Self-Regulatory Organizations; NYSE MKT LLC; Order Approving a Proposed Rule Change Deleting Rule 410B-Equities Governing Reporting Requirements for Off-Exchange Transactions, 5793-5795 [2016-01923]

Download as PDF mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / Notices 0001, telephone: 301–415–3306; email: Lois.James@nrc.gov. SUPPLEMENTARY INFORMATION: Notice is hereby given that the NRC has issued renewed facility operating license Nos. NPF–72 and NPF–77 to Exelon Generation Company, LLC, the operator of Braidwood Station. Renewed facility operating license Nos. NPF–72 and NPF–77 authorizes the operation of Braidwood Units 1 and 2 at reactor core power levels not in excess of 3645 megawatts thermal each, in accordance with the provisions of the Braidwood, Units 1 and 2 renewed licenses and technical specifications. The NRC’s ROD that supports the decision to renew facility operating license Nos. NPF–72 and NPF–77 is available in ADAMS under Accession No. ML15322A317. As discussed in the ROD and the final supplemental environmental impact statement (FSEIS) for Braidwood Station, Supplement 55 to NUREG– 1437, ‘‘Generic Environmental Impact Statement for License Renewal of Nuclear Plants Regarding Braidwood Station, Units 1 and 2,’’ issued in November 2015 (ADAMS Accession No. ML15314A814), the NRC considered a range of reasonable alternatives that included new nuclear generation, coalintegrated gasification combined cycle, natural gas combined-cycle (NGCC), combination (NGCC, wind, and solar generation), replacement power, and the no-action alternative. The ROD and FSEIS document the NRC’s determination that the adverse environmental impacts of license renewal for Braidwood are not so great that preserving the option of license renewal for energy planning decision makers would be unreasonable. Braidwood Station, Units 1 and 2, has two pressurized water reactors and is located in Will County, Illinois. The application for the renewed licenses, ‘‘License Renewal Application, Byron and Braidwood Stations, Units 1 and 2,’’ dated May 29, 2013 (ADAMS Accession Nos. ML13155A420 and ML13155A421), as supplemented by letters dated through April 13, 2015, with respect to Braidwood Station, complied with the standards and requirements of the Atomic Energy Act of 1954, as amended (AEA) and the NRC’s regulations in Chapter I of title 10 of the Code of Federal Regulations. The NRC has made appropriate findings, which are set forth in each of the licenses, as required by the AEA and its regulations. A public notice of the proposed issuance of the renewed licenses and an opportunity for a hearing was published in the Federal Register on July 24, 2013 (78 FR 44603). VerDate Sep<11>2014 19:14 Feb 02, 2016 Jkt 238001 For further details with respect to this action, see: (1) Exelon Generation Company, LLC’s (Exelon) license renewal application for Byron Station, Units 1 and 2, and Braidwood Station, Units 1 and 2, dated May 29, 2013, as supplemented by letters dated through April 13, 2015; (2) the NRC’s safety evaluation report dated July 2015 (ADAMS Accession No. ML15182A051); (3) the NRC’s final environmental impact statement (NUREG–1437, Supplement 55), for Braidwood, Units 1 and 2, published in November 2015; and (4) the NRC’s ROD. Dated at Rockville, Maryland, this 27 day of January 2016. For the Nuclear Regulatory Commission, Christopher G. Miller, Director, Division of License Renewal, Office of Nuclear Reactor Regulation. [FR Doc. 2016–02070 Filed 2–2–16; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76982; File No. SR– NYSEMKT–2015–80] Self-Regulatory Organizations; NYSE MKT LLC; Order Approving a Proposed Rule Change Deleting Rule 410B—Equities Governing Reporting Requirements for Off-Exchange Transactions January 28, 2016. I. Introduction On October 16, 2015, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b-4 thereunder,2 a proposed rule change to delete Rule 410B—Equities governing reporting requirements for off-Exchange transactions. The proposed rule change was published for comment in the Federal Register on November 2, 2015.3 The Commission received no comment letters on the proposed rule change. On December 16, 2015, the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change.4 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 76276 (October 27, 2015), 80 FR 67454. 4 See Securities Exchange Act Release No. 76669, 80 FR 79640 (December 22, 2015). 