Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Temporarily Suspend the Requirements of EDGX Rule 2.6, 34427-34429 [2012-14076]
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Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67136; File No. SR–EDGX–
2012–20]
Self-Regulatory Organizations; EDGX
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Temporarily Suspend
the Requirements of EDGX Rule 2.6
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, EDGX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGX’’) 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.
srobinson on DSK4SPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is proposing to
temporarily suspend the requirements
of EDGX Rule 2.6 and related EDGX
Rules concerning the approval of new
Members in order to admit Apex
Clearing Corporation (‘‘Apex Clearing’’),
f/k/a Ridge Clearing and Outsourcing
Solutions, Inc. (‘‘Ridge’’), as a Member
of EDGX, subject to Apex Clearing
complying with the Exchange’s
Membership qualification rules within
30 calendar days of the effective date of
this filing. 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 other EDGX
Members by execution of a global
agreement thereto. The text of the
proposed rule change is available on the
Exchange’s Web site at
www.directedge.com, at the Exchange’s
principal office, and at the Public
Reference Room of the Commission.
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
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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statements may be examined at the
places specified in Item IV below. The
self-regulatory organization 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 Exchange is proposing to
temporarily suspend the requirements
of EDGX Rule 2.6 and related rules
governing the qualification and
admission of Members in order to
immediately approve Apex Clearing as
an EDGX Member. The Exchange
proposes this temporary suspension on
an expedited basis to ensure that Apex
Clearing can continue the clearing
operations of PFSI without unnecessary
disruption, which could have a
significant collateral impact on a
number of other Members. The
proposed temporary suspension is
contingent upon Apex Clearing having
complied with all of the Exchange’s
Membership qualification requirements
within 30 calendar days of the effective
date of 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.3 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’’).4
As a result of the Transaction, Apex
Clearing, which is not currently an
EDGX Member, will provide the
clearing services and execution services
currently provided to the Transferring
Accounts by PFSI. On May 31, 2012,
Apex Clearing submitted an application
3 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.
4 See Penson Worldwide, Inc. Form 8–K dated
May 31, 2012.
PO 00000
Frm 00091
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34427
to be admitted as an EDGX Member.
However because of the expedited
nature of the transaction, Apex Clearing
was unable to fully comply in a timely
manner with EDGX Rule 2.6 and related
Membership rules. Because of the need
for seamless continuity with respect to
the Transferring Accounts, Apex
Clearing has requested that the
Exchange temporarily suspend its
Membership qualification rules in order
to enable Apex Clearing’s approval as a
Member on an expedited basis. Pursuant
to its request, Apex Clearing has
represented that it will fully comply
with the Exchange’s Membership
qualification requirements within 30
calendar days of the effective date of
this filing.
EDGX Rule 2.6 establishes the
requirements for applications for
Membership with the Exchange and
requires prospective Members to submit
such information as the Exchange may
require.
Among other things, to be approved
as an EDGX Member, an applicant must:
• Provide the Exchange with an
agreement to abide by, comply with,
and adhere to the provisions of the
Exchange’s Certificate of Incorporation,
its By-Laws, the Exchange’s Rules, the
policies, interpretations and guidelines
of the Exchange, and all orders and
decisions of the Exchange’s Board and
penalties imposed by the Board, and
any duly authorized committee;5
• Agree to pay such dues,
assessments, and other charges in the
manner and amount as shall from time
to time be fixed by the Exchange;6
• Agree to maintain and make
available to the Exchange, its authorized
employees and its Board or any duly
authorized committee such books and
records as may be required to be
maintained by the Commission or the
Exchange’s Rules;7
• Agree to supply other reasonable
information with respect to the
applicant as the Exchange may require
in its Membership application (e.g.,
certificate of incorporation, by-laws, and
other corporate documents);8 and
• Register all Authorized Traders
with the Exchange 9 in compliance with
the Exchange’s registration requirements
as outlined in EDGX Rule 2.3(b) through
(d).
In addition, the Exchange reviews
whether the applicant meets applicable
regulatory capital requirements and
whether it has adopted controls and
5 EDGX
Rule 2.6(a)(1).
Rule 2.6(a)(2).
