 30, 2018. II. Self-Regulatory Organization’s
rule change be refiled in accordance
For the Commission, by the Division of Statement of the Purpose of, and the
with the provisions of Section 19(b)(1) Trading and Markets, pursuant to delegated Statutory Basis for, the Proposed Rule
of the Exchange Act.10 authority.11 Change
IV. Solicitation of Comments Eduardo A. Aleman,
In its filing with the Commission, the
Interested persons are invited to Assistant Secretary. self-regulatory organization included
submit written data, views, and [FR Doc. 2018–14669 Filed 7–6–18; 8:45 am] statements concerning the purpose of
arguments concerning the foregoing, BILLING CODE 8011–01–P and basis for the proposed rule change
including whether the proposed rule and discussed any comments it received
change is consistent with the Exchange on the proposed rule change. The text
Act. Comments may be submitted by SECURITIES AND EXCHANGE of these statement [sic] may be
any of the following methods: COMMISSION examined at the places specified in Item
[Release No. 34–83586; File No. SR–IEX– IV below. The self-regulatory
Electronic Comments 2018–12] organization has prepared summaries,
• Use the Commission’s internet set forth in Sections A, B, and C below,
comment form (http://www.sec.gov/ Self-Regulatory Organizations: of the most significant aspects of such
rules/sro.shtml); or Investors Exchange LLC; Notice of statements.
• Send an email to rule-comments@ Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend A. Self-Regulatory Organization’s
sec.gov. Please include File Number SR–
Rule 11.420 Concerning the Order Statement of the Purpose of, and the
NFA–2018–03 on the subject line.
Audit Trail System Requirements To Statutory Basis for, the Proposed Rule
Paper Comments Change
Make Conforming and Technical
• Send paper comments in triplicate Changes 1. Purpose
to Secretary, Securities and Exchange
July 2, 2018. The Exchange is proposing to make
Commission, 100 F Street NE,
Pursuant to Section 19(b)(1) 1 of the three changes to Rule 11.420 related to
Washington, DC 20549–1090.
Securities Exchange Act of 1934 (the OATS reporting requirements to (1)
All submissions should refer to File amend Rule 11.420(a)(13) to permit
Number SR–NFA–2018–03. This file ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 21, members to route orders to two
number should be included on the Reporting Members for a defined period
subject line if email is used. To help the 2018, the Investors Exchange LLC
(‘‘IEX’’ or the ‘‘Exchange’’) filed with the of time provided certain conditions are
Commission process and review your met without losing the exception from
comments more efficiently, please use Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule the definition of ‘‘Reporting Member’’ in
only one method. The Commission will conformance to comparable provisions
post all comments on the Commission’s change as described in Items I and II
below, which Items have been prepared of the Financial Industry Regulatory
internet website (http://www.sec.gov/ Authority (‘‘FINRA’’) Rule 7410; (2)
rules/sro.shtml). Copies of the by the self-regulatory organization. The
Commission is publishing this notice to amend rule citations in Rule 11.420(c)
submission, all subsequent to correct [sic] citation to FINRA Rule
amendments, all written statements solicit comments on the proposed rule
change from interested persons. 7430 to FINRA Rule 4590; and (3)
with respect to the proposed rule amend the rule reference in Rule
change that are filed with the I. Self-Regulatory Organization’s 11.420(g) to correct the reference to
Commission, and all written Statement of the Terms of Substance of FINRA Rule 7470A to FINRA Rule 7470.
communications relating to the the Proposed Rule Change Each proposed change is described
proposed rule change between the Pursuant to the provisions of Section below.
Commission and any person, other than 19(b)(1) under the Act,4 and Rule 19b– First Change
sradovich on DSK3GMQ082PROD with NOTICES
those that may be withheld from the 4 thereunder,5 the Exchange is filing
public in accordance with the IEX Rule 11.420 imposes an
provisions of 5 U.S.C. 552, will be 11 17 CFR 200.30–3(a)(73). obligation on Exchange Members to
available for website viewing and 1 15 U.S.C. 78s(b)(1). record in electronic form and report to
printing in the Commission’s Public 2 15 U.S.C. 78a. FINRA on a daily basis certain
3 17 CFR 240.19b–4.
9 See Letter, Supra note 3. 4 15 U.S.C. 78s(b)(1). 6 15 U.S.C. 78s(b)(3)(A).
10 15 U.S.C. 78s(b)(1). 5 17 CFR 240.19b–4. 7 17 CFR 240.19b–4.
VerDate Sep<11>2014 18:00 Jul 06, 2018 Jkt 244001 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 E:\FR\FM\09JYN1.SGM 09JYN1](https://thefederalregister.org/doc/83_FR_31935/page/3.svg)
Document Created: 2018-07-07 00:42:26
Document Modified: 2018-07-07 00:42:26
| 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 31804 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR