Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change To Implement CHX SNAPSM, 48375-48376 [2015-19760]
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Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices
Specifically, the Commission cannot
find that each iteration of the amended
process would qualify as an exception
under Section 5(b)(ii) of the Linkage
Plan. The Commission notes that when
the Original Participant Exchanges
proposed the Options Linkage Plan, all
seven exchanges represented to the
Commission that:
Section 5(b)(ii) of the Plan carries forward
the current Trade-Through exception in the
old plan and is the options equivalent to the
single price opening exception in Regulation
NMS for equity securities. Options exchanges
use a trading rotation to open an option for
trading, or to reopen an option after a trading
halt. The rotation is effectively a single price
auction to price the option and there are no
practical means to include prices on other
exchanges in that auction.
mstockstill on DSK4VPTVN1PROD with NOTICES
(emphasis added).55 Relying on this
unanimous representation from all
exchanges who jointly proposed the
Options Linkage Plan, the Commission
stated in the Options Linkage Plan
Approval Order that the language used
in the Section 5(b)(ii) is ‘‘similar to an
exception available for NMS stocks
under Regulation NMS,’’ 56 and ‘‘[a]s
noted by the Participants, the trading
rotation is effectively a single price
auction to price the option.’’ 57
The Commission acknowledges that
the text of Section 5(b)(ii) of the Options
Linkage Plan refers to the trade-through
exception during a ‘‘trading rotation,’’
not a ‘‘single price auction.’’ But as even
the Exchange notes in the ISE Letter, the
Options Linkage Plan also does not
define the term ‘‘trading rotation’’ nor
55 See Letter from Michael Simon, Secretary, ISE,
dated November 7, 2008, and available at https://
www.sec.gov/rules/sro/nms/2008/4-546-iseamend3.pdf. See also Letters from Peter G.
Armstrong, Managing Director, Options, NYSE
Arca, dated October 30, 2008, available at https://
www.sec.gov/rules/sro/nms/2008/4-546-nysearcaamend3.pdf; Edward J. Joyce, President & Chief
Operating Officer, Chicago Board Options
Exchange, dated November 21, 2008, available at
https://www.sec.gov/rules/sro/nms/2008/4-546-cboeamend1.pdf; Jeffrey P. Burns, Managing Director,
NYSE Alternext US LLC, dated November 25, 2008,
available at https://www.sec.gov/rules/sro/nms/
2008/4-546-nysealtr-amend1.pdf; John Katovich,
Vice President, BSE, dated December 1, 2008,
available at https://www.sec.gov/rules/sro/nms/
2008/4-546-bse-amend1.pdf; Richard S. Rudolph,
Counsel, Nasdaq OMX Phlx, dated December 3,
2008, available at https://www.sec.gov/rules/sro/
nms/2008/4-546-phlx-amend1.pdf; and Jeffrey S.
Davis, Vice President & Deputy General Counsel,
Nasdaq Stock Market LLC, dated December 4, 2008,
available at https://www.sec.gov/rules/sro/nms/
2008/4-546-nasdaq-amend1.pdf.
56 See Options Linkage Plan Approval Order,
supra note 32, at 39366. See also Rule 611(b)(3) of
Regulation NMS under the Act (17 CFR
242.611(b)(3)) which provides that ‘‘the transaction
that constituted the trade-through was a singlepriced opening, reopening, or closing transaction by
the trading center.’’
57 See Options Linkage Plan Approval Order,
supra note 32, at 39366.
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provide additional clarification to what
the trading rotation exception under
Section 5(b)(ii) means.58 In addition, as
noted above, all seven exchanges that
jointly proposed the Linkage Plan
explicitly represented to the
Commission that the trading rotation
exception is ‘‘similar to an exception
available for NMS stocks under
Regulation NMS’’ and is ‘‘effectively a
single price auction to price the
option.’’ 59 Accordingly, in the absence
of any basis in the Options Linkage Plan
itself for the Commission to determine
otherwise, and in light of prior, explicit
representations by the Original
Participant Exchanges that the trading
rotation exception applies to a ‘‘single
price auction,’’ the Commission cannot
find that the Exchange’s proposal is
consistent with the Linkage Plan and
thereby the Act.
The Commission acknowledges that
the ISE’s proposed iterative opening
process, unlike its current process,
would provide away market protection
for Public Customer Orders. For the
reasons discussed above, however, the
Commission cannot find that the
proposed rule change is consistent with
the Options Linkage Plan or the Act.
Further, the Commission does not agree
with the Exchange that the decision of
other options exchanges not to comment
on the proposed rule change equates to
agreement with ISE’s interpretation of
the trading rotation exception. It would
be inappropriate for the Commission to
draw any such conclusion unless
explicitly stated by a commenter. As ISE
itself noted, ‘‘exchanges may have
several reasons for not commenting on
a proposed rule change.’’ 60
Finally, in analyzing the proposed
rule change, and in making its
determination to disapprove the rule
change, the Commission has considered
whether the action will promote
efficiency, competition, and capital
58 Further, the Commission notes that the Linkage
Plan refers to a singular ‘‘trading rotation’’ not, as
ISE implies, multiple ‘‘trading rotations.’’