7 EDGX Rule 2.6(a)(5).
8 EDGX Rule 2.6(a)(6).
9 EDGX Rule 2.3(b).
6 EDGX
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Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
srobinson on DSK4SPTVN1PROD with NOTICES
procedures to comply with Exchange
Rules.
Due to the amount of information an
applicant is required to provide and
have completed prior to being admitted
as a Member, the Member approval
process generally takes several weeks to
complete. The length of time varies
based on the timing of the applicant’s
responses to requests for information
and documentation.
As proposed, Apex Clearing will
continue the clearing and certain other
operations of PSFI as of June 6, 2012. In
order to avoid interruption of the
services PSFI currently provides to
other Exchange Members, EDGX
believes that Apex Clearing should be
approved immediately as an EDGX
Member. The Exchange notes that Apex
Clearing is already a registered brokerdealer and FINRA member, which are
prerequisites for becoming an EDGX
Member.10
The Exchange therefore proposes to
temporarily suspend EDGX Rule 2.6 and
related Membership rules (Rules 2.3 and
2.5), and immediately approve Apex
Clearing and its associated persons as a
Member. As proposed, this temporary
suspension is contingent upon:
• Apex Clearing providing the
Exchange with sufficient information to
confirm that Apex Clearing will satisfy
its capital requirements as an EDGX
Member; and
• Within 30 calendar days of the
effective date of this rule filing, Apex
Clearing and its associated persons shall
have complied with the Exchange’s
Member qualification requirements as
set forth in EDGX Rules 2.3, 2.5, and
2.6.
As proposed, if Apex Clearing does
not comply with all applicable EDGX
Member qualification requirements
within 30 calendar days of the effective
date of this filing, its status as an
approved EDGX 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 EDGX Members by execution of
global agreements thereto. Apex
Clearing has represented that it will
provide notice of such assumption 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) 11 of the Act and furthers the
objectives of Section 6(b)(5) 12 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 of a free and open
market and a national market system
and to protect investors and the public
interest. The Exchange believes that
permitting the expeditious approval of
Apex Clearing as an EDGX Member will
avoid interruption of the services PSFI
currently provides to other Exchange
Members. Based on information and
representations provided by Apex
Clearing, a temporary suspension of
certain EDGX membership rules is
needed based on the expedited nature of
the transaction to enable seamless
continuity with respect to the
Transferring Accounts. Consequently,
EDGX believes that temporary
suspension of its Member qualification
requirements so that Apex Clearing can
be approved immediately as an EDGX
Member will help to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and is therefore consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
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 13 and Rule
19b–4(f)(6) thereunder.14 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)
12 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A)(iii).
14 17 CFR 240.19b–4(f)(6).
10 See
EDGX Rule 2.5(a).
11 15 U.S.C. 78f(b).
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13 15
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of the Act 15 and Rule 19b–4(f)(6)(iii)
thereunder.16
A proposed rule change filed under
Rule 19b–4(f)(6) 17 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),18 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 EDGX 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.19
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
15 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.
17 17 CFR 240.19b–4(f)(6).
18 17 CFR 240.19b–4(f)(6)(iii).
19 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).
16 17
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Federal Register / Vol. 77, No. 112 / Monday, June 11, 2012 / Notices
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
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–14076 Filed 6–8–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67134; File No. SR–C2–
2012–018]
• 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–EDGX–2012–20 on the
subject line.
Self-Regulatory Organizations; C2
Options Exchange, Incorporated:
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Regarding the Approval of
Trading Permit Holders
Paper Comments
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934, 15
U.S.C. 78s(b)(1), notice is hereby given
that on June 5, 2012, C2 Options
Exchange, Incorporated (‘‘C2’’ or the
‘‘Exchange’’) 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 C2. The Commission is publishing
this notice to solicit comments on the
proposed rule change from interested
persons.
srobinson on DSK4SPTVN1PROD with NOTICES
• 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–EDGX–2012–20. 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–EDGX–
2012–20 and should be submitted on or
before July 2, 2012.
