Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Chapter IX of Its Rulebook To Incorporate Certain Rules of NASDAQ and FINRA Relating to Arbitration and Mediation, 5861-5863 [2015-02013]
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Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–02014 Filed 2–2–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74160; File No. SR–BATS–
2015–05]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Chapter IX of
Its Rulebook To Incorporate Certain
Rules of NASDAQ and FINRA Relating
to Arbitration and Mediation
January 28, 2015.
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 January
14, 2015, BATS Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BATS’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been
substantially prepared by the Exchange.
The Exchange has designated this
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A) of the Act 3 and Rule
19b–4(f)(6)(iii) thereunder,4 which
renders it effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
rljohnson on DSK3VPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend Chapter IX of its rulebook to
incorporate certain rules of the
NASDAQ Stock Market LLC
(‘‘NASDAQ’’) and the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) relating to arbitration and
mediation. The text of the proposed rule
change is available at the Exchange’s
Web site at https://
www.batstrading.com/, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
1 15
14:46 Feb 02, 2015
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On July 30, 2007, the National
Association of Securities Dealers, Inc.
(‘‘NASD’’), the Exchange, and NYSE
Regulation, Inc. consolidated their
member firm regulation operations into
a combined organization, FINRA, and
entered into a plan to allocate to FINRA
certain regulatory responsibilities for
common rules and common members
(‘‘17d–2 Agreement’’).5 The 17d–2
Agreement was entered into in
accordance with the requirements of
Rule 17d–2 promulgated pursuant to the
Act,6 which permits self-regulatory
organizations (‘‘SROs’’) to allocate
certain regulatory responsibilities with
respect to common members and
common rules. On September 5, 2012,
the Exchange and FINRA entered into a
Regulatory Services Agreement
(‘‘RSA’’), whereby FINRA was retained
to perform certain regulatory services on
behalf of the Exchange pertaining to
dispute resolution. On February 1, 2014,
the Exchange and FINRA terminated
their 2012 RSA and entered into a new
RSA that covers the services contained
in the 2012 RSA plus additional
regulatory services. Today, FINRA
performs all arbitration, mediation, and
other dispute resolution services, as
may be needed from time to time, on
behalf of the Exchange.
To facilitate FINRA’s performance of
these functions under the 2014 RSA and
to further harmonize the rules of FINRA
and the Exchange generally, the
Exchange is proposing to conform the
text of its rules governing arbitration
and mediation (Chapter IX) to the
5 See Securities Exchange Act Release No. 56148
(Jul. 26, 2007), 72 FR 42146 (Aug. 1, 2007) (File No.
4–544) (Notice of Filing and Order Approving and
Declaring Effective a Plan for the Allocation of
Regulatory Responsibilities).
6 17 CFR 240.17d–2.
15 17
VerDate Sep<11>2014
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
Jkt 235001
PO 00000
Frm 00134
Fmt 4703
Sfmt 4703
5861
FINRA Code of Arbitration Procedure
for Customer Disputes (12000 Series),
FINRA Code of Arbitration Procedure
for Industry Disputes (13000 Series),
and the FINRA Code of Mediation
(14000 Series).
The Exchange proposes to amend
Chapter IX (Arbitration) of its rulebook
to incorporate certain rules of NASDAQ
and FINRA relating to arbitration and
mediation, and to make certain nonsubstantive changes. The Exchange
proposes to make the following changes
to its current rules in Chapter IX of its
rulebook.
Proposed Amendments to Current Rules
The Exchange proposes to amend
current Rule 9.1 (Code of Arbitration) to
make the rule substantially similar to
NASDAQ Rule 10100. The Exchange
proposes to replace the reference to
NASD Code of Arbitration with FINRA
Code of Arbitration,7 clarify the
meaning of ‘‘Exchange arbitrations,’’ 8
and add a sentence stating that Members
must comply with FINRA arbitration
rules as if they were rules of the
Exchange.
The Exchange proposes to replace
current Rule 9.2 (Jurisdiction) with
amended Rule 9.2 (Matters Eligible for
Submission), which is substantially
similar to NASDAQ Rule 10101.9
Amended Rule 9.2 would state that the
Exchange adopts the FINRA Code of
Arbitration for any dispute, claim, or
controversy arising out of or in
connection with the business of any
Member, or arising out of the
employment or termination of
employment of associated person(s)
with any Member: Between or among
Members; between or among Members
and associated persons; and between or
among Members or associated persons
and public customers, or others, except
for any type of dispute, claim, or
controversy that is not permitted to be
arbitrated under the FINRA Code of
Procedure.
