Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Rule 3.20, Influencing or Rewarding Employees of Others, Concerning Gifts and Gratuities in Relation to the Business of the Employer of the Recipient, 63629-63631 [2015-26578]
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mstockstill on DSK4VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 202 / Tuesday, October 20, 2015 / Notices
the SEC, the ‘‘Commissions’’) regarding
whether a particular instrument (or
class of instruments) is a swap, a
security-based swap, or both (i.e., a
mixed swap). Under Rule 3a68–2, a
person provides to the Commissions a
copy of all material information
regarding the terms of, and a statement
of the economic characteristics and
purpose of, each relevant agreement,
contract, or transaction (or class
thereof), along with that person’s
determination as to whether each such
agreement, contract, or transaction (or
class thereof) should be characterized as
a swap, security-based swap, or both
(i.e., a mixed swap). The Commissions
also may request the submitting person
to provide additional information.
The SEC expects 25 requests pursuant
to Rule 3a68–2 per year. The SEC
estimates the total paperwork burden
associated with preparing and
submitting each request would be 20
hours to retrieve, review, and submit the
information associated with the
submission. This 20 hour burden is
divided between the SEC and the CFTC,
with 10 hours per response regarding
reporting to the SEC and 10 hours of
response regarding third party
disclosure to the CFTC.1 The SEC
estimates this would result in an
aggregate annual burden of 500 hours
(25 requests × 20 hours/request).
The SEC estimates that the total costs
resulting from a submission under Rule
3a68–2 would be approximately $12,000
for outside attorneys to retrieve, review,
and submit the information associated
with the submission. The SEC estimates
this would result in aggregate costs each
year of $300,000 (25 requests × 30
hours/request × $400).
Rule 3a68–4(c) establishes a process
for persons to request that the
Commissions issue a joint order
permitting such persons (and any other
person or persons that subsequently
lists, trades, or clears that class of mixed
swap) to comply, as to parallel
provisions only, with specified parallel
provisions of either the Commodity
Exchange Act (‘‘CEA’’) or the Securities
Exchange Act of 1934 (‘‘Exchange Act’’),
and related rules and regulations
(collectively ‘‘specified parallel
provisions’’), instead of being required
to comply with parallel provisions of
both the CEA and the Exchange Act.
The SEC expects ten requests
pursuant to Rule 3a68–4(c) per year.
The SEC estimates that nine of these
requests will have also been made in a
request for a joint interpretation
pursuant to Rule 3a68–2, and one will
1 The burdens imposed by the CFTC are included
in this collection of information.
VerDate Sep<11>2014
17:55 Oct 19, 2015
Jkt 238001
not have been. The SEC estimates the
total burden for the one request for
which the joint interpretation pursuant
to 3a68–2 was not requested would be
30 hours, and the total burden
associated with the other nine requests
would be 20 hours per request because
some of the information required to be
submitted pursuant to Rule 3a68–4(c)
would have already been submitted
pursuant to Rule 3a68–2. The burden in
both cases is evenly divided between
the SEC and the CFTC.
The SEC estimates that the total costs
resulting from a submission under Rule
3a68–4(c) would be approximately
$20,000 for the services of outside
attorneys to retrieve, review, and submit
the information associated with the
submission of the one request for which
a request for a joint interpretation
pursuant to Rule 3a68–2 was not
previously made (1 request × 50 hours/
request × $400). For the nine requests
for which a request for a joint
interpretation pursuant to Rule 3a68–2
was previously made, the SEC estimates
the total costs associated with preparing
and submitting a party’s request
pursuant to Rule 3a68–4(c) would be
$6,000 less per request because, as
discussed above, some of the
information required to be submitted
pursuant to Rule 3a68–4(c) already
would have been submitted pursuant to
Rule 3a68–2. The SEC estimates this
would result in an aggregate cost each
year of $126,000 for the services of
outside attorneys (9 requests × 35 hours/
request × $400).
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following Web site:
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Pamela
Dyson, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE., Washington, DC
20549, or by sending an email to: PRA_
Mailbox@sec.gov. Comments must be
submitted to OMB within 30 days of
this notice.
