Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Delete Phlx Rules 792, 794, 797, and 798, 3527-3529 [2016-01054]
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Federal Register / Vol. 81, No. 13 / Thursday, January 21, 2016 / Notices
otherwise payable to the Fund of Funds
Sub-Adviser, directly or indirectly, by
the Investing Management Company in
an amount at least equal to any
compensation received from a Fund (or
its respective Master Fund) by the Fund
of Funds Sub-Adviser, or an affiliated
person of the Fund of Funds SubAdviser, other than any advisory fees
paid to the Fund of Funds Sub-Adviser
or its affiliated person by the Fund (or
its respective Master Fund), in
connection with the investment by the
Investing Management Company in the
Fund made at the direction of the Fund
of Funds Sub-Adviser. In the event that
the Fund of Funds Sub-Adviser waives
fees, the benefit of the waiver will be
passed through to the Investing
Management Company.
6. No Fund of Funds or Fund of
Funds Affiliate (except to the extent it
is acting in its capacity as an investment
adviser to a Fund (or its respective
Master Fund)) will cause a Fund (or its
respective Master Fund) to purchase a
security in an Affiliated Underwriting.
7. The Board of the Fund (or its
respective Master Fund), including a
majority of the independent Board
members, will adopt procedures
reasonably designed to monitor any
purchases of securities by the Fund (or
its respective Master Fund) in an
Affiliated Underwriting, once an
investment by a Fund of Funds in the
securities of the Fund exceeds the limit
of section 12(d)(1)(A)(i) of the Act,
including any purchases made directly
from an Underwriting Affiliate. The
Board will review these purchases
periodically, but no less frequently than
annually, to determine whether the
purchases were influenced by the
investment by the Fund of Funds in the
Fund. The Board will consider, among
other things: (i) Whether the purchases
were consistent with the investment
objectives and policies of the Fund (or
its respective Master Fund); (ii) how the
performance of securities purchased in
an Affiliated Underwriting compares to
the performance of comparable
securities purchased during a
comparable period of time in
underwritings other than Affiliated
Underwritings or to a benchmark such
as a comparable market index; and (iii)
whether the amount of securities
purchased by the Fund (or its respective
Master Fund) in Affiliated
Underwritings and the amount
purchased directly from an
Underwriting Affiliate have changed
significantly from prior years. The
Board will take any appropriate actions
based on its review, including, if
appropriate, the institution of
procedures designed to ensure that
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18:26 Jan 20, 2016
Jkt 238001
purchases of securities in Affiliated
Underwritings are in the best interest of
shareholders of the Fund.
8. Each Fund (or its respective Master
Fund) will maintain and preserve
permanently in an easily accessible
place a written copy of the procedures
described in the preceding condition,
and any modifications to such
procedures, and will maintain and
preserve for a period of not less than six
years from the end of the fiscal year in
which any purchase in an Affiliated
Underwriting occurred, the first two
years in an easily accessible place, a
written record of each purchase of
securities in Affiliated Underwritings
once an investment by a Fund of Funds
in the securities of the Fund exceeds the
limit of section 12(d)(1)(A)(i) of the Act,
setting forth from whom the securities
were acquired, the identity of the
underwriting syndicate’s members, the
terms of the purchase, and the
information or materials upon which
the Board’s determinations were made.
9. Before investing in a Fund in
excess of the limits in section
12(d)(1)(A), a Fund of Funds will
execute a FOF Participation Agreement
with the Fund stating that their
respective boards of directors or trustees
and their investment advisers, or trustee
and Sponsor, as applicable, understand
the terms and conditions of the order,
and agree to fulfill their responsibilities
under the order. At the time of its
investment in Shares of a Fund in
excess of the limit in section
12(d)(1)(A)(i), a Fund of Funds will
notify the Fund of the investment. At
such time, the Fund of Funds will also
transmit to the Fund a list of the names
of each Fund of Funds Affiliate and
Underwriting Affiliate. The Fund of
Funds will notify the Fund of any
changes to the list as soon as reasonably
practicable after a change occurs. The
Fund and the Fund of Funds will
maintain and preserve a copy of the
order, the FOF Participation Agreement,
and the list with any updated
information for the duration of the
investment and for a period of not less
than six years thereafter, the first two
years in an easily accessible place.
