Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing of a Proposed Rule Change To Update OCX's Rulebook for a Filing Previously Made With the Commodity Futures Trading Commission, 38343-38345 [2014-15718]
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mstockstill on DSK4VPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Notices
identified by BNPP or any U.S. or nonU.S. regulatory or enforcement agencies
as having been responsible for the
Conduct will be an officer, director, or
employee of FFTW, BSCM, or IAM, or
of any other Covered Person; (iii) those
identified employees have had no, and
will not have any future, involvement in
the Covered Persons’ activities in any
capacity described in section 9(a) of the
Act; and (iv) because the personnel of
the Applicants (other than certain
personnel of BNPP who were not
involved in any of the Applicants’ Fund
Service Activities) did not have any
involvement in the Conduct,
shareholders of the Funds were not
affected any differently than if those
Funds had received services from any
other non-affiliated investment adviser.
5. Except as discussed above,
Applicants have agreed that neither they
nor any of the other Covered Persons
will employ any of the current or former
employees of BNPP or any Covered
Person who previously have been or
who subsequently may be identified by
BNPP or any U.S. or non-U.S. regulatory
or enforcement agencies as having been
responsible for the Conduct in any
capacity without first making a further
application to the Commission pursuant
to section 9(c). Applicants also have
agreed that each Applicant (and any
Covered Person that acts in any capacity
described in section 9(a) of the Act) will
adopt and implement policies and
procedures reasonably designed to
ensure compliance with the terms and
conditions of the order granted under
section 9(c). In addition, BNPP has
agreed to comply in all material respects
with the material terms and conditions
of the Plea Agreements and the material
terms of the Federal Reserve/ACPR
Order, the Federal Reserve CMP Order,
the DFS Order and the OFAC Order, all
of which are described more fully in the
application.
6. Applicants further represent that
the inability of FFTW, BSCM, and IAM
to continue providing Fund Service
Activities would result in potential
hardships for both the Funds and their
shareholders. Applicants state that they
will distribute written materials,
including an offer to meet in person to
discuss the materials, to the board of
trustees/directors of the Funds,
including the directors who are not
‘‘interested persons,’’ as defined in
section 2(a)(19) of the Act, of such
Funds, and their independent legal
counsel as defined in rule 0–1(a)(6)
under the Act, if any, regarding the Plea
Agreements, any impact on the Funds,
and the application. The Applicants
will provide the Funds with all
information concerning the Plea
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15:59 Jul 03, 2014
Jkt 232001
Agreements and the application that is
necessary for the Funds to fulfill their
disclosure and other obligations under
the federal securities laws.
7. Applicants also state that, if FFTW,
BSCM, and IAM were barred from
providing Fund Service Activities to the
Funds, the effect on their business and
employees would be severe.
8. Applicants state that none of the
Applicants and none of their affiliates
previously have received orders under
section 9(c).
Applicants’ Conditions
Applicants agree that any order
granted by the Commission pursuant to
the application will be subject to the
following conditions:
1. Any temporary exemption granted
pursuant to the application will be
without prejudice to, and will not limit
the Commission’s rights in any manner
with respect to, any Commission
investigation of, or administrative
proceedings involving or against,
Covered Persons, including, without
limitation, the consideration by the
Commission of a permanent exemption
from section 9(a) of the Act requested
pursuant to the application or the
revocation or removal of any temporary
exemptions granted under the Act in
connection with the application.
2. Except as set out in the second
paragraph on Section IV.E. of the
application, neither the Applicants nor
any of the other Covered Persons will
employ any of the current or former
employees of BNPP or any Covered
Person who previously have been or
who subsequently may be identified by
BNPP or any U.S. or non-U.S. regulatory
or enforcement agencies as having been
responsible for the Conduct in any
capacity without first making a further
application to the Commission pursuant
to section 9(c).
3. Each Applicant and Covered Person
will adopt and implement policies and
procedures reasonably designed to
ensure that it will comply with the
terms and conditions of the requested
orders within 60 days of the date on
which any permanent order is granted
or, with respect to condition four, such
later date as may be contemplated by
the Federal Reserve/ACPR Order, the
Federal Reserve CMP Order, the DFS
Order or the OFAC Order.
4. BNPP will comply in all material
respects with the material terms and
conditions of the Plea Agreements and
with the material terms of the Federal
Reserve/ACPR Order, the Federal
Reserve CMP Order, the DFS Order and
the OFAC Order.
5. Applicants will provide written
notification to the Chief Counsel of the
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38343
Commission’s Division of Investment
Management, with a copy to the Chief
Counsel of the Commission’s Division of
Enforcement, of a material violation of
the terms and conditions of the
requested orders within 30 days of
discovery of the material violation.
