Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Proposed Membership of Apex Clearing, 34431-34433 [2012-14073]
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Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 8 and Rule 19b–4(f)(6)(iii)
thereunder.9
A proposed rule change filed under
Rule 19b–4(f)(6) 10 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),11 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest.
The Exchange has asked the
Commission to waive the five-day prefiling requirement and the 30-day
operative delay so that the proposed
rule change may become operative
immediately upon filing. The
Commission notes that the Exchange is
proposing that certain of its rules
relating to membership requirements be
temporarily suspended so that Apex
Clearing can be provisionally approved
as a C2 Trading Permit Holder. The
proposed relief does not exempt Apex
Clearing from Exchange rule
requirements governing C2 Trading
Permit Holders. Apex Clearing would
have a 30 calendar day grace period
within which to apply for and be
approved under relevant Exchange
rules. Moreover, the Commission
believes that waiver of the 30-day
operative delay is appropriate to ensure
a smooth transition of PFSI operations
to Apex Clearing. In particular, given
the rapidity with which events have
developed, waiver of the 30-day
operative delay is necessary to avoid
significant disruption to PFSI’s existing
customers and the market generally.
Therefore, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest and
designates the proposed rule change as
operative upon filing.12
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
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) 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 Commission is
waiving this five-day pre-filing requirement.
10 17 CFR 240.19b–4(f)(6).
11 17 CFR 240.19b–4(f)(6)(iii).
12 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
srobinson on DSK4SPTVN1PROD with NOTICES
9 17
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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.
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 Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–C2–2012–018 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–C2–2012–018. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
34431
should refer to File Number SR–C2–
2012–018 and should be submitted on
or before July 2, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–14074 Filed 6–8–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67133; File No. SR–BYX–
2012–010]
Self-Regulatory Organizations; BATS
Y-Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to the Proposed
Membership of Apex Clearing
June 5, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 5,
2012, BATS Y-Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to temporarily
suspend the requirements of Exchange
Rule 2.6 and related Exchange rules
concerning the approval of new
Members 3 of the Exchange in order to
approve Apex Clearing Corporation,
f/k/a Ridge Clearing and Outsourcing
Solutions, Inc. (‘‘Apex Clearing’’) as an
Exchange Member, subject to Apex
Clearing complying with Exchange
Rules for a new Member within 30
calendar days of the date that Apex
Clearing is provisionally approved as an
Exchange Member. The Exchange is also
proposing to accept Apex Clearing’s
assumption of all of the existing clearing
agreements and arrangements currently
in effect between Penson Financial
Services Inc. (‘‘PFSI’’) and various other
13 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 A ‘‘Member’’ is defined in Rule 2.5(n) as any
registered broker or dealer that has been admitted
to membership in the Exchange.
1 15
E:\FR\FM\11JNN1.SGM
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34432
Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
Exchange Members by execution of a
global agreement thereto.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
srobinson on DSK4SPTVN1PROD with NOTICES
1. Purpose
The Exchange proposes this rule filing
to temporarily suspend the
requirements of Exchange Rule 2.6 and
related rules regarding the approval of
Members in order to immediately
approve Apex Clearing as an Exchange
Member. The Exchange proposes this
temporary suspension on an emergency
basis to ensure that Apex Clearing can
continue the clearing operations of PFSI
without unnecessary disruption, which
could have a significant collateral
impact to a number of other Members.
The proposed temporary suspension is
contingent upon Apex Clearing having
complied with all new Member
Exchange Rules within 30 calendar days
of the date Apex Clearing is
provisionally approved as an Exchange
Member pursuant to this filing.
On May 31, 2012, Apex Clearing
Holdings, LLC (‘‘Apex Holdings’’), Apex
Clearing Solutions, LLC, Broadridge
Financial Solutions, Inc. (‘‘Broadridge’’),
PFSI and Penson Worldwide, Inc.