10. Before approving any advisory
contract under section 15 of the Act, the
board of directors or trustees of each
Investing Management Company,
including a majority of the independent
directors or trustees, will find that the
advisory fees charged under such
contract are based on services provided
that will be in addition to, rather than
duplicative of, the services provided
under the advisory contract(s) of any
Fund (or its respective Master Fund) in
which the Investing Management
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3527
Company may invest. These findings
and their basis will be recorded fully in
the minute books of the appropriate
Investing Management Company.
11. Any sales charges and/or service
fees charged with respect to shares of a
Fund of Funds will not exceed the
limits applicable to a fund of funds as
set forth in NASD Conduct Rule 2830.
12. No Fund (or its respective Master
Fund) will acquire securities of an
investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act in excess of the limits contained
in section 12(d)(1)(A) of the Act, except
to the extent that (i) the Fund (or its
respective Master Fund) acquires
securities of another investment
company pursuant to exemptive relief
from the Commission permitting the
Fund (or its respective Master Fund) to
acquire securities of one or more
investment companies for short-term
cash management purposes, (ii) the
Fund acquires securities of the Master
Fund pursuant to the Master-Feeder
Relief, or (iii) the Fund invests in a
Wholly-Owned Subsidiary that is a
wholly-owned and controlled
subsidiary of the Fund (or its respective
Master Fund) as described in the
application. Further, no Wholly-Owned
Subsidiary will acquire securities of any
other investment company or company
relying on section 3(c)(1) or 3(c)(7) of
the Act other than money market funds
that comply with rule 2a–7 for shortterm cash management purposes.
For the Commission, by the Division
of Investment Management, under
delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–01147 Filed 1–20–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76902; File No. SR–Phlx–
2016–01]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Delete Phlx
Rules 792, 794, 797, and 798
January 14, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January 4,
2016, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
1 15
2 17
E:\FR\FM\21JAN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
21JAN1
3528
Federal Register / Vol. 81, No. 13 / Thursday, January 21, 2016 / Notices
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II 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 proposes to delete
Rules 792, 794, 797, and 798 from the
Phlx rules.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.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 aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
asabaliauskas on DSK9F6TC42PROD with NOTICES
1. Purpose
The purpose of this proposed rule
change is to delete Rules 792, 794, 797,
and 798, which generally concern
member organization governance and
ownership. As discussed below, the
Exchange has determined that these
rules are anachronistic and no longer
serve a purpose. Consequently, the
Exchange is proposing to eliminate the
rules from the rulebook to avoid any
confusion that may be caused by
retaining them.
Rule 792
Rule 792 concerns control of the
voting stock of a member organization.
The rule requires the officers and
directors of a member organization that
is a corporation to have working control
of such member organization. To
comply with the rule, such officers and
directors must own at least fifty-five per
cent (55%) of the voting stock, and shall
have contributed at least thirty per cent
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18:26 Jan 20, 2016
Jkt 238001
(30%) of the total capital represented by
all classes of stock. The rule allows the
Exchange to waive these requirements
in specific cases, when it appears that
a majority of the officers and a majority
of the directors are actively engaged in
the conduct of the business of such
member organization. As such, the rule
is designed to ensure the management of
a member organization has more than a
simple majority vote and a significant
investment in the firm.
The Exchange believes that the rule is
no longer relevant. The rule was
adopted at a time when the Exchange
was owned by its members, and member
organizations (then known as ‘‘member
corporations’’) were small and privately
held. Many of the Exchange’s current
member organizations are large firms,
which are publicly held and have a
significant number of issued shares. As
a consequence, it is unreasonable to
require the management of the member
organization to hold at least 55% of the
voting stock and to contribute at least
30% of the member organization’s total
capital. Moreover, the Exchange notes
that Phlx’s affiliate exchanges NASDAQ
OMX BX (‘‘BX’’) and The Nasdaq Stock
Market (‘‘Nasdaq’’) do not have such
restrictive ownership requirements.
Accordingly, the Exchange does not
believe the rule serves a regulatory
purpose and it is accordingly proposing
to delete the rule.
