Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 9.218 To Specify the List of Violations Eligible for Disposition Under IEX's Minor Rule Violation Plan, 53509-53512 [2016-19171]
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Federal Register / Vol. 81, No. 156 / Friday, August 12, 2016 / Notices
available for public inspection all
submissions from organizations or
businesses and from persons identifying
themselves as representatives or
officials of organizations and
businesses.
Time: The meeting will be held from
10:00 a.m. to 11:30 a.m. on Monday,
September 12, 2016.
Location: The meeting will be held at
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FOR FURTHER INFORMATION CONTACT:
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online at https://www.presidio.gov/
institute/about/Pages/advisorycouncil.aspx
Dated: August 8, 2016.
Andrea M. Andersen,
Acting General Counsel.
[FR Doc. 2016–19200 Filed 8–11–16; 8:45 am]
BILLING CODE 4310–4R–P
SECURITIES AND EXCHANGE
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[SEC File No. 270–72, OMB Control No.
3235–0076]
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mstockstill on DSK3G9T082PROD with NOTICES
Extension:
Form D and Regulation D.
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
(‘‘Commission’’) has submitted to the
Office of Management and Budget this
request for extension of the previously
approved collection of information
discussed below.
Form D (17 CFR 239.500) is a notice
of sales filed by issuers making an
offering of securities in reliance on an
exemption under Regulation D (17 CFR
230.501 et seq.) or Section 4(a)(5) of the
Securities Act of 1933 (15 U.S.C.
77d(a)(5)). Regulation D sets forth rules
governing the limited offer and sale of
securities without Securities Act
registration. The purpose of Form D is
to collect empirical data, which
provides a continuing basis for action by
the Commission either in terms of
amending existing rules and regulations
or proposing new ones. In addition, the
Form D allows the Commission to elicit
information necessary in assessing the
effectiveness of Regulation D (17 CFR
230.501 et seq.) and Section 4(6) of the
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18:42 Aug 11, 2016
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Securities Act of 1933 (15 U.S.C. 77d(6))
as capital-raising devices for all
businesses. Form D information is
required to obtain or retain benefits
under Regulation D. Approximately
21,686 issuers file Form D and it takes
approximately 4 hours per response. We
estimate that 25% of the 4 hours per
response (1 hour per response) is
prepared by the issuer for an annual
reporting burden of 21,686 hours (1
hour per response × 21,686 responses).
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.
Dated: August 5, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–19182 Filed 8–11–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
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[Release No. 34–78502; File No. SR–IEX–
2016–10]
Self-Regulatory Organizations:
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
9.218 To Specify the List of Violations
Eligible for Disposition Under IEX’s
Minor Rule Violation Plan
August 8, 2016.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
4, 2016, the Investors Exchange LLC
(‘‘IEX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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53509
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Pursuant to the provisions of Section
19(b)(1) under the Securities Exchange
Act of 1934 (‘‘Act’’) [sic],4 and Rule
19b–4 thereunder,5 Investors Exchange
LLC (‘‘IEX’’ or ‘‘Exchange’’) [sic] is filing
with the Securities and Exchange
Commission (‘‘Commission’’) [sic] a
proposed rule change to amend IEX
Rule 9.218 (Violations Appropriate for
Disposition Under Plan Pursuant to
Exchange Act Rule 19d–1(c)(2)) to
specify the list of violations eligible for
disposition under IEX Rule 9.216(b),
(Procedure for Violation Under Plan
Pursuant to Exchange Act Rule 19d–
1(c)(2)) pursuant to IEX’s Minor Rule
Violation Plan (‘‘MRVP’’).6 The
Exchange has designated this proposal
as non-controversial and provided the
Commission with the notice required by
Rule 19b–4(f)(6)(iii) under the Act.7
The text of the proposed rule change
is available at the Exchange’s Web site
at www.iextrading.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 the
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 these statement [sic] may be
examined at the places specified in Item
IV below. The self-regulatory
organization has prepared summaries,
set forth in Sections A, B, and C below,
of the most significant aspects of such
statements.
4 15
U.S.C. 78s(b)(1).
CRF 240.19b–4.
6 IEX’s MRVP was declared effective by the
Commission on August 3, 2016. See, Securities
Exchange Act Release No. 78474 (August 3, 2016).
7 17 CFR 240.19b–4(f)(6)(iii).
5 17
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
IEX Rule 9.216(b) provides
procedures for disposition of certain
rule violations designated as minor rule
violations pursuant to a plan declared
effective by the Commission in
accordance with Section 19(d)(1) of the
Act and Rule 19d–1(c)(2) thereunder.
IEX’s MRVP allows IEX, or FINRA on its
behalf, to impose a fine of up to $2,500
on any Member or associated person of
a Member for a minor violation of an
eligible rule. As proposed, IEX Rule
9.218 sets forth the rules eligible for
disposition pursuant to IEX’s MRVP as
well as the recommended fine schedule
for such dispositions. While IEX
considers compliance with all of its
rules to be important, inclusion of more
technical rule violations in the MRVP is
designed to provide for a risk-based
allocation of FINRA and IEX resources
to more high-risk matters because MRVP
settlements are typically handled more
efficiently and expeditiously.
The purpose of the MRVP is to
provide reasonable but meaningful
sanctions for minor or technical
violations of rules when the conduct at
issue does not warrant stronger,
reportable disciplinary sanctions. The
inclusion of a rule in IEX’s MRVP does
not minimize the importance of
compliance with such rule, nor does it
preclude IEX, or FINRA on its behalf,
from choosing to pursue violations of
eligible rules through an Acceptance,
Waiver and Consent (‘‘AWC’’) or
Complaint if the nature of the violations
or prior disciplinary history warrants
more significant sanctions. Rather, the
option to impose an MRVP sanction
gives IEX, and FINRA on its behalf,
additional flexibility to administer its
enforcement program in the most
effective and efficient manner, while
still fully meeting IEX’s remedial
objectives in addressing violative
conduct. FINRA, on behalf of IEX, and
subject to IEX oversight, will examine
and surveil for compliance with MRVP
eligible rules in a manner consistent
with the IEX regulatory program and
will determine on a case-by-case basis
whether disposition pursuant to the
MRVP is appropriate.
In addition, Members and their
associated persons may decline to
accept a Minor Rule Violation, in which
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18:42 Aug 11, 2016
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case FINRA, on behalf of IEX, may
proceed in accordance with the
Exchange’s disciplinary rules, which
include hearing rights for formal
disciplinary proceedings.8
IEX conducted a comprehensive
review of its rules to determine the rules
that are appropriate to add to the MRVP.
As proposed, the rules included in the
MRVP are as follows:
• Continuing education: Rule
2.160(p) specifies the continuing
education requirements applicable to
registered representatives of Members.
Both FINRA and the Nasdaq Stock
Market (‘‘Nasdaq’’) include comparable
rules in each of their MRVPs.9
• Books and records: Rule 4.511
requires IEX Members to comply with
FINRA Rule 4511 as if such rule were
part of the Exchange’s rules, and
specifies applicable books and records
requirements. FINRA Rule 4511 is
included in FINRA’s MRVP.
• Furnishing of records: Rule 4.540
requires IEX Members to furnish
specified records to the Exchange, upon
request and in a time and manner
required by the Exchange. The rule also
provides that the Exchange shall be
allowed access, at any time, to the books
and records of the Member in order to
obtain or verify information related to
transactions executed on or through the
Exchange or activities relating to the
Exchange. This rule is comparable to
BATS BZX Exchange, Inc. (‘‘BZX’’) Rule
4.2, which is included in the BZX
MRVP.10
• Supervision: Rule 5.110 requires
that each Member establish and
maintain a system to supervise the
activities of each associated person that
is reasonably designed to achieve
compliance with applicable securities
laws and regulations, and with
applicable IEX rules; including, as
specified, written procedures, internal
inspections, transaction review and
investigation, and investigation of
applicants for registration. Violations of
Rule 5.110 would be included in the
MRVP where the underlying violative
conduct is also included in the MRVP.11
8 See,
Chapter 9 generally.
FINRA Rules 9217 and 1250, Nasdaq Rules
1120 and IM–9216.
10 See BZX Rule 8.15.
11 For example, if FINRA (on behalf of IEX)
identified that a short sale order marking violation
(Rule 11.290) was attributable to a supervision
deficiency, the supervision deficiency could be
included in a disposition under the MRVP.
9 See
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FINRA treats its comparable Rule 3110
in the same manner.
• Automated submission of trading
data requested: Rule 8.220 requires
Members to submit trade data in the
specified automated format upon
request by IEX. This rule is comparable
to FINRA Rule 8211 which is included
in FINRA’s MRVP.
• Market Maker two-sided quotation
requirement: Rule 11.151(a)(1) requires
that a Member registered as a Market
Maker comply with the specified
continuous two-sided quotations
requirements. This rule is comparable to
BZX Rule 11.8(a)(1) which is included
in BZX MRVP.
• Short sales: Rule 11.290 requires,
among other things, that all sell orders
be marked long, short, or short exempt.
FINRA includes Rule 200(g) of SEC
Regulation SHO (Failure to accurately
mark sell orders of equity securities) in
its MRV. Similarly, BZX includes its
Rule 11.19 requirement to identify short
sale orders as such in its MRV plan.
• Locking or crossing quotations in
NMS stocks: Rule 11.310 provides in
relevant part that Users of IEX shall
reasonably avoid displaying, and shall
not engage in a pattern or practice of
displaying, any quotations that lock or
cross a protected quotation previously
disseminated pursuant to an effective
national market system plan. This rule
is comparable to BZX Rule 11.20, which
is included in BZX MRVP.
• Order audit trail system
requirements: Rule 11.420 specifies the
order audit trail system requirements
applicable to Members and persons
associated with a Member, and in
relevant part also requires compliance
with FINRA Rules 7440 and 7550 as if
such rule were part of IEX’s rules. This
rule is comparable to Nasdaq Rules 6954
and 6955,12 as well as FINRA Rules
7440 and 7450, each of which are
included in the Nasdaq and FINRA
MRVP.
In addition, as proposed, Rule 9.218
includes the following recommended
fine schedule for minor rule violation
dispositions of the rules included
therein:
12 Nasdaq Rules 6954 and 6955 were renumbered
as Rules 7440A and 7450A respectively.
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Occurrence *
Individual
First time fined .........................................................................................................................................................
Second time fined ....................................................................................................................................................
Third time fined ........................................................................................................................................................
$100
300
500
Member
$500
1,000
2,500
* Within a ‘‘rolling’’ 12-month period.
The recommended fine schedule is
based on BZX Rule 8.15, Interpretations
and Policies .01. The recommended fine
schedule is intended to provide
transparency to IEX Members and
associated persons with respect to
administration of the Exchange’s MRVP.
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2. Statutory Basis
IEX believes that the proposed rule
change is consistent with the provisions
of Section 6 of the Act,13 in general, and
furthers the objectives of Sections
6(b)(5),14 (6) 15 and (7) 16 of the Act, in
particular.
The Exchange believes that the
proposal is consistent with Section
6(b)(5) of the Act 17 because it is
designed to promote just and equitable
principles of trade, remove
impediments to, and perfect the
mechanism of, a free and open market
and a national market system, and, in
general, protect investors and the public
interest. Specifically, the proposed rule
change will provide the Exchange with
the ability to impose reasonable but
meaningful sanctions for minor or
technical violations of rules when the
conduct at issue does not warrant
stronger, reportable disciplinary
sanctions, which is consistent with the
protection of investors and the public
interest. Further, the Exchange believes
that inclusion of the specified rules in
the Exchange’s MRVP, as well as the
recommended fine schedule, would
provide FINRA, on behalf of the
Exchange, with the ability to administer
its enforcement program in the most
effective and efficient manner, while
still fully meeting IEX’s remedial
objectives in addressing violative
conduct, which is also consistent with
the protection of investors and the
public interest.
In addition, the Exchange believes
that the proposal is consistent with
Section 6(b)(7) of the Act 18 because it
would provide a fair procedure for the
disciplining of IEX Members and
associated persons. As discussed above,
under the Exchange’s disciplinary rules
a Member or associated person may
13 15
U.S.C. 78f.
U.S.C. 78f(b)(5).
15 15 U.S.C. 78f(b)(6).
16 15 U.S.C. 78f(b)(7).
17 See supra note 14 [sic].
18 See supra note 16 [sic].
18:42 Aug 11, 2016
B. Self-Regulatory Organization’s
Statement on Burden on Competition
IEX does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change will allow for a
quicker, more efficient means to resolve
minor violations of eligible rules,
potentially lessening the burden on
firms in those circumstances where,
absent the rule’s inclusion in the MRVP,
a more resource-intense formal process
might ensue.
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) of the Act 21 and Rule 19b–
4(f)(6) thereunder.22 Because the
proposed rule change does not: (i)
Significantly affect the protection of
19 See
supra, notes 15 [sic] and 16 [sic].
Securities Exchange Act Release No. 34–
78101 (June 17, 2016), 81 FR 41141 (June 23, 2016)
(File No. 10–222).
21 15 U.S.C. 78s(b)(3)(A).
22 17 CFR 240.19b–4(f)(6).
14 15
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decline to accept a Minor Rule
Violation, in which case FINRA, on
behalf of IEX, may proceed in
accordance with the Exchange’s
disciplinary rules, which include
hearing rights for formal disciplinary
proceedings. The Exchange’s rules
governing formal disciplinary rules have
already been approved by the
Commission, which included a finding
that IEX’s rules concerning its
disciplinary and oversight programs are
consistent with the requirements of
Sections 6(b)(6) and 6(b)(7) of the Act 19
in that they provide fair procedures for
the disciplining of members and
persons associated with members.20
The Exchange also believes that the
proposed rule change does not unfairly
discriminate between customers,
issuers, brokers and dealers in that it
will be applicable to all Members.
20 See
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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 23 and Rule 19b–4(f)(6)
thereunder.24
A proposed rule change filed under
Rule 19b–4(f)(6) 25 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),26 the
Commission may 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 proposed
rule change may become operative at
the time of the launch of its operation
as a national securities exchange.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest. As
noted above, the IEX MRVP, including
the proposed violations, was declared
effective by the Commission on August
3, 2016.27 The proposed rule change
merely incorporates the list of violations
included in the MRVP into IEX Rule
9.218. For this reason, the Commission
hereby waives the 30-day operative
delay and designates the proposal
operative upon filing.28
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
23 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). 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.
25 17 CFR 240.19b–4(f)(6).
26 17 CFR 240.19b–4(f)(6)(iii).
27 See supra note 6.
28 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
24 17
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public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
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–
IEX–2016–10 on the subject line.
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Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–IEX–2016–10. 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 such
filing also will be available for
inspection and copying at the principal
offices 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–IEX–
18:42 Aug 11, 2016
Jkt 238001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–19171 Filed 8–11–16; 8:45 am]
BILLING CODE 8011–01–P
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:
VerDate Sep<11>2014
2016–10, and should be submitted on or
before September 2, 2016.
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32209; File No. 812–14497]
Blackrock Funds, et al.; Notice of
Application
August 8, 2016.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order pursuant to: (a) Section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from
sections 18(f) and 21(b) of the Act; (b)
section 12(d)(1)(J) of the Act granting an
exemption from section 12(d)(1) of the
Act; (c) sections 6(c) and 17(b) of the
Act granting an exemption from sections
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
and (d) section 17(d) of the Act and rule
17d-1 under the Act to permit certain
joint arrangements and transactions.
