Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Rule 14.3 Regarding the Requirements for the Listing of Securities That Are Issued by the Exchange or Any of Its Affiliates, 23768-23770 [2016-09320]
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mstockstill on DSK4VPTVN1PROD with NOTICES
23768
Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
holidays) prior to its use.1 Commission
staff reviews sales material filed under
rule 607 for materially misleading
statements and omissions. The
requirements of rule 607 are designed to
protect investors from the use of false or
misleading sales material in connection
with Regulation E offerings.
Respondents to this collection of
information include SBICs and BDCs
making an offering of securities under
Regulation E. Each respondent’s
reporting burden under rule 607 relates
to the burden associated with filing its
sales material electronically. The
burden of filing electronically, however,
is negligible and there have been no
filings made under this rule, so this
collection of information does not
impose any burden on the industry.
However, we are requesting one annual
response and an annual burden of one
hour for administrative purposes. The
estimate of average burden hours is
made solely for purposes of the
Paperwork Reduction Act and is not
derived from a quantitative,
comprehensive, or even representative
survey or study of the burdens
associated with Commission rules and
forms.
The requirements of this collection of
information are mandatory. Responses
will not be kept confidential. An agency
may not conduct or sponsor, and a
person is not required to respond to a
collection of information unless it
displays a currently valid control
number.
The public may view the background
documentation for this information
collection at the following Web site,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Pamela
Dyson, Director/Chief Information
Officer, Securities and Exchange
Commission, c/o Remi Pavlik-Simon,
100 F Street NE., Washington, DC 20549
or send an email to: PRA_Mailbox@
sec.gov. Comments must be submitted to
OMB within 30 days of this notice.
1 Sales material includes advertisements, articles
or other communications to be published in
newspapers, magazines, or other periodicals; radio
and television scripts; and letters, circulars or other
written communications proposed to be sent given
or otherwise communicated to more than ten
persons.
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19:18 Apr 21, 2016
Jkt 238001
Dated: April 19, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–09361 Filed 4–21–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77639; File No. SR–
BatsBZX–2016–08]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change to Rule 14.3
Regarding the 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 BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) 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 is proposing a rule
change to make a series of changes to
paragraph (e) of Exchange Rule 14.3
regarding the requirements for the
listing of securities that are issued by
the Exchange or any of its affiliates.
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
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).
2 17
PO 00000
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Fmt 4703
Sfmt 4703
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 make a
series of changes to paragraph (e) of
Exchange Rule 14.3 regarding the
reporting requirements on the Exchange
should the Exchange or BZX Affiliate 5
list a security on the Exchange (the
‘‘Affiliate Security’’). These changes are:
(i) Expanding the definition of Affiliate
Security under Exchange Rule
14.3(e)(1)(B); (ii) specifying that the
Exchange shall also prepare a report
describing the Exchange’s monitoring of
the trading of an Affiliate Security; and
(iii) making a series of organizational
changes.
Exchange Rule 14.3(e)(1)(B) currently
defines Affiliate Security as ‘‘any
security issued by a BZX Affiliate, with
the exception of Portfolio Depository
Receipts as defined in Rule 14.11(b) and
Index Fund Shares as defined in Rule
14.11(c).’’ The Exchange proposes to
expand the definition of Affiliate
Security to include any Exchange-listed
option on any security issued by a BZX
Affiliate.
In the event that a BZX Affiliate seeks
to list an Affiliate Security, paragraph
(e)(2) of Rule 14.3 requires 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. The Exchange proposes to
renumber this paragraph as (e)(2)(A) and
rename paragraph (2) as ‘‘Affiliate
Securities Listed on the Exchange.’’ The
Exchange does not propose any
5 Exchange Rule 14.3(e)(1)(A) defines ‘‘BZX
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.’’ The Exchange does not propose to
amend the definition of BZX Affiliate.
E:\FR\FM\22APN1.SGM
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Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
additional changes to this section of
Rule 14.3.
Current Rule 14.3(e)(3) states 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.
Current sub-paragraph (i) of the Rule
14.3(e)(3) requires that the report
describe the Exchange’s monitoring of
the Affiliate Security’s compliance with
the Exchange’s listing standards,
including, as described in current subparagraph (i)(a), the Affiliate Security’s
compliance with the Exchange’s
minimum share price requirement, and,
as described under current subparagraph (i)(b) the Affiliate Security’s
compliance with each of the
quantitative continued listing
requirements.
The Exchange proposes to renumber
paragraph (3)(A) of Rule 14.3(e) as
paragraph as (2)(B) and reformat this
section of the rule as follows. Paragraph
(2)(B) 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
describing the Exchange’s monitoring of
the Affiliate Security’s compliance with
the Exchange’s listing standards.