Rule 794
Rule 794 concerns notice of the
assignment of the voting stock of a
member organization. Specifically, the
rule requires that no holder of ten per
cent (10%) or more of the common or
voting stock in a member organization
that is a corporation may sell, assign,
transfer, pledge, or hypothecate their
holdings of common or voting stock in
such member organization, except to
such member organization or to officers
or directors thereof, without written
notice to the Exchange. The rule allows
the Exchange to keep apprised of the
significant holders of the member
organization’s voting stock. Such
holders would exercise significant
control of the member organizations.
Similar to Rule 792 discussed above,
the Exchange believes that the rule is no
longer relevant. The rule was adopted at
a time when the Exchange was owned
by its members, and member
organizations were small and privately
held. As noted, many of the Exchange’s
member organizations now are large
firms, which are publicly held and have
a significant number of issued shares.
As a consequence, it is unreasonable to
require notice of the sale, assignment,
transfer, pledge, or hypothecation of
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Sfmt 4703
10% or more of the holdings of common
or voting stock of the member
organization. Moreover, to the extent a
member organization is publicly held,
the Exchange may readily access the
largest holders of member organization’s
stock. To the extent the member
organization is privately held, the
Exchange may request a list of
shareholders from the member
organization. The ownership of a
member organization is not a regulatory
issue, but rather it was an issue to the
Exchange when the requirement was
adopted because it was member-owned.
As such, influence of a member
organization translated to influence of
the Exchange. The Exchange is now a
wholly-owned subsidiary of a publiclytraded company; therefore, member
organization influence as owners of the
Exchange is no longer an issue.3 The
Exchange notes that neither BX nor
Nasdaq have a similar requirement. As
a consequence, the Exchange does not
believe the rule serves a regulatory
purpose and it is accordingly proposing
to delete the rule.
Rule 797
Rule 797 concerns loans to officers
and directors of member organizations.
Specifically, the rule prohibits a
member organization from making any
loan to any officer or director of the
member organization. The Exchange
believes that the rule is outdated and a
remnant from when the Exchange was a
member-owned organization. The
Exchange notes that neither BX nor
Nasdaq has a similar prohibition.
Moreover, the Exchange notes that
corporate law is generally a function of
state law, which in most cases allows
loans to officers and directors.4 Thus,
the Exchange does not believe the rule
serves a regulatory purpose and it is
accordingly proposing to delete the rule.
Rule 798
Rule 798 discusses what is required of
a corporation to be issued a permit by
the Exchange. A permit provides the
right to a member to trade on the
Exchange and the right to vote for a
Member Representative Director.
Permits are established by the Board of
Directors. A corporation may be issued
a permit by the Exchange if the
corporation is incorporated under the
laws of the Commonwealth of
Pennsylvania, and all of its shares are
owned by the Exchange. The rule
further provides that such a corporate
member whose shares are owned by the
Exchange is not liable for dues. This
3 The
4 See,
E:\FR\FM\21JAN1.SGM
Exchange is wholly-owned by Nasdaq, Inc.
e.g., DEL. CODE ANN. tit. 8, § 143 (2015).
21JAN1
Federal Register / Vol. 81, No. 13 / Thursday, January 21, 2016 / Notices
exchanges. Thus, the Exchange is able to
compete without the needless
restrictions currently imposed by the
deleted rules. Last, the proposed
changes promote clarity in the
application of the Exchange’s rules by
eliminating unneeded rules.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,6 in general, and furthers the
objectives of Section 6(b)(5) of the Act,7
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in facilitating
transactions in securities, 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. The Exchange believes
the proposed changes are consistent
with just and equitable principles of
trade because they delete outdated and
potentially confusing rules. Each of the
rules that the Exchange proposes to
delete is anachronistic and does not
have application to the Exchange’s
current function as a for-profit exchange
whereby members no longer own the
Exchange,8 but rather are granted
permits to trade thereon. Thus, the
governance and ownership
requirements of Rules 792, 794 and 797,
which generally restrict member
organizations from taking corporate
actions that they would otherwise be
able to do, are no longer relevant.
