Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Requiring Certain Member Organizations To Participate in Business Continuity and Disaster Recovery Plans Testing in Connection With Regulation Systems Compliance and Integrity, 69738-69741 [2015-28521]

Download as PDF 69738 Federal Register / Vol. 80, No. 217 / Tuesday, November 10, 2015 / Notices of the Act and Rule 19b–4(f)(6)(iii) thereunder. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Exchange has stated that it is requesting this waiver because NSX intends to reactivate its status as an operating Participant of the SIPs, subject to regulatory approval, and that the proposed rule change would permit the Exchange to immediately provide the enhanced transparency in Exchange rules regarding which data feeds the Exchange would use for NSX. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest because this waiver will enable the Exchange to disclose in a timely manner that it will be using NSX SIP data for purpose of fulfilling its order handling and execution, order routing, and regulatory compliance obligations, if and when NSX receives the necessary regulatory approval to recommence trading.10 For this reason, the Commission hereby waives the 30day operative delay requirement and designates the proposed rule change as operative upon filing.11 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 12 of the Act to determine whether the proposed rule change should be approved or disapproved. asabaliauskas on DSK5VPTVN1PROD with NOTICES 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 19:41 Nov 09, 2015 Jkt 238001 Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2015–51. 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 also will be available for inspection and copying at the principal offices 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–NYSE– 2015–51, and should be submitted on or before December 1, 2015.13 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. Brent J. Fields, Secretary. [FR Doc. 2015–28505 Filed 11–9–15; 8:45 am] BILLING CODE 8011–01–P 10 In granting this waiver, the Commission does not express an opinion on whether or not NSX will receive regulatory approval to recommence trading. 11 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 12 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2015–51 on the subject line. 13 17 PO 00000 CFR 200.30–3(a)(12). Frm 00107 Fmt 4703 Sfmt 4703 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76343; File No. SR– NYSEMKT–2015–82] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Requiring Certain Member Organizations To Participate in Business Continuity and Disaster Recovery Plans Testing in Connection With Regulation Systems Compliance and Integrity November 4, 2015. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on October 26, 2015, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to require certain Exchange member organizations 4 (‘‘Members’’) to participate in business continuity and disaster recovery plans (‘‘BC/DR Plans’’) 1 15 U.S.C.78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 The term ‘‘member organization’’ is defined in Rule 24 (Office Rules) as ‘‘a partnership, corporation or such other entity as the Exchange may, by Rule, permit to become a member organization, and which meets the qualifications specified in the Rules.’’ The term ‘‘member organization’’ is defined in Rule 2(b)(i) (Equities Rules) as a registered broker or dealer (unless exempt pursuant to the Securities Exchange Act of 1934) (the ‘‘Act’’) that is a member of the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) or another registered securities exchange. Member organizations that transact business with public customers or conduct business on the Floor of the Exchange shall at all times be members of FINRA. A registered broker or dealer must also be approved by the Exchange and authorized to designate an associated natural person to effect transactions on the floor of the Exchange or any facility thereof. This term shall include a natural person so registered, approved and licensed who directly effects transactions on the floor of the Exchange or any facility thereof.’’ The term ‘‘member organization’’ also includes any registered broker or dealer that is a member of FINRA or a registered securities exchange, consistent with the requirements of section 2(b)(i) of this Rule, which does not own a trading license and agrees to be regulated by the Exchange as a member organization and which the Exchange has agreed to regulate.’’ See Rule 2(b)(ii)—Equities. 2 15 E:\FR\FM\10NON1.SGM 10NON1 Federal Register / Vol. 80, No. 217 / Tuesday, November 10, 2015 / Notices testing in connection with Regulation Systems Compliance and Integrity (‘‘Regulation SCI’’).5 The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.