AGENCY:
Summary of the Application:
Applicants request an order that would
permit certain registered open-end
management investment companies to
participate in a joint lending and
borrowing facility.
Applicants: Blackrock Funds;
Blackrock Funds II; BBIF Government
Securities Fund; BBIF Money Fund;
BBIF Tax-Exempt Fund; BBIF Treasury
Fund; BIF Government Securities Fund;
BIF Money Fund; BIF Multi-State
Municipal Series Trust; BIF Tax-Exempt
Fund; BIF Treasury Fund; Blackrock
Emerging Markets Fund, Inc.; Blackrock
Financial Institutions Series Trust;
Blackrock Index Funds, Inc.; Blackrock
Large Cap Series Funds, Inc.; Blackrock
Latin America Fund, Inc.; Blackrock
Liquidity Funds; Blackrock Master LLC;
Blackrock Pacific Fund, Inc.; Blackrock
Series, Inc.; Master Government
Securities LLC; Master Large Cap Series
LLC; Master Money LLC; Master TaxExempt LLC; Master Treasury LLC;
Quantitative Master Series LLC; Ready
Asset Government Liquidity Fund;
Ready Assets U.S.A. Government
Money Fund; Ready Assets U.S.
Treasury Money Fund; Retirement
Series Trust; Blackrock Allocation
29 17
PO 00000
CFR 200.30–3(a)(12), (59).
Frm 00118
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Target Shares; Blackrock Balanced
Capital Fund, Inc.; Blackrock Basic
Value Fund, Inc.; Blackrock Bond Fund,
Inc.; Blackrock California Municipal
Series Trust; Blackrock Capital
Appreciation Fund, Inc.; Blackrock Cori
Funds; Blackrock Equity Dividend
Fund; Blackrock Eurofund; Blackrock
Focus Growth Fund, Inc.; Blackrock
Global Allocation Fund, Inc.; Blackrock
Global Smallcap Fund, Inc., Blackrock
Long-Horizon Equity Fund; Blackrock
Mid Cap Value Opportunities Series,
Inc.; Blackrock Multi-State Municipal
Series Trust; Blackrock Municipal Bond
Fund, Inc.; Blackrock Municipal Series
Trust; Blackrock Natural Resources
Trust; Blackrock Series Fund, Inc.;
Blackrock Strategic Global Bond Fund,
Inc.; Blackrock Value Opportunities
Fund, Inc.; Blackrock Variable Series
Funds, Inc.; FDP Series, Inc.; Managed
Account Series; Master Bond LLC;
Master Focus Growth LLC; Master Value
Opportunities LLC; Blackrock Funds III;
Master Investment Portfolio; Funds For
Institutions Series; and Master
Institutional Money Market LLC
(together with each investment
company listed in Exhibit A–1 to the
application, a ‘‘Company’’ and
collectively, the ‘‘Companies’’);
Blackrock Advisors, LLC and Blackrock
Fund Advisors (each, an ‘‘Adviser,’’ and
together, the ‘‘Advisers’’).
DATES: The application was filed on
June 26, 2015, and amended on
November 20, 2015, May 13, 2016 and
August 5, 2016.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on September 2, 2016 and
should be accompanied by proof of
service on the applicants, in the form of
an affidavit, or, for lawyers, a certificate
of service. Pursuant to Rule 0–5 under
the Act, hearing requests should state
the nature of the writer’s interest, any
facts bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090;
Applicants: Benjamin Archibald, Esq.,
BlackRock Advisors, LLC, 55 East 52
Street, New York, NY 10055 and John A.
