Self-Regulatory Organizations; BATS Exchange, Inc.; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend BATS Fee Schedule To Impose Fees for Physical Ports Used To Connect to BATS Exchange, 8769-8770 [2010-3822]
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Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices
result, FINRA stated that NASD IM–
2830–2 no longer serves any useful
purpose, and proposed not to
incorporate its content into the
consolidated FINRA rulebook.
Furthermore, FINRA proposed to repeal
Incorporated NYSE Rule 413, which
requires members to adopt such uniform
forms as the NYSE may prescribe to
facilitate the orderly flow of transactions
within the financial community. FINRA
stated that its By-Laws contain several
provisions by which FINRA may
prescribe processes for members’
activities, including the use of uniform
forms. Thus, FINRA stated that
Incorporated NYSE Rule 413 is
duplicative of these provisions and
should be repealed. In approving this
proposed rule change, the Commission
notes that FINRA members and their
associated persons are required to
comply with all applicable Federal
securities laws and that FINRA, as a
self-regulatory organization, has the
obligation to have the capacity to
enforce compliance by its members and
their associated persons with the Act
and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,6 that the
proposed rule change (SR–FINRA–
2009–093) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–3779 Filed 2–24–10; 8:45 am]
19b–4 thereunder,2 a proposed rule
change to amend the fee schedule
applicable to Members3 and nonmembers of the Exchange to begin
charging for certain physical ports used
to connect to the Exchange’s systems.
The proposed rule change was
published for comment in the Federal
Register on January 8, 2010.4 The
Commission received no comments
regarding the proposal. On February 9,
2010, the Exchange filed Amendment
No. 1 to the proposed rule change.5 This
order grants approval of the proposed
rule change, as modified by Amendment
No. 1.
BATS proposes to begin charging a
monthly fee for certain physical ports6
used to connect to the Exchange’s
system for order entry and receipt of
data from the Exchange.7 BATS states
that under its current policy all physical
ports are provided free of charge but
Members and non-members are only
permitted to establish up to four such
physical port pairs.8 Under the
proposal, BATS will continue to
provide four pairs of physical ports
without charge to any Member or nonmember that has been approved to
connect to the Exchange. In addition,
the Exchange will permit Members and
non-members to establish additional
physical ports at a charge of $2,000 for
each additional single physical port
provided by the Exchange to any
Member or non-member in any data
center. The proposal applies to all
Exchange constituents with physical
connections, including Members that
obtain ports for direct access to the
Exchange, non-member service bureaus
BILLING CODE 8011–01–P
2 17
CFR 240.19b–4.
Member is any registered broker or dealer that
has been admitted to membership in the Exchange.
See BATS Rule 1.5(n).
4 Securities Exchange Act Release No. 61260
(December 30, 2009), 75 FR 1109 (‘‘Notice’’).
5 In Amendment No. 1, the Exchange replaced the
bracketed ‘‘[September 1, 2009]’’ with ‘‘[February 1,
2010]’’ in the proposed rule text to reflect the fact
that the current fee schedule is dated February 1,
2010. Because the change in Amendment No. 1 is
technical in nature, it is not subject to notice and
comment.
6 The Exchange states that a physical port is used
by a Member or non-member to literally plug into
the Exchange at the data centers where the
Exchange’s servers are located (i.e., either a crossconnection or a private line Ethernet connection to
the Exchange’s network within the data center).
7 The Commission notes that BATS will
implement the proposed physical port fees
commencing on the first day of the month
immediately following Commission approval of this
proposed rule change (or on the date of approval,
if on the first business day of a month). See Notice,
supra note 4.
8 A ‘‘pair’’ of ports refers to one port at the site
of the Exchange’s primary data center (including
the expansion space located adjacent to such data
center) and one port at the site of the Exchange’s
secondary data center.
3A
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61545; File No. SR–BATS–
2009–032]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Order Approving
Proposed Rule Change, as Modified by
Amendment No. 1 Thereto, To Amend
BATS Fee Schedule To Impose Fees
for Physical Ports Used To Connect to
BATS Exchange
jlentini on DSKJ8SOYB1PROD with NOTICES
February 19, 2010.
