Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt Exchange Rule 14.10 Setting Forth Additional Requirements for the Listing of Securities That Are Issued by the Exchange or Any of Its Affiliates, 23765-23767 [2016-09318]
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Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
The Postal Service intends for the
Amendment to become effective one
business day after the date that the
Commission completes its review of the
Notice. Id. The Postal Service asserts
that the Amendment will not materially
affect cost coverage; therefore, the
supporting financial documentation and
certification originally filed in this
docket remain applicable. Id.
II. Notice of Filings
The Commission invites comments on
whether the changes presented in the
Postal Service’s Notice are consistent
with the policies of 39 U.S.C. 3632,
3633, or 3642, 39 CFR 3015.5, and 39
CFR part 3020, subpart B. Comments are
due no later than April 25, 2016. The
public portions of these filings can be
accessed via the Commission’s Web site
(https://www.prc.gov).
The Commission appoints Cassie
D’Souza to represent the interests of the
general public (Public Representative)
in this docket.
III. Ordering Paragraphs
It is ordered:
1. The Commission reopens Docket
No. CP2015–110 for consideration of
matters raised by the Postal Service’s
Notice.
2. Pursuant to 39 U.S.C. 505, the
Commission appoints Cassie D’Souza to
serve as an officer of the Commission
(Public Representative) to represent the
interests of the general public in this
proceeding.
3. Comments are due no later than
April 25, 2016.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2016–09306 Filed 4–21–16; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
mstockstill on DSK4VPTVN1PROD with NOTICES
[Release No. 34–77637; File No. SR–
BatsEDGA–2016–06]
Self-Regulatory Organizations; Bats
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Adopt
Exchange Rule 14.10 Setting Forth
Additional Requirements for the
Listing of Securities That Are Issued
by the Exchange or Any of Its Affiliates
April 18, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
VerDate Sep<11>2014
19:18 Apr 21, 2016
Jkt 238001
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 13,
2016, Bats EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange has
designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(6)(iii)
thereunder,4 which renders it effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
adopt Exchange Rule 14.10 setting forth
additional requirements for the listing of
securities that are issued by the
Exchange or any of its affiliates as well
as the monitoring of such securities’
trading activity on the Exchange.
Proposed Rule 14.10 is based on Bats
BZX Exchange, Inc. (‘‘BZX’’) Rule
14.3(e), which was recently amended
and filed for immediate effectiveness
with the Commission.5
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6)(iii).
5 See SR–BatsBZX–2016–08 (filed for immediate
effectiveness on April 13, 2016). See also Securities
Exchange Act Release No. 66580 (March 13, 2012),
77 FR 16110 (March 19, 2012) (SR–BATS–2012–
012).
2 17
PO 00000
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Fmt 4703
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23765
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to adopt
Rule 14.10 setting forth reporting
requirements on the Exchange should
the Exchange or EDGA Affiliate list a
security on the Exchange (the ‘‘Affiliate
Security’’). Proposed Rule 14.10(a)(1)
would define ‘‘EDGA Affiliate’’ as ‘‘the
Exchange and any entity that directly or
indirectly, through one or more
intermediaries, controls, is controlled
by, or is under common control with the
Exchange, where ‘‘control’’ means that
one entity possesses, directly or
indirectly, voting control of the other
entity either through ownership of
capital stock or other equity securities
or through majority representation on
the board of directors or other
management body of such entity.’’
Proposed Rule 14.10(a)(2) would define
‘‘Affiliate Security’’ as ‘‘any security
issued by an EDGA Affiliate or any
Exchange-listed option on any such
security, with the exception of Portfolio
Depositary Receipts as defined in Rule
14.8(d) and Investment Company Units
as defined in Rule 14.2.’’ 6
In the event that an EDGA Affiliate
seeks to list an Affiliate Security,
paragraph (b)(1) of proposed Rule 14.10
would require that prior to the initial
listing of the Affiliate Security on the
Exchange, Exchange personnel shall
determine that such security satisfies
the Exchange’s rules for listing, and
such finding must be approved by the
Regulatory Oversight Committee of the
Exchange’s Board of Directors.