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 self-regulatory organization 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 those 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 the Statutory Basis for, the Proposed Rule Change asabaliauskas on DSK5VPTVN1PROD with NOTICES 1. Purpose As adopted by the Commission, Regulation SCI applies to certain selfregulatory organizations (including the Exchange), alternative trading systems (‘‘ATSs’’), plan processors, and exempt clearing agencies (collectively, ‘‘SCI entities’’), and will require these SCI entities to comply with requirements with respect to the automated systems central to the performance of their regulated activities. Among the requirements of Regulation SCI is Rule 1001(a)(2)(v), which requires the Exchange and other SCI entities to maintain ‘‘[b]usiness continuity and disaster recovery plans that include maintaining backup and recovery capabilities sufficiently resilient and geographically diverse and that are reasonably designed to achieve next business day resumption of trading and two-hour resumption of critical SCI systems following a wide-scale disruption.’’ 6 As a matter of course, the Exchange has put extensive time and resources toward planning for system failures and already maintains robust BC/DR plans consistent with the proposed rule. As set forth below, in connection with Regulation SCI, the Exchange is proposing to require certain Members to participate in testing of the 5 See Securities Exchange Act Release No. 73639 (November 19, 2014), 79 FR 72252 (December 5, 2014) (‘‘SCI Adopting Release’’). 6 17 CFR 242.1001(a)(2)(v). VerDate Sep<11>2014 19:41 Nov 09, 2015 Jkt 238001 operation of the Exchange’s BC/DR plans. With respect to an SCI entity’s BC/DR plans, including its backup systems, paragraph (a) of Rule 1004 of Regulation SCI requires each SCI entity to: ‘‘[e]stablish standards for the designation of those members or participants that the SCI entity reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of such plans.’’ 7 Paragraph (b) of Rule 1004 further requires each SCI entity to ‘‘[d]esignate members or participants pursuant to the standards established in paragraph (a) of [Rule 1004] and require participation by such designated members or participants in scheduled functional and performance testing of the operation of such plans, in the manner and frequency specified by the SCI entity, provided that such frequency shall not be less than once every 12 months.’’ 8 To comply with Rule 1004 of Regulation SCI, the Exchange proposes to amend current Rule 431,9 governing mandatory testing of Exchange backup systems as described below. The requirements of revised Rule 431 would apply to Members of the Exchange’s equities and options markets.10 First, in paragraph (a) of revised Rule 431, the Exchange proposes to establish standards for the designation of Members that the Exchange reasonably determines are, taken as a whole, the minimum necessary for the maintenance of fair and orderly markets in the event of the activation of the Exchange’s business continuity and disaster recovery plans. Second, in paragraph (b) of revised Rule 431, the Exchange proposes to specify that Members that are designated pursuant to paragraph (a) of revised Rule 431 would be required to participate in scheduled functional and performance testing of the Exchange’s business continuity and disaster recovery plans, which shall not be less than once every 12 months. Third, in paragraph (c) of revised Rule 431, the Exchange proposes to make 7 17 CFR 242.1004(a). CFR 242.1004(b). 9 Current Rule 431 requires each member or member organization to participate in the testing of their computer systems to ascertain decimal pricing conversion compatibility of such systems. The Exchange proposes to delete the text of the current rule as it is obsolete and no longer applicable. 10 A rule reference has been added to Rule 0— Equities to make clear that the proposed rule applies to Members that conduct equities transactions on the Exchange. 8 17 PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 69739 clear that Designated Market Makers,11 Specialists and e-Specialists 12 that have been determined by the Exchange to contribute a meaningful percentage of volume in securities they trade, measured on a quarterly or monthly basis, will be required to participate in scheduled functional and performance testing. The Exchange further proposes that it may also consider other factors in determining the Members that will be required to participate in scheduled functional and performance testing, including average daily volume traded on the Exchange measured on a quarterly or monthly basis, or Members who collectively account for a certain percentage of market share on the Exchange. Fourth, in paragraph (d) of revised Rule 431, the Exchange proposes that at least three (3) months prior to a scheduled functional and performance testing of the Exchange’s business continuity and disaster recovery plans, the Exchange will publish the criteria to be used by the Exchange to determine which Members will be required to participate in such testing and notify those Members that are required to