PO 00000
Frm 00132
Fmt 4703
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63629
Dated: October 13, 2015.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–26514 Filed 10–19–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76157; File No. SR–EDGA–
2015–39]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Adopt Rule 3.20,
Influencing or Rewarding Employees
of Others, Concerning Gifts and
Gratuities in Relation to the Business
of the Employer of the Recipient
October 15, 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
September 30, 2015, EDGA Exchange,
Inc. (the ‘‘Exchange’’ or ‘‘EDGA’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
adopt Rule 3.20 to conform to the rules
of the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) for purposes
of an agreement between the Exchange
and FINRA pursuant to Rule 17d–2
under the Act.5 The Exchange also
proposes to adopt Rule 3.20 to conform
to the rules of BATS Exchange, Inc.
(‘‘BZX’’) and BATS Y-Exchange, Inc.
(‘‘BYX’’).6
The text of the proposed rule change
is available at the Exchange’s Web site
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
5 17 CFR 240.17d–2.
6 See SR–BATS–2015–79 and SR–BYX–2015–43
(filed September 30, 2015) (Notice of Filing and
Immediate Effectiveness to Amend Rule 3.22 to
Conform to FINRA Rule 3220).
2 17
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63630
Federal Register / Vol. 80, No. 202 / Tuesday, October 20, 2015 / Notices
at 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.
mstockstill on DSK4VPTVN1PROD with NOTICES
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Pursuant to Rule 17d–2 under the
Act,7 the Exchange and FINRA entered
into an agreement to allocate regulatory
responsibility for common rules (the
‘‘17d–2 Agreement’’). The 17d–2
Agreement covers common members of
the Exchange and FINRA and allocates
to FINRA regulatory responsibility, with
respect to common members, for the
following: (i) Examination of common
members of the Exchange and FINRA
for compliance with certain federal
securities laws, rules and regulations
and rules of the Exchange that the
Exchange has certified as identical or
substantially similar to FINRA rules; (ii)
investigation of common members of
the Exchange and FINRA for violations
of certain federal securities laws, rules
or regulations, or Exchange rules that
the Exchange has certified as identical
or substantially identical to a FINRA
rule; and (iii) enforcement of
compliance by common members with
certain federal securities laws, rules and
regulations, and the rules of the
Exchange that the Exchange has
certified as identical or substantially
similar to FINRA rules.8
The 17d–2 Agreement included a
certification by the Exchange that states
that the requirements contained in
certain Exchange rules are identical to,
or substantially similar to, certain
FINRA rules that have been identified as
comparable. The Exchange does not
currently maintain a rule similar to
7 17
CFR 240.17d–2.
Securities and Exchange Release No. 62078
(May 11, 2010), 75 FR 28078 (May 19, 2010)
(approving File No. 4–597).
8 See
VerDate Sep<11>2014
17:55 Oct 19, 2015
Jkt 238001
FINRA Rule 3220 governing a Member’s
giving of gifts. To conform to
comparable FINRA rules for purposes of
the 17d–2 Agreement, the Exchange
proposes [sic] adopt Rule 3.20,
Influencing or Rewarding Employees of
Others, that is identical to FINRA Rule
3220. The proposed rule text is also
identical to New York Stock Exchange,
Inc. (‘‘NYSE’’) Rule 3220, which has
been approved by the Commission.9
The Exchange believes that these
changes will help to avoid confusion
among Members of the Exchange that
are also members of FINRA by further
aligning the Exchange Rules with
FINRA Rule 3220. The proposed
adoption of Rule 3.20 is designed to
enable the Exchange to incorporate Rule
3.20 into the 17d–2 Agreement, further
harmonizing regulation of Members that
are also members of FINRA. For the
avoidance of doubt, Rule 3.20 would
equally apply to Exchange-only
Members as the Exchange believes it
appropriately protects against
improprieties that might arise when
substantial gifts or monetary payments
are given to certain persons. The
Exchange will issue a Regulatory Notice
to its Members, including Exchangeonly Members that may not also be
FINRA Members, and those Members
registered with FINRA, clarifying that
FINRA’s interpretive guidance related to
FINRA Rule 3220 is considered part of
Exchange Rule 3.20, and that all
Members are required to regulate their
conduct according to Rule 3.20 and the
interpretive guidance related to FINRA
Rule 3220.10
As amended, like FINRA Rule
3220(a), proposed paragraph (a) of Rule
3.20 would prevent gifts in excess of
$100.00 per individual per year where
the gift or gratuity is in relation to the
business of the employee 11 of the
recipient. A gift of any kind would be
considered a gratuity. The Rule would
also contain an express exclusion for
payments made pursuant to bona fide,
written employment contracts.