2 17 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 5793 The Commission is approving the proposed rule change. II. Description of the Proposed Rule Change The Exchange proposes to delete Rule 410B—Equities (‘‘Rule 410B’’), which sets forth certain regulatory reporting requirements for member or member organizations effecting off-Exchange transactions in Exchange listed securities that are not reported to the Consolidated Tape, and to make conforming amendments to Rule 476A to delete a reference to Rule 410B. The Exchange represents that Rule 410B is no longer necessary in light of changes in trade reporting and regulatory requirements that have been put in place since the Exchange adopted Rule 410B. Changes to Regulatory Landscape On July 30, 2007, the National Association of Securities Dealers, Inc. (‘‘NASD’’), New York Stock Exchange LLC (‘‘NYSE’’), and NYSE Regulation, Inc. (‘‘NYSE Regulation’’) consolidated their member-firm regulation operations to create the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) and entered into a plan to allocate to FINRA regulatory responsibility for common rules and common members (‘‘17d–2 Agreement’’).5 The Exchange was added as a party to the 17d-2 Agreement in 2009.6 In 2008, the Exchange, NASD, NYSE, and NYSE Regulation also entered into a plan to allocate to FINRA regulatory responsibility, over exchange members that are also FINRA members, for surveillance, investigation, and enforcement of insider trading with respect to NYSE- and MKT-listed stocks, among others, irrespective of where the relevant trading occurred (the ‘‘Insider Trading Plan’’).7 On June 14, 2010, FINRA was retained to perform the residual market surveillance and enforcement functions that had, up to that point, been performed by NYSE 5 See Securities Exchange Act Release No. 56148 (July 26, 2007), 72 FR 42146 (August 1, 2007) (File No. 4–544) (Notice of Filing and Order Approving and Declaring Effective a Plan for the Allocation of Regulatory Responsibilities). In 2007, the NASD, NYSE, the Exchange and NYSE Regulation also entered into a Regulatory Services Agreement (‘‘RSA’’), whereby FINRA was retained to perform certain regulatory services for non-common rules. 6 See Securities Exchange Act Release No. 60409 (July 30, 2009), 74 FR 39353 (August 6, 2009) (File No. 4–587). 7 See Securities Exchange Act Release No. 54646 (September 12, 2008), 73 FR 54646 (September 22, 2008) (File No. 4–566). See also Securities Exchange Act Release No. 58806 (October 17, 2008), 73 FR 63216 (October 23, 2008) (File No. 4–566). E:\FR\FM\03FEN1.SGM 03FEN1 5794 Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / Notices Regulation.8 In January 2011, the SEC approved an amendment to the Insider Trading Plan whereby FINRA also assumed responsibility for performing the insider-trading-related market surveillance and enforcement functions previously conducted by NYSE Regulation for its U.S. equities and options markets.9 mstockstill on DSK4VPTVN1PROD with NOTICES Changes in Trade Reporting and Regulatory Reporting In 1998, FINRA (then the NASD) established the Order Audit Trail System (OATS), as an integrated audit trail of order, quote, and trade information for OTC equity securities and equity securities listed and traded on The Nasdaq Stock Market, Inc. (‘‘Nasdaq’’).10 In 2010, FINRA Rules 7410 through 7470 (the ‘‘OATS Rules’’) were amended to extend the recording and reporting requirements to all NMS stocks, as that term is defined in Rule 600(b)(47) of Regulation NMS,11 including NYSE- and MKT-listed securities. The Exchange adopted the OATS Rules in 2011.12 The Exchange states that FINRA may use the information it collects pursuant to the OATS Rules to perform its regulatory functions. According to the Exchange, Rule 410B also predates the establishment of a FINRA Trade Reporting Facility (‘‘TRF’’). FINRA Rule 6110 requires FINRA members to report transactions in NMS stocks 13 effected ‘‘otherwise than on or through a national securities exchange.’’ 14 Pursuant to FINRA Rules 6310A and 6310B, FINRA members may use either the FINRA/NYSE TRF or FINRA/Nasdaq TRF to report such offExchange transactions.15 FINRA members using these TRFs to report offExchange transactions are in turn 8 See Securities Exchange Act Release No. 62355 (June 22, 2010), 75 FR 36729 (June 28, 2010) (SR– NYSE–2010–46); Securities Exchange Act Release No. 62354 (June 22, 2010), 75 FR 36730 (June 28, 2010) (SR–NYSEAmex–2010–57). NYSE Regulation performed the regulatory functions of NYSE MKT pursuant to an intercompany RSA. 9 See Securities Exchange Act Release No. 63750 (January 21, 2011), 76 FR 4948 (January 27, 2011) (File No. 4–566). 10 See Securities Exchange Act Release No. 39729 (March 6, 1998), 63 FR 12559 (March 13, 1998) (SR– NASD–97–56). 11 See Securities Exchange Act Release No. 63311 (November 12, 2010), 75 FR 70757 (November 18, 2010) (SR–FINRA–2010–044). See also 17 CFR 242.600(b)(47). 12 See Securities Exchange Act Release No. 65524 (October 7, 2011), 76 FR 64151 (October 17, 2011) (SR–NYSEAmex–2011–74). 13 As defined in Rule 600(b)(47) of Regulation NMS, 17 CFR 242.600(b)(47). 