participate based on such criteria.13 The Exchange believes that proposed notice requirements are necessary to provide Members with proper advance notice when they become subject to the proposed rule. The proposed timeframes would also provide Members with adequate time to prepare for the testing, including any systems changes needed, to connect to the Exchange’s backup systems. Finally, in paragraph (e) of revised Rule 431, the Exchange proposes to make clear that Members not designated pursuant to standards established in paragraph (a) of revised Rule 431 are permitted to connect to the Exchange’s backup systems and may participate in testing of such systems. Proposed paragraph (e) is consistent with Regulation SCI, which encourages ‘‘SCI 11 The term ‘‘Designated Market Maker’’ (‘‘DMM’’) shall mean an individual member, officer, partner, employee or associated person of a Designated Market Maker Unit who is approved by the Exchange to act in the capacity of a DMM. See Rule 2(i)—Equities. 12 The term ‘‘Specialist’’ means an individual or entity that has been deemed qualified by the Exchange for the purpose of making transactions on the Exchange in accordance with the provisions of Rule 920NY, and who meets the qualification requirements of Rule 927NY(b). Each Specialist must be registered with the Exchange as a Market Maker. Any ATP Holder registered as a Market Maker with the Exchange is eligible to be qualified as a Specialist. See Rule 900.2NY(76). E-Specialists are Members designated by the Exchange in an options class to fulfill certain obligations required of Specialists. See Rule 927.4NY. 13 The Exchange will publish the initial notice to Members no later than November 3, 2015. E:\FR\FM\10NON1.SGM 10NON1 69740 Federal Register / Vol. 80, No. 217 / Tuesday, November 10, 2015 / Notices asabaliauskas on DSK5VPTVN1PROD with NOTICES entities to permit non-designated members or participants to participate in the testing of the SCE entity’s BC/DR plans if they request to do so.’’14 The Exchange notes that it encourages all Members to connect to the Exchange’s backup systems and to participate in testing of such systems. However, in adopting the requirements of revised Rule 431, the rule will subject only those Members to mandatory testing that the Exchange believes are, taken as a whole, the minimum necessary to maintain fair and orderly markets. The Exchange believes that designating Members to participate in mandatory testing because they, for example, account for a significant portion of the Exchange’s overall volume or maintain exclusive responsibilities with respect to Exchange-listed securities is a reasonable means to ensure the maintenance of a fair and orderly market on the Exchange. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,15 in general, and furthers the objectives of Sections 6(b)(5) of the Act,16 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanisms of, a free and open market and a national market system and, in general, to protect investors and the public interest and because it is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The proposal would ensure that the Members necessary to ensure the maintenance of a fair and orderly market are properly designated consistent with Rule 1004 of Regulation SCI. Specifically, as proposed, the Exchange would adopt clear and objective criteria with respect to the designation of Members that are required to participate in the testing of the Exchange’s BC/DR plans, as well as appropriate notification regarding such designation. As set forth in the SCI Adopting Release, ‘‘SROs have the authority, and legal responsibility, under Section 6 of the Exchange Act, to adopt and enforce rules (including rules to comply with Regulation SCI’s requirements relating to BC/DR testing) applicable to their members or participants that are designed to, among other things, foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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.’’ 17 The Exchange believes that this proposal is consistent with such authority and legal responsibility. 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 not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the proposal is not a competitive proposal but rather is necessary for the Exchange’s compliance with Regulation SCI. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 18 and Rule 19b–4(f)(6) thereunder.19 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, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b–4(f)(6) 20 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 17 See 14 See SCI Adopting Release, supra note 5 at 72350. 15 15 U.S.C. 78f(b). 16 15 U.S.C. 78f(b)(5). VerDate Sep<11>2014 19:41 Nov 09, 2015 Jkt 238001 SCI Adopting Release, supra note 5 at 72350. 18 15 U.S.C. 78s(b)(3)(A)(iii). 19 17 CFR 240.19b–4(f)(6). 