Proposed paragraph (b)(2) of proposed
Rule 14.10 would state that throughout
the continued listing of the Affiliate
Security on the Exchange, the Exchange
will prepare a quarterly report for the
Regulatory Oversight Committee of the
Exchange’s Board of Directors and that
such report describe the Exchange’s
monitoring of the Affiliate Security’s
compliance with the Exchange’s listing
standards. Sub-paragraph (A) of
proposed Rule 14.10(b)(2) would require
the report include a description of the
Affiliate Security’s compliance with the
Exchange’s minimum share price
requirement, and, sub-paragraph (B)
would require the report to describe the
6 The Exchange notes that BZX Rule 14.3(e)(1)(B)
excludes Index Fund Shares as defined under BZX
Rule 14.11(c). The Exchange rules do not currently
define Index Fund Shares. Therefore, the Exchange
proposes to exclude Investment Company Unit as
defined under Exchange Rule 14.2 as it believes
Investment Company Units to be synonymous with
Index Fund Shares.
E:\FR\FM\22APN1.SGM
22APN1
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23766
Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
Affiliate Security’s compliance with
each of the quantitative continued
listing requirements.
Sub-paragraph (3) of proposed Rule
14.10(b) would require the Exchange to
commission an annual review and
report by an independent accounting
firm of the compliance of the Affiliate
Security with the Exchange’s listing
requirements. The Exchange would be
required to promptly furnish a copy of
this annual report to the Regulatory
Oversight Committee of the Exchange’s
Board of Directors.
Sub-paragraph (4) of proposed Rule
14.10(b) would state that in the event
the Exchange determines that the EDGA
Affiliate is not in compliance with any
of the Exchange’s listing standards, the
Exchange is required to notify the issuer
of such non-compliance promptly and
request a plan of compliance. The
Exchange would also be required to file
a report with the Commission within
five business days of providing such
notice to the issuer of its noncompliance. The required report would
identify the date of the non-compliance,
type of non-compliance, and any other
material information conveyed to the
issuer in the notice of non-compliance.
Within five business days of receipt of
a plan of compliance from the issuer,
the Exchange would again be required
to notify the Commission of such
receipt, whether the plan of compliance
was accepted by the Exchange or what
other action was taken with respect to
the plan and the time period provided
to regain compliance with the
Exchange’s listing standards, if any.
Sub-paragraph (c) of proposed Rule
14.10 would require that throughout the
trading of an Affiliate Security on the
Exchange, the Exchange prepare a
quarterly report on the Affiliate Security
for the Regulatory Oversight Committee
of the Exchange’s Board of Directors that
describes the Exchange’s monitoring of
the trading of the Affiliate Security,
including summaries of all related
surveillance alerts, complaints,
regulatory referrals, trades cancelled or
adjusted pursuant to Exchange Rules,
investigations, examinations, formal and
informal disciplinary actions, exception
reports and trading data used to ensure
the Affiliate Security’s compliance with
the Exchange’s listing and trading rules.
Lastly, paragraph (d) of proposed Rule
14.10 would require the Exchange to
promptly provide a copy of the reports
required by sub-paragraphs (b) and (c)
described above to the Commission.