Specifically, like FINRA Rule 3220(b),
proposed paragraph (b) of Rule 3.20
would state that the rule would not
9 See Securities Exchange Act Release No. 59965
(May 21, 2009), 74 FR 25783 (May 29, 2009) (SR–
NYSE–2009–25).
10 See, e.g., FINRA’s interpretative guidance
concerning business entertainment expenses,
including a June 24, 1999, Letter to Henry H.
Hopkins and Sarah McCafferty, T. Rowe Price
Investment Services, Inc. This interpretative letter
and other interpretive guidance concerning gifts
and gratuities expenses are currently available at
FINRA’s Web site.
11 The Commission notes that both FINRA Rule
3220 and proposed EDGA Rule 3.20 limit gifts and
gratuities in relation to the employer of the
recipient, rather than those in relation to the
‘‘employee’’ of the recipient as stated above.
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
apply to contracts of employment with
or to compensation for services
rendered by persons enumerated in
paragraph (a) of the Rule, provided that
there is in existence prior to the time of
employment or before the services are
rendered, a written agreement between
the member and the person who is to be
employed to perform such services.
Proposed paragraph (c) would require
such agreement to include the nature of
the proposed employment, the amount
of the proposed compensation, and the
written consent of such person’s
employer or principal.
The Rule would also require each
Member to maintain a separate record of
all gifts or gratuities. Like FINRA Rule
3220(c), proposed paragraph (c) of Rule
3.20 would require a separate record of
all payments or gratuities in any amount
known to the member, the employment
agreement referred to in proposed
paragraph (b) of Rule 3.20 and any
employment compensation paid as a
result thereof shall be retained by the
member for the period specified by
Exchange Act Rule 17a–4.12
In early 2014, the Exchange and its
affiliate, EDGX Exchange, Inc. (‘‘EDGX’’)
received approval to effect a merger (the
‘‘Merger’’) of the Exchange’s parent
company, Direct Edge Holdings LLC,
with BATS Global Markets, Inc., the
parent of BZX and the BYX (together
with BZX, EDGA and EDGX, the ‘‘BGM
Affiliated Exchanges’’).13 In the context
of the Merger, the BGM Affiliated
Exchanges are working to align their
rules, retaining only intended
differences between the BGM Affiliated
Exchanges. Thus, the proposed text of
Rule 3.20 is also identical to recent rule
changes filed with the Commission by
BZX and BYX to adopt identical rule
text to that proposed herein and FINRA
Rule 3220. This proposed rule change
would enable the Exchange to adopt
rules that correspond to rules of BYX
and BZX and provide a consistent rule
set across each of the BGM Affiliated
Exchanges.14
2. Statutory Basis
The Exchange believes that proposed
rule change is consistent with Section
6(b)(5) of the Act,15 which requires,
among other things, that the Exchange’s
rules be designed to prevent fraudulent
and manipulative acts and practices, to
12 17
CFR 240.17a–4.
Securities Exchange Act Release No. 71449
(January 30, 2014), 79 FR 6961 (February 5, 2014)
(SR–EDGX–2013–43; SR–EDGA–2013–34).
14 The Exchange notes that EDGX intends to file
an identical proposal with the Commission to adopt
Rule 3.20, Influencing or Rewarding Employees of
Others.
15 15 U.S.C. 78f(b)(5).
13 See
E:\FR\FM\20OCN1.SGM
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Federal Register / Vol. 80, No. 202 / Tuesday, October 20, 2015 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
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. The Exchange believes that the
proposed rule change will further these
requirements by providing greater
harmonization between Exchange and
FINRA rules of similar purpose,
resulting in greater uniformity and less
burdensome and more efficient
regulatory compliance. As such, the
proposed rule change would foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities and would
remove impediments to and perfect the
mechanism of a free and open market
and a national market system.