MacKinnon, Esq., Sidley Austin LLP,
E:\FR\FM\12AUN1.SGM
12AUN1
]]>Agencies
[Federal Register Volume 81, Number 156 (Friday, August 12, 2016)]
[Notices]
[Pages 53509-53512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19171]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78502; File No. SR-IEX-2016-10]
Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 9.218 To Specify the List of Violations Eligible for Disposition
Under IEX's Minor Rule Violation Plan
August 8, 2016.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on August 4, 2016, the Investors Exchange LLC (``IEX'' or
``Exchange'') 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
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act'') [sic],\4\ and Rule 19b-4 thereunder,\5\
Investors Exchange LLC (``IEX'' or ``Exchange'') [sic] is filing with
the Securities and Exchange Commission (``Commission'') [sic] a
proposed rule change to amend IEX Rule 9.218 (Violations Appropriate
for Disposition Under Plan Pursuant to Exchange Act Rule 19d-1(c)(2))
to specify the list of violations eligible for disposition under IEX
Rule 9.216(b), (Procedure for Violation Under Plan Pursuant to Exchange
Act Rule 19d-1(c)(2)) pursuant to IEX's Minor Rule Violation Plan
(``MRVP'').\6\ The Exchange has designated this proposal as non-
controversial and provided the Commission with the notice required by
Rule 19b-4(f)(6)(iii) under the Act.\7\
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\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CRF 240.19b-4.
\6\ IEX's MRVP was declared effective by the Commission on
August 3, 2016. See, Securities Exchange Act Release No. 78474
(August 3, 2016).
\7\ 17 CFR 240.19b-4(f)(6)(iii).
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The text of the proposed rule change is available at the Exchange's
Web site at www.iextrading.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 the
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 these statement [sic] may be examined
at the places specified in Item IV below. The self-regulatory
organization has prepared summaries, set forth in Sections A, B, and C
below, of the most significant aspects of such statements.
[[Page 53510]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
IEX Rule 9.216(b) provides procedures for disposition of certain
rule violations designated as minor rule violations pursuant to a plan
declared effective by the Commission in accordance with Section
19(d)(1) of the Act and Rule 19d-1(c)(2) thereunder. IEX's MRVP allows
IEX, or FINRA on its behalf, to impose a fine of up to $2,500 on any
Member or associated person of a Member for a minor violation of an
eligible rule. As proposed, IEX Rule 9.218 sets forth the rules
eligible for disposition pursuant to IEX's MRVP as well as the
recommended fine schedule for such dispositions. While IEX considers
compliance with all of its rules to be important, inclusion of more
technical rule violations in the MRVP is designed to provide for a
risk-based allocation of FINRA and IEX resources to more high-risk
matters because MRVP settlements are typically handled more efficiently
and expeditiously.
The purpose of the MRVP is to provide reasonable but meaningful
sanctions for minor or technical violations of rules when the conduct
at issue does not warrant stronger, reportable disciplinary sanctions.
The inclusion of a rule in IEX's MRVP does not minimize the importance
of compliance with such rule, nor does it preclude IEX, or FINRA on its
behalf, from choosing to pursue violations of eligible rules through an
Acceptance, Waiver and Consent (``AWC'') or Complaint if the nature of
the violations or prior disciplinary history warrants more significant
sanctions. Rather, the option to impose an MRVP sanction gives IEX, and
FINRA on its behalf, additional flexibility to administer its
enforcement program in the most effective and efficient manner, while
still fully meeting IEX's remedial objectives in addressing violative
conduct. FINRA, on behalf of IEX, and subject to IEX oversight, will
examine and surveil for compliance with MRVP eligible rules in a manner
consistent with the IEX regulatory program and will determine on a
case-by-case basis whether disposition pursuant to the MRVP is
appropriate.
In addition, Members and their associated persons may decline to
accept a Minor Rule Violation, in which case FINRA, on behalf of IEX,
may proceed in accordance with the Exchange's disciplinary rules, which
include hearing rights for formal disciplinary proceedings.\8\
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\8\ See, Chapter 9 generally.
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IEX conducted a comprehensive review of its rules to determine the
rules that are appropriate to add to the MRVP. As proposed, the rules
included in the MRVP are as follows:
Continuing education: Rule 2.160(p) specifies the
continuing education requirements applicable to registered
representatives of Members. Both FINRA and the Nasdaq Stock Market
(``Nasdaq'') include comparable rules in each of their MRVPs.\9\
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\9\ See FINRA Rules 9217 and 1250, Nasdaq Rules 1120 and IM-
9216.