59 See supra note 55.
60 See ISE Letter, supra note 7, at 3. ISE also
provides as an exhibit to its response letter data
purporting to show trade-throughs from all options
exchanges during the first minute of trading on
April 29, 2015, and April 30, 2015. According to
ISE, the data shows trade-throughs from every
exchange, with the total number of contracts trading
through being 9,316 on April 29, and 48,269
contracts on April 30. See Exhibit to ISE Letter,
supra note 7. The Commission cannot surmise from
the data whether the trade-throughs are occurring
without an exception or whether the exchanges are
not complying with the Linkage Plan or their own
rules. The Commission notes that the Options
Linkage Plan provides that if a participant exchange
relies on a trade-through exception, it would be
required to establish, maintain, and enforce written
policies and procedures reasonably designed to
assure compliance with the terms of the exception.
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48375
formation,61 but, as discussed above, the
Commission cannot find that the
proposed rule change is consistent with
the Options Linkage Plan or Section
6(b)(5) of the Act.
IV. Conclusion
For the foregoing reasons, the
Commission does not find that the
proposed rule change, is consistent with
the Act and the rules and regulations
thereunder applicable to a national
securities exchange, and, in particular,
with Section 6(b)(5) of the Act.
IT IS THEREFORE ORDERED,
pursuant to section 19(b)(2) of the Act,
that the proposed rule change (SR–ISE–
2014–24), be, and hereby is,
disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.62
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–19762 Filed 8–11–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75630; File No. SR–CHX–
2015–03]
Self-Regulatory Organizations;
Chicago Stock Exchange, Inc.; Notice
of Designation of a Longer Period for
Commission Action on a Proposed
Rule Change To Implement CHX
SNAPSM, an Intra-Day and On-Demand
Auction Service
August 6, 2015.
On June 23, 2015, the Chicago Stock
Exchange, Inc. (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to implement CHX SNAPSM,
which would be an intra-day and ondemand auction service that would be
initiated at the request of market
participants seeking to trade securities
in bulk. The proposed rule change was
published for comment in the Federal
61 Whenever pursuant to the Act the Commission
is engaged in rulemaking or the review of a rule of
a self-regulatory organization, and is required to
consider or determine whether an action is
necessary or appropriate in the public interest, the
Commission shall also consider, in addition to the
protection of investors, whether the action will
promote efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
62 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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48376
Federal Register / Vol. 80, No. 155 / Wednesday, August 12, 2015 / Notices
Register on July 8, 2015.3 The
Commission has received no comment
letters regarding the proposed rule
change.
Section 19(b)(2) of the Act 4 provides
that, within 45 days of the publication
of the notice of the filing of a proposed
rule change, or within such longer
period up to 90 days as the Commission
may designate if it finds such longer
period to be appropriate and publishes
its reasons for so finding, or as to which
the self-regulatory organization
consents, the Commission shall either
approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether the proposed rule change
should be disapproved. The
Commission is extending this 45-day
time period.
The Commission finds that it is
appropriate to designate a longer period
within which to take action on the
proposed rule change so that it has
sufficient time to consider the proposed
rule change. Accordingly, the
Commission, pursuant to Section
19(b)(2) of the Act,5 designates October
6, 2015 as the date by which the
Commission should either approve or
disapprove or institute proceedings to
determine whether to disapprove the
proposed rule change (File Number SR–
CHX–2015–03).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–19760 Filed 8–11–15; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75633; File No. SR–FINRA–
2015–009]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving a
Proposed Rule Change To Adopt
FINRA Rule 2272 To Govern Sales or
Offers of Sales of Securities on the
Premises of Any Military Installation to
Members of the U.S. Armed Forces or
Their Dependents
August 6, 2015.
I. Introduction
On April 23, 2015, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt FINRA Rule 2272. Rule 2272
would govern sales or offers of sales of
securities on the premises of any
military installation to members of the
U.S. Armed Forces or their dependents.
The proposed rule was published for
comment in the Federal Register on
May 6, 2015.3 The Commission received
four comment letters in response to the
proposal.4 On June 18, 2015, FINRA
granted the Commission an extension of
time, until August 10, 2015, to act on
the proposal.5 FINRA responded to the
comment letters on July 21, 2015.6
This order approves the rule as
proposed.
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Notice of Filing of a Proposed Rule to Adopt
FINRA Rule 2272 to Govern Sales or Offers of Sales
of Securities on the Premises of Any Military
Installation to Members of the U.S. Armed Forces
or Their Dependents; Exchange Act Release No.
74890 (May 6, 2015), 80 FR 27220 (May 12, 2015)
(‘‘Notice’’).
4 See Letters from Jason T. Robinson, Georgia
State University College of Law Investor Advocacy
Clinic, dated May 30, 2015 (‘‘GSU Letter’’); Hugh
D. Berkson, Public Investors Arbitration Bar
Association, dated June 1, 2015 (‘‘PIABA Letter’’);
David T. Bellaire, Esq., Financial Services Institute,
dated June 2, 2015 (‘‘FSI Letter’’); David M. Rader,
Michigan State University College of Law Investor
Advocacy Legal Clinic, dated June 9, 2015 (‘‘MSU
Letter’’).