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June 5, 2012.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Pursuant to the provisions of Section
19(b)(1) of the Securities Exchange Act
of 1934 (the ‘‘Act’’),1 the Exchange
proposes to temporarily suspend the
requirements of C2 Rule 3.1 and related
C2 rules concerning the approval of new
Permit Holders in order to approve
Apex Clearing, Inc., f/k/a Ridge Clearing
and Outsourcing Solutions, Inc. (‘‘Apex
Clearing’’) as a C2 Permit Holder,
subject to Apex Clearing complying
with Exchange rules for a new Permit
Holder within 30 calendar days of the
date that Apex Clearing is provisionally
approved as a C2 Permit Holder. 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 C2 Permit
Holders by execution of a global
agreement thereto. The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.C2exchange.com), at the
20 17
1 15
PO 00000
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
Frm 00093
Fmt 4703
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34429
Exchange’s Office of the Secretary and
at the Commission.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, C2
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. C2 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 Exchange proposes this rule filing
to temporarily suspend the
requirements of C2 Rule 3.1 and related
rules regarding the approval of Permit
Holders in order to immediately
approve Apex Clearing as a C2 Permit
Holder. 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 Permit
Holders. The proposed temporary
suspension is contingent upon Apex
having complied with all new Permit
Holder Exchange rules within 30
calendar days of the date Apex is
provisionally approved as a C2 Permit
Holder 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.2 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
2 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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]]>Agencies
[Federal Register Volume 77, Number 112 (Monday, June 11, 2012)]
[Notices]
[Pages 34427-34429]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-14076]
[[Page 34427]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67136; File No. SR-EDGX-2012-20]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To
Temporarily Suspend the Requirements of EDGX Rule 2.6
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, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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 is proposing to temporarily suspend the requirements
of EDGX Rule 2.6 and related EDGX Rules concerning the approval of new
Members in order to admit Apex Clearing Corporation (``Apex
Clearing''), f/k/a Ridge Clearing and Outsourcing Solutions, Inc.
(``Ridge''), as a Member of EDGX, subject to Apex Clearing complying
with the Exchange's Membership qualification rules within 30 calendar
days of the effective date of this filing. 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 other EDGX Members by execution
of a global agreement thereto. The text of the proposed rule change is
available on the Exchange's Web site at www.directedge.com, at the
Exchange's principal office, and at the Public Reference Room of the
Commission.
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 self-regulatory organization 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 Exchange is proposing to temporarily suspend the requirements
of EDGX Rule 2.6 and related rules governing the qualification and
admission of Members in order to immediately approve Apex Clearing as
an EDGX Member. The Exchange proposes this temporary suspension on an
expedited basis to ensure that Apex Clearing can continue the clearing
operations of PFSI without unnecessary disruption, which could have a
significant collateral impact on a number of other Members. The
proposed temporary suspension is contingent upon Apex Clearing having
complied with all of the Exchange's Membership qualification
requirements within 30 calendar days of the effective date of 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.\3\ 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'').\4\
---------------------------------------------------------------------------
\3\ 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.
\4\ See Penson Worldwide, Inc. Form 8-K dated May 31, 2012.
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As a result of the Transaction, Apex Clearing, which is not
currently an EDGX Member, will provide the clearing services and
execution services currently provided to the Transferring Accounts by
PFSI. On May 31, 2012, Apex Clearing submitted an application to be
admitted as an EDGX Member. However because of the expedited nature of
the transaction, Apex Clearing was unable to fully comply in a timely
manner with EDGX Rule 2.6 and related Membership rules. Because of the
need for seamless continuity with respect to the Transferring Accounts,
Apex Clearing has requested that the Exchange temporarily suspend its
Membership qualification rules in order to enable Apex Clearing's
approval as a Member on an expedited basis. Pursuant to its request,
Apex Clearing has represented that it will fully comply with the
Exchange's Membership qualification requirements within 30 calendar
days of the effective date of this filing.
EDGX Rule 2.6 establishes the requirements for applications for
Membership with the Exchange and requires prospective Members to submit
such information as the Exchange may require.
Among other things, to be approved as an EDGX Member, an applicant
must:
Provide the Exchange with an agreement to abide by, comply
with, and adhere to the provisions of the Exchange's Certificate of
Incorporation, its By-Laws, the Exchange's Rules, the policies,
interpretations and guidelines of the Exchange, and all orders and
decisions of the Exchange's Board and penalties imposed by the Board,
and any duly authorized committee;\5\
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\5\ EDGX Rule 2.6(a)(1).