The listing of an Affiliate Security or
where an Affiliate Security is traded on
the Exchange could potentially create a
conflict of interest between the
Exchange’s self-regulatory responsibility
VerDate Sep<11>2014
19:18 Apr 21, 2016
Jkt 238001
to vigorously oversee the listing and
trading of the stock on its market, and
its own commercial or economic
interests. Such ‘‘self-listing’’ may raise
questions as to the Exchange’s ability to
independently and effectively enforce
its rules against an affiliate or the
operator/owner of its facility. In
addition, such listing has the potential
to exacerbate possible conflicts that may
arise when the Exchange oversees
competitors that may also be listed or
traded on the Exchange. The Exchange
believes that the proposed rule change,
by requiring heightened reporting by the
Exchange to the Regulatory Oversight
Committee of the Exchange’s Board of
Directors and the Commission with
respect to the Exchange’s oversight of
the listing and trading on the Exchange
of any EDGA Affiliate Security, will
help protect against any concern that
the Exchange will not effectively
enforce its rules with respect to the
listing and trading of these securities. In
addition, the requirements that an
independent accounting firm review
such issuer’s compliance with the
Exchange’s listing standards adds a
degree of independent oversight to the
Exchange’s regulation of the listing of
these securities and should help
mitigate against any potential or actual
conflicts of interest. The Exchange also
believes that these additional
requirements contained in the proposed
rule change would provide additional
assurance that any Affiliate Securities
listed and traded on the Exchange by an
EDGA Affiliate comply with the
Exchange’s listing standards and trading
rules on an on-going basis. Finally, the
Exchange believes that the proposed
rule change would eliminate any
perception of a potential conflict of
interest if an EDGA Affiliate seeks to list
a security on the Exchange or if an
Affiliate Security is traded on the
Exchange.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange, and, in particular, with the
requirements of Section 6(b) of the Act.7
Specifically, the proposed change is
consistent with Section 6(b)(5) of the
Act,8 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 facilitating transactions in securities,
7 15
8 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00093
Fmt 4703
Sfmt 4703
and to remove impediments to, and
perfect the mechanism of, a free and
open market and a national market
system. Specifically, the Exchange
believes that the proposed rule change,
by requiring heightened reporting by the
Exchange to the Regulatory Oversight
Committee of the Exchange’s Board of
Directors and the Commission with
respect to oversight of the listing and
trading on the Exchange of Affiliate
Securities, will help protect against
concerns that the Exchange will not
effectively enforce its rules with respect
to the listing and trading of these
securities. In addition, the requirement
that an independent accounting firm
review such issuer’s compliance with
the Exchange’s listing standards adds a
degree of independent oversight to the
Exchange’s regulation of the listing of
these securities, which may mitigate any
potential or actual conflicts of interest.
Further, the additional requirements
contained in the proposed rule change
would help to provide additional
assurance: (i) That any Affiliate
Securities listed on the Exchange by an
EDGA Affiliate comply with the
Exchange’s listing standards both upon
the initial listing of the EDGA Affiliate
and on an on-going basis; and (ii)
regarding the Exchange’s monitoring of
the trading of the Affiliate Security
traded on the Exchange. The Exchange
believes that the proposed rule change
would eliminate any perception of a
potential conflict of interest if an EDGA
Affiliate seeks to list a security on the
Exchange and where an Affiliate
Security is traded on the Exchange.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is not designed to
address any competitive issues, but
rather set forth the Exchange’s controls
that are in place to address the potential
conflicts of interest that may arise in the
listing of Affiliate Securities on the
Exchange.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were neither
solicited nor received.
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
E:\FR\FM\22APN1.SGM
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Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
19(b)(3)(A)(iii) of the Act 9 and Rule
19b–4(f)(6) thereunder.10 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, 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 11 and Rule 19b–4(f)(6)
thereunder.12
A proposed rule change filed under
Rule 19b–4(f)(6) under the Act 13
normally does not become operative for
30 days after the date of filing. However,
Rule 19b–4(f)(6)(iii) 14 permits the
Commission to 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 Exchange states that waiver
of the operative delay will allow the
Exchange to implement the proposed
rule change immediately in the event an
Affiliate seeks to list on the Exchange or
an Affiliate Security is traded on the
Exchange. The Exchange further states
that providing the reports required by
the rule is in the best interest of
investors and the public interest
because it would provide greater
transparency to market participants
regarding the controls in place to
address the potential conflicts of
interest that may arise in the listing and
trading of Affiliate Securities on the
Exchange. Based on the foregoing, the
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest.15 The Commission
hereby grants the Exchange’s request
9 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
11 15 U.S.C. 78s(b)(3)(A).