The Exchange proposes to amend
current Rule 9.3 (Predispute Arbitration
Agreements) to incorporate FINRA Rule
2268 by reference, instead of restating
the predispute arbitration agreement
rules in full.
The Exchange proposes to amend
current Rule 9.5 (Payment of Awards),
to re-name its title as ‘‘Failure to Act
7 See FINRA Rule 12000 Series (Code of
Arbitration Procedure for Customer Disputes) and
FINRA Rule 13000 Series (Code of Arbitration
Procedure for Industry Disputes).
8 They would be defined as ‘‘every claim, dispute
or controversy arising out of or in connection with
matters eligible for submission under Rule 9.2.’’
9 See also FINRA Rule 12000 Series, FINRA Rule
13000 Series.
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03FEN1
rljohnson on DSK3VPTVN1PROD with NOTICES
5862
Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices
under Provisions of FINRA Code of
Arbitration,’’ to expand the rule to
include additional conduct deemed
inconsistent with just and equitable
principles of trade and a violation of
Rule 3.1 (Business Conduct of
Members), using the language of
NASDAQ IM–10100, and FINRA IM–
12000 and IM–13000. These prohibited
acts include: Failure to submit a dispute
for arbitration under the FINRA Code of
Arbitration as required by the FINRA
Code of Arbitration; failure to comply
with any injunctive order issued
pursuant to the FINRA Code of
Arbitration; failure to appear or to
produce any document in his or her or
its possession or control as directed
pursuant to provisions of the FINRA
Code of Arbitration; failure to honor an
award, or comply with a written and
executed settlement agreement,
obtained in connection with an
arbitration submitted for disposition
under the FINRA Code of Arbitration
where timely motion has not been made
to vacate or modify such award
pursuant to applicable law; or, failure to
comply with a written and executed
agreement obtained in connection with
a mediation submitted for disposition
pursuant to the FINRA Code of
Mediation.10 The Exchange proposed to
add Rule 9.5(b) to provide that action by
Members requiring associated persons
to waive the arbitration of disputes
contrary to the provisions of the FINRA
Code of Arbitration is a violation of
Exchange Rule 3.1.
The Exchange proposes to amend
current Rule 9.6 to extend the
application of the rule (currently
applicable to arbitration) to mediation.
The Exchange proposes to add
proposed Rule 9.7 (Mediation) to state
that FINRA’s mediation services, as
governed by the 14000 Series of
FINRA’s Manual (the Code of Mediation
Procedure), are also available to
Members who voluntarily agree to
submit matters for mediation. The
Exchange also proposes to incorporate
by reference the FINRA Code of
Mediation into its rules so that Members
have the same obligations with which to
comply as if such rules and
interpretations were part of the
Exchange’s rules.
The Exchange proposes to add Rule
9.8 (Regulatory Services Agreement) to
state, among other things, that FINRA
staff will perform arbitrations and
mediations on behalf of the Exchange
pursuant to an RSA with FINRA in
accordance with the FINRA Codes of
Arbitration and Mediation.
10 See FINRA Rule 14000 Series (Code of
Mediation Procedure).
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14:46 Feb 02, 2015
Jkt 235001
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,11 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,12 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.
In particular, the Exchange believes
that the proposed rule change will
provide greater harmonization between
Exchange and FINRA rules of similar
purpose, resulting in less burdensome
and more efficient regulatory
compliance for members of both the
Exchange and FINRA (‘‘dual members’’).
As previously noted, in many instances
the proposed rule text is substantially
similar to FINRA’s and NASDAQ’s
respective rule texts, which have
already been approved by the
Commission. As such, the Exchange
believes that the proposed rule change
will foster cooperation and coordination
with persons engaged in facilitating
transactions in securities and will
remove impediments to and perfect the
mechanism of a free and open market
and a national market system.
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. The
proposed rule change is not designed to
address any competitive issues but
rather is designed to provide greater
harmonization between Exchange and
FINRA rules of similar purpose for
arbitration and mediation matters,
resulting in less burdensome and more
efficient regulatory compliance for dual
members and facilitating FINRA’s
performance of its regulatory functions
under the 2014 RSA.
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
proposal.
11 15
12 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00135
Fmt 4703
Sfmt 4703
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Commission believes that
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, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14
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: (1) Necessary or appropriate in
the public interest; (2) for the protection
of investors; or (3) 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 proposal 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 No. SR–
BATS–2015–05 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 No.