20 17 CFR 240.19b–4(f)(6). PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 19b4(f)(6)(iii),21 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Exchange to incorporate changes required under Regulation SCI, such as establishing standards for designating BCP/DR participants, prior to the November 3, 2015 compliance date. Accordingly, the Commission designates the proposed rule change to be operative upon filing.22 At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 23 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEMKT–2015–82 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEMKT–2015–82. This file number should be included on the subject line if email is used. To help the 21 17 CFR 240.19b–4(f)(6)(iii). purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 23 15 U.S.C. 78s(b)(2)(B). 22 For E:\FR\FM\10NON1.SGM 10NON1 Federal Register / Vol. 80, No. 217 / Tuesday, November 10, 2015 / Notices 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 Section, 100 F Street NE., Washington, DC 20549–1090. Copies of the filing will also be available for inspection and copying at the NYSE’s principal office and on its Internet Web site at www.nyse.com. 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– NYSEMKT–2015–82 and should be submitted on or before December 1, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Brent J. Fields, Secretary. [FR Doc. 2015–28521 Filed 11–9–15; 8:45 am] Dated: November 5, 2015. Brent J. Fields, Secretary. [FR Doc. 2015–28699 Filed 11–6–15; 11:15 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76354; File No. SR–CBOE– 2015–099] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change To List and Trade Options That Overlie a Reduced Value of the FTSE China 50 Index November 4, 2015. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting asabaliauskas on DSK5VPTVN1PROD with NOTICES and (10), permit consideration of the scheduled matter at the Closed Meeting. Commissioner Aguilar, as duty officer, voted to consider the items listed for the Closed Meeting in closed session. The subject matter of the Closed Meeting will be: Institution and settlement of injunctive actions; Institution and settlement of administrative proceedings; and Other matters relating to enforcement proceedings. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at (202) 551–5400. Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94–409, that the Securities and Exchange Commission will hold a Closed Meeting on Thursday, November 12, 2015 at 2 p.m. Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the Closed Meeting. Certain staff members who have an interest in the matters also may be present. The General Counsel of the Commission, or her designee, has certified that, in her opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR 200.402(a)(3), (5), (7), 9(ii) 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 October 30, 2015, Chicago Board Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘CBOE’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is proposing to amend its rules to list and trade options that overlie a reduced value of the FTSE China 50 Index. 1 15 24 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 19:41 Nov 09, 2015 2 17 Jkt 238001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00110 Fmt 4703 Sfmt 4703 69741 The text of the proposed rule change is available on the Exchange’s Web site (https://www.cboe.com/AboutCBOE/ CBOELegalRegulatoryHome.aspx), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of this proposed rule change is to permit the Exchange to list and trade options that overlie a reduced value of the FTSE China 50 Index (‘‘China 50 options’’). China 50 options would be A.M., cash-settled contracts with European-style exercise. FTSE China 50 Index Design, Methodology and Dissemination The FTSE China 50 Index is a free float-adjusted market capitalization index that is designed to measure the performance of 50 of the largest and most liquid Chinese stocks (H Shares,3 Red Chips 4 and P Chips 5) listed and trading on the Stock Exchange of Hong Kong (SEHK).6 The FTSE China 50 Index was launched on April 19, 2001 and is 3 H Shares are securities of companies incorporated in the People’s Republic of China (PRC) and listed on SEHK. They can only be traded by Chinese investors under the Qualified Domestic Institutional Investors Scheme (QDII). There are no restrictions for international investors. 4 Red Chip companies are incorporated outside the PRC and traded on SEHK. A Red Chip company has at least 30 percent of its shares in aggregate held directly or indirectly by mainland state entities, and at least 50 percent of its revenue or assets derived from mainland China. 5 P Chip companies are incorporated outside the PRC that trade on SEHK. A P Chip is a company that is controlled by Mainland China individuals, with the establishment and origin of the company in Mainland China and at least 50 percent of its revenue or assets derived from mainland China. 6 See FTSE China 50 Index fact sheet (dated August 31, 2015) located at: https://www.ftse.com/ Analytics/FactSheets/temp/a5b0d638-068e-41d9b169-be9838d8227a.pdf. E:\FR\FM\10NON1.SGM 10NON1