12 In addition, Rule 19b–4(f)(6)(iii) requires the
Exchange to give the Commission written notice of
the Exchange’s intent to file the proposed rule
change, along with a brief description and text of
the proposed rule change, at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 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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10 17
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19:18 Apr 21, 2016
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and designates the proposal operative
upon filing.
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
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–
BatsEDGA–2016–06 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BatsEDGA–2016–06. 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;
PO 00000
Frm 00094
Fmt 4703
Sfmt 4703
23767
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–
BatsEDGA–2016–06 and should be
submitted on or before May 13, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–09318 Filed 4–21–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736.
Extension:
Rule 607, SEC File No. 270–561, OMB
Control No. 3235–0634, Request for a
New OMB Control No.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Regulation E (17 CFR 230.601–
230.610a) exempts from registration
under the Securities Act of 1933 (15
U.S.C. 77a et seq.) (‘‘Securities Act’’)
securities issued by a small business
investment company (‘‘SBIC’’) which is
registered under the Investment
Company Act of 1940 (15 U.S.C. 80a–1
et seq.) (‘‘Investment Company Act’’) or
a closed-end investment company that
has elected to be regulated as a business
development company (‘‘BDC’’) under
the Investment Company Act, so long as
the aggregate offering price of all
securities of the issuer that may be sold
within a 12-month period does not
exceed $5,000,000 and certain other
conditions are met. Rule 607 under
Regulation E (17 CFR 230.607) entitled,
‘‘Sales material to be filed,’’ requires
sales material used in connection with
securities offerings under Regulation E
to be filed with the Commission at least
five days (excluding weekends and
16 17
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CFR 200.30–3(a)(12).
22APN1
]]>Agencies
[Federal Register Volume 81, Number 78 (Friday, April 22, 2016)]
[Notices]
[Pages 23765-23767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09318]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77637; File No. SR-BatsEDGA-2016-06]
Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Adopt Exchange Rule 14.10 Setting Forth Additional Requirements for the
Listing of Securities That Are Issued by the Exchange or Any of Its
Affiliates
April 18, 2016.
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 April 13, 2016, Bats EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
has designated this proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to adopt Exchange Rule 14.10 setting
forth additional requirements for the listing of securities that are
issued by the Exchange or any of its affiliates as well as the
monitoring of such securities' trading activity on the Exchange.
Proposed Rule 14.10 is based on Bats BZX Exchange, Inc. (``BZX'') Rule
14.3(e), which was recently amended and filed for immediate
effectiveness with the Commission.\5\
---------------------------------------------------------------------------
\5\ See SR-BatsBZX-2016-08 (filed for immediate effectiveness on
April 13, 2016). See also Securities Exchange Act Release No. 66580
(March 13, 2012), 77 FR 16110 (March 19, 2012) (SR-BATS-2012-012).
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to adopt Rule 14.10 setting forth
reporting requirements on the Exchange should the Exchange or EDGA
Affiliate list a security on the Exchange (the ``Affiliate Security'').
Proposed Rule 14.10(a)(1) would define ``EDGA Affiliate'' as ``the
Exchange and any entity that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common
control with the Exchange, where ``control'' means that one entity
possesses, directly or indirectly, voting control of the other entity
either through ownership of capital stock or other equity securities or
through majority representation on the board of directors or other
management body of such entity.'' Proposed Rule 14.10(a)(2) would
define ``Affiliate Security'' as ``any security issued by an EDGA
Affiliate or any Exchange-listed option on any such security, with the
exception of Portfolio Depositary Receipts as defined in Rule 14.8(d)
and Investment Company Units as defined in Rule 14.2.'' \6\
---------------------------------------------------------------------------
\6\ The Exchange notes that BZX Rule 14.3(e)(1)(B) excludes
Index Fund Shares as defined under BZX Rule 14.11(c). The Exchange
rules do not currently define Index Fund Shares. Therefore, the
Exchange proposes to exclude Investment Company Unit as defined
under Exchange Rule 14.2 as it believes Investment Company Units to
be synonymous with Index Fund Shares.