Paragraph (2)(B)(i) would require that
the report include a description of the
Affiliate Security’s compliance with the
Exchange’s minimum share price
requirement and paragraph (2)(B)(ii)
would require that the report include a
description of the Affiliate Security’s
compliance with each of the
quantitative continued listing
requirements. The Exchange does not
propose any substantive changes to this
section of the rule.
Current sub-paragraph (ii) of Rule
14.3(e)(3)(A) states that the report shall
also describe 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 Rule 11.17,
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.
The Exchange proposes to relocate
current sub-paragraph (3)(A)(ii) under
new sub-paragraph (3) to Rule 14.3(e).
The Exchange proposes to include
additional language specifying that the
Exchange shall prepare a quarterly
report on the Affiliate Security for the
Regulatory Oversight Committee of the
Exchange’s Board of Directors that
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19:18 Apr 21, 2016
Jkt 238001
describes the activity described in the
sub-paragraph. The Exchange proposes
to include additional language that
these requirements will be applicable
throughout the trading of the Affiliate
Security on the Exchange. Current subparagraph (3)(B) of Rule 14.3(e) also
states that to the extent the Exchange
uses Exchange staff to conduct
surveillance of trading activity on the
Exchange, the Exchange is required to
engage an independent third party once
a year to review and prepare a report
regarding surveillance of the Affiliate
Security and promptly forward to the
Regulatory Oversight Committee of the
Exchange’s Board of Directors and the
Commission a copy of the report
prepared by the independent third
party. The Exchange proposes to
eliminate the requirements of current
sub-paragraph (3)(B) based on the fact
that this requirement is not applicable
on other national securities exchanges
with similar rules regarding the listing
or trading of an affiliate security.6 The
Exchange does not propose any
additional substantive changes to these
sections of the rule.
Current Rule 14.3(e)(3)(A) also
requires that the Exchange to promptly
furnish a copy of the quarterly report
required by current paragraph (e)(3)(A)
to the Commission. The Exchange
proposes to renumber this paragraph as
(e)(4) and revise it to state that a copy
of the reports required by proposed
renumbered sub-paragraphs (2) and (3)
of Rule 14.3(e), discussed above, will be
forwarded promptly to the Commission.
Current sub-paragraph (C) of Rule
14.3(e)(3) requires 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 is required
to promptly furnish a copy of this
annual report to the Regulatory
Oversight Committee of the Exchange’s
Board of Directors and the Commission.
The Exchange proposes to renumber
this paragraph as (2)(C) of Rule 14.3(e)
to conform with the reformatting of Rule
14.3(e) proposed above. The Exchange
also proposes to delete the requirement
that the report also be sent to the
Commission as this requirement is
proposed to be included in proposed
paragraph (e)(4) discussed below. The
Exchange does not propose any
substantive changes to this section of
the rule.
Lastly, current Rule 14.3(e)(4) states
that in the event the Exchange
determines that the BZX 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 is also 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 identifies the date of the
non-compliance, type of noncompliance, 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 is again 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. The Exchange
proposes to renumber this section of the
rule as (2)(D) of Rule 14.3(e) to conform
with the reformatting of Rule 14.3(e)
proposed above. The Exchange does not
propose any substantive changes to this
section of the rule.
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 Commission with
respect to oversight of the listing and
trading on the Exchange of Affiliate
Securities, will continue to help protect
against concerns that the Exchange will
not effectively enforce its rules with
respect to the listing and trading of
these securities. The Exchange believes
that the proposed amendments to Rule
14.3(e) would continue to eliminate any
perception of a potential conflict of
interest if a BZX Affiliate seeks to list a
security on the Exchange. The Exchange
notes that the elimination of current
7 15
6 See,
PO 00000
e.g., NYSE Rule 497; Nasdaq Rule 4370.
Frm 00096
Fmt 4703
Sfmt 4703
23769
8 15
E:\FR\FM\22APN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
22APN1
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Federal Register / Vol. 81, No. 78 / Friday, April 22, 2016 / Notices
sub-paragraph (3)(B) does not present
any risk to investors or the public
interest, as the Exchange is retaining the
requirement to furnish quarterly reports
to both the Regulatory Oversight
Committee of the Exchange’s Board and
to the Commission. The Exchange also
notes that other national securities
exchanges with similar rules do not
have such a provision.9 Lastly, the
Exchange believes that the
reorganization of, and the additional
specificity proposed to be included in
Rule 14.3(e) promotes just and equitable
principles of trade and remove
impediments to a free and open market
by providing greater transparency
concerning the controls in place to
address the potential conflicts of
interest that may arise in the listing or
trading of Affiliate Securities 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 provide additional specificity and
transparency to Members, Users, and
the investing public regarding 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.
mstockstill on DSK4VPTVN1PROD with NOTICES
(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 10 and Rule
19b–4(f)(6) thereunder.11 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
9 See
supra, note 6.