SR–BATS–2015–05. 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
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a SRO 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
Exchange has satisfied this requirement. See 17 CFR
240.19b–4(f)(6)(iii).
14 17
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Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices
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 will also 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 No. SR–BATS–
2015–05 and should be submitted on or
before February 24, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015–02013 Filed 2–2–15; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74159; File No. SR–CBOE–
2015–007]
Self-Regulatory Organizations:
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Adopt a Box Spread
Strategy Rebate for Users of the
Exchange’s Customized Options
Pricing Service
rljohnson on DSK3VPTVN1PROD with NOTICES
January 28, 2015.
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 January
15, 2015, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
14:46 Feb 02, 2015
Jkt 235001
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a box
spread strategy rebate for users of the
Exchange’s Customized Options Pricing
Service (‘‘COPS’’). The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
15 17
change as described in Items I, II, and
III 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. Purpose
The Exchange proposes to adopt a box
spread strategy rebate for users of the
Exchange’s COPS.3 COPS provides
market participants with an ‘‘end-ofday’’ 4 file and ‘‘historical’’ 5 files of
valuations for Flexible Exchange
(‘‘FLEX’’) 6 options and certain over-the3 See Securities Exchange Act Release No. 67813
(September 10, 2012), 77 FR 56903 (September 14,
2012) (SR–CBOE–2012–083), Securities Exchange
Act Release No. 67928 (September 26, 2012), 77 FR
60161 (October 2, 2012) (SR–CBOE–2012–090),
Securities Exchange Act Release No. 70705 (October
17, 2013), 78 FR 63265 (October 23, 2013) (SR–
CBOE–2013–097), Securities Exchange Act Release
No. 70845 (November 12, 2013), 78 FR 69168
(November 18, 2013) (SR–CBOE–2013–104), and
Securities Exchange Act Release No. 72621 (July 16,
2014), 79 FR 42616 (July 22, 2014) (SR–CBOE–
2014–057).
4 ‘‘End of day’’ refers to data that is distributed
prior to the opening of the next trading day.
5 ‘‘Historical’’ COPS data consists of COPS data
that is over one month old (i.e., copies of the ‘‘endof-day’’ COPS file that are over one month old).
6 FLEX options are exchange traded options that
provide investors with the ability to customize
PO 00000
Frm 00136
Fmt 4703
Sfmt 4703
5863
counter (‘‘OTC’’) options (collectively,
‘‘COPS Data’’). Market Data Express,
LLC (‘‘MDX’’), an affiliate of CBOE,
offers COPS Data for sale to all market
participants. COPS Data is available to
‘‘Subscribers’’ for internal use and
internal distribution only, and to
‘‘Customers’’ who, pursuant to a written
vendor agreement between MDX and a
Customer, may distribute the Data
externally (i.e., act as a vendor) and/or
use and distribute the Data internally.
COPS Data consists of indicative 7 and
implied volatility values for four
categories of ‘‘customized’’ options. The
first category of options is all open
series of FLEX options listed on any
exchange that offers FLEX options for
trading.8 The second category is OTC
options that have the same degree of
customization as FLEX options. The
third category includes options with
strike prices expressed in percentage
terms. Values for such options are
expressed in percentage terms and are
theoretical values.9 The fourth category
includes ‘‘exotic’’ options.10
The Exchange uses values produced
by CBOE Trading Permit Holders
(‘‘TPHs’’) to produce COPS Data.
Participating CBOE TPHs submit values
to MDX on options series specified by
MDX on a daily basis. These values are
generated by the TPH’s internal pricing
models. The valuations that MDX
ultimately publishes are an average of
multiple contributions of values from
participating CBOE TPHs. For each
value provided by MDX through COPS,
MDX includes a corresponding
indication of the number of marketmaker contributors that factored into
that value.
CBOE TPHs that meet the following
objective qualification criteria are
allowed to contribute values to MDX for
purposes of producing COPS Data.
Interested CBOE TPHs must be
approved by the Exchange, have the
basic option features including size, expiration
date, exercise style, and certain exercise prices.
7 ‘‘Indicative’’ values are indications of potential
market prices only and as such are neither firm nor
the basis for a transaction.
8 Current FLEX options open interest spans over
2,000 series on over 300 different underlying
securities.
9 These values are theoretical in that they are
indications of potential market prices for options
that have not traded (i.e., do not yet exist). Market
participants sometimes express option values in
percentage terms rather than in dollar terms
because they find it is easier to assess the change,
or lack of change, in the marketplace from one day
to the next when values are expressed in percentage
terms.