---------------------------------------------------------------------------
In the event that an EDGA Affiliate seeks to list an Affiliate
Security, paragraph (b)(1) of proposed Rule 14.10 would require that
prior to the initial listing of the Affiliate Security on the Exchange,
Exchange personnel shall determine that such security satisfies the
Exchange's rules for listing, and such finding must be approved by the
Regulatory Oversight Committee of the Exchange's Board of Directors.
Proposed paragraph (b)(2) of proposed Rule 14.10 would state that
throughout the continued listing of the Affiliate Security on the
Exchange, the Exchange will prepare a quarterly report for the
Regulatory Oversight Committee of the Exchange's Board of Directors and
that such report describe the Exchange's monitoring of the Affiliate
Security's compliance with the Exchange's listing standards. Sub-
paragraph (A) of proposed Rule 14.10(b)(2) would require the report
include a description of the Affiliate Security's compliance with the
Exchange's minimum share price requirement, and, sub-paragraph (B)
would require the report to describe the
[[Page 23766]]
Affiliate Security's compliance with each of the quantitative continued
listing requirements.
Sub-paragraph (3) of proposed Rule 14.10(b) would require the
Exchange to commission an annual review and report by an independent
accounting firm of the compliance of the Affiliate Security with the
Exchange's listing requirements. The Exchange would be required to
promptly furnish a copy of this annual report to the Regulatory
Oversight Committee of the Exchange's Board of Directors.
Sub-paragraph (4) of proposed Rule 14.10(b) would state that in the
event the Exchange determines that the EDGA Affiliate is not in
compliance with any of the Exchange's listing standards, the Exchange
is required to notify the issuer of such non-compliance promptly and
request a plan of compliance. The Exchange would also be required to
file a report with the Commission within five business days of
providing such notice to the issuer of its non-compliance. The required
report would identify the date of the non-compliance, type of non-
compliance, and any other material information conveyed to the issuer
in the notice of non-compliance. Within five business days of receipt
of a plan of compliance from the issuer, the Exchange would again be
required to notify the Commission of such receipt, whether the plan of
compliance was accepted by the Exchange or what other action was taken
with respect to the plan and the time period provided to regain
compliance with the Exchange's listing standards, if any.
Sub-paragraph (c) of proposed Rule 14.10 would require that
throughout the trading of an Affiliate Security on the Exchange, the
Exchange prepare a quarterly report on the Affiliate Security for the
Regulatory Oversight Committee of the Exchange's Board of Directors
that describes the Exchange's monitoring of the trading of the
Affiliate Security, including summaries of all related surveillance
alerts, complaints, regulatory referrals, trades cancelled or adjusted
pursuant to Exchange Rules, investigations, examinations, formal and
informal disciplinary actions, exception reports and trading data used
to ensure the Affiliate Security's compliance with the Exchange's
listing and trading rules.
Lastly, paragraph (d) of proposed Rule 14.10 would require the
Exchange to promptly provide a copy of the reports required by sub-
paragraphs (b) and (c) described above to the Commission.
