Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt a General Prohibition Against Affiliation Between the Exchange and any Participant, 51633-51635 [2014-20558]
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Federal Register / Vol. 79, No. 168 / Friday, August 29, 2014 / Notices
inspection and copying at the principal
office of FICC and on FICC’s Web site
at https://www.dtcc.com/legal/sec-rulefilings.aspx.
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–FICC–2014–01 and should
be submitted on or before September 19,
2014.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
Authority.14
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–20557 Filed 8–28–14; 8:45 am]
BILLING CODE 8011–01–P
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
CHX included statements concerning
the purpose of and basis for the
proposed rule changes 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
CHX 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
Changes
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72909; File No. SR–CHX–
2014–13]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Adopt a
General Prohibition Against Affiliation
Between the Exchange and any
Participant
August 25, 2014.
wreier-aviles on DSK5TPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’),2 and Rule 19b–4 thereunder,3
notice is hereby given that on August
18, 2014, the Chicago Stock Exchange,
Inc. (‘‘CHX’’ 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 the self-regulatory
organization. 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
CHX proposes to adopt Article 3, Rule
20 that establishes a general prohibition
against affiliation between the Exchange
and any Participants. The text of this
proposed rule change is available on the
Exchange’s Web site at (www.chx.com)
and in the Commission’s Public
Reference Room.
14 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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The Exchange proposes to adopt
Article 3, Rule 20 (No Affiliation
between Exchange and any Participant).
The purpose of the proposed rule is to
guard against any possibility that the
Exchange may exercise, or forbear to
exercise, regulatory authority with
respect to an affiliated Participant 4 in a
manner that is influenced by
commercial considerations and to
provide an opportunity for Commission
review of certain proposed affiliations.
Specifically, the proposed rule
provides that the Exchange or any entity
with which it is affiliated shall not,
directly or indirectly, acquire or
maintain an ownership interest in a
Participant in the absence of an effective
filing under Section 19(b) of the Act.5
The proposed rule defines ‘‘affiliate’’
with reference to Rule 12b–2 under the
Act.6 In addition, in order to make it
clear that the obligation to avoid
affiliations applies to both the Exchange
and its Participants, the proposed rule
also provides that a Participant shall not
be or become an affiliate of the
Exchange, or an affiliate of any affiliate
of the Exchange, in the absence of an
effective filing under Section 19(b) of
the Act.7
4 CHX Article 1, Rule 1(s) provides, in pertinent
part, that ‘‘‘Participant’ means, except as otherwise
described in these Rules, any Participant Firm that
hold a valid Trading Permit’’ and that a ‘‘Participant
shall be considered a ‘member’ of the Exchange for
the purposes of the Exchange Act.’’
5 15 U.S.C. 78s(b).
6 Rule 12b–2 under the Act provides the
following definition of ‘‘affiliate’’: Affiliate. An
‘‘affiliate’’ of, or a person ‘‘affiliated’’ with, a
specified person, is a person that directly, or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, the person specified. 17 CFR 240.12b–
2.
7 15 U.S.C. 78s(b).
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51633
Moreover, the proposed rule provides
that nothing in this proposed rule shall
prohibit a Participant or its affiliate from
acquiring or holding an equity interest
in CHX Holdings, Inc. that is permitted
by the ownership and voting limitation
contained in the Certificate of
Incorporation of CHX Holdings, Inc.
Specifically, paragraph (b)(ii)(B) of the
fifth section of the Certificate of
Incorporation of CHX Holdings, Inc.
provides that no Person, either alone or
together with its Related Persons,8 who
holds a trading permit of the Exchange
(i.e., a Participant), may own, directly or
indirectly, of record or beneficially
shares of stock of CHX Holdings, Inc.
representing in the aggregate more than
twenty percent (20%) of the then
outstanding votes entitled to be cast on
any matter.
The proposed rule also limits possible
expansive interpretations of the term
‘‘affiliate’’ by providing that nothing in
the proposed rule shall prohibit a
Participant from being or becoming an
affiliate of the Exchange, or an affiliate
of any affiliate of the Exchange, solely
by reason of such Participant or any
officer, director, manager, managing
member, partner or affiliate of such
Participant being or becoming either (a)
a Director (as such term is defined in the
Bylaws of the Exchange) pursuant to the
Bylaws of the Exchange, or (b) a Director
serving on the Board of Directors of
CHX Holdings, Inc.
The Exchange believes that it is
currently in compliance with the
proposed rule. The Exchange and
CHXBD, LLC are both wholly owned
subsidiaries of CHX Holdings, Inc.