In addition, the proposed rule change
would provide greater harmonization
between rules of similar purpose on the
BGM Affiliated Exchanges, resulting in
greater uniformity and less burdensome
and more efficient regulatory
compliance and understanding of
Exchange Rules. As such, the proposed
rule change would foster cooperation
and coordination with persons engaged
in facilitating transactions in securities
and would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system. Similarly, the Exchange also
believes that, by harmonizing the rules
across each BGM Affiliated Exchange,
the proposal will enhance the
Exchange’s ability to fairly and
efficiently regulate its Members,
meaning that the proposed rule change
would promote just and equitable
principles of trade in accordance with
Section 6(b)(5) of the Act.16
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change would 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 to provide greater harmonization
among Exchange and FINRA rules of
similar purpose, resulting in less
burdensome and more efficient
regulatory compliance for common
members and facilitating FINRA’s
performance of its regulatory functions
under the 17d–2 Agreement. In
addition, allowing the Exchange to
implement substantively identical rules
that apply to all members of the BGM
Affiliated Exchanges across each of the
BGM Affiliated Exchanges does not
present any competitive issues, but
rather is designed to provide greater
harmonization among Exchange, BZX,
BYX, and EDGA rules of similar
purpose.
(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
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule
filing as non-controversial under
Section 19(b)(3)(A) of the Act 17 and
paragraph (f)(6) of Rule 19b–4
thereunder.18 The proposed rule change
effects a change that (A) does not
significantly affect the protection of
investors or the public interest; (B) does
not impose any significant burden on
competition; and (C) by its terms, does
not become operative for 30 days after
the date of the filing, or such shorter
time as the Commission may designate
if consistent with the protection of
investors and the public interest;
provided that the self-regulatory
organization has given the Commission
written notice of its intent to file the
proposed rule change, along with a brief
description and text of the proposed
rule change, at least five business days
prior to the date of filing of the
proposed rule change, or such shorter
time as designated by the Commission.
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily
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:
17 15
16 Id.
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18 17
17:55 Oct 19, 2015
Jkt 238001
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4.
Frm 00134
Fmt 4703
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–
EDGA–2015–39 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–EDGA–2015–39. 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–EDGA–
2015–39 and should be submitted on or
before November 10, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–26578 Filed 10–19–15; 8:45 am]
BILLING CODE 8011–01–P
19 17
Sfmt 9990
63631
E:\FR\FM\20OCN1.SGM
CFR 200.30–3(a)(12).
20OCN1
]]>Agencies
[Federal Register Volume 80, Number 202 (Tuesday, October 20, 2015)]
[Notices]
[Pages 63629-63631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26578]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76157; File No. SR-EDGA-2015-39]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt
Rule 3.20, Influencing or Rewarding Employees of Others, Concerning
Gifts and Gratuities in Relation to the Business of the Employer of the
Recipient
October 15, 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 September 30, 2015, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been 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 adopt Rule 3.20 to conform to the
rules of the Financial Industry Regulatory Authority, Inc. (``FINRA'')
for purposes of an agreement between the Exchange and FINRA pursuant to
Rule 17d-2 under the Act.\5\ The Exchange also proposes to adopt Rule
3.20 to conform to the rules of BATS Exchange, Inc. (``BZX'') and BATS
Y-Exchange, Inc. (``BYX'').\6\
---------------------------------------------------------------------------
\5\ 17 CFR 240.17d-2.
\6\ See SR-BATS-2015-79 and SR-BYX-2015-43 (filed September 30,
2015) (Notice of Filing and Immediate Effectiveness to Amend Rule
3.22 to Conform to FINRA Rule 3220).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
Web site
[[Page 63630]]
at 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
Pursuant to Rule 17d-2 under the Act,\7\ the Exchange and FINRA
entered into an agreement to allocate regulatory responsibility for
common rules (the ``17d-2 Agreement''). The 17d-2 Agreement covers
common members of the Exchange and FINRA and allocates to FINRA
regulatory responsibility, with respect to common members, for the
following: (i) Examination of common members of the Exchange and FINRA
for compliance with certain federal securities laws, rules and
regulations and rules of the Exchange that the Exchange has certified
as identical or substantially similar to FINRA rules; (ii)
investigation of common members of the Exchange and FINRA for
violations of certain federal securities laws, rules or regulations, or
Exchange rules that the Exchange has certified as identical or
substantially identical to a FINRA rule; and (iii) enforcement of
compliance by common members with certain federal securities laws,
rules and regulations, and the rules of the Exchange that the Exchange
has certified as identical or substantially similar to FINRA rules.\8\
---------------------------------------------------------------------------
\7\ 17 CFR 240.17d-2.