Temporary Order
The Commission has considered the
matter and finds that the Applicants
have made the necessary showing to
justify granting a temporary exemption.
Accordingly
It is hereby ordered, pursuant to
section 9(c) of the Act, that the
Applicants and the other Covered
Persons are granted a temporary
exemption from the provisions of
section 9(a), effective forthwith, solely
with respect to guilty pleas entered into
pursuant to the Plea Agreements,
subject to the representations and
conditions in the application, until the
date the Commission takes final action
on their application for a permanent
order.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014–15737 Filed 7–3–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72497; File No. SR–OC–
2014–03]
Self-Regulatory Organizations;
OneChicago, LLC; Notice of Filing of a
Proposed Rule Change To Update
OCX’s Rulebook for a Filing Previously
Made With the Commodity Futures
Trading Commission
June 30, 2014.
Pursuant to Section 19(b)(7) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 notice is hereby given that on
June 17, 2014, OneChicago, LLC
(‘‘OneChicago,’’ ‘‘OCX,’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
OneChicago has previously filed the
rule change with the Commodity
Futures Trading Commission (‘‘CFTC’’).
OneChicago filed a written certification
with the CFTC under Section 5c(c) of
1 15
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Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Notices
the Commodity Exchange Act (‘‘CEA’’) 2
on September 12, 2012.
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I. Self-Regulatory Organization’s
Description of the Proposed Rule
Change
OneChicago is proposing to file with
the SEC a Notice to Members (‘‘NTM’’)
that the Exchange has previously filed
with the CFTC, but did not file with the
SEC. OneChicago is filing the NTM with
the SEC because it relates to sales
practices.
On September 12, 2012, OCX filed
NTM 2012–26 with the CFTC (originally
filed as NTM 2012–24 on August 31,
2012, but refiled as NTM 2012–26 to
make a technical amendment). NTM
2012–26 updates NTM 2010–13 by
separating the issues in NTM 2012–26
(Pre-Execution Discussions and Cross
Trades) from the general block trade
issues discussed in NTM 2010–13. NTM
2012–26 provides guidance on two
issues related to trading and sales
practices. First, NTM 2012–26 interprets
and provides guidance on OCX Rule 614
with regard to pre-execution
discussions. Second, NTM 2012–26
interprets and provides guidance on
OCX Rules 409 and 610 with regard to
cross trades.
Pre-Execution Discussions
OCX Rule 614 prohibits market
participants from entering any Order
into the OneChicago System which has
been pre-arranged, except as expressly
permitted by Rules 416 and 417 or in
accordance with any policies or
procedures for pre-execution
discussions from time to time adopted
by the Exchange. NTM 2012–26
establishes such a pre-execution
discussion policy. Specifically, NTM
2012–26 permits market participants to
engage in pre-execution discussions
pursuant to which one party may agree
in advance to take the opposite side of
the other party’s Order for a transaction
to be executed on the Exchange.
NTM 2012–26 then lays out three
conditions which, if applicable, must be
met in order for a pre-execution
discussion to comply with the NTM.
First, customers of each party engaging
in a pre-execution discussion must
consent to allow pre-execution
discussions with other market
participants. Second, any market
participant who is solicited to
participate in an OCX transaction
through pre-execution discussions shall
not (i) disclose to any other party the
details of such discussions, or (ii) enter
an order or quote through the Exchange
to take advantage of information
27
U.S.C. 7a–2(c).
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Jkt 232001
conveyed during such discussions.
Finally, for any non-bilateral trade
conducted on the Exchange pursuant to
a pre-execution discussion, a period of
four seconds must elapse between
entering the first order or quote and
entering the second order for the
opposite side.
Cross Trades
OCX Rule 409 states that the
Exchange may from time to time adopt
procedures to facilitate the crossing of
Orders through the OneChicago System.
OCX Rule 610 lays out the requirements
for market participants executing
customers’ orders, and more
specifically, explains that customers’
orders are treated with higher priority
than proprietary orders.
NTM 2012–26 expands upon OCX
Rules 409 and 610 and permits the
crossing of Orders so long as one side
of the trade is entered into the
OneChicago System at least four
seconds before the opposite side. In
addition, if the market participant
crossing the Orders is taking the
opposite side of a customer Order, that
market participant must enter the
customer’s side of the trade into the
OneChicago System first.