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Books and records: Rule 4.511 requires IEX Members to
comply with FINRA Rule 4511 as if such rule were part of the Exchange's
rules, and specifies applicable books and records requirements. FINRA
Rule 4511 is included in FINRA's MRVP.
Furnishing of records: Rule 4.540 requires IEX Members to
furnish specified records to the Exchange, upon request and in a time
and manner required by the Exchange. The rule also provides that the
Exchange shall be allowed access, at any time, to the books and records
of the Member in order to obtain or verify information related to
transactions executed on or through the Exchange or activities relating
to the Exchange. This rule is comparable to BATS BZX Exchange, Inc.
(``BZX'') Rule 4.2, which is included in the BZX MRVP.\10\
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\10\ See BZX Rule 8.15.
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Supervision: Rule 5.110 requires that each Member
establish and maintain a system to supervise the activities of each
associated person that is reasonably designed to achieve compliance
with applicable securities laws and regulations, and with applicable
IEX rules; including, as specified, written procedures, internal
inspections, transaction review and investigation, and investigation of
applicants for registration. Violations of Rule 5.110 would be included
in the MRVP where the underlying violative conduct is also included in
the MRVP.\11\ FINRA treats its comparable Rule 3110 in the same manner.
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\11\ For example, if FINRA (on behalf of IEX) identified that a
short sale order marking violation (Rule 11.290) was attributable to
a supervision deficiency, the supervision deficiency could be
included in a disposition under the MRVP.
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Automated submission of trading data requested: Rule 8.220
requires Members to submit trade data in the specified automated format
upon request by IEX. This rule is comparable to FINRA Rule 8211 which
is included in FINRA's MRVP.
Market Maker two-sided quotation requirement: Rule
11.151(a)(1) requires that a Member registered as a Market Maker comply
with the specified continuous two-sided quotations requirements. This
rule is comparable to BZX Rule 11.8(a)(1) which is included in BZX
MRVP.
Short sales: Rule 11.290 requires, among other things,
that all sell orders be marked long, short, or short exempt. FINRA
includes Rule 200(g) of SEC Regulation SHO (Failure to accurately mark
sell orders of equity securities) in its MRV. Similarly, BZX includes
its Rule 11.19 requirement to identify short sale orders as such in its
MRV plan.
Locking or crossing quotations in NMS stocks: Rule 11.310
provides in relevant part that Users of IEX shall reasonably avoid
displaying, and shall not engage in a pattern or practice of
displaying, any quotations that lock or cross a protected quotation
previously disseminated pursuant to an effective national market system
plan. This rule is comparable to BZX Rule 11.20, which is included in
BZX MRVP.
Order audit trail system requirements: Rule 11.420
specifies the order audit trail system requirements applicable to
Members and persons associated with a Member, and in relevant part also
requires compliance with FINRA Rules 7440 and 7550 as if such rule were
part of IEX's rules. This rule is comparable to Nasdaq Rules 6954 and
6955,\12\ as well as FINRA Rules 7440 and 7450, each of which are
included in the Nasdaq and FINRA MRVP.
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\12\ Nasdaq Rules 6954 and 6955 were renumbered as Rules 7440A
and 7450A respectively.
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In addition, as proposed, Rule 9.218 includes the following
recommended fine schedule for minor rule violation dispositions of the
rules included therein:
[[Page 53511]]
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Occurrence * Individual Member
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First time fined........................ $100 $500
Second time fined....................... 300 1,000
Third time fined........................ 500 2,500
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* Within a ``rolling'' 12-month period.
The recommended fine schedule is based on BZX Rule 8.15,
Interpretations and Policies .01. The recommended fine schedule is
intended to provide transparency to IEX Members and associated persons
with respect to administration of the Exchange's MRVP.