\8\ See Securities and Exchange Release No. 62078 (May 11,
2010), 75 FR 28078 (May 19, 2010) (approving File No. 4-597).
---------------------------------------------------------------------------
The 17d-2 Agreement included a certification by the Exchange that
states that the requirements contained in certain Exchange rules are
identical to, or substantially similar to, certain FINRA rules that
have been identified as comparable. The Exchange does not currently
maintain a rule similar to FINRA Rule 3220 governing a Member's giving
of gifts. To conform to comparable FINRA rules for purposes of the 17d-
2 Agreement, the Exchange proposes [sic] adopt Rule 3.20, Influencing
or Rewarding Employees of Others, that is identical to FINRA Rule 3220.
The proposed rule text is also identical to New York Stock Exchange,
Inc. (``NYSE'') Rule 3220, which has been approved by the
Commission.\9\
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 59965 (May 21,
2009), 74 FR 25783 (May 29, 2009) (SR-NYSE-2009-25).
---------------------------------------------------------------------------
The Exchange believes that these changes will help to avoid
confusion among Members of the Exchange that are also members of FINRA
by further aligning the Exchange Rules with FINRA Rule 3220. The
proposed adoption of Rule 3.20 is designed to enable the Exchange to
incorporate Rule 3.20 into the 17d-2 Agreement, further harmonizing
regulation of Members that are also members of FINRA. For the avoidance
of doubt, Rule 3.20 would equally apply to Exchange-only Members as the
Exchange believes it appropriately protects against improprieties that
might arise when substantial gifts or monetary payments are given to
certain persons. The Exchange will issue a Regulatory Notice to its
Members, including Exchange-only Members that may not also be FINRA
Members, and those Members registered with FINRA, clarifying that
FINRA's interpretive guidance related to FINRA Rule 3220 is considered
part of Exchange Rule 3.20, and that all Members are required to
regulate their conduct according to Rule 3.20 and the interpretive
guidance related to FINRA Rule 3220.\10\
---------------------------------------------------------------------------
\10\ See, e.g., FINRA's interpretative guidance concerning
business entertainment expenses, including a June 24, 1999, Letter
to Henry H. Hopkins and Sarah McCafferty, T. Rowe Price Investment
Services, Inc. This interpretative letter and other interpretive
guidance concerning gifts and gratuities expenses are currently
available at FINRA's Web site.
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As amended, like FINRA Rule 3220(a), proposed paragraph (a) of Rule
3.20 would prevent gifts in excess of $100.00 per individual per year
where the gift or gratuity is in relation to the business of the
employee \11\ of the recipient. A gift of any kind would be considered
a gratuity. The Rule would also contain an express exclusion for
payments made pursuant to bona fide, written employment contracts.
Specifically, like FINRA Rule 3220(b), proposed paragraph (b) of Rule
3.20 would state that the rule would not apply to contracts of
employment with or to compensation for services rendered by persons
enumerated in paragraph (a) of the Rule, provided that there is in
existence prior to the time of employment or before the services are
rendered, a written agreement between the member and the person who is
to be employed to perform such services. Proposed paragraph (c) would
require such agreement to include the nature of the proposed
employment, the amount of the proposed compensation, and the written
consent of such person's employer or principal.
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\11\ The Commission notes that both FINRA Rule 3220 and proposed
EDGA Rule 3.20 limit gifts and gratuities in relation to the
employer of the recipient, rather than those in relation to the
``employee'' of the recipient as stated above.
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The Rule would also require each Member to maintain a separate
record of all gifts or gratuities. Like FINRA Rule 3220(c), proposed
paragraph (c) of Rule 3.20 would require a separate record of all
payments or gratuities in any amount known to the member, the
employment agreement referred to in proposed paragraph (b) of Rule 3.20
and any employment compensation paid as a result thereof shall be
retained by the member for the period specified by Exchange Act Rule
17a-4.\12\
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\12\ 17 CFR 240.17a-4.