The NTM then goes on to add that
market participants shall not be in
violation of either OCX Rule 409 or OCX
Rule 610 if no Person on whose behalf
the orders are being crossed has
knowledge of the other side’s Order and
there is no coordination or
prearrangement of the cross trade. In
such a circumstance, both sides of the
trade are responsible for demonstrating
to OCX staff that neither side had
knowledge of the other’s Order.
The NTM is attached as Exhibit 4 to
the filing submitted by the Exchange,
but is not attached to the published
notice of the filing.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
OneChicago 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.
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Sfmt 4703
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of OneChicago’s filing is
to update the OCX Rulebook to account
for a filing OneChicago has previously
made with the CFTC, but has not made
concurrently with the SEC. Specifically,
the purpose of the NTM is to clarify the
obligations of market participants
regarding pre-execution discussions and
cross trades, and to require that certain
conditions are met in order to engage in
pre-execution discussions or cross
trades.
The purpose of the pre-execution
discussion section in NTM 2012–26 is
to explain to market participants how a
pre-execution discussion may be
effected within the bounds of OCX Rule
614. The NTM lays out three conditions
that must be met in order to engage in
a pre-execution discussion. These three
conditions have been imposed for two
purposes: (1) To protect customers, and
(2) to preserve the integrity of OCX’s
markets. Regarding customer protection,
market participants engaging in preexecution discussions on behalf of
customers must receive consent from
their customers to engage in such
discussions. This requirement ensures
that customers are aware of the method
by which their Orders are being
executed. With regard to preserving the
integrity of OCX’s markets, market
participants are prohibited from
entering any Order on the basis of
information gained through a preexecution discussion. This prohibition
preserves market integrity by ensuring
that market participants are not trading
on the basis of non-public information
that is not freely available.
The purpose of the cross trade section
in NTM 2012–26 is to explain to market
participants how a cross trade may be
effected within the bounds of OCX Rule
409 and 610. The NTM preserves market
integrity be requiring cross trades to be
exposed to market risk for a period of
at least four seconds. This delay ensures
that the trade to be crossed has the
chance to execute competitively with
other market participants. Additionally,
the four second delay rule requires
market participants to enter the
customer side of the trade (if the market
participant is taking the opposite side of
a customer order) first, allowing the
customer to be executed against a third
party market participant. This
requirement ensures that customers
receive fair and reasonable prices for
their trades.
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Federal Register / Vol. 79, No. 129 / Monday, July 7, 2014 / Notices
2. Statutory Basis
OneChicago believes that the
proposed rule change is consistent with
Section 6(b) of the Act,3 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,4 in particular in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities,
and 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.
NTM 2012–26 promotes just and
equitable principles of trade and fosters
cooperation and coordination with
persons engaged in facilitating
transactions in securities by explaining
the method by which these market
participants may engage in two distinct
trading practices that are permitted by
the Exchange. The NTM sets forth
requirements for market participants
effecting pre-execution discussions and
cross trades. The Exchange also believes
that the rule change benefits investors
and market participants because it
enhances customer protection and helps
preserve the integrity of OCX’s market.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
OneChicago does not believe that the
rule change will impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act. The Exchange
believes that the proposed rule change
is equitable and promotes the principles
of trade because it is designed to
prevent manipulative acts and protect
investors. Additionally, all of the
conditions to engage in pre-execution
discussions and cross trades apply
equally to all market participants and
are not enforced in a discriminatory
manner.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Comments on the OneChicago
proposed rule change have not been
solicited and none have been received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
OneChicago filed the proposed rule
change with the CFTC on September 12,
2012. OneChicago did not file the
3 15
U.S.C. 78f(b).
4 15 U.S.C. 78(f)(b)(5).
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15:59 Jul 03, 2014
Jkt 232001
proposed rule change concurrently with
the SEC. Instead, OneChicago filed the
proposed rule change on June 17, 2014.5
At any time within 60 days of the date
of effectiveness 6 of the proposed rule
change, the Commission, after
consultation with the CFTC, may
summarily abrogate the proposed rule
change and require that the proposed
rule change be refiled in accordance
with the provisions of Section 19(b)(1)
of the Act.7
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–
OC–2014–03 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–OC–2014–03. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet 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
5 Section 19(b)(7)(B) of the Act provides that a
proposed rule change filed with the SEC pursuant
to section 19(b)(7)(A) of the Act shall be filed
concurrently with the CFTC.
6 Section 19(b)(7)(C) of the Act provides, inter
alia, that ‘‘[a]ny proposed rule change of a selfregulatory organization that has taken effect
pursuant to [Section 19(b)(7)(B) of the Act] may be
enforced by such self-regulatory organization to the
extent such rule is not inconsistent with the
provisions of this title, the rules and regulations
thereunder, and applicable Federal law.’’