(‘‘PWI’’) (together, the ‘‘Parties’’)
consummated a transaction resulting in
a change in ownership of Apex
Clearing.4 Broadridge, Apex Holdings,
PWI and PFSI each made capital
investments in Apex Holdings, the
holding company parent of Apex
Clearing. PFSI also assigned all of its
U.S. clearing contracts and all customer
4 Prior to the Transaction, Apex Clearing’s name
was Ridge Clearing & Outsourcing Solutions, Inc.
Prior to the transaction, Ridge Clearing &
Outsourcing Solutions, Inc. contributed its
outsourcing operations and all associated personnel
and systems to its affiliated entity, Broadridge
Securities Processing Solutions, LLC (‘‘BSPS’’)
where it will continue to provide operations
support and outsourcing services to a number of
broker-dealers, including Apex Clearing.
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Jkt 226001
and introducing broker proprietary
accounts along with key personnel to
Apex Clearing (the ‘‘Transferring
Accounts’’).5
As a result of the transaction, Apex
Clearing, which is not an Exchange
Member, will provide the clearing and
execution services currently provided to
the Transferring Accounts by PFSI. On
May 31, 2012, Apex Clearing submitted
an application for approval as an
Exchange Member. However because of
the expedited nature of the transaction,
Apex Clearing was unable to fully
comply with Exchange Rule 2.6 and
related new Member rules. Because of
the need for seamless continuity with
respect to the Transferring Accounts,
Apex Clearing has requested that the
Exchange temporarily suspend its new
Member rules in order to enable Apex
Clearing’s approval as a Member on an
expedited basis. Pursuant to its request,
Apex Clearing will fully comply with
the Exchange’s new Member
requirements within 30 calendar days
after provisional approval.
Exchange Rule 2.6 requires any
person who proposes to become a
Member of the Exchange to submit such
specified agreements and
supplementary information as may be
required by the Exchange. Among other
things, to be approved as an Exchange
Member, the applicant must:
• Provide the Exchange with a
written application with the name and
address of the applicant as well as an
agreement to abide by, comply with,
and adhere to the provisions of the
Exchange’s Rules (Exchange Rule 2.6);
• Submit to the Exchange partnership
or corporate documents as may be
applicable including applicable
corporate formation documents of the
applicant (Exchange Rule 2.6);
• Submit to the Exchange a list and
descriptive identification of those
persons associated with the applicant
who are its executive officers, directors,
principal shareholders, and general
partners (Exchange Rule 2.6); and
• Register associated persons with the
Exchange that satisfy the Exchange’s
registration requirements (Exchange
Rule 2.4, Interpretation and Policy .01,
.03).
In addition, the Exchange reviews
whether the applicant meets applicable
net capital requirements and conducts
other due diligence regarding an
applicant. Due to the amount of
information an applicant is required to
provide and have completed prior to
being approved as an Exchange
Member, the membership approval
5 See Penson Worldwide, Inc. Form 8–K dated
May 31, 2012.
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
process sometimes takes several months
to complete. The length of time varies
based on the timing of the applicant’s
response to requests for information and
documentation.
As proposed, Apex Clearing will
continue the clearing and certain other
operations of PFSI as of June 6, 2012. In
order to avoid interruption of the
services PFSI currently provides to
other Exchange Members, the Exchange
believes that Apex Clearing should be
approved immediately as an Exchange
Member. The Exchange notes that Apex
Clearing is already a registered broker
dealer and FINRA member, which
satisfies existing prerequisites for
becoming an Exchange Member.6
The Exchange therefore proposes
providing Apex Clearing with a
temporary suspension of Exchange Rule
2.6 and related membership rules as
they relate to approval to operate an
Exchange Member, and immediately
approving Apex Clearing as a Member.
As proposed this temporary suspension
is contingent upon Apex Clearing and
its associated persons’ compliance with
the Exchange’s new Member
requirements as set forth in Chapter II
of the Exchange’s Rules within 30
calendar days of Apex Clearing’s
approval as a Member under this
proposed filing. As proposed, if Apex
Clearing does not comply with all
applicable Exchange Member
application requirements within 30
calendar days of the effective date of
this filing, its status as an Exchange
Member will no longer be effective.