On December 18, 2009, BATS
Exchange, Inc. (‘‘BATS’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
6 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
7 17
VerDate Nov<24>2008
16:34 Feb 24, 2010
Jkt 220001
PO 00000
Frm 00125
Fmt 4703
Sfmt 4703
8769
that act as a conduit for orders entered
by Exchange Members that are their
customers, Sponsored Participants, and
market data recipients.
The Exchange states that very few
Members or non-members require four
physical ports for their operations
related to the Exchange or would utilize
more than four physical ports, and thus,
the Exchange believes that the proposal
should not affect many of the
Exchange’s constituents. However, the
Exchange believes that Members and
non-members that wish to pay for
additional physical ports outside of
those provided for free should have the
ability to do so.
The Commission has carefully
reviewed the proposed rule change and
finds that it is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.9
Specifically, the Commission finds that
the proposal is consistent with Section
6(b)(4) of the Act,10 which requires the
equitable allocation of reasonable dues,
fees, and other charges among Exchange
Members and other persons using the
Exchange’s facilities, and Section 6(b)(5)
of the Act,11 which requires, among
other things, that the rules of a national
securities exchange be designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system and, in general, to protect
investors and the public interest, and
not be designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers. The
Commission also finds that the
proposed rule change is consistent with
Section 6(b)(8) of the Act,12 which
requires that the rules of an exchange
not impose a burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. Finally, the
Commission finds that the proposed
rule change is consistent with Rule
603(a) of Regulation NMS,13 which
requires an exclusive processor that
distributes information with respect to
quotations for or transactions in an NMS
stock to do so on terms that are fair and
reasonable and not unreasonably
discriminatory.
The Commission believes that the
proposed physical port fees are
equitably allocated among Members and
9 In approving this proposed rule change the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
10 15 U.S.C. 78f(b)(4).
11 15 U.S.C. 78f(b)(5).
12 15 U.S.C. 78f(b)(8).
13 17 CFR 242.603(a).
E:\FR\FM\25FEN1.SGM
25FEN1
8770
Federal Register / Vol. 75, No. 37 / Thursday, February 25, 2010 / Notices
non-members and do not unfairly or
unreasonably discriminate between
customers, issuers, brokers, or dealers
because the proposed physical port fees
do not distinguish among the type of
participant but rather are the same for
all Members and non-members. The
Commission also believes that BATS
was subject to significant competitive
pressure to act equitably, fairly, and
reasonably in setting the physical port
fees, in light of the highly competitive
nature of the market for execution and
routing services.14
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,15 that the
proposed rule change (SR–BATS–2009–
032), as modified by Amendment No. 1
thereto, be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–3822 Filed 2–24–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61543; File No. SR–FINRA–
2010–005]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change To Repeal
Incorporated NYSE Rule 405(4)
(Common Sales Accounts)
February 18, 2010.
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 January 21, 2010,
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. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
jlentini on DSKJ8SOYB1PROD with NOTICES
FINRA is proposing to repeal
Incorporated NYSE Rule 405(4)
14 See Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (SR–NYSEArca–2006–21).
15 15 U.S.C. 78s(b)(2).
16 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
VerDate Nov<24>2008
16:34 Feb 24, 2010
Jkt 220001
(Common Sales Accounts) as part of the
process to develop the consolidated
FINRA rulebook.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA 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,
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
As part of the process of developing
a new consolidated rulebook
(‘‘Consolidated FINRA Rulebook’’),3
FINRA is proposing to repeal NYSE
Rule 405(4) (Common Sales Accounts).4
NYSE Rule 405(4) (Common Sales
Accounts) requires proper supervision
of registered representatives handling
common sales accounts. The rule
provides that a member may facilitate
the isolated liquidation of securities
valued at $1,000 or less registered in the
name of an individual who does not
have an account, and which are not part
of any distribution, through a common
sales account set up for the specific
purpose of handling such sales. The rule
further provides that such sales may be
effected on behalf of the customer
without requiring the member to send a
periodic customer account statement to
the individual as otherwise generally
required, provided the following
conditions are satisfied: (1) The
3 The current FINRA rulebook consists of
(1) FINRA Rules; (2) NASD Rules; and (3) rules
incorporated from the New York Stock Exchange
(‘‘Incorporated NYSE Rules’’) (together, the NASD
Rules and Incorporated NYSE Rules are referred to
as the ‘‘Transitional Rulebook’’). While the NASD
Rules generally apply to all FINRA members, the
Incorporated NYSE Rules apply only to those
members of FINRA that are also members of the
NYSE (‘‘Dual Members’’). The FINRA Rules apply to
all FINRA members, unless such rules have a more
limited application by their terms. For more
information about the rulebook consolidation
process, see Information Notice, March 12, 2008
(Rulebook Consolidation Process).