(together ‘‘CHX affiliates’’). None of the
CHX affiliates have an ownership
interest in a Participant and neither
CHX Holdings, Inc. nor CHXBD, LLC are
Participants.9 Moreover, although some
8 Paragraph (a)(ii) of the fifth section of the
Certificate of Incorporation of CHX Holdings, Inc.
states as follows: The term ‘‘Related Persons’’ shall
mean (A) with respect to any Person, all ‘‘affiliates’’
and ‘‘associates’’ of such Persons (as such terms are
defined in Rule 12b–2 under the Securities and
Exchange Act of 1934, as amended); (B) with
respect to any Person that holds a permit issued by
the Chicago Stock Exchange, Inc. to trade securities
on the Chicago Stock Exchange (‘‘Participant’’), any
broker or dealer with which a Participant is
associated; and (C) any two or more Persons that
have any agreement, arrangement or understanding
(whether or not in writing) to act together for the
purpose of acquiring, voting, holding or disposing
of shares of the capital stock of the Corporation.
9 CHXBD, LLC is a registered broker-dealer and
member of the Financial Industry Regulatory
Authority. However, CHXBD, LLC is not yet a
Participant of the Exchange nor is it operational.
The Exchange intends to operate CHXBD, LLC as
an outbound routing facility of the Exchange only
upon adoption of effective rules pursuant to Rule
19b–4 under the Act and notice to Participants. See
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29AUN1
51634
Federal Register / Vol. 79, No. 168 / Friday, August 29, 2014 / Notices
Participants currently hold an equity
interest in CHX Holdings, Inc., as
currently permitted and limited by the
Certificate of Incorporation of CHX
Holdings, Inc., the Exchange does not
believe that any of these Participants are
affiliated with the Exchange or any
affiliate of the Exchange.
2. Statutory Basis
The Exchange believes that the
proposed rule change to adopt a general
prohibition of affiliation between the
Exchange and any Participant is
consistent with Section 6(b) of the Act
in general 10 and furthers the objectives
of Section 6(b)(5) in particular,11
because 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 transaction in securities,
to remove impediments to, and perfect
the mechanisms of, a free and open
market and, in general, by protecting
investors and the public interest.
Specifically, the proposed rule would
guard against any possibility that the
Exchange may exercise, or forbear to
exercise, regulatory authority with
respect to an affiliated Participant in a
manner that is influenced by
commercial considerations by (1)
establishing a general prohibition on
affiliation between the Exchange and
Participants and (2) requiring an
effective filing pursuant to Section 19(b)
of the Act 12 before the Exchange
acquires or maintains an ownership
interest in a Participant or a Participant
becomes affiliated with the Exchange or
any of its affiliates.
B. Self-Regulatory Organization’s
Statement of Burden on Competition
The Exchange does not believe that
the proposed rule change implicates any
competitive issues because the proposed
rule only addresses the relationship
between the Exchange and its
Participants.
wreier-aviles on DSK5TPTVN1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments Regarding the
Proposed Rule Changes Received From
Members, Participants, or Others
No written comments were either
solicited or received.
17 CFR 240.19b–4. In addition, CHXBD, LLC will
only become a Participant of the Exchange pursuant
to an effective filing under Section 19(b) of the Act.
See 15 U.S.C. 78s(b).
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
12 15 U.S.C. 78s(b).
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 13 and
subparagraph (f)(6) of Rule 19b–4
thereunder.14
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Commission notes that it has
previously expressed concern about the
potential for unfair competition and
conflicts of interest between an
exchange’s self-regulatory obligations
and its commercial interests that could
exist if an exchange were to otherwise
become affiliated with one of its
members, as well as the potential for
unfair competitive advantage that the
affiliated member could have by virtue
of informational or operational
advantages, or the ability to receive
preferential treatment.15 The Exchange
states the purpose of the proposed rule
is to guard against any possibility that
the Exchange may exercise, or forbear to
exercise, regulatory authority with
respect to an affiliated Participant in a
manner that is influenced by
commercial considerations and to
provide an opportunity for Commission
review of certain proposed affiliations,16
and that waiver of the 30-day operative
delay will allow the Exchange to
provide immediate transparency
concerning its position on affiliations
with Participants.17 The Commission
also notes that the proposed rule is
consistent with the rules of other
national securities exchanges previously
approved by the Commission.18 For
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change along with a brief
description and text of 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 Exchange
has satisfied this requirement.