In addition, the Exchange proposes to
permit Apex Clearing to assume all
existing clearing agreements and
arrangements currently in effect with
other Exchange Members by execution
of global agreements thereto. Notice of
such assumption will be provided to
impacted Members prior to the effective
date thereof.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) 7 of the Securities Exchange Act of
1934 (the ‘‘Act’’), in general, and
furthers the objectives of Section
6(b)(5) 8 in particular in that it is
designed to promote just and equitable
principles of trade, to prevent
fraudulent and manipulative acts, to
remove impediments to and to perfect
the mechanism for a free and open
market and a national market system
6 Exchange Rule 2.3 requires registration as a
broker-dealer and membership with at least one
other registered national securities exchange or
association.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
E:\FR\FM\11JNN1.SGM
11JNN1
Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
and, in general, to protect investors and
the public interest. The Exchange
believes that permitting the expeditious
approval of Apex Clearing as an
Exchange Member will avoid
interruption of the services PFSI
currently provides to other Exchange
Members. Based on information and
representations provided by Apex
Clearing, a temporary suspension of
certain Exchange membership rules is
needed based on the expedited nature of
the transaction to enable seamless
continuity with respect to the
transferring accounts. Consequently, the
Exchange believes that temporary
suspension of its member organization
requirements so that Apex Clearing can
be approved immediately as an
Exchange Member will help to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities and is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change imposes any
burden on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
srobinson on DSK4SPTVN1PROD with NOTICES
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and Rule
19b–4(f)(6) thereunder.10 Because the
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
prior to 30 days from the date on which
it was filed, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 11 and Rule 19b–4(f)(6)(iii)
thereunder.12
U.S.C. 78s(b)(3)(A)(iii).
10 17 CFR 240.19b–4(f)(6).
11 15 U.S.C. 78s(b)(3)(A).
12 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule
19b–4(f)(6)(iii) 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
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),14 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest.
The Exchange has asked the
Commission to waive the five-day prefiling requirement and the 30-day
operative delay so that the proposed
rule change may become operative
immediately upon filing. The
Commission notes that the Exchange is
proposing that certain of its rules
relating to membership requirements be
temporarily suspended so that Apex
Clearing can be provisionally approved
as an Exchange Member. The proposed
relief does not exempt Apex Clearing
from Exchange rule requirements
governing Members. Apex Clearing
would have a 30 calendar day grace
period within which to apply for and be
approved under relevant Exchange
rules. Moreover, the Commission
believes that waiver of the 30-day
operative delay is appropriate to ensure
a smooth transition of PFSI operations
to Apex Clearing. In particular, given
the rapidity with which events have
developed, waiver of the 30-day
operative delay is necessary to avoid
significant disruption to PFSI’s existing
customers and the market generally.
Therefore, the Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest and
designates the proposed rule change as
operative upon filing.15
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.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
9 15
VerDate Mar<15>2010
20:21 Jun 08, 2012
Jkt 226001
designated by the Commission. The Commission is
waiving this five-day pre-filing requirement.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
PO 00000
Frm 00097
Fmt 4703
Sfmt 9990
34433
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–BYX–2012–010 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BYX–2012–010. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BYX–
2012–010 and should be submitted on
or before July 2, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–14073 Filed 6–8–12; 8:45 am]
BILLING CODE 8011–01–P
16 17
E:\FR\FM\11JNN1.SGM
CFR 200.30–3(a)(12).
11JNN1
]]>Agencies
[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Notices]
[Pages 34431-34433]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14073]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67133; File No. SR-BYX-2012-010]
Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
to the Proposed Membership of Apex Clearing
June 5, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 5, 2012, BATS Y-Exchange, Inc. (the ``Exchange'' or
``BYX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 temporarily suspend the requirements of
Exchange Rule 2.6 and related Exchange rules concerning the approval of
new Members \3\ of the Exchange in order to approve Apex Clearing
Corporation, f/k/a Ridge Clearing and Outsourcing Solutions, Inc.