Agencies

[Federal Register Volume 80, Number 217 (Tuesday, November 10, 2015)]
[Notices]
[Pages 69738-69741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-28521]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76343; File No. SR-NYSEMKT-2015-82]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Requiring Certain 
Member Organizations To Participate in Business Continuity and Disaster 
Recovery Plans Testing in Connection With Regulation Systems Compliance 
and Integrity

November 4, 2015.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on October 26, 2015, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to require certain Exchange member 
organizations \4\ (``Members'') to participate in business continuity 
and disaster recovery plans (``BC/DR Plans'')

[[Page 69739]]

testing in connection with Regulation Systems Compliance and Integrity 
(``Regulation SCI'').\5\ The text of the proposed rule change is 
available on the Exchange's Web site at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \4\ The term ``member organization'' is defined in Rule 24 
(Office Rules) as ``a partnership, corporation or such other entity 
as the Exchange may, by Rule, permit to become a member 
organization, and which meets the qualifications specified in the 
Rules.'' The term ``member organization'' is defined in Rule 2(b)(i) 
(Equities Rules) as a registered broker or dealer (unless exempt 
pursuant to the Securities Exchange Act of 1934) (the ``Act'') that 
is a member of the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') or another registered securities exchange. Member 
organizations that transact business with public customers or 
conduct business on the Floor of the Exchange shall at all times be 
members of FINRA. A registered broker or dealer must also be 
approved by the Exchange and authorized to designate an associated 
natural person to effect transactions on the floor of the Exchange 
or any facility thereof. This term shall include a natural person so 
registered, approved and licensed who directly effects transactions 
on the floor of the Exchange or any facility thereof.'' The term 
``member organization'' also includes any registered broker or 
dealer that is a member of FINRA or a registered securities 
exchange, consistent with the requirements of section 2(b)(i) of 
this Rule, which does not own a trading license and agrees to be 
regulated by the Exchange as a member organization and which the 
Exchange has agreed to regulate.'' See Rule 2(b)(ii)--Equities.
    \5\ See Securities Exchange Act Release No. 73639 (November 19, 
2014), 79 FR 72252 (December 5, 2014) (``SCI Adopting Release'').
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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 self-regulatory organization 
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 those 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    As adopted by the Commission, Regulation SCI applies to certain 
self-regulatory organizations (including the Exchange), alternative 
trading systems (``ATSs''), plan processors, and exempt clearing 
agencies (collectively, ``SCI entities''), and will require these SCI 
entities to comply with requirements with respect to the automated 
systems central to the performance of their regulated activities. Among 
the requirements of Regulation SCI is Rule 1001(a)(2)(v), which 
requires the Exchange and other SCI entities to maintain ``[b]usiness 
continuity and disaster recovery plans that include maintaining backup 
and recovery capabilities sufficiently resilient and geographically 
diverse and that are reasonably designed to achieve next business day 
resumption of trading and two-hour resumption of critical SCI systems 
following a wide-scale disruption.'' \6\ As a matter of course, the 
Exchange has put extensive time and resources toward planning for 
system failures and already maintains robust BC/DR plans consistent 
with the proposed rule. As set forth below, in connection with 
Regulation SCI, the Exchange is proposing to require certain Members to 
participate in testing of the operation of the Exchange's BC/DR plans.
---------------------------------------------------------------------------

    \6\ 17 CFR 242.1001(a)(2)(v).
---------------------------------------------------------------------------