7 15 U.S.C. 78s(b)(1).
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38345
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
offices 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–OC–
2014–03, and should be submitted on or
before July 28, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014–15718 Filed 7–3–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72499; File No. SR–C2–
2014–012]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change Relating to the Exchange’s
Quote Risk Monitor Mechanism
June 30, 2014.
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 20,
2014, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
Commission (the ‘‘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 amend its
Quote Risk Monitor Mechanism rule.
The text of the proposed rule change is
provided below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Agencies
[Federal Register Volume 79, Number 129 (Monday, July 7, 2014)]
[Notices]
[Pages 38343-38345]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15718]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72497; File No. SR-OC-2014-03]
Self-Regulatory Organizations; OneChicago, LLC; Notice of Filing
of a Proposed Rule Change To Update OCX's Rulebook for a Filing
Previously Made With the Commodity Futures Trading Commission
June 30, 2014.
Pursuant to Section 19(b)(7) of the Securities Exchange Act of 1934
(the ``Act''),\1\ notice is hereby given that on June 17, 2014,
OneChicago, LLC (``OneChicago,'' ``OCX,'' or the ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons. OneChicago has previously filed the
rule change with the Commodity Futures Trading Commission (``CFTC'').
OneChicago filed a written certification with the CFTC under Section
5c(c) of
[[Page 38344]]
the Commodity Exchange Act (``CEA'') \2\ on September 12, 2012.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(7).
\2\ 7 U.S.C. 7a-2(c).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Description of the Proposed Rule
Change
OneChicago is proposing to file with the SEC a Notice to Members
(``NTM'') that the Exchange has previously filed with the CFTC, but did
not file with the SEC. OneChicago is filing the NTM with the SEC
because it relates to sales practices.
On September 12, 2012, OCX filed NTM 2012-26 with the CFTC
(originally filed as NTM 2012-24 on August 31, 2012, but refiled as NTM
2012-26 to make a technical amendment). NTM 2012-26 updates NTM 2010-13
by separating the issues in NTM 2012-26 (Pre-Execution Discussions and
Cross Trades) from the general block trade issues discussed in NTM
2010-13. NTM 2012-26 provides guidance on two issues related to trading
and sales practices. First, NTM 2012-26 interprets and provides
guidance on OCX Rule 614 with regard to pre-execution discussions.
Second, NTM 2012-26 interprets and provides guidance on OCX Rules 409
and 610 with regard to cross trades.
Pre-Execution Discussions
OCX Rule 614 prohibits market participants from entering any Order
into the OneChicago System which has been pre-arranged, except as
expressly permitted by Rules 416 and 417 or in accordance with any
policies or procedures for pre-execution discussions from time to time
adopted by the Exchange. NTM 2012-26 establishes such a pre-execution
discussion policy. Specifically, NTM 2012-26 permits market
participants to engage in pre-execution discussions pursuant to which
one party may agree in advance to take the opposite side of the other
party's Order for a transaction to be executed on the Exchange.
NTM 2012-26 then lays out three conditions which, if applicable,
must be met in order for a pre-execution discussion to comply with the
NTM. First, customers of each party engaging in a pre-execution
discussion must consent to allow pre-execution discussions with other
market participants. Second, any market participant who is solicited to
participate in an OCX transaction through pre-execution discussions
shall not (i) disclose to any other party the details of such
discussions, or (ii) enter an order or quote through the Exchange to
take advantage of information conveyed during such discussions.
Finally, for any non-bilateral trade conducted on the Exchange pursuant
to a pre-execution discussion, a period of four seconds must elapse
between entering the first order or quote and entering the second order
for the opposite side.
Cross Trades
OCX Rule 409 states that the Exchange may from time to time adopt
procedures to facilitate the crossing of Orders through the OneChicago
System. OCX Rule 610 lays out the requirements for market participants
executing customers' orders, and more specifically, explains that
customers' orders are treated with higher priority than proprietary
orders.
NTM 2012-26 expands upon OCX Rules 409 and 610 and permits the
crossing of Orders so long as one side of the trade is entered into the
OneChicago System at least four seconds before the opposite side. In
addition, if the market participant crossing the Orders is taking the
opposite side of a customer Order, that market participant must enter
the customer's side of the trade into the OneChicago System first.
The NTM then goes on to add that market participants shall not be
in violation of either OCX Rule 409 or OCX Rule 610 if no Person on
whose behalf the orders are being crossed has knowledge of the other
side's Order and there is no coordination or prearrangement of the
cross trade. In such a circumstance, both sides of the trade are
responsible for demonstrating to OCX staff that neither side had
knowledge of the other's Order.