(``Apex Clearing'') as an Exchange Member, subject to Apex Clearing
complying with Exchange Rules for a new Member within 30 calendar days
of the date that Apex Clearing is provisionally approved as an Exchange
Member. The Exchange is also proposing to accept Apex Clearing's
assumption of all of the existing clearing agreements and arrangements
currently in effect between Penson Financial Services Inc. (``PFSI'')
and various other
[[Page 34432]]
Exchange Members by execution of a global agreement thereto.
---------------------------------------------------------------------------
\3\ A ``Member'' is defined in Rule 2.5(n) as any registered
broker or dealer that has been admitted to membership in the
Exchange.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes this rule filing to temporarily suspend the
requirements of Exchange Rule 2.6 and related rules regarding the
approval of Members in order to immediately approve Apex Clearing as an
Exchange Member. The Exchange proposes this temporary suspension on an
emergency basis to ensure that Apex Clearing can continue the clearing
operations of PFSI without unnecessary disruption, which could have a
significant collateral impact to a number of other Members. The
proposed temporary suspension is contingent upon Apex Clearing having
complied with all new Member Exchange Rules within 30 calendar days of
the date Apex Clearing is provisionally approved as an Exchange Member
pursuant to this filing.
On May 31, 2012, Apex Clearing Holdings, LLC (``Apex Holdings''),
Apex Clearing Solutions, LLC, Broadridge Financial Solutions, Inc.
(``Broadridge''), PFSI and Penson Worldwide, Inc. (``PWI'') (together,
the ``Parties'') consummated a transaction resulting in a change in
ownership of Apex Clearing.\4\ Broadridge, Apex Holdings, PWI and PFSI
each made capital investments in Apex Holdings, the holding company
parent of Apex Clearing. PFSI also assigned all of its U.S. clearing
contracts and all customer and introducing broker proprietary accounts
along with key personnel to Apex Clearing (the ``Transferring
Accounts'').\5\
---------------------------------------------------------------------------
\4\ Prior to the Transaction, Apex Clearing's name was Ridge
Clearing & Outsourcing Solutions, Inc. Prior to the transaction,
Ridge Clearing & Outsourcing Solutions, Inc. contributed its
outsourcing operations and all associated personnel and systems to
its affiliated entity, Broadridge Securities Processing Solutions,
LLC (``BSPS'') where it will continue to provide operations support
and outsourcing services to a number of broker-dealers, including
Apex Clearing.
\5\ See Penson Worldwide, Inc. Form 8-K dated May 31, 2012.
---------------------------------------------------------------------------
As a result of the transaction, Apex Clearing, which is not an
Exchange Member, will provide the clearing and execution services
currently provided to the Transferring Accounts by PFSI. On May 31,
2012, Apex Clearing submitted an application for approval as an
Exchange Member. However because of the expedited nature of the
transaction, Apex Clearing was unable to fully comply with Exchange
Rule 2.6 and related new Member rules. Because of the need for seamless
continuity with respect to the Transferring Accounts, Apex Clearing has
requested that the Exchange temporarily suspend its new Member rules in
order to enable Apex Clearing's approval as a Member on an expedited
basis. Pursuant to its request, Apex Clearing will fully comply with
the Exchange's new Member requirements within 30 calendar days after
provisional approval.
Exchange Rule 2.6 requires any person who proposes to become a
Member of the Exchange to submit such specified agreements and
supplementary information as may be required by the Exchange. Among
other things, to be approved as an Exchange Member, the applicant must:
Provide the Exchange with a written application with the
name and address of the applicant as well as an agreement to abide by,
comply with, and adhere to the provisions of the Exchange's Rules
(Exchange Rule 2.6);
Submit to the Exchange partnership or corporate documents
as may be applicable including applicable corporate formation documents
of the applicant (Exchange Rule 2.6);
Submit to the Exchange a list and descriptive
identification of those persons associated with the applicant who are
its executive officers, directors, principal shareholders, and general
partners (Exchange Rule 2.6); and
Register associated persons with the Exchange that satisfy
the Exchange's registration requirements (Exchange Rule 2.4,
Interpretation and Policy .01, .03).
