Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options Floor Procedure Advice F-1, Entitled “Use of Identification Letters and Numbers.”, 70447-70449 [2016-24572]
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Federal Register / Vol. 81, No. 197 / Wednesday, October 12, 2016 / Notices
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long-term financial self-sufficiency.
FOR FURTHER INFORMATION CONTACT:
Additional information is available
online at https://www.presidio.gov/
institute/about/Pages/advisorycouncil.aspx.
Dated: October 5, 2016.
Andrea M. Andersen,
Acting General Counsel.
[FR Doc. 2016–24585 Filed 10–11–16; 8:45 am]
BILLING CODE 4310–4R–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79047; File No. SR–Phlx–
2016–96]
Self-Regulatory Organizations;
NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend
Options Floor Procedure Advice F–1,
Entitled ‘‘Use of Identification Letters
and Numbers.’’
October 5, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 23, 2016, NASDAQ PHLX
LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
70447
in Items I, II, and III, below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Options Floor Procedure Advice
(‘‘OFPA’’) F–1, entitled ‘‘Use of
Identification Letters and Numbers’’ to
eliminate the current fine schedule.
Pursuant to this OFPA F–1, today, all
Specialists, ROTs, and Floor Brokers
must use the complete alpha/numeric
identification assigned by the Exchange.
Specifically, all Floor Brokers or their
employees must indicate their complete
alpha/numeric identifiers on the
Options Floor Broker Management
System (‘‘FBMS’’) for each order they
receive and represent in the trading
crowd. The FMBS system is automated
and requires this field to be completed
before the transaction may be submitted.
These numbers are important because
they represent the parties to the
particular transaction for purposes of
audit trail, clearance and settlement of
that transaction. This information is
submitted to The Options Clearing
Corporation at the end of the day to
complete the back-office portion of the
transaction. The information is available
to and reviewed by both parties to the
transaction. The Exchange currently has
a fine schedule for violations of OFPA
F–1 as follows:
The Exchange proposes to amend
Options Floor Procedure Advice F–1,
entitled ‘‘Use of Identification Letters
and Numbers.’’
The text of the proposed rule change
is available on the Exchange’s Web site
at
https://nasdaqphlx.cchwallstreet.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 aspects of such
statements.
1. Purpose
FINE SCHEDULE
[Implemented on a two-year running calendar basis]
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1st Occurrence .........................................................................................
2nd Occurrence ........................................................................................
3rd Occurrence .........................................................................................
4th Occurrence and Thereafter ................................................................
The Exchange notes that the
violations of this rule today consist of
inadvertent failures to include the
requisite alpha/numeric identification.3
These errors are corrected post-trade, by
end of day by the party in error. The
Floor Brokers receive inter-day reports
which allow them to review this
information and determine if any errors
occurred. Also, the contra-party to the
transaction may alert the Floor Broker
that an error occurred. The Exchange
notes that where errors have been
identified through surveillance, it has
not witnessed any manipulative
conduct, rather the error was an
U.S.C. 78s(b)(1).
17 CFR 240.19b–4.
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20:13 Oct 11, 2016
Jkt 241001
inadvertent data entry error, which was
subsequently corrected.
By way of background, the Exchange
notes that when the floor operated with
more manual procedures and inter-day
reports were not available, these types
of error occurred with more frequency.
The Exchange at that time employed a
greater number of staff employees on the
Exchange floor when the population on
the floor was also at greater numbers.
The amount of time that staff was
devoted to assisting with these types of
errors placed an administrative burden
on the Exchange and presented an
administrative cost to the Exchange to
employ staff to assist with clerical
errors. The fine at that time was justified
to prevent a greater number of violations
and also to support the amount of
regulatory resources that were required
to surveil for such violations and assist
in the correction of errors.
Today, the automated processes and
inter-day reports alleviate many of the
issues that previously existed, including
the burden on staff to correct errors. The
Exchange does not believe that