Eliminating Rule 798 is consistent with
just and equitable principles of trade
because the Exchange no longer
operates SCCP, which was the sole
reason for the rule’s adoption. Thus,
removing it from the rules promotes
clarity and eliminates potential
confusion caused by allowing it to
remain.
asabaliauskas on DSK9F6TC42PROD with NOTICES
rule was intended to permit Exchange
membership for the Exchange’s
subsidiary, the Stock Clearing
Corporation of Philadelphia (‘‘SCCP’’).5
The Exchange has since wound down
SCCP and made it inactive. Thus, the
Exchange is deleting the rule.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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 for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 9 and Rule 19b–4(f)(6)
thereunder.10
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Rather it is designed to promote
competition among exchanges by
removing archaic and overly restrictive
rules in comparison to the rules of other
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–
Phlx–2016–01 on the subject line.
5 See
Securities Exchange Act Release No. 57134
(January 11, 2008), 73 FR 3306 (January 17, 2008)
(SR–Phlx–2005–68) at note 6 (establishing the
purpose of the requirement).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
8 See note 3 above.
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18:26 Jan 20, 2016
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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:
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under Rule
19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the 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.
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–Phlx–2016–01. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–Phlx–
2016–01 and should be submitted on or
before February 11, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–01054 Filed 1–20–16; 8:45 am]
BILLING CODE 8011–01–P
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10 17
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11 17
E:\FR\FM\21JAN1.SGM
CFR 200.30–3(a)(12).
21JAN1
]]>Agencies
[Federal Register Volume 81, Number 13 (Thursday, January 21, 2016)]
[Notices]
[Pages 3527-3529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01054]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76902; File No. SR-Phlx-2016-01]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Delete
Phlx Rules 792, 794, 797, and 798
January 14, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 4, 2016, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the
[[Page 3528]]
Securities and Exchange Commission (``SEC'' or ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to delete Rules 792, 794, 797, and 798 from
the Phlx rules.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.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 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 delete Rules 792,
794, 797, and 798, which generally concern member organization
governance and ownership. As discussed below, the Exchange has
determined that these rules are anachronistic and no longer serve a
purpose. Consequently, the Exchange is proposing to eliminate the rules
from the rulebook to avoid any confusion that may be caused by
retaining them.
Rule 792
Rule 792 concerns control of the voting stock of a member
organization. The rule requires the officers and directors of a member
organization that is a corporation to have working control of such
member organization. To comply with the rule, such officers and
directors must own at least fifty-five per cent (55%) of the voting
stock, and shall have contributed at least thirty per cent (30%) of the
total capital represented by all classes of stock. The rule allows the
Exchange to waive these requirements in specific cases, when it appears
that a majority of the officers and a majority of the directors are
actively engaged in the conduct of the business of such member
organization. As such, the rule is designed to ensure the management of
a member organization has more than a simple majority vote and a
significant investment in the firm.
The Exchange believes that the rule is no longer relevant. The rule
was adopted at a time when the Exchange was owned by its members, and
member organizations (then known as ``member corporations'') were small
and privately held. Many of the Exchange's current member organizations
are large firms, which are publicly held and have a significant number
of issued shares. As a consequence, it is unreasonable to require the
management of the member organization to hold at least 55% of the
voting stock and to contribute at least 30% of the member
organization's total capital. Moreover, the Exchange notes that Phlx's
affiliate exchanges NASDAQ OMX BX (``BX'') and The Nasdaq Stock Market
(``Nasdaq'') do not have such restrictive ownership requirements.
Accordingly, the Exchange does not believe the rule serves a regulatory
purpose and it is accordingly proposing to delete the rule.
Rule 794
Rule 794 concerns notice of the assignment of the voting stock of a
member organization. Specifically, the rule requires that no holder of
ten per cent (10%) or more of the common or voting stock in a member
organization that is a corporation may sell, assign, transfer, pledge,
or hypothecate their holdings of common or voting stock in such member
organization, except to such member organization or to officers or
directors thereof, without written notice to the Exchange. The rule
allows the Exchange to keep apprised of the significant holders of the
member organization's voting stock. Such holders would exercise
significant control of the member organizations.