In addition, the Exchange reviews whether the applicant meets
applicable net capital requirements and conducts other due diligence
regarding an applicant. Due to the amount of information an applicant
is required to provide and have completed prior to being approved as an
Exchange Member, the membership approval process sometimes takes
several months to complete. The length of time varies based on the
timing of the applicant's response to requests for information and
documentation.
As proposed, Apex Clearing will continue the clearing and certain
other operations of PFSI as of June 6, 2012. In order to avoid
interruption of the services PFSI currently provides to other Exchange
Members, the Exchange believes that Apex Clearing should be approved
immediately as an Exchange Member. The Exchange notes that Apex
Clearing is already a registered broker dealer and FINRA member, which
satisfies existing prerequisites for becoming an Exchange Member.\6\
---------------------------------------------------------------------------
\6\ Exchange Rule 2.3 requires registration as a broker-dealer
and membership with at least one other registered national
securities exchange or association.
---------------------------------------------------------------------------
The Exchange therefore proposes providing Apex Clearing with a
temporary suspension of Exchange Rule 2.6 and related membership rules
as they relate to approval to operate an Exchange Member, and
immediately approving Apex Clearing as a Member. As proposed this
temporary suspension is contingent upon Apex Clearing and its
associated persons' compliance with the Exchange's new Member
requirements as set forth in Chapter II of the Exchange's Rules within
30 calendar days of Apex Clearing's approval as a Member under this
proposed filing. As proposed, if Apex Clearing does not comply with all
applicable Exchange Member application requirements within 30 calendar
days of the effective date of this filing, its status as an Exchange
Member will no longer be effective.
In addition, the Exchange proposes to permit Apex Clearing to
assume all existing clearing agreements and arrangements currently in
effect with other Exchange Members by execution of global agreements
thereto. Notice of such assumption will be provided to impacted Members
prior to the effective date thereof.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \7\ of the Securities Exchange Act of 1934 (the ``Act''),
in general, and furthers the objectives of Section 6(b)(5) \8\ in
particular in that it is designed to promote just and equitable
principles of trade, to prevent fraudulent and manipulative acts, to
remove impediments to and to perfect the mechanism for a free and open
market and a national market system
[[Page 34433]]
and, in general, to protect investors and the public interest. The
Exchange believes that permitting the expeditious approval of Apex
Clearing as an Exchange Member will avoid interruption of the services
PFSI currently provides to other Exchange Members. Based on information
and representations provided by Apex Clearing, a temporary suspension
of certain Exchange membership rules is needed based on the expedited
nature of the transaction to enable seamless continuity with respect to
the transferring accounts. Consequently, the Exchange believes that
temporary suspension of its member organization requirements so that
Apex Clearing can be approved immediately as an Exchange Member will
help to foster cooperation and coordination with persons engaged in
facilitating transactions in securities and is consistent with the Act.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change imposes
any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
Because the 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 prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6)(iii) thereunder.\12\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) 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 Commission is waiving this five-day pre-filing
requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the five-day pre-
filing requirement and the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing. The
Commission notes that the Exchange is proposing that certain of its
rules relating to membership requirements be temporarily suspended so
that Apex Clearing can be provisionally approved as an Exchange Member.
The proposed relief does not exempt Apex Clearing from Exchange rule
requirements governing Members. Apex Clearing would have a 30 calendar
day grace period within which to apply for and be approved under
relevant Exchange rules. Moreover, the Commission believes that waiver
of the 30-day operative delay is appropriate to ensure a smooth
transition of PFSI operations to Apex Clearing. In particular, given
the rapidity with which events have developed, waiver of the 30-day
operative delay is necessary to avoid significant disruption to PFSI's
existing customers and the market generally. Therefore, the Commission
believes that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest and designates the
proposed rule change as operative upon filing.\15\
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\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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 Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BYX-2012-010 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BYX-2012-010. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of 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; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BYX-2012-010 and should be
submitted on or before July 2, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14073 Filed 6-8-12; 8:45 am]
BILLING CODE 8011-01-P