14 See FINRA Rule 6110. See generally FINRA Rule 6300A and 7200A Series (FINRA/Nasdaq TRF) and 6300B and 7200B Series (FINRA/NYSE TRF). 15 See FINRA Rules 6300A & 6300B. VerDate Sep<11>2014 19:14 Feb 02, 2016 Jkt 238001 subject to FINRA Rule 7230B, which, the Exchange states, imposes transaction-information reporting requirements similar to Rule 410B.16 As a result, the Exchange represents that dual members of both the Exchange and FINRA must report off-Exchange transactions to a TRF and submit substantially similar reports to the Exchange and FINRA. Proposed Rule Change The Exchange proposes to delete Rule 410B in its entirety. The Exchange represents that, since 2010, surveillance and enforcement responsibilities across markets have been consolidated at FINRA, which conducts cross-market surveillances on the Exchange’s behalf utilizing various data sources, including extensive trade and other information that FINRA collects pursuant to its rules. This trade information includes reports of off-exchange transactions. The Exchange represents that all of its member organizations, with only nine exceptions, are members of FINRA and, as such, must report all off-exchange transactions to FINRA, including transactions away from the Exchange that are not reported to the Consolidated Tape. The Exchange further represents that this information is essentially duplicative of the Rule 410B reports the Exchange currently supplies to FINRA. The Exchange notes that one exception would be transactions in dually listed securities executed on and reported to a foreign securities exchange, which are not required to be reported because such trades are executed ‘‘on or through an exchange.’’ 17 The Exchange represents that it believes such trades pose little regulatory risk and, given that no other exchange has a rule comparable to Rule 410B, notes that such trades are also not being reported to other equities exchanges. Finally, the Exchange represents that only a handful of firms currently account for all of the Rule 410B activity, all of whom are also FINRA members.18 The Exchange believes that Rule 410B is thus no longer necessary, and deleting it would eliminate essentially duplicative reporting of off-Exchange transactions by dual members. 16 See Rule 7230B. Trade Reporting Frequently Asked Questions, Section 701, Q/A701.1, available at https://www.finra.org/industry/trade-reporting-faq. 18 According to the Exchange, Rule 410B Weekly Reports submitted to the SEC in July and August 2015 reveal that only five firms, all also FINRA members, accounted for all of the Rule 410B trading activity. The Exchange further represents that the list of firms that have in the past submitted Rule 410B reports does not include any non-FINRA members. 17 See PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 The Exchange does not believe that eliminating the Rule 410B reporting requirement for the small number of NYSE MKT-only members19 would pose any significant regulatory risk. The Exchange represents that none of these firms has ever submitted a Rule 410B report. The Exchange also notes that NYSE MKT-only members would remain subject to federal and Exchange books and records requirements.20 III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act 21 and the rules and regulations thereunder applicable to a national securities exchange.22 In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,23 which requires, among other things, that the rules of a national securities exchange be 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 and that the rules are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Based on the Exchange’s representations, the Commission believes that eliminating the Rule 410B reporting requirement will not reduce the amount of publicly available information about securities transactions and that it is not likely to hamper the ability of the Exchange to conduct regulatory oversight of its members. The Commission notes that Rule 410B does not currently provide for real-time, publicly disseminated reporting of transactions, but instead requires non-public, electronic reporting of trade data to the Exchange on a nextday basis for regulatory purposes only. The Commission further notes that the Exchange represents that its members would remain subject to federal and 19 The Exchange represents that these nine nonFINRA member firms do not have any public customers and are also members of Nasdaq as well as NYSE. 20 See 17 CFR 240.17a–3, 17 CFR 240.17a–4 & Rule 440—Equities. 21 15 U.S.C. 78f. 22 In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 23 15 U.S.C. 78f(b)(5). E:\FR\FM\03FEN1.SGM 03FEN1 Federal Register / Vol. 81, No. 22 / Wednesday, February 3, 2016 / Notices Exchange books-and-records requirements 24 and that Exchange members would still be required to provide such trade data to the Exchange upon the Exchange’s request. For these reasons, the Commission believes that the proposal should help to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, protect investors and the public interest. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,25 that the proposed rule change (SR–NYSEMKT– 2015–80) be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–01923 Filed 2–2–16; 8:45 am] SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76995; File No. SR–C2– 2016–001] Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Options Regulatory Fee mstockstill on DSK4VPTVN1PROD with NOTICES January 28, 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 14, 2016, C2 Options Exchange, Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) 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 Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. VerDate Sep<11>2014 19:53 Feb 02, 2016 Jkt 238001 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 BILLING CODE 8011–01–P 24 See 17 CFR 240.17a–3, 17 CFR 240.17a–4 & Rule 440—Equities. 25 15 U.S.C. 78s(b)(2). 26 17 CFR 200.30–3(a)(12). 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 amend the Options Regulatory Fee. The text of the proposed rule change is available on the Exchange’s Web site (https:// www.c2exchange.com/Legal/), at the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 1. Purpose The Exchange proposes to decrease the Options Regulatory Fee (‘‘ORF’’) from $.0051 to $.0015 per contract in order to help ensure that revenue collected from the ORF, in combination with other regulatory fees and fines, does not exceed the Exchange’s total regulatory costs. The proposed fee change would be operative on February 1, 2016. The ORF is assessed by the Exchange to each Permit Holder for all options transactions executed or cleared by the Permit Holder that are cleared by The Options Clearing Corporation (‘‘OCC’’) in the customer range (i.e., transactions that clear in a customer account at OCC) regardless of the exchange on which the transaction occurs. In other words, the Exchange imposes the ORF on all customer-range transactions executed by a Permit Holder, even if the transactions do not take place on the Exchange. The ORF also is charged for transactions that are not executed by a Permit Holder but are ultimately cleared by a Permit Holder. In the case where a Permit Holder executes a transaction and a different Permit Holder clears the transaction, the ORF is assessed to the Permit Holder who executed the transaction. In the case where a nonPermit Holder executes a transaction and a Permit Holder clears the PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 5795 transaction, the ORF is assessed to the Permit Holder who clears the transaction. The ORF is collected indirectly from Permit Holders through their clearing firms by OCC on behalf of the Exchange. The ORF is designed to recover a material portion of the costs to the Exchange of the supervision and regulation of Permit Holder customer options business, including performing routine surveillances, investigations, examinations, financial monitoring, as well as policy, rulemaking, interpretive and enforcement activities. The Exchange believes that revenue generated from the ORF, when combined with all of the Exchange’s other regulatory fees and fines, will cover a material portion, but not all, of the Exchange’s regulatory costs. The Exchange notes that its regulatory responsibilities with respect to Permit Holder compliance with options sales practice rules have largely been allocated to FINRA under a 17d–2 agreement.3 The ORF is not designed to cover the cost of that options sales practice regulation. The Exchange will continue to monitor the amount of revenue collected from the ORF to ensure that it, in combination with its other regulatory fees and fines, does not exceed the Exchange’s total regulatory costs. The Exchange monitors its regulatory costs and revenues at a minimum on a semiannual basis. If the Exchange determines regulatory revenues exceed or are insufficient to cover a material portion of its regulatory costs, the Exchange will adjust the ORF by submitting a fee change filing to the Commission. The Exchange notifies Permit Holders of adjustments to the ORF via regulatory circular. The Exchange endeavors to provide Permit Holders with such notice at least 30 calendar days prior to the effective date of the change. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.4 Specifically, the Exchange believes the proposed rule change is consistent with Section 6(b)(4) of the Act,5 which provides that Exchange rules may provide for the 3 See Securities Exchange Act Release No. 76309 (October 29, 2015), 80 FR 68361 (November 4, 2015). 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(4). E:\FR\FM\03FEN1.SGM 03FEN1

