Self-Regulatory Organizations; BATS Y-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, 5858-5861 [2015-02014]

Download as PDF 5858 Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices rljohnson on DSK3VPTVN1PROD with NOTICES non-discriminatory in that they apply uniformly to all Members. The Exchange believes that the nonsubstantive clarifying changes to its Fee Schedule are reasonable because they are designed to provide greater transparency to Members with regard to how the Exchange assesses fees and provides rebates. The Exchange notes that none of the proposed nonsubstantive clarifying changes are designed to amend any fee or rebate, nor alter the manner in which it assesses fees or calculates rebates. In particular, the proposed amendments to Step-Up Tiers 1 and 2 are reasonable and equitable because they conform to existing practice and do not modify the fees that the Exchange charges its Members that satisfy the tier’s criteria. The Exchange has historically in practice and will continue to require a Member’s added ADV be more than the Member’s added ADV as a percentage of TCV during the month indicated in the tier when determining the Member satisfied the tier’s criteria. The Exchange believes that Members would benefit from clear guidance in its Fee Schedule that describes the manner in which the Exchange would assess fees and calculate rebates. The proposed rule change is also designed, in part, to align terminology and definitions with that included in the current BATS fee schedules in order to use consistent fee schedules across the BGM Affiliated Exchanges. These changes to the Fee Schedule are intended to provide greater harmonization between Exchange, BYX, and BZX fee schedules and make the Fee Schedule clearer and less confusing for investors, thereby eliminating potential investor confusion. As such, the proposed rule change would remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The Exchange reiterates that the proposed rule change is being proposed in the context of the technology integration of the BGM Affiliated Exchanges and that the changes are entirely non-substantive. The proposed changes are not designed to have any impact on competition. Rather, they are intended to provide greater harmonization between Exchange, BYX, and BZX fee schedules and make the VerDate Sep<11>2014 14:46 Feb 02, 2015 Jkt 235001 Fee Schedule clearer and less confusing for investors. As stated above, the Exchange notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if the deem fee structures to be unreasonable or excessive. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from Members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 16 and paragraph (f) of Rule 19b–4 thereunder.17 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. 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– EDGA–2015–04 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–EDGA–2015–04. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–EDGA– 2015–04, and should be submitted on or before February 24, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Jill M. Peterson, Assistant Secretary. [FR Doc. 2015–02016 Filed 2–2–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74164; File No. SR–BYX– 2015–04] Self-Regulatory Organizations; BATS Y-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 Y-Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by the Exchange. 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 16 15 U.S.C. 78s(b)(3)(A). 17 17 CFR 240.19b–4(f). PO 00000 Frm 00131 Fmt 4703 1 15 Sfmt 4703 E:\FR\FM\03FEN1.SGM 03FEN1 Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices 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. 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. rljohnson on DSK3VPTVN1PROD with NOTICES 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 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 6 17 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6)(iii). 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). VerDate Sep<11>2014 14:46 Feb 02, 2015 Jkt 235001 CFR 240.17d–2. 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.’’ 7 See PO 00000 Frm 00132 Fmt 4703 Sfmt 4703 5859 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 tile as ‘‘Failure to Act 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 9 See also FINRA Rule 12000 Series, FINRA Rule 13000 Series. 10 See FINRA Rule 14000 Series (Code of Mediation Procedure). E:\FR\FM\03FEN1.SGM 03FEN1 5860 Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Notices rljohnson on DSK3VPTVN1PROD with NOTICES 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. mechanism of a free and open market and a national market system. 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 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 11 15 12 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). VerDate Sep<11>2014 14:46 Feb 02, 2015 Jkt 235001 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. 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. 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 PO 00000 Frm 00133 Fmt 4703 Sfmt 4703 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– BYX–2015–04 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–BYX–2015–04. 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 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–BYX–2015– 04 and should be submitted on or before February 24, 2015. E:\FR\FM\03FEN1.SGM 03FEN1 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. E:\FR\FM\03FEN1.SGM 03FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 22 (Tuesday, February 3, 2015)]
[Notices]
[Pages 5858-5861]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02014]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74164; File No. SR-BYX-2015-04]

Self-Regulatory Organizations; BATS Y-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 Y-Exchange, Inc. (the ``Exchange'' or
``BYX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been substantially prepared by the Exchange.

[[Page 5859]]

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).
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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 tile as ``Failure to Act 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

[[Page 5860]]

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-BYX-2015-04 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-BYX-2015-04. 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 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-BYX-2015-04 and should be
submitted on or before February 24, 2015.

[[Page 5861]]

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. 2015-02014 Filed 2-2-15; 8:45 am]
BILLING CODE 8011-01-P

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