15 See, e.g., Securities Exchange Act Release No.
58375 (August 18, 2008), 73 FR 49498 (August 21,
2008) (approving the registration of BATS Exchange
as a national securities exchange) (‘‘BATS Exchange
Approval’’), at 49502 n.90 and accompanying text.
16 See supra note 4 and accompanying text.
17 See SR–CHX–2014–13, Item 7.
18 See, e.g., BYX Rule 2.10 and Nasdaq Rule
2160(a); BATS Exchange Approval, supra note 15;
14 17
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these reasons, the Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest.
Therefore, the Commission designates
the proposed rule change to be 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
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–
CHX–2014–13 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–CHX–2014–13. 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
and Securities Exchange Act Release No. 54170
(July 18, 2006), 71 FR 42149 (July 25, 2006)
(approving Nasdaq’s rule restricting affiliations
between Nasdaq and its members).
19 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
E:\FR\FM\29AUN1.SGM
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Federal Register / Vol. 79, No. 168 / Friday, August 29, 2014 / Notices
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 CHX. 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–CHX–
2014–13 and should be submitted on or
before September 19, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–20558 Filed 8–28–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[File No. 500–1]
[FR Doc. 2014–20768 Filed 8–27–14; 4:15 pm]
BILLING CODE 8011–01–P
In the Matter of Clavis Technologies
International Co., Ltd.; Order of
Suspension of Trading
August 27, 2014.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Clavis
Technologies International Co., Ltd.
because it has not filed any periodic
reports since the period ended
September 30, 2011.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted company is suspended for the
period from 9:30 a.m. EDT on August
27, 2014, through 11:59 p.m. EDT on
September 10, 2014.
SECURITIES AND EXCHANGE
COMMISSION
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[File No. 500–1]
[FR Doc. 2014–20737 Filed 8–27–14; 4:15 pm]
BILLING CODE 8011–01–P
In the Matter of Gold Horse
International, Inc.; Order of
Suspension of Trading
wreier-aviles on DSK5TPTVN1PROD with NOTICES
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014–20736 Filed 8–27–14; 4:15 pm]
BILLING CODE 8011–01–P
CFR 200.30–3(a)(12).
15:29 Aug 28, 2014
[File No. 500–1]
In the Matter of China Wood, Inc.,
Order of Suspension of Trading
August 27, 2014.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of China
Wood, Inc. because it has not filed any
periodic reports since the period ended
December 31, 2010.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted company is suspended for the
period from 9:30 a.m. EDT on August
27, 2014, through 11:59 p.m. EDT on
September 10, 2014.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014–20753 Filed 8–27–14; 4:15 pm]
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Gold Horse
International, Inc. because it has not
filed any periodic reports since the
period ended March 31, 2012.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted company is suspended for the
period from 9:30 a.m. EDT on August
27, 2014, through 11:59 p.m. EDT on
September 10, 2014.
VerDate Mar<15>2010
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES AND EXCHANGE
COMMISSION
August 27, 2014.
20 17
51635
Jkt 232001
BILLING CODE 8011–01–P
[File No. 500–1]
TENNESSEE VALLEY AUTHORITY
In the Matter of Xinde Technology
Company; Order of Suspension of
Trading
Meeting of the Regional Resource
Stewardship Council
August 27, 2014.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Xinde
Technology Company because it has not
filed any periodic reports since the
period ended March 31, 2012.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
company. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted company is suspended for the
period from 9:30 a.m. EDT on August
27, 2014, through 11:59 p.m. EDT on
September 10, 2014.
PO 00000
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Tennessee Valley Authority
(TVA).
ACTION: Notice of Meeting.
AGENCY:
The TVA Regional Resource
Stewardship Council (RRSC) will hold a
meeting on Wednesday, September 24,
and Thursday, September 25, 2014, to
consider various matters.
The RRSC was established to advise
TVA on its natural resource stewardship
activities. Notice of this meeting is given
under the Federal Advisory Committee
Act (FACA), 5 U.S.C. App. 2.
The meeting agenda includes the
following:
1. Introductions.
2. Updates on Natural Resources
issues.