10 Exotic options are options which are generally
traded OTC and are more complex than standard
options, usually relating to determination of payoff.
An exotic option may also include a non-standard
underlying instrument, developed for a particular
client or for a particular market.
E:\FR\FM\03FEN1.SGM
03FEN1
]]>Agencies
[Federal Register Volume 80, Number 22 (Tuesday, February 3, 2015)]
[Notices]
[Pages 5861-5863]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02013]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74160; File No. SR-BATS-2015-05]
Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Chapter IX of Its Rulebook To Incorporate Certain Rules of NASDAQ and
FINRA Relating to Arbitration and Mediation
January 28, 2015.
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 January 14, 2015, BATS Exchange, Inc. (the ``Exchange'' or
``BATS'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by the Exchange.
The Exchange has designated this proposal as a ``non-controversial''
proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and
Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend Chapter IX of its rulebook
to incorporate certain rules of the NASDAQ Stock Market LLC
(``NASDAQ'') and the Financial Industry Regulatory Authority, Inc.
(``FINRA'') relating to arbitration and mediation. The text of the
proposed rule change is available at the Exchange's Web site at https://www.batstrading.com/, at the principal office of the Exchange, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On July 30, 2007, the National Association of Securities Dealers,
Inc. (``NASD''), the Exchange, and NYSE Regulation, Inc. consolidated
their member firm regulation operations into a combined organization,
FINRA, and entered into a plan to allocate to FINRA certain regulatory
responsibilities for common rules and common members (``17d-2
Agreement'').\5\ The 17d-2 Agreement was entered into in accordance
with the requirements of Rule 17d-2 promulgated pursuant to the Act,\6\
which permits self-regulatory organizations (``SROs'') to allocate
certain regulatory responsibilities with respect to common members and
common rules. On September 5, 2012, the Exchange and FINRA entered into
a Regulatory Services Agreement (``RSA''), whereby FINRA was retained
to perform certain regulatory services on behalf of the Exchange
pertaining to dispute resolution. On February 1, 2014, the Exchange and
FINRA terminated their 2012 RSA and entered into a new RSA that covers
the services contained in the 2012 RSA plus additional regulatory
services. Today, FINRA performs all arbitration, mediation, and other
dispute resolution services, as may be needed from time to time, on
behalf of the Exchange.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 56148 (Jul. 26,
2007), 72 FR 42146 (Aug. 1, 2007) (File No. 4-544) (Notice of Filing
and Order Approving and Declaring Effective a Plan for the
Allocation of Regulatory Responsibilities).
\6\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
To facilitate FINRA's performance of these functions under the 2014
RSA and to further harmonize the rules of FINRA and the Exchange
generally, the Exchange is proposing to conform the text of its rules
governing arbitration and mediation (Chapter IX) to the FINRA Code of
Arbitration Procedure for Customer Disputes (12000 Series), FINRA Code
of Arbitration Procedure for Industry Disputes (13000 Series), and the
FINRA Code of Mediation (14000 Series).
The Exchange proposes to amend Chapter IX (Arbitration) of its
rulebook to incorporate certain rules of NASDAQ and FINRA relating to
arbitration and mediation, and to make certain non-substantive changes.
The Exchange proposes to make the following changes to its current
rules in Chapter IX of its rulebook.
Proposed Amendments to Current Rules
The Exchange proposes to amend current Rule 9.1 (Code of
Arbitration) to make the rule substantially similar to NASDAQ Rule
10100. The Exchange proposes to replace the reference to NASD Code of
Arbitration with FINRA Code of Arbitration,\7\ clarify the meaning of
``Exchange arbitrations,'' \8\ and add a sentence stating that Members
must comply with FINRA arbitration rules as if they were rules of the
Exchange.
---------------------------------------------------------------------------
\7\ See FINRA Rule 12000 Series (Code of Arbitration Procedure
for Customer Disputes) and FINRA Rule 13000 Series (Code of
Arbitration Procedure for Industry Disputes).
\8\ They would be defined as ``every claim, dispute or
controversy arising out of or in connection with matters eligible
for submission under Rule 9.2.''