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\13\ in general, and furthers the
objectives of Sections 6(b)(5),\14\ (6) \15\ and (7) \16\ of the Act,
in particular.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(5).
\15\ 15 U.S.C. 78f(b)(6).
\16\ 15 U.S.C. 78f(b)(7).
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The Exchange believes that the proposal is consistent with Section
6(b)(5) of the Act \17\ because it is designed to promote just and
equitable principles of trade, remove impediments to, and perfect the
mechanism of, a free and open market and a national market system, and,
in general, protect investors and the public interest. Specifically,
the proposed rule change will provide the Exchange with the ability to
impose reasonable but meaningful sanctions for minor or technical
violations of rules when the conduct at issue does not warrant
stronger, reportable disciplinary sanctions, which is consistent with
the protection of investors and the public interest. Further, the
Exchange believes that inclusion of the specified rules in the
Exchange's MRVP, as well as the recommended fine schedule, would
provide FINRA, on behalf of the Exchange, with the ability to
administer its enforcement program in the most effective and efficient
manner, while still fully meeting IEX's remedial objectives in
addressing violative conduct, which is also consistent with the
protection of investors and the public interest.
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\17\ See supra note 14 [sic].
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In addition, the Exchange believes that the proposal is consistent
with Section 6(b)(7) of the Act \18\ because it would provide a fair
procedure for the disciplining of IEX Members and associated persons.
As discussed above, under the Exchange's disciplinary rules a Member or
associated person may decline to accept a Minor Rule Violation, in
which case FINRA, on behalf of IEX, may proceed in accordance with the
Exchange's disciplinary rules, which include hearing rights for formal
disciplinary proceedings. The Exchange's rules governing formal
disciplinary rules have already been approved by the Commission, which
included a finding that IEX's rules concerning its disciplinary and
oversight programs are consistent with the requirements of Sections
6(b)(6) and 6(b)(7) of the Act \19\ in that they provide fair
procedures for the disciplining of members and persons associated with
members.\20\
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\18\ See supra note 16 [sic].
\19\ See supra, notes 15 [sic] and 16 [sic].
\20\ See Securities Exchange Act Release No. 34-78101 (June 17,
2016), 81 FR 41141 (June 23, 2016) (File No. 10-222).
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The Exchange also believes that the proposed rule change does not
unfairly discriminate between customers, issuers, brokers and dealers
in that it will be applicable to all Members.
B. Self-Regulatory Organization's Statement on Burden on Competition
IEX does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change will
allow for a quicker, more efficient means to resolve minor violations
of eligible rules, potentially lessening the burden on firms in those
circumstances where, absent the rule's inclusion in the MRVP, a more
resource-intense formal process might ensue.
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) of the Act \21\ and Rule 19b-4(f)(6) thereunder.\22\
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 \23\ and Rule 19b-
4(f)(6) thereunder.\24\
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\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(6).
\23\ 15 U.S.C. 78s(b)(3)(A).
\24\ 17 CFR 240.19b-4(f)(6). 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) \25\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\26\ the Commission
may 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 proposed
rule change may become operative at the time of the launch of its
operation as a national securities exchange.
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\25\ 17 CFR 240.19b-4(f)(6).
\26\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest. As
noted above, the IEX MRVP, including the proposed violations, was
declared effective by the Commission on August 3, 2016.\27\ The
proposed rule change merely incorporates the list of violations
included in the MRVP into IEX Rule 9.218. For this reason, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\28\
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\27\ See supra note 6.
\28\ For purposes only of waiving the 30-day operative delay,
the Commission has 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
[[Page 53512]]
public interest, for the protection of investors, or otherwise in
furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings to determine whether
the proposed rule change should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-IEX-2016-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-IEX-2016-10. 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 such filing also will be available
for inspection and copying at the principal offices 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-IEX-2016-10,
and should be submitted on or before September 2, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12), (59).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19171 Filed 8-11-16; 8:45 am]
BILLING CODE 8011-01-P