3. Presentations covering TVA’s Dam
Safety Management and TVA’s
Reservoir Operations Study
SUMMARY:
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]]>Agencies
[Federal Register Volume 79, Number 168 (Friday, August 29, 2014)]
[Notices]
[Pages 51633-51635]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-20558]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72909; File No. SR-CHX-2014-13]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt a General Prohibition Against Affiliation Between the Exchange
and any Participant
August 25, 2014.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on August 18, 2014, the Chicago Stock Exchange, Inc. (``CHX'' 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 the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
CHX proposes to adopt Article 3, Rule 20 that establishes a general
prohibition against affiliation between the Exchange and any
Participants. The text of this proposed rule change is available on the
Exchange's Web site at (www.chx.com) and in the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the CHX included statements
concerning the purpose of and basis for the proposed rule changes 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 CHX 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 Changes
1. Purpose
The Exchange proposes to adopt Article 3, Rule 20 (No Affiliation
between Exchange and any Participant). The purpose of the proposed rule
is to guard against any possibility that the Exchange may exercise, or
forbear to exercise, regulatory authority with respect to an affiliated
Participant \4\ in a manner that is influenced by commercial
considerations and to provide an opportunity for Commission review of
certain proposed affiliations.
---------------------------------------------------------------------------
\4\ CHX Article 1, Rule 1(s) provides, in pertinent part, that
```Participant' means, except as otherwise described in these Rules,
any Participant Firm that hold a valid Trading Permit'' and that a
``Participant shall be considered a `member' of the Exchange for the
purposes of the Exchange Act.''
---------------------------------------------------------------------------
Specifically, the proposed rule provides that the Exchange or any
entity with which it is affiliated shall not, directly or indirectly,
acquire or maintain an ownership interest in a Participant in the
absence of an effective filing under Section 19(b) of the Act.\5\ The
proposed rule defines ``affiliate'' with reference to Rule 12b-2 under
the Act.\6\ In addition, in order to make it clear that the obligation
to avoid affiliations applies to both the Exchange and its
Participants, the proposed rule also provides that a Participant shall
not be or become an affiliate of the Exchange, or an affiliate of any
affiliate of the Exchange, in the absence of an effective filing under
Section 19(b) of the Act.\7\
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\5\ 15 U.S.C. 78s(b).
\6\ Rule 12b-2 under the Act provides the following definition
of ``affiliate'': Affiliate. An ``affiliate'' of, or a person
``affiliated'' with, a specified person, is a person that directly,
or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person
specified. 17 CFR 240.12b-2.
\7\ 15 U.S.C. 78s(b).
---------------------------------------------------------------------------
Moreover, the proposed rule provides that nothing in this proposed
rule shall prohibit a Participant or its affiliate from acquiring or
holding an equity interest in CHX Holdings, Inc. that is permitted by
the ownership and voting limitation contained in the Certificate of
Incorporation of CHX Holdings, Inc. Specifically, paragraph (b)(ii)(B)
of the fifth section of the Certificate of Incorporation of CHX
Holdings, Inc. provides that no Person, either alone or together with
its Related Persons,\8\ who holds a trading permit of the Exchange
(i.e., a Participant), may own, directly or indirectly, of record or
beneficially shares of stock of CHX Holdings, Inc. representing in the
aggregate more than twenty percent (20%) of the then outstanding votes
entitled to be cast on any matter.
---------------------------------------------------------------------------
\8\ Paragraph (a)(ii) of the fifth section of the Certificate of
Incorporation of CHX Holdings, Inc. states as follows: The term
``Related Persons'' shall mean (A) with respect to any Person, all
``affiliates'' and ``associates'' of such Persons (as such terms are
defined in Rule 12b-2 under the Securities and Exchange Act of 1934,
as amended); (B) with respect to any Person that holds a permit
issued by the Chicago Stock Exchange, Inc. to trade securities on
the Chicago Stock Exchange (``Participant''), any broker or dealer
with which a Participant is associated; and (C) any two or more
Persons that have any agreement, arrangement or understanding
(whether or not in writing) to act together for the purpose of
acquiring, voting, holding or disposing of shares of the capital
stock of the Corporation.
---------------------------------------------------------------------------
The proposed rule also limits possible expansive interpretations of
the term ``affiliate'' by providing that nothing in the proposed rule
shall prohibit a Participant from being or becoming an affiliate of the
Exchange, or an affiliate of any affiliate of the Exchange, solely by
reason of such Participant or any officer, director, manager, managing
member, partner or affiliate of such Participant being or becoming
either (a) a Director (as such term is defined in the Bylaws of the
Exchange) pursuant to the Bylaws of the Exchange, or (b) a Director
serving on the Board of Directors of CHX Holdings, Inc.