---------------------------------------------------------------------------
The Exchange proposes to replace current Rule 9.2 (Jurisdiction)
with amended Rule 9.2 (Matters Eligible for Submission), which is
substantially similar to NASDAQ Rule 10101.\9\ Amended Rule 9.2 would
state that the Exchange adopts the FINRA Code of Arbitration for any
dispute, claim, or controversy arising out of or in connection with the
business of any Member, or arising out of the employment or termination
of employment of associated person(s) with any Member: Between or among
Members; between or among Members and associated persons; and between
or among Members or associated persons and public customers, or others,
except for any type of dispute, claim, or controversy that is not
permitted to be arbitrated under the FINRA Code of Procedure.
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\9\ See also FINRA Rule 12000 Series, FINRA Rule 13000 Series.
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The Exchange proposes to amend current Rule 9.3 (Predispute
Arbitration Agreements) to incorporate FINRA Rule 2268 by reference,
instead of restating the predispute arbitration agreement rules in
full.
The Exchange proposes to amend current Rule 9.5 (Payment of
Awards), to re-name its title as ``Failure to Act
[[Page 5862]]
under Provisions of FINRA Code of Arbitration,'' to expand the rule to
include additional conduct deemed inconsistent with just and equitable
principles of trade and a violation of Rule 3.1 (Business Conduct of
Members), using the language of NASDAQ IM-10100, and FINRA IM-12000 and
IM-13000. These prohibited acts include: Failure to submit a dispute
for arbitration under the FINRA Code of Arbitration as required by the
FINRA Code of Arbitration; failure to comply with any injunctive order
issued pursuant to the FINRA Code of Arbitration; failure to appear or
to produce any document in his or her or its possession or control as
directed pursuant to provisions of the FINRA Code of Arbitration;
failure to honor an award, or comply with a written and executed
settlement agreement, obtained in connection with an arbitration
submitted for disposition under the FINRA Code of Arbitration where
timely motion has not been made to vacate or modify such award pursuant
to applicable law; or, failure to comply with a written and executed
agreement obtained in connection with a mediation submitted for
disposition pursuant to the FINRA Code of Mediation.\10\ The Exchange
proposed to add Rule 9.5(b) to provide that action by Members requiring
associated persons to waive the arbitration of disputes contrary to the
provisions of the FINRA Code of Arbitration is a violation of Exchange
Rule 3.1.
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\10\ See FINRA Rule 14000 Series (Code of Mediation Procedure).
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The Exchange proposes to amend current Rule 9.6 to extend the
application of the rule (currently applicable to arbitration) to
mediation.
The Exchange proposes to add proposed Rule 9.7 (Mediation) to state
that FINRA's mediation services, as governed by the 14000 Series of
FINRA's Manual (the Code of Mediation Procedure), are also available to
Members who voluntarily agree to submit matters for mediation. The
Exchange also proposes to incorporate by reference the FINRA Code of
Mediation into its rules so that Members have the same obligations with
which to comply as if such rules and interpretations were part of the
Exchange's rules.
The Exchange proposes to add Rule 9.8 (Regulatory Services
Agreement) to state, among other things, that FINRA staff will perform
arbitrations and mediations on behalf of the Exchange pursuant to an
RSA with FINRA in accordance with the FINRA Codes of Arbitration and
Mediation.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\11\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\12\ 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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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that the proposed rule change
will provide greater harmonization between Exchange and FINRA rules of
similar purpose, resulting in less burdensome and more efficient
regulatory compliance for members of both the Exchange and FINRA
(``dual members''). As previously noted, in many instances the proposed
rule text is substantially similar to FINRA's and NASDAQ's respective
rule texts, which have already been approved by the Commission. As
such, the Exchange believes that the proposed rule change will foster
cooperation and coordination with persons engaged in facilitating
transactions in securities and will remove impediments to and perfect
the mechanism of a free and open market and a national market system.
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. The proposed rule change is
not designed to address any competitive issues but rather is designed
to provide greater harmonization between Exchange and FINRA rules of
similar purpose for arbitration and mediation matters, resulting in
less burdensome and more efficient regulatory compliance for dual
members and facilitating FINRA's performance of its regulatory
functions under the 2014 RSA.
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 proposal.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Commission believes that 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, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) 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 a SRO 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 Exchange has satisfied
this requirement. See 17 CFR 240.19b-4(f)(6)(iii).
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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: (1)
Necessary or appropriate in the public interest; (2) for the protection
of investors; or (3) 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 proposal 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 No. SR-BATS-2015-05 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 No. SR-BATS-2015-05. 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
[[Page 5863]]
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 will also 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 No. SR-BATS-2015-05 and should be submitted on or before February
24, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-02013 Filed 2-2-15; 8:45 am]
BILLING CODE 8011-01-P