    With respect to an SCI entity's BC/DR plans, including its backup 
systems, paragraph (a) of Rule 1004 of Regulation SCI requires each SCI 
entity to: ``[e]stablish standards for the designation of those members 
or participants that the SCI entity reasonably determines are, taken as 
a whole, the minimum necessary for the maintenance of fair and orderly 
markets in the event of the activation of such plans.'' \7\ Paragraph 
(b) of Rule 1004 further requires each SCI entity to ``[d]esignate 
members or participants pursuant to the standards established in 
paragraph (a) of [Rule 1004] and require participation by such 
designated members or participants in scheduled functional and 
performance testing of the operation of such plans, in the manner and 
frequency specified by the SCI entity, provided that such frequency 
shall not be less than once every 12 months.'' \8\
---------------------------------------------------------------------------

    \7\ 17 CFR 242.1004(a).
    \8\ 17 CFR 242.1004(b).
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    To comply with Rule 1004 of Regulation SCI, the Exchange proposes 
to amend current Rule 431,\9\ governing mandatory testing of Exchange 
backup systems as described below. The requirements of revised Rule 431 
would apply to Members of the Exchange's equities and options 
markets.\10\
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    \9\ Current Rule 431 requires each member or member organization 
to participate in the testing of their computer systems to ascertain 
decimal pricing conversion compatibility of such systems. The 
Exchange proposes to delete the text of the current rule as it is 
obsolete and no longer applicable.
    \10\ A rule reference has been added to Rule 0--Equities to make 
clear that the proposed rule applies to Members that conduct 
equities transactions on the Exchange.
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    First, in paragraph (a) of revised Rule 431, the Exchange proposes 
to establish standards for the designation of Members that the Exchange 
reasonably determines are, taken as a whole, the minimum necessary for 
the maintenance of fair and orderly markets in the event of the 
activation of the Exchange's business continuity and disaster recovery 
plans.
    Second, in paragraph (b) of revised Rule 431, the Exchange proposes 
to specify that Members that are designated pursuant to paragraph (a) 
of revised Rule 431 would be required to participate in scheduled 
functional and performance testing of the Exchange's business 
continuity and disaster recovery plans, which shall not be less than 
once every 12 months.
    Third, in paragraph (c) of revised Rule 431, the Exchange proposes 
to make clear that Designated Market Makers,\11\ Specialists and e-
Specialists \12\ that have been determined by the Exchange to 
contribute a meaningful percentage of volume in securities they trade, 
measured on a quarterly or monthly basis, will be required to 
participate in scheduled functional and performance testing. The 
Exchange further proposes that it may also consider other factors in 
determining the Members that will be required to participate in 
scheduled functional and performance testing, including average daily 
volume traded on the Exchange measured on a quarterly or monthly basis, 
or Members who collectively account for a certain percentage of market 
share on the Exchange.
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    \11\ The term ``Designated Market Maker'' (``DMM'') shall mean 
an individual member, officer, partner, employee or associated 
person of a Designated Market Maker Unit who is approved by the 
Exchange to act in the capacity of a DMM. See Rule 2(i)--Equities.
    \12\ The term ``Specialist'' means an individual or entity that 
has been deemed qualified by the Exchange for the purpose of making 
transactions on the Exchange in accordance with the provisions of 
Rule 920NY, and who meets the qualification requirements of Rule 
927NY(b). Each Specialist must be registered with the Exchange as a 
Market Maker. Any ATP Holder registered as a Market Maker with the 
Exchange is eligible to be qualified as a Specialist. See Rule 
900.2NY(76). E-Specialists are Members designated by the Exchange in 
an options class to fulfill certain obligations required of 
Specialists. See Rule 927.4NY.
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    Fourth, in paragraph (d) of revised Rule 431, the Exchange proposes 
that at least three (3) months prior to a scheduled functional and 
performance testing of the Exchange's business continuity and disaster 
recovery plans, the Exchange will publish the criteria to be used by 
the Exchange to determine which Members will be required to participate 
in such testing and notify those Members that are required to 
participate based on such criteria.\13\ The Exchange believes that 
proposed notice requirements are necessary to provide Members with 
proper advance notice when they become subject to the proposed rule. 
The proposed timeframes would also provide Members with adequate time 
to prepare for the testing, including any systems changes needed, to 
connect to the Exchange's backup systems.
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    \13\ The Exchange will publish the initial notice to Members no 
later than November 3, 2015.
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    Finally, in paragraph (e) of revised Rule 431, the Exchange 
proposes to make clear that Members not designated pursuant to 
standards established in paragraph (a) of revised Rule 431 are 
permitted to connect to the Exchange's backup systems and may 
participate in testing of such systems. Proposed paragraph (e) is 
consistent with Regulation SCI, which encourages ``SCI