U.S.C. 78s(b)(3)(A)(iii).
11 17 CFR 240.19b–4(f)(6).
10 15
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19:18 Apr 21, 2016
Jkt 238001
effective pursuant to Section 19(b)(3)(A)
of the Act 12 and Rule 19b–4(f)(6)
thereunder.13
A proposed rule change filed under
Rule 19b–4(f)(6) under the Act 14
normally does not become operative for
30 days after the date of filing. However,
Rule 19b–4(f)(6)(iii) 15 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
the Exchange seeks to trade an Affiliate
Security on the Exchange. The Exchange
further states that the proposal will
provide greater transparency concerning
the controls in place to address the
potential conflicts of interest that may
arise in the listing 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.16 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
12 15
U.S.C. 78s(b)(3)(A).
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.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
16 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).
13 In
PO 00000
Frm 00097
Fmt 4703
Sfmt 9990
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–
BatsBZX–2016–08 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–BatsBZX–2016–08. 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–
BatsBZX–2016–08 and should be
submitted on or before May 13, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–09320 Filed 4–21–16; 8:45 am]
BILLING CODE 8011–01–P
17 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 23768-23770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09320]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77639; File No. SR-BatsBZX-2016-08]
Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to Rule
14.3 Regarding the 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 BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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 make a series of changes
to paragraph (e) of Exchange Rule 14.3 regarding the requirements for
the listing of securities that are issued by the Exchange or any of its
affiliates.
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 make a series of changes to paragraph
(e) of Exchange Rule 14.3 regarding the reporting requirements on the
Exchange should the Exchange or BZX Affiliate \5\ list a security on
the Exchange (the ``Affiliate Security''). These changes are: (i)
Expanding the definition of Affiliate Security under Exchange Rule
14.3(e)(1)(B); (ii) specifying that the Exchange shall also prepare a
report describing the Exchange's monitoring of the trading of an
Affiliate Security; and (iii) making a series of organizational
changes.
---------------------------------------------------------------------------
\5\ Exchange Rule 14.3(e)(1)(A) defines ``BZX 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.'' The Exchange
does not propose to amend the definition of BZX Affiliate.
---------------------------------------------------------------------------
Exchange Rule 14.3(e)(1)(B) currently defines Affiliate Security as
``any security issued by a BZX Affiliate, with the exception of
Portfolio Depository Receipts as defined in Rule 14.11(b) and Index
Fund Shares as defined in Rule 14.11(c).'' The Exchange proposes to
expand the definition of Affiliate Security to include any Exchange-
listed option on any security issued by a BZX Affiliate.
In the event that a BZX Affiliate seeks to list an Affiliate
Security, paragraph (e)(2) of Rule 14.3 requires 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. The Exchange
proposes to renumber this paragraph as (e)(2)(A) and rename paragraph
(2) as ``Affiliate Securities Listed on the Exchange.'' The Exchange
does not propose any
[[Page 23769]]
additional changes to this section of Rule 14.3.
Current Rule 14.3(e)(3) states 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. Current sub-paragraph (i) of the
Rule 14.3(e)(3) requires that the report describe the Exchange's
monitoring of the Affiliate Security's compliance with the Exchange's
listing standards, including, as described in current sub-paragraph
(i)(a), the Affiliate Security's compliance with the Exchange's minimum
share price requirement, and, as described under current sub-paragraph
(i)(b) the Affiliate Security's compliance with each of the
quantitative continued listing requirements.
The Exchange proposes to renumber paragraph (3)(A) of Rule 14.3(e)
as paragraph as (2)(B) and reformat this section of the rule as
follows. Paragraph (2)(B) 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 describing the Exchange's monitoring
of the Affiliate Security's compliance with the Exchange's listing
standards. Paragraph (2)(B)(i) would require that the report include a
description of the Affiliate Security's compliance with the Exchange's
minimum share price requirement and paragraph (2)(B)(ii) would require
that the report include a description of the Affiliate Security's
compliance with each of the quantitative continued listing
requirements. The Exchange does not propose any substantive changes to
this section of the rule.
Current sub-paragraph (ii) of Rule 14.3(e)(3)(A) states that the
report shall also describe 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 Rule 11.17, 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. The Exchange proposes to relocate current
sub-paragraph (3)(A)(ii) under new sub-paragraph (3) to Rule 14.3(e).