Agencies

[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5793-5795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01923]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76982; File No. SR-NYSEMKT-2015-80]


Self-Regulatory Organizations; NYSE MKT LLC; Order Approving a 
Proposed Rule Change Deleting Rule 410B--Equities Governing Reporting 
Requirements for Off-Exchange Transactions

January 28, 2016.

I. Introduction

    On October 16, 2015, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to delete Rule 410B--Equities governing reporting 
requirements for off-Exchange transactions. The proposed rule change 
was published for comment in the Federal Register on November 2, 
2015.\3\ The Commission received no comment letters on the proposed 
rule change. On December 16, 2015, the Commission designated a longer 
period within which to approve the proposed rule change, disapprove the 
proposed rule change, or institute proceedings to determine whether to 
approve or disapprove the proposed rule change.\4\ The Commission is 
approving the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 76276 (October 27, 
2015), 80 FR 67454.
    \4\ See Securities Exchange Act Release No. 76669, 80 FR 79640 
(December 22, 2015).
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange proposes to delete Rule 410B--Equities (``Rule 
410B''), which sets forth certain regulatory reporting requirements for 
member or member organizations effecting off-Exchange transactions in 
Exchange listed securities that are not reported to the Consolidated 
Tape, and to make conforming amendments to Rule 476A to delete a 
reference to Rule 410B. The Exchange represents that Rule 410B is no 
longer necessary in light of changes in trade reporting and regulatory 
requirements that have been put in place since the Exchange adopted 
Rule 410B.

Changes to Regulatory Landscape

    On July 30, 2007, the National Association of Securities Dealers, 
Inc. (``NASD''), New York Stock Exchange LLC (``NYSE''), and NYSE 
Regulation, Inc. (``NYSE Regulation'') consolidated their member-firm 
regulation operations to create the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and entered into a plan to allocate to 
FINRA regulatory responsibility for common rules and common members 
(``17d-2 Agreement'').\5\ The Exchange was added as a party to the 17d-
2 Agreement in 2009.\6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 56148 (July 26, 
2007), 72 FR 42146 (August 1, 2007) (File No. 4-544) (Notice of 
Filing and Order Approving and Declaring Effective a Plan for the 
Allocation of Regulatory Responsibilities). In 2007, the NASD, NYSE, 
the Exchange and NYSE Regulation also entered into a Regulatory 
Services Agreement (``RSA''), whereby FINRA was retained to perform 
certain regulatory services for non-common rules.
    \6\ See Securities Exchange Act Release No. 60409 (July 30, 
2009), 74 FR 39353 (August 6, 2009) (File No. 4-587).
---------------------------------------------------------------------------

    In 2008, the Exchange, NASD, NYSE, and NYSE Regulation also entered 
into a plan to allocate to FINRA regulatory responsibility, over 
exchange members that are also FINRA members, for surveillance, 
investigation, and enforcement of insider trading with respect to NYSE- 
and MKT-listed stocks, among others, irrespective of where the relevant 
trading occurred (the ``Insider Trading Plan'').\7\ On June 14, 2010, 
FINRA was retained to perform the residual market surveillance and 
enforcement functions that had, up to that point, been performed by 
NYSE