[[Page 69740]]

entities to permit non-designated members or participants to 
participate in the testing of the SCE entity's BC/DR plans if they 
request to do so.''\14\
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    \14\ See SCI Adopting Release, supra note 5 at 72350.
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    The Exchange notes that it encourages all Members to connect to the 
Exchange's backup systems and to participate in testing of such 
systems. However, in adopting the requirements of revised Rule 431, the 
rule will subject only those Members to mandatory testing that the 
Exchange believes are, taken as a whole, the minimum necessary to 
maintain fair and orderly markets. The Exchange believes that 
designating Members to participate in mandatory testing because they, 
for example, account for a significant portion of the Exchange's 
overall volume or maintain exclusive responsibilities with respect to 
Exchange-listed securities is a reasonable means to ensure the 
maintenance of a fair and orderly market on the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\15\ in general, and furthers the 
objectives of Sections 6(b)(5) of the Act,\16\ in particular, because 
it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    The proposal would ensure that the Members necessary to ensure the 
maintenance of a fair and orderly market are properly designated 
consistent with Rule 1004 of Regulation SCI. Specifically, as proposed, 
the Exchange would adopt clear and objective criteria with respect to 
the designation of Members that are required to participate in the 
testing of the Exchange's BC/DR plans, as well as appropriate 
notification regarding such designation. As set forth in the SCI 
Adopting Release, ``SROs have the authority, and legal responsibility, 
under Section 6 of the Exchange Act, to adopt and enforce rules 
(including rules to comply with Regulation SCI's requirements relating 
to BC/DR testing) applicable to their members or participants that are 
designed to, among other things, foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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.'' \17\ The Exchange believes 
that this proposal is consistent with such authority and legal 
responsibility.
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    \17\ See SCI Adopting Release, supra note 5 at 72350.
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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 not necessary or appropriate in 
furtherance of the purposes of the Act. To the contrary, the proposal 
is not a competitive proposal but rather is necessary for the 
Exchange's compliance with Regulation SCI.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\ 
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, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b-
4(f)(6) \20\ normally does not become operative prior to 30 days after 
the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),\21\ 
the Commission may designate a shorter time if such action is 
consistent with the protection of investors and the public interest.
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Commission believes that waiving the 30-day operative delay 
is consistent with the protection of investors and the public interest 
as it will allow the Exchange to incorporate changes required under 
Regulation SCI, such as establishing standards for designating BCP/DR 
participants, prior to the November 3, 2015 compliance date. 
Accordingly, the Commission designates the proposed rule change to be 
operative upon filing.\22\
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    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSEMKT-2015-82 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2015-82. This 
file number should be included on the subject line if email is used. To 
help the

[[Page 69741]]

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 Section, 100 F Street NE., 
Washington, DC 20549-1090. Copies of the filing will also be available 
for inspection and copying at the NYSE's principal office and on its 
Internet Web site at www.nyse.com. 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-NYSEMKT-2015-82 and should be submitted on or before 
December 1, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-28521 Filed 11-9-15; 8:45 am]
 BILLING CODE 8011-01-P
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