Similar to Rule 792 discussed above, the Exchange believes that the
rule is no longer relevant. The rule was adopted at a time when the
Exchange was owned by its members, and member organizations were small
and privately held. As noted, many of the Exchange's member
organizations now are large firms, which are publicly held and have a
significant number of issued shares. As a consequence, it is
unreasonable to require notice of the sale, assignment, transfer,
pledge, or hypothecation of 10% or more of the holdings of common or
voting stock of the member organization. Moreover, to the extent a
member organization is publicly held, the Exchange may readily access
the largest holders of member organization's stock. To the extent the
member organization is privately held, the Exchange may request a list
of shareholders from the member organization. The ownership of a member
organization is not a regulatory issue, but rather it was an issue to
the Exchange when the requirement was adopted because it was member-
owned. As such, influence of a member organization translated to
influence of the Exchange. The Exchange is now a wholly-owned
subsidiary of a publicly-traded company; therefore, member organization
influence as owners of the Exchange is no longer an issue.\3\ The
Exchange notes that neither BX nor Nasdaq have a similar requirement.
As a consequence, the Exchange does not believe the rule serves a
regulatory purpose and it is accordingly proposing to delete the rule.
---------------------------------------------------------------------------
\3\ The Exchange is wholly-owned by Nasdaq, Inc.
---------------------------------------------------------------------------
Rule 797
Rule 797 concerns loans to officers and directors of member
organizations. Specifically, the rule prohibits a member organization
from making any loan to any officer or director of the member
organization. The Exchange believes that the rule is outdated and a
remnant from when the Exchange was a member-owned organization. The
Exchange notes that neither BX nor Nasdaq has a similar prohibition.
Moreover, the Exchange notes that corporate law is generally a function
of state law, which in most cases allows loans to officers and
directors.\4\ Thus, the Exchange does not believe the rule serves a
regulatory purpose and it is accordingly proposing to delete the rule.
---------------------------------------------------------------------------
\4\ See, e.g., DEL. CODE ANN. tit. 8, Sec. 143 (2015).
---------------------------------------------------------------------------
Rule 798
Rule 798 discusses what is required of a corporation to be issued a
permit by the Exchange. A permit provides the right to a member to
trade on the Exchange and the right to vote for a Member Representative
Director. Permits are established by the Board of Directors. A
corporation may be issued a permit by the Exchange if the corporation
is incorporated under the laws of the Commonwealth of Pennsylvania, and
all of its shares are owned by the Exchange. The rule further provides
that such a corporate member whose shares are owned by the Exchange is
not liable for dues. This
[[Page 3529]]
rule was intended to permit Exchange membership for the Exchange's
subsidiary, the Stock Clearing Corporation of Philadelphia
(``SCCP'').\5\ The Exchange has since wound down SCCP and made it
inactive. Thus, the Exchange is deleting the rule.
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\5\ See Securities Exchange Act Release No. 57134 (January 11,
2008), 73 FR 3306 (January 17, 2008) (SR-Phlx-2005-68) at note 6
(establishing the purpose of the requirement).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\7\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, 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. The Exchange believes the proposed
changes are consistent with just and equitable principles of trade
because they delete outdated and potentially confusing rules. Each of
the rules that the Exchange proposes to delete is anachronistic and
does not have application to the Exchange's current function as a for-
profit exchange whereby members no longer own the Exchange,\8\ but
rather are granted permits to trade thereon. Thus, the governance and
ownership requirements of Rules 792, 794 and 797, which generally
restrict member organizations from taking corporate actions that they
would otherwise be able to do, are no longer relevant. Eliminating Rule
798 is consistent with just and equitable principles of trade because
the Exchange no longer operates SCCP, which was the sole reason for the
rule's adoption. Thus, removing it from the rules promotes clarity and
eliminates potential confusion caused by allowing it to remain.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ See note 3 above.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. Rather it is designed to promote competition among exchanges
by removing archaic and overly restrictive rules in comparison to the
rules of other exchanges. Thus, the Exchange is able to compete without
the needless restrictions currently imposed by the deleted rules. Last,
the proposed changes promote clarity in the application of the
Exchange's rules by eliminating unneeded rules.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6)
thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings 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-Phlx-2016-01 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-Phlx-2016-01. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-Phlx-2016-01 and should be
submitted on or before February 11, 2016.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-01054 Filed 1-20-16; 8:45 am]
BILLING CODE 8011-01-P