5 See Letter from Jeanette Wingler, Assistant
General Counsel, FINRA, to Katherine England,
Assistant Director, Division of Trading and Markets,
Securities and Exchange Commission, dated June
18, 2015.
6 See Letter from Jeanette Wingler, Assistant
General Counsel, FINRA, to Brent J. Fields,
Secretary, Securities and Exchange Commission,
dated July 21, 2015 (‘‘FINRA Response Letter’’).
mstockstill on DSK4VPTVN1PROD with NOTICES
2 17
3 See Securities Exchange Act Release No. 75346
(July 1, 2015), 80 FR 39172 (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 Id.
6 17 CFR 200.30–3(a)(31).
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II. Description of the Proposed Rule
a. Background
As stated in the Notice, FINRA is
proposing to adopt Rule 2272 to govern
sales or offers of sales of securities on
the premises of any military installation
to members of the U.S. Armed Forces or
their dependents.7 Proposed Rule 2272
would impose a number of restrictions
upon FINRA members engaged in the
sales or offers of sales of securities,
including a disclosure requirement, a
suitability obligation, and a ban on
referral fees to persons not associated
with a FINRA member.8
i. Statutory Basis
To comply with the requirements of
Section 15A(b)(14) of the Exchange
Act,9 FINRA proposed rules governing
the sales, or offers of sales, of securities
on the premises of any military
installation to members of the U.S.
Armed Forces or their dependents.10
Section 15A(b)(14) requires these rules
mandate: (1) A broker-dealer performing
brokerage services to military personnel
or dependents disclose (a) that
securities offered are not being offered
or provided on behalf of the federal
government, and that their offer is not
sanctioned, recommended, or
encouraged by the federal government
and (b) the identity of the registered
broker-dealer offering the securities; (2)
such broker-dealer to perform an
appropriate suitability determination
prior to making a recommendation of a
security to a member of the U.S. Armed
Forces or a dependent thereof; and (3)
that no person receive referral fees or
incentive compensation unless such
person is an associated person of a
registered broker-dealer and qualified
pursuant to the rules of a self-regulatory
organization.11
ii. Proposed Rule
Proposed FINRA Rule 2272 requires
that, prior to engaging in sales or offers
of sales of securities on the premises of
a military installation to any member of
the U.S. Armed Forces or a dependent
thereof, a FINRA member must clearly
and conspicuously disclose in writing:
(1) The identity of the member offering
7 See
Notice at 27221.
id.
9 15 U.S.C. 78o–3(b)(14).
10 Congress amended Section 15A(b) of the
Exchange Act in the Military Personnel Financial
Services Protection Act (‘‘Military Act’’). Pub. L.
109–290, 120 Stat. 1317. The Military Act requires
the rules of a registered national securities
association to include provisions governing the
sales, or offers of sales, of securities on the premises
of any military installation to any member of the
Armed Forces or a dependent thereof.
11 15 U.S.C. 78o–3(b)(14).
8 See
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]]>Agencies
[Federal Register Volume 80, Number 155 (Wednesday, August 12, 2015)]
[Notices]
[Pages 48375-48376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19760]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75630; File No. SR-CHX-2015-03]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Designation of a Longer Period for Commission Action on a
Proposed Rule Change To Implement CHX SNAPSM, an Intra-Day
and On-Demand Auction Service
August 6, 2015.
On June 23, 2015, the Chicago Stock Exchange, Inc. (``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
implement CHX SNAPSM, which would be an intra-day and on-
demand auction service that would be initiated at the request of market
participants seeking to trade securities in bulk. The proposed rule
change was published for comment in the Federal
[[Page 48376]]
Register on July 8, 2015.\3\ The Commission has received no comment
letters regarding the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 75346 (July 1,
2015), 80 FR 39172 (``Notice'').
---------------------------------------------------------------------------
Section 19(b)(2) of the Act \4\ provides that, within 45 days of
the publication of the notice of the filing of a proposed rule change,
or within such longer period up to 90 days as the Commission may
designate if it finds such longer period to be appropriate and
publishes its reasons for so finding, or as to which the self-
regulatory organization consents, the Commission shall either approve
the proposed rule change, disapprove the proposed rule change, or
institute proceedings to determine whether the proposed rule change
should be disapproved. The Commission is extending this 45-day time
period.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
The Commission finds that it is appropriate to designate a longer
period within which to take action on the proposed rule change so that
it has sufficient time to consider the proposed rule change.
Accordingly, the Commission, pursuant to Section 19(b)(2) of the
Act,\5\ designates October 6, 2015 as the date by which the Commission
should either approve or disapprove or institute proceedings to
determine whether to disapprove the proposed rule change (File Number
SR-CHX-2015-03).
---------------------------------------------------------------------------
\5\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
---------------------------------------------------------------------------
\6\ 17 CFR 200.30-3(a)(31).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19760 Filed 8-11-15; 8:45 am]
BILLING CODE 8011-01-P