The Exchange proposes to include additional language specifying that
the Exchange shall prepare a quarterly report on the Affiliate Security
for the Regulatory Oversight Committee of the Exchange's Board of
Directors that describes the activity described in the sub-paragraph.
The Exchange proposes to include additional language that these
requirements will be applicable throughout the trading of the Affiliate
Security on the Exchange. Current sub-paragraph (3)(B) of Rule 14.3(e)
also states that to the extent the Exchange uses Exchange staff to
conduct surveillance of trading activity on the Exchange, the Exchange
is required to engage an independent third party once a year to review
and prepare a report regarding surveillance of the Affiliate Security
and promptly forward to the Regulatory Oversight Committee of the
Exchange's Board of Directors and the Commission a copy of the report
prepared by the independent third party. The Exchange proposes to
eliminate the requirements of current sub-paragraph (3)(B) based on the
fact that this requirement is not applicable on other national
securities exchanges with similar rules regarding the listing or
trading of an affiliate security.\6\ The Exchange does not propose any
additional substantive changes to these sections of the rule.
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\6\ See, e.g., NYSE Rule 497; Nasdaq Rule 4370.
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Current Rule 14.3(e)(3)(A) also requires that the Exchange to
promptly furnish a copy of the quarterly report required by current
paragraph (e)(3)(A) to the Commission. The Exchange proposes to
renumber this paragraph as (e)(4) and revise it to state that a copy of
the reports required by proposed renumbered sub-paragraphs (2) and (3)
of Rule 14.3(e), discussed above, will be forwarded promptly to the
Commission.
Current sub-paragraph (C) of Rule 14.3(e)(3) requires 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 is required to promptly furnish a
copy of this annual report to the Regulatory Oversight Committee of the
Exchange's Board of Directors and the Commission. The Exchange proposes
to renumber this paragraph as (2)(C) of Rule 14.3(e) to conform with
the reformatting of Rule 14.3(e) proposed above. The Exchange also
proposes to delete the requirement that the report also be sent to the
Commission as this requirement is proposed to be included in proposed
paragraph (e)(4) discussed below. The Exchange does not propose any
substantive changes to this section of the rule.
Lastly, current Rule 14.3(e)(4) states that in the event the
Exchange determines that the BZX 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 is also 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 identifies 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 is again 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. The Exchange proposes to renumber this section of
the rule as (2)(D) of Rule 14.3(e) to conform with the reformatting of
Rule 14.3(e) proposed above. The Exchange does not propose any
substantive changes to this section of the rule.
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 Commission with
respect to oversight of the listing and trading on the Exchange of
Affiliate Securities, will continue to help protect against concerns
that the Exchange will not effectively enforce its rules with respect
to the listing and trading of these securities. The Exchange believes
that the proposed amendments to Rule 14.3(e) would continue to
eliminate any perception of a potential conflict of interest if a BZX
Affiliate seeks to list a security on the Exchange. The Exchange notes
that the elimination of current
[[Page 23770]]
sub-paragraph (3)(B) does not present any risk to investors or the
public interest, as the Exchange is retaining the requirement to
furnish quarterly reports to both the Regulatory Oversight Committee of
the Exchange's Board and to the Commission. The Exchange also notes
that other national securities exchanges with similar rules do not have
such a provision.\9\ Lastly, the Exchange believes that the
reorganization of, and the additional specificity proposed to be
included in Rule 14.3(e) promotes just and equitable principles of
trade and remove impediments to a free and open market by providing
greater transparency concerning the controls in place to address the
potential conflicts of interest that may arise in the listing or
trading of Affiliate Securities on the Exchange.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ See supra, note 6.
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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 provide
additional specificity and transparency to Members, Users, and the
investing public regarding 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 \10\ and Rule 19b-4(f)(6) thereunder.\11\
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 \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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
\14\ normally does not become operative for 30 days after the date of
filing. However, Rule 19b-4(f)(6)(iii) \15\ 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 the Exchange seeks to trade an Affiliate
Security on the Exchange. The Exchange further states that the proposal
will provide greater transparency concerning the controls in place to
address the potential conflicts of interest that may arise in the
listing 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.\16\ The Commission hereby grants the Exchange's request and
designates the proposal operative upon filing.
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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-BatsBZX-2016-08 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-BatsBZX-2016-08. 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-BatsBZX-2016-08 and should
be submitted on or before May 13, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-09320 Filed 4-21-16; 8:45 am]
BILLING CODE 8011-01-P
