Self-Regulatory Organizations; Bats BYX 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, 23771-23773 [2016-09319]
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Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77638; File No. SRBatsBYX–2016–05]
Self-Regulatory Organizations; Bats
BYX 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 BYX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BYX’’) 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
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The Exchange is proposing a 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
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.
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
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19:18 Apr 21, 2016
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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 BYX Affiliate list a
security on the Exchange (the ‘‘Affiliate
Security’’). Proposed Rule 14.10(a)(1)
would define ‘‘BYX 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 a BYX 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 a BYX 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.
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.
PO 00000
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Fmt 4703
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23771
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
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 BYX
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,
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Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
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 BYX 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 a BYX 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 a BYX 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
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19:18 Apr 21, 2016
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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 a
BYX Affiliate comply with the
Exchange’s listing standards both upon
the initial listing of the BYX 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 a BYX
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
7 15
8 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00099
Fmt 4703
Sfmt 4703
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
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
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).
10 17
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Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
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.
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:
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Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR&BatsBYX–2016–05 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–BatsBYX–2016–05. 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
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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19:18 Apr 21, 2016
Jkt 238001
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–
BatsBYX–2016–05 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. 2016–09319 Filed 4–21–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77641; File No. SR–
NYSEARCA–2016–19]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Establishing Fees
Relating to End Users and Amending
the Definition of ‘‘Affiliate,’’ as Well as
Amending the Arca Options Fee
Schedule and the NYSE Arca Equities
Schedule of Fees and Charges for
Exchange Services to Reflect the
Changes
April 18, 2016.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on April 4,
2016, NYSE Arca, Inc. (the ‘‘Exchange’’
or ‘‘NYSE Arca’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
23773
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to establish
fees relating to end users and amend the
definition of ‘‘affiliate,’’ as well as to
amend the co-location section of the
Arca Options Fee Schedule (the
‘‘Options Fee Schedule’’) and, through
its wholly owned subsidiary NYSE Arca
Equities, Inc. (‘‘NYSE Arca Equities’’),
the NYSE Arca Equities Schedule of
Fees and Charges for Exchange Services
(the ‘‘Equities Fee Schedule’’ and,
together with the Options Fee Schedule,
the ‘‘Fee Schedules’’) to reflect the
changes. The Exchange proposes that
the changes be effective the first of the
month following approval by the
Securities and Exchange Commission
(‘‘Commission’’).
The proposed rule change is available
on the Exchange’s Web site at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to establish
fees relating to certain end users and
amend the definition of ‘‘affiliate,’’ as
well as to amend the co-location 4
section of the Fee Schedules to reflect
the changes. The Exchange proposes
that the changes be effective the first of
4 The Exchange initially filed rule changes
relating to its co-location services with the
Securities and Exchange Commission
(‘‘Commission’’) in 2010. See Securities Exchange
Act Release No. 63275 (November 8, 2010), 75 FR
70048 (November 16, 2010) (SR–NYSEArca–2010–
100). The Exchange operates a data center in
Mahwah, New Jersey (the ‘‘data center’’) from
which it provides co-location services to Users.
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]]>Agencies
[Federal Register Volume 81, Number 78 (Friday, April 22, 2016)]
[Notices]
[Pages 23771-23773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09319]
[[Page 23771]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77638; File No. SR-BatsBYX-2016-05]
Self-Regulatory Organizations; Bats BYX 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 BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') 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 is proposing a 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 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 BYX
Affiliate list a security on the Exchange (the ``Affiliate Security'').
Proposed Rule 14.10(a)(1) would define ``BYX 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 a BYX
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 a BYX 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 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 BYX 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,
[[Page 23772]]
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 BYX 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 a BYX 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 a BYX 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 a BYX Affiliate
comply with the Exchange's listing standards both upon the initial
listing of the BYX 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 a BYX 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
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
[[Page 23773]]
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&BatsBYX-2016-05 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-BatsBYX-2016-05. 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-BatsBYX-2016-05 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. 2016-09319 Filed 4-21-16; 8:45 am]
BILLING CODE 8011-01-P