The listing of an Affiliate Security or where an Affiliate Security
is traded on the Exchange could potentially create a conflict of
interest between the Exchange's self-regulatory responsibility to
vigorously oversee the listing and trading of the stock on its market,
and its own commercial or economic interests. Such ``self-listing'' may
raise questions as to the Exchange's ability to independently and
effectively enforce its rules against an affiliate or the operator/
owner of its facility. In addition, such listing has the potential to
exacerbate possible conflicts that may arise when the Exchange oversees
competitors that may also be listed or traded on the Exchange. The
Exchange believes that the proposed rule change, by requiring
heightened reporting by the Exchange to the Regulatory Oversight
Committee of the Exchange's Board of Directors and the Commission with
respect to the Exchange's oversight of the listing and trading on the
Exchange of any EDGA Affiliate Security, will help protect against any
concern that the Exchange will not effectively enforce its rules with
respect to the listing and trading of these securities. In addition,
the requirements that an independent accounting firm review such
issuer's compliance with the Exchange's listing standards adds a degree
of independent oversight to the Exchange's regulation of the listing of
these securities and should help mitigate against any potential or
actual conflicts of interest. The Exchange also believes that these
additional requirements contained in the proposed rule change would
provide additional assurance that any Affiliate Securities listed and
traded on the Exchange by an EDGA Affiliate comply with the Exchange's
listing standards and trading rules on an on-going basis. Finally, the
Exchange believes that the proposed rule change would eliminate any
perception of a potential conflict of interest if an EDGA Affiliate
seeks to list a security on the Exchange or if an Affiliate Security is
traded on the Exchange.
2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\7\ Specifically, the
proposed change is consistent with Section 6(b)(5) of the Act,\8\
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 facilitating
transactions in securities, and to remove impediments to, and perfect
the mechanism of, a free and open market and a national market system.
Specifically, the Exchange believes that the proposed rule change, by
requiring heightened reporting by the Exchange to the Regulatory
Oversight Committee of the Exchange's Board of Directors and the
Commission with respect to oversight of the listing and trading on the
Exchange of Affiliate Securities, will help protect against concerns
that the Exchange will not effectively enforce its rules with respect
to the listing and trading of these securities. In addition, the
requirement that an independent accounting firm review such issuer's
compliance with the Exchange's listing standards adds a degree of
independent oversight to the Exchange's regulation of the listing of
these securities, which may mitigate any potential or actual conflicts
of interest. Further, the additional requirements contained in the
proposed rule change would help to provide additional assurance: (i)
That any Affiliate Securities listed on the Exchange by an EDGA
Affiliate comply with the Exchange's listing standards both upon the
initial listing of the EDGA Affiliate and on an on-going basis; and
(ii) regarding the Exchange's monitoring of the trading of the
Affiliate Security traded on the Exchange. The Exchange believes that
the proposed rule change would eliminate any perception of a potential
conflict of interest if an EDGA Affiliate seeks to list a security on
the Exchange and where an Affiliate Security is traded on the Exchange.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not designed to address any competitive issues, but rather set forth
the Exchange's controls that are in place to address the potential
conflicts of interest that may arise in the listing of Affiliate
Securities on the Exchange.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received.
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
[[Page 23767]]
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
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, 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 \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to
give the Commission written notice of the Exchange's intent to file
the proposed rule change, along with a brief description and text of
the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change, or such shorter time as
designated by the Commission. The Exchange has satisfied this
requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) under the Act
\13\ normally does not become operative for 30 days after the date of
filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to
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 Exchange states that
waiver of the operative delay will allow the Exchange to implement the
proposed rule change immediately in the event an Affiliate seeks to
list on the Exchange or an Affiliate Security is traded on the
Exchange. The Exchange further states that providing the reports
required by the rule is in the best interest of investors and the
public interest because it would provide greater transparency to market
participants regarding the controls in place to address the potential
conflicts of interest that may arise in the listing and trading of
Affiliate Securities on the Exchange. Based on the foregoing, the
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public
interest.\15\ The Commission hereby grants the Exchange's request and
designates the proposal operative upon filing.
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ 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 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 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-BatsEDGA-2016-06 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BatsEDGA-2016-06. 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-BatsEDGA-2016-06 and should
be submitted on or before May 13, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-09318 Filed 4-21-16; 8:45 am]
BILLING CODE 8011-01-P