4 For convenience, the Incorporated NYSE Rules
are referred to as the ‘‘NYSE Rules.’’
PO 00000
Frm 00126
Fmt 4703
Sfmt 4703
customer is identified as the individual
in whose name the securities are
registered; (2) the securities are received
by the member, at or prior to the time
of the entry of the order, in the exact
amount to be sold in good delivery
form; (3) a confirmation is sent to the
customer; (4) all proceeds of such sales
are paid out on or immediately
following settlement date; and (5) a
record is made in the common sales
account that includes certain customerspecific information.
FINRA believes that the rule as
written may raise potential investor
protection concerns. The term ‘‘isolated’’
is not defined.5 Further, NYSE Rule
405(4) permits a member to effect sales
of securities for customers without
expressly requiring prior customer
consent and without the need to send
periodic account statements to the
customer. For these reasons, FINRA
proposes to eliminate NYSE Rule 405(4)
and not adopt its content into the
Consolidated FINRA Rulebook.6
FINRA will announce the
implementation date of the proposed
rule change in a Regulatory Notice to be
published no later than 90 days
following Commission approval. The
implementation date will be no later
than 180 days following Commission
approval.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
5 NYSE Rule 405(4) was adopted by the NYSE in
the late 1960’s. In 1977, the NYSE proposed
amendments to Rule 405(4) to define the term
‘‘isolated’’ to mean ‘‘not exceeding five $2,000
transactions during any twelve-month period unless
otherwise approved by the NYSE,’’ and to allow
unsolicited purchases as well as sales of securities.
In late 1977, the SEC instituted proceedings to
determine whether to disapprove the proposed rule
change and identified the potential grounds for
disapproval. See Securities Exchange Act Release
No. 14143 (November 7, 1977) (Order Instituting
Proceedings to Determine Whether Proposed
Changes to Rule 405 Should be Disapproved; File
No. SR–NYSE–76–34). The SEC expressed concern
that ‘‘execution of such transactions, and in
particular of purchases [as proposed], in the
common purchase and sale account may permit
opportunities for fraudulent and manipulative acts
or practices[.]’’ In February 1978, the NYSE
withdrew the filing. See Securities Exchange Act
Release No. 14630 (April 3, 1978) (Order Approving
Withdrawal of NYSE’s Proposed Changes to Rule
405; File No. SR–NYSE–76–34).
6 FINRA notes that in the event a member may
seek permission not to send customer account
statements under certain limited circumstances,
proposed FINRA Rule 2231 which relates to
customer account statements, would authorize
FINRA to exempt members from the provisions of
such rule, including the requirement to deliver
periodic account statements, pursuant to the Rule
9600 Series. See Securities Exchange Act Release
No. 59921 (May 14, 2009), 74 FR 23912 (May 21,
2009) (Notice of Filing; File No. SR–FINRA–2009–
028).
E:\FR\FM\25FEN1.SGM
25FEN1
]]>Agencies
[Federal Register Volume 75, Number 37 (Thursday, February 25, 2010)]
[Notices]
[Pages 8769-8770]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-3822]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61545; File No. SR-BATS-2009-032]
Self-Regulatory Organizations; BATS Exchange, Inc.; Order
Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto,
To Amend BATS Fee Schedule To Impose Fees for Physical Ports Used To
Connect to BATS Exchange
February 19, 2010.
On December 18, 2009, BATS Exchange, Inc. (``BATS'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend the fee schedule applicable to Members\3\
and non-members of the Exchange to begin charging for certain physical
ports used to connect to the Exchange's systems. The proposed rule
change was published for comment in the Federal Register on January 8,
2010.\4\ The Commission received no comments regarding the proposal. On
February 9, 2010, the Exchange filed Amendment No. 1 to the proposed
rule change.\5\ This order grants approval of the proposed rule change,
as modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange. See BATS Rule 1.5(n).