The NTM is attached as Exhibit 4 to the filing submitted by the
Exchange, but is not attached to the published notice of the filing.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, OneChicago 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 purpose of OneChicago's filing is to update the OCX Rulebook to
account for a filing OneChicago has previously made with the CFTC, but
has not made concurrently with the SEC. Specifically, the purpose of
the NTM is to clarify the obligations of market participants regarding
pre-execution discussions and cross trades, and to require that certain
conditions are met in order to engage in pre-execution discussions or
cross trades.
The purpose of the pre-execution discussion section in NTM 2012-26
is to explain to market participants how a pre-execution discussion may
be effected within the bounds of OCX Rule 614. The NTM lays out three
conditions that must be met in order to engage in a pre-execution
discussion. These three conditions have been imposed for two purposes:
(1) To protect customers, and (2) to preserve the integrity of OCX's
markets. Regarding customer protection, market participants engaging in
pre-execution discussions on behalf of customers must receive consent
from their customers to engage in such discussions. This requirement
ensures that customers are aware of the method by which their Orders
are being executed. With regard to preserving the integrity of OCX's
markets, market participants are prohibited from entering any Order on
the basis of information gained through a pre-execution discussion.
This prohibition preserves market integrity by ensuring that market
participants are not trading on the basis of non-public information
that is not freely available.
The purpose of the cross trade section in NTM 2012-26 is to explain
to market participants how a cross trade may be effected within the
bounds of OCX Rule 409 and 610. The NTM preserves market integrity be
requiring cross trades to be exposed to market risk for a period of at
least four seconds. This delay ensures that the trade to be crossed has
the chance to execute competitively with other market participants.
Additionally, the four second delay rule requires market participants
to enter the customer side of the trade (if the market participant is
taking the opposite side of a customer order) first, allowing the
customer to be executed against a third party market participant. This
requirement ensures that customers receive fair and reasonable prices
for their trades.
[[Page 38345]]
2. Statutory Basis
OneChicago believes that the proposed rule change is consistent
with Section 6(b) of the Act,\3\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\4\ in particular in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and 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.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78(f)(b)(5).
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NTM 2012-26 promotes just and equitable principles of trade and
fosters cooperation and coordination with persons engaged in
facilitating transactions in securities by explaining the method by
which these market participants may engage in two distinct trading
practices that are permitted by the Exchange. The NTM sets forth
requirements for market participants effecting pre-execution
discussions and cross trades. The Exchange also believes that the rule
change benefits investors and market participants because it enhances
customer protection and helps preserve the integrity of OCX's market.
B. Self-Regulatory Organization's Statement on Burden on Competition
OneChicago does not believe that the rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. The Exchange believes that the proposed rule
change is equitable and promotes the principles of trade because it is
designed to prevent manipulative acts and protect investors.
Additionally, all of the conditions to engage in pre-execution
discussions and cross trades apply equally to all market participants
and are not enforced in a discriminatory manner.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Comments on the OneChicago proposed rule change have not been
solicited and none have been received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
OneChicago filed the proposed rule change with the CFTC on
September 12, 2012. OneChicago did not file the proposed rule change
concurrently with the SEC. Instead, OneChicago filed the proposed rule
change on June 17, 2014.\5\
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\5\ Section 19(b)(7)(B) of the Act provides that a proposed rule
change filed with the SEC pursuant to section 19(b)(7)(A) of the Act
shall be filed concurrently with the CFTC.
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At any time within 60 days of the date of effectiveness \6\ of the
proposed rule change, the Commission, after consultation with the CFTC,
may summarily abrogate the proposed rule change and require that the
proposed rule change be refiled in accordance with the provisions of
Section 19(b)(1) of the Act.\7\
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\6\ Section 19(b)(7)(C) of the Act provides, inter alia, that
``[a]ny proposed rule change of a self-regulatory organization that
has taken effect pursuant to [Section 19(b)(7)(B) of the Act] may be
enforced by such self-regulatory organization to the extent such
rule is not inconsistent with the provisions of this title, the
rules and regulations thereunder, and applicable Federal law.''
\7\ 15 U.S.C. 78s(b)(1).
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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-OC-2014-03 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-OC-2014-03. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet 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 such filing also will be available
for inspection and copying at the principal offices 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-OC-2014-03,
and should be submitted on or before July 28, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-15718 Filed 7-3-14; 8:45 am]
BILLING CODE 8011-01-P