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In early 2014, the Exchange and its affiliate, EDGX Exchange, Inc.
(``EDGX'') received approval to effect a merger (the ``Merger'') of the
Exchange's parent company, Direct Edge Holdings LLC, with BATS Global
Markets, Inc., the parent of BZX and the BYX (together with BZX, EDGA
and EDGX, the ``BGM Affiliated Exchanges'').\13\ In the context of the
Merger, the BGM Affiliated Exchanges are working to align their rules,
retaining only intended differences between the BGM Affiliated
Exchanges. Thus, the proposed text of Rule 3.20 is also identical to
recent rule changes filed with the Commission by BZX and BYX to adopt
identical rule text to that proposed herein and FINRA Rule 3220. This
proposed rule change would enable the Exchange to adopt rules that
correspond to rules of BYX and BZX and provide a consistent rule set
across each of the BGM Affiliated Exchanges.\14\
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\13\ See Securities Exchange Act Release No. 71449 (January 30,
2014), 79 FR 6961 (February 5, 2014) (SR-EDGX-2013-43; SR-EDGA-2013-
34).
\14\ The Exchange notes that EDGX intends to file an identical
proposal with the Commission to adopt Rule 3.20, Influencing or
Rewarding Employees of Others.
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2. Statutory Basis
The Exchange believes that proposed rule change is consistent with
Section 6(b)(5) of the Act,\15\ which requires, among other things,
that the Exchange's rules be designed to prevent fraudulent and
manipulative acts and practices, to
[[Page 63631]]
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. The Exchange
believes that the proposed rule change will further these requirements
by providing greater harmonization between Exchange and FINRA rules of
similar purpose, resulting in greater uniformity and less burdensome
and more efficient regulatory compliance. As such, the proposed rule
change would foster cooperation and coordination with persons engaged
in facilitating transactions in securities and would remove impediments
to and perfect the mechanism of a free and open market and a national
market system.
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\15\ 15 U.S.C. 78f(b)(5).
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In addition, the proposed rule change would provide greater
harmonization between rules of similar purpose on the BGM Affiliated
Exchanges, resulting in greater uniformity and less burdensome and more
efficient regulatory compliance and understanding of Exchange Rules. As
such, the proposed rule change would foster cooperation and
coordination with persons engaged in facilitating transactions in
securities and would remove impediments to and perfect the mechanism of
a free and open market and a national market system. Similarly, the
Exchange also believes that, by harmonizing the rules across each BGM
Affiliated Exchange, the proposal will enhance the Exchange's ability
to fairly and efficiently regulate its Members, meaning that the
proposed rule change would promote just and equitable principles of
trade in accordance with Section 6(b)(5) of the Act.\16\
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\16\ Id.
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(B) Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
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 to provide
greater harmonization among Exchange and FINRA rules of similar
purpose, resulting in less burdensome and more efficient regulatory
compliance for common members and facilitating FINRA's performance of
its regulatory functions under the 17d-2 Agreement. In addition,
allowing the Exchange to implement substantively identical rules that
apply to all members of the BGM Affiliated Exchanges across each of the
BGM Affiliated Exchanges does not present any competitive issues, but
rather is designed to provide greater harmonization among Exchange,
BZX, BYX, and EDGA rules of similar purpose.
(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 proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) of the Act \17\ and paragraph (f)(6) of Rule
19b-4 thereunder.\18\ The proposed rule change effects a change that
(A) does not significantly affect the protection of investors or the
public interest; (B) does not impose any significant burden on
competition; and (C) by its terms, does not become operative for 30
days after the date of the filing, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest; provided that the self-regulatory organization
has given the Commission written notice of its intent to file the
proposed rule change, along with a brief description and text of the
proposed rule change, at least five business days prior to the date of
filing of the proposed rule change, or such shorter time as designated
by the Commission.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4.
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily 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-EDGA-2015-39 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-EDGA-2015-39. 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-EDGA-2015-39 and should be
submitted on or before November 10, 2015.
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\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26578 Filed 10-19-15; 8:45 am]
BILLING CODE 8011-01-P