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Agree to pay such dues, assessments, and other charges in
the manner and amount as shall from time to time be fixed by the
Exchange;\6\
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\6\ EDGX Rule 2.6(a)(2).
---------------------------------------------------------------------------
Agree to maintain and make available to the Exchange, its
authorized employees and its Board or any duly authorized committee
such books and records as may be required to be maintained by the
Commission or the Exchange's Rules;\7\
---------------------------------------------------------------------------
\7\ EDGX Rule 2.6(a)(5).
---------------------------------------------------------------------------
Agree to supply other reasonable information with respect
to the applicant as the Exchange may require in its Membership
application (e.g., certificate of incorporation, by-laws, and other
corporate documents);\8\ and
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\8\ EDGX Rule 2.6(a)(6).
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Register all Authorized Traders with the Exchange \9\ in
compliance with the Exchange's registration requirements as outlined in
EDGX Rule 2.3(b) through (d).
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\9\ EDGX Rule 2.3(b).
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In addition, the Exchange reviews whether the applicant meets
applicable regulatory capital requirements and whether it has adopted
controls and
[[Page 34428]]
procedures to comply with Exchange Rules.
Due to the amount of information an applicant is required to
provide and have completed prior to being admitted as a Member, the
Member approval process generally takes several weeks to complete. The
length of time varies based on the timing of the applicant's responses
to requests for information and documentation.
As proposed, Apex Clearing will continue the clearing and certain
other operations of PSFI as of June 6, 2012. In order to avoid
interruption of the services PSFI currently provides to other Exchange
Members, EDGX believes that Apex Clearing should be approved
immediately as an EDGX Member. The Exchange notes that Apex Clearing is
already a registered broker-dealer and FINRA member, which are
prerequisites for becoming an EDGX Member.\10\
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\10\ See EDGX Rule 2.5(a).
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The Exchange therefore proposes to temporarily suspend EDGX Rule
2.6 and related Membership rules (Rules 2.3 and 2.5), and immediately
approve Apex Clearing and its associated persons as a Member. As
proposed, this temporary suspension is contingent upon:
Apex Clearing providing the Exchange with sufficient
information to confirm that Apex Clearing will satisfy its capital
requirements as an EDGX Member; and
Within 30 calendar days of the effective date of this rule
filing, Apex Clearing and its associated persons shall have complied
with the Exchange's Member qualification requirements as set forth in
EDGX Rules 2.3, 2.5, and 2.6.
As proposed, if Apex Clearing does not comply with all applicable
EDGX Member qualification requirements within 30 calendar days of the
effective date of this filing, its status as an approved EDGX 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 EDGX Members by execution of global agreements
thereto. Apex Clearing has represented that it will provide notice of
such assumption 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) \11\ of the Act and furthers the objectives of Section
6(b)(5) \12\ 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 of a free and open
market and a national market system and to protect investors and the
public interest. The Exchange believes that permitting the expeditious
approval of Apex Clearing as an EDGX Member will avoid interruption of
the services PSFI currently provides to other Exchange Members. Based
on information and representations provided by Apex Clearing, a
temporary suspension of certain EDGX membership rules is needed based
on the expedited nature of the transaction to enable seamless
continuity with respect to the Transferring Accounts. Consequently,
EDGX believes that temporary suspension of its Member qualification
requirements so that Apex Clearing can be approved immediately as an
EDGX Member will help to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, and is
therefore consistent with the Act.
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\11\ 15 U.S.C. 78f(b).
\12\ 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 will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
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 \13\ and Rule 19b-4(f)(6) thereunder.\14\
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 \15\ and Rule 19b-
4(f)(6)(iii) thereunder.\16\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 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) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ 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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\17\ 17 CFR 240.19b-4(f)(6).
\18\ 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 EDGX 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.\19\
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\19\ 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
[[Page 34429]]
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-EDGX-2012-20 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-EDGX-2012-20. 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-EDGX-2012-20 and should be
submitted on or before July 2, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14076 Filed 6-8-12; 8:45 am]
BILLING CODE 8011-01-P