[[Page 5794]]

Regulation.\8\ In January 2011, the SEC approved an amendment to the 
Insider Trading Plan whereby FINRA also assumed responsibility for 
performing the insider-trading-related market surveillance and 
enforcement functions previously conducted by NYSE Regulation for its 
U.S. equities and options markets.\9\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 54646 (September 12, 
2008), 73 FR 54646 (September 22, 2008) (File No. 4-566). See also 
Securities Exchange Act Release No. 58806 (October 17, 2008), 73 FR 
63216 (October 23, 2008) (File No. 4-566).
    \8\ See Securities Exchange Act Release No. 62355 (June 22, 
2010), 75 FR 36729 (June 28, 2010) (SR-NYSE-2010-46); Securities 
Exchange Act Release No. 62354 (June 22, 2010), 75 FR 36730 (June 
28, 2010) (SR-NYSEAmex-2010-57). NYSE Regulation performed the 
regulatory functions of NYSE MKT pursuant to an intercompany RSA.
    \9\ See Securities Exchange Act Release No. 63750 (January 21, 
2011), 76 FR 4948 (January 27, 2011) (File No. 4-566).
---------------------------------------------------------------------------

Changes in Trade Reporting and Regulatory Reporting

    In 1998, FINRA (then the NASD) established the Order Audit Trail 
System (OATS), as an integrated audit trail of order, quote, and trade 
information for OTC equity securities and equity securities listed and 
traded on The Nasdaq Stock Market, Inc. (``Nasdaq'').\10\ In 2010, 
FINRA Rules 7410 through 7470 (the ``OATS Rules'') were amended to 
extend the recording and reporting requirements to all NMS stocks, as 
that term is defined in Rule 600(b)(47) of Regulation NMS,\11\ 
including NYSE- and MKT-listed securities. The Exchange adopted the 
OATS Rules in 2011.\12\ The Exchange states that FINRA may use the 
information it collects pursuant to the OATS Rules to perform its 
regulatory functions.
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 39729 (March 6, 
1998), 63 FR 12559 (March 13, 1998) (SR-NASD-97-56).
    \11\ See Securities Exchange Act Release No. 63311 (November 12, 
2010), 75 FR 70757 (November 18, 2010) (SR-FINRA-2010-044). See also 
17 CFR 242.600(b)(47).
    \12\ See Securities Exchange Act Release No. 65524 (October 7, 
2011), 76 FR 64151 (October 17, 2011) (SR-NYSEAmex-2011-74).
---------------------------------------------------------------------------

    According to the Exchange, Rule 410B also predates the 
establishment of a FINRA Trade Reporting Facility (``TRF''). FINRA Rule 
6110 requires FINRA members to report transactions in NMS stocks \13\ 
effected ``otherwise than on or through a national securities 
exchange.'' \14\ Pursuant to FINRA Rules 6310A and 6310B, FINRA members 
may use either the FINRA/NYSE TRF or FINRA/Nasdaq TRF to report such 
off-Exchange transactions.\15\ FINRA members using these TRFs to report 
off-Exchange transactions are in turn subject to FINRA Rule 7230B, 
which, the Exchange states, imposes transaction-information reporting 
requirements similar to Rule 410B.\16\ As a result, the Exchange 
represents that dual members of both the Exchange and FINRA must report 
off-Exchange transactions to a TRF and submit substantially similar 
reports to the Exchange and FINRA.
---------------------------------------------------------------------------

    \13\ As defined in Rule 600(b)(47) of Regulation NMS, 17 CFR 
242.600(b)(47).
    \14\ See FINRA Rule 6110. See generally FINRA Rule 6300A and 
7200A Series (FINRA/Nasdaq TRF) and 6300B and 7200B Series (FINRA/
NYSE TRF).
    \15\ See FINRA Rules 6300A & 6300B.
    \16\ See Rule 7230B.
---------------------------------------------------------------------------