The Exchange believes that it is currently in compliance with the
proposed rule. The Exchange and CHXBD, LLC are both wholly owned
subsidiaries of CHX Holdings, Inc. (together ``CHX affiliates''). None
of the CHX affiliates have an ownership interest in a Participant and
neither CHX Holdings, Inc. nor CHXBD, LLC are Participants.\9\
Moreover, although some
[[Page 51634]]
Participants currently hold an equity interest in CHX Holdings, Inc.,
as currently permitted and limited by the Certificate of Incorporation
of CHX Holdings, Inc., the Exchange does not believe that any of these
Participants are affiliated with the Exchange or any affiliate of the
Exchange.
---------------------------------------------------------------------------
\9\ CHXBD, LLC is a registered broker-dealer and member of the
Financial Industry Regulatory Authority. However, CHXBD, LLC is not
yet a Participant of the Exchange nor is it operational. The
Exchange intends to operate CHXBD, LLC as an outbound routing
facility of the Exchange only upon adoption of effective rules
pursuant to Rule 19b-4 under the Act and notice to Participants. See
17 CFR 240.19b-4. In addition, CHXBD, LLC will only become a
Participant of the Exchange pursuant to an effective filing under
Section 19(b) of the Act. See 15 U.S.C. 78s(b).
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2. Statutory Basis
The Exchange believes that the proposed rule change to adopt a
general prohibition of affiliation between the Exchange and any
Participant is consistent with Section 6(b) of the Act in general \10\
and furthers the objectives of Section 6(b)(5) in particular,\11\
because 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
transaction in securities, to remove impediments to, and perfect the
mechanisms of, a free and open market and, in general, by protecting
investors and the public interest. Specifically, the proposed rule
would guard against any possibility that the Exchange may exercise, or
forbear to exercise, regulatory authority with respect to an affiliated
Participant in a manner that is influenced by commercial considerations
by (1) establishing a general prohibition on affiliation between the
Exchange and Participants and (2) requiring an effective filing
pursuant to Section 19(b) of the Act \12\ before the Exchange acquires
or maintains an ownership interest in a Participant or a Participant
becomes affiliated with the Exchange or any of its affiliates.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78s(b).
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B. Self-Regulatory Organization's Statement of Burden on Competition
The Exchange does not believe that the proposed rule change
implicates any competitive issues because the proposed rule only
addresses the relationship between the Exchange and its Participants.
C. Self-Regulatory Organization's Statement on Comments Regarding the
Proposed Rule Changes Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change along with a
brief description and text of 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
Exchange has satisfied this requirement.
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The Exchange has asked the Commission to waive the 30-day operative
delay so that the proposal may become operative immediately upon
filing. The Commission notes that it has previously expressed concern
about the potential for unfair competition and conflicts of interest
between an exchange's self-regulatory obligations and its commercial
interests that could exist if an exchange were to otherwise become
affiliated with one of its members, as well as the potential for unfair
competitive advantage that the affiliated member could have by virtue
of informational or operational advantages, or the ability to receive
preferential treatment.\15\ The Exchange states the purpose of the
proposed rule is to guard against any possibility that the Exchange may
exercise, or forbear to exercise, regulatory authority with respect to
an affiliated Participant in a manner that is influenced by commercial
considerations and to provide an opportunity for Commission review of
certain proposed affiliations,\16\ and that waiver of the 30-day
operative delay will allow the Exchange to provide immediate
transparency concerning its position on affiliations with
Participants.\17\ The Commission also notes that the proposed rule is
consistent with the rules of other national securities exchanges
previously approved by the Commission.\18\ For these reasons, the
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission designates the proposed rule change to be
operative upon filing.\19\
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\15\ See, e.g., Securities Exchange Act Release No. 58375
(August 18, 2008), 73 FR 49498 (August 21, 2008) (approving the
registration of BATS Exchange as a national securities exchange)
(``BATS Exchange Approval''), at 49502 n.90 and accompanying text.
\16\ See supra note 4 and accompanying text.
\17\ See SR-CHX-2014-13, Item 7.
\18\ See, e.g., BYX Rule 2.10 and Nasdaq Rule 2160(a); BATS
Exchange Approval, supra note 15; and Securities Exchange Act
Release No. 54170 (July 18, 2006), 71 FR 42149 (July 25, 2006)
(approving Nasdaq's rule restricting affiliations between Nasdaq and
its members).
\19\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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-CHX-2014-13 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-CHX-2014-13. 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
[[Page 51635]]
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 CHX. 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-CHX-2014-13 and should be submitted on or before
September 19, 2014.
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. 2014-20558 Filed 8-28-14; 8:45 am]
BILLING CODE 8011-01-P