\4\ Securities Exchange Act Release No. 61260 (December 30,
2009), 75 FR 1109 (``Notice'').
\5\ In Amendment No. 1, the Exchange replaced the bracketed
``[September 1, 2009]'' with ``[February 1, 2010]'' in the proposed
rule text to reflect the fact that the current fee schedule is dated
February 1, 2010. Because the change in Amendment No. 1 is technical
in nature, it is not subject to notice and comment.
---------------------------------------------------------------------------
BATS proposes to begin charging a monthly fee for certain physical
ports\6\ used to connect to the Exchange's system for order entry and
receipt of data from the Exchange.\7\ BATS states that under its
current policy all physical ports are provided free of charge but
Members and non-members are only permitted to establish up to four such
physical port pairs.\8\ Under the proposal, BATS will continue to
provide four pairs of physical ports without charge to any Member or
non-member that has been approved to connect to the Exchange. In
addition, the Exchange will permit Members and non-members to establish
additional physical ports at a charge of $2,000 for each additional
single physical port provided by the Exchange to any Member or non-
member in any data center. The proposal applies to all Exchange
constituents with physical connections, including Members that obtain
ports for direct access to the Exchange, non-member service bureaus
that act as a conduit for orders entered by Exchange Members that are
their customers, Sponsored Participants, and market data recipients.
---------------------------------------------------------------------------
\6\ The Exchange states that a physical port is used by a Member
or non-member to literally plug into the Exchange at the data
centers where the Exchange's servers are located (i.e., either a
cross-connection or a private line Ethernet connection to the
Exchange's network within the data center).
\7\ The Commission notes that BATS will implement the proposed
physical port fees commencing on the first day of the month
immediately following Commission approval of this proposed rule
change (or on the date of approval, if on the first business day of
a month). See Notice, supra note 4.
\8\ A ``pair'' of ports refers to one port at the site of the
Exchange's primary data center (including the expansion space
located adjacent to such data center) and one port at the site of
the Exchange's secondary data center.
---------------------------------------------------------------------------
The Exchange states that very few Members or non-members require
four physical ports for their operations related to the Exchange or
would utilize more than four physical ports, and thus, the Exchange
believes that the proposal should not affect many of the Exchange's
constituents. However, the Exchange believes that Members and non-
members that wish to pay for additional physical ports outside of those
provided for free should have the ability to do so.
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\9\ Specifically, the Commission finds that the proposal is
consistent with Section 6(b)(4) of the Act,\10\ which requires the
equitable allocation of reasonable dues, fees, and other charges among
Exchange Members and other persons using the Exchange's facilities, and
Section 6(b)(5) of the Act,\11\ which requires, among other things,
that the rules of a national securities exchange be designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest,
and not be designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The Commission also finds that the
proposed rule change is consistent with Section 6(b)(8) of the Act,\12\
which requires that the rules of an exchange not impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Act. Finally, the Commission finds that the proposed rule change
is consistent with Rule 603(a) of Regulation NMS,\13\ which requires an
exclusive processor that distributes information with respect to
quotations for or transactions in an NMS stock to do so on terms that
are fair and reasonable and not unreasonably discriminatory.
---------------------------------------------------------------------------
\9\ In approving this proposed rule change the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\10\ 15 U.S.C. 78f(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(8).
\13\ 17 CFR 242.603(a).
---------------------------------------------------------------------------
The Commission believes that the proposed physical port fees are
equitably allocated among Members and
[[Page 8770]]
non-members and do not unfairly or unreasonably discriminate between
customers, issuers, brokers, or dealers because the proposed physical
port fees do not distinguish among the type of participant but rather
are the same for all Members and non-members. The Commission also
believes that BATS was subject to significant competitive pressure to
act equitably, fairly, and reasonably in setting the physical port
fees, in light of the highly competitive nature of the market for
execution and routing services.\14\
---------------------------------------------------------------------------
\14\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\15\ that the proposed rule change (SR-BATS-2009-032), as modified
by Amendment No. 1 thereto, be, and it hereby is, approved.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3822 Filed 2-24-10; 8:45 am]
BILLING CODE 8011-01-P