Proposed Rule Change

    The Exchange proposes to delete Rule 410B in its entirety. The 
Exchange represents that, since 2010, surveillance and enforcement 
responsibilities across markets have been consolidated at FINRA, which 
conducts cross-market surveillances on the Exchange's behalf utilizing 
various data sources, including extensive trade and other information 
that FINRA collects pursuant to its rules. This trade information 
includes reports of off-exchange transactions.
    The Exchange represents that all of its member organizations, with 
only nine exceptions, are members of FINRA and, as such, must report 
all off-exchange transactions to FINRA, including transactions away 
from the Exchange that are not reported to the Consolidated Tape. The 
Exchange further represents that this information is essentially 
duplicative of the Rule 410B reports the Exchange currently supplies to 
FINRA. The Exchange notes that one exception would be transactions in 
dually listed securities executed on and reported to a foreign 
securities exchange, which are not required to be reported because such 
trades are executed ``on or through an exchange.'' \17\ The Exchange 
represents that it believes such trades pose little regulatory risk 
and, given that no other exchange has a rule comparable to Rule 410B, 
notes that such trades are also not being reported to other equities 
exchanges. Finally, the Exchange represents that only a handful of 
firms currently account for all of the Rule 410B activity, all of whom 
are also FINRA members.\18\ The Exchange believes that Rule 410B is 
thus no longer necessary, and deleting it would eliminate essentially 
duplicative reporting of off-Exchange transactions by dual members.
---------------------------------------------------------------------------

    \17\ See Trade Reporting Frequently Asked Questions, Section 
701, Q/A701.1, available at https://www.finra.org/industry/trade-reporting-faq.
    \18\ According to the Exchange, Rule 410B Weekly Reports 
submitted to the SEC in July and August 2015 reveal that only five 
firms, all also FINRA members, accounted for all of the Rule 410B 
trading activity. The Exchange further represents that the list of 
firms that have in the past submitted Rule 410B reports does not 
include any non-FINRA members.
---------------------------------------------------------------------------

    The Exchange does not believe that eliminating the Rule 410B 
reporting requirement for the small number of NYSE MKT-only members\19\ 
would pose any significant regulatory risk. The Exchange represents 
that none of these firms has ever submitted a Rule 410B report. The 
Exchange also notes that NYSE MKT-only members would remain subject to 
federal and Exchange books and records requirements.\20\
---------------------------------------------------------------------------

    \19\ The Exchange represents that these nine non-FINRA member 
firms do not have any public customers and are also members of 
Nasdaq as well as NYSE.
    \20\ See 17 CFR 240.17a-3, 17 CFR 240.17a-4 & Rule 440--
Equities.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act \21\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\22\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\23\ which 
requires, among other things, that the rules of a national securities 
exchange be 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 and that the 
rules are not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f.
    \22\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \23\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Based on the Exchange's representations, the Commission believes 
that eliminating the Rule 410B reporting requirement will not reduce 
the amount of publicly available information about securities 
transactions and that it is not likely to hamper the ability of the 
Exchange to conduct regulatory oversight of its members. The Commission 
notes that Rule 410B does not currently provide for real-time, publicly 
disseminated reporting of transactions, but instead requires non-
public, electronic reporting of trade data to the Exchange on a next-
day basis for regulatory purposes only. The Commission further notes 
that the Exchange represents that its members would remain subject to 
federal and

[[Page 5795]]

Exchange books-and-records requirements \24\ and that Exchange members 
would still be required to provide such trade data to the Exchange upon 
the Exchange's request. For these reasons, the Commission believes that 
the proposal should help to prevent fraudulent and manipulative acts 
and practices, promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, protect investors and the 
public interest.
---------------------------------------------------------------------------

    \24\ See 17 CFR 240.17a-3, 17 CFR 240.17a-4 & Rule 440--
Equities.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\25\ that the proposed rule change (SR-NYSEMKT-2015-80) be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
Robert W. Errett,
Deputy Secretary.
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

[FR Doc. 2016-01923 Filed 2-2-16; 8:45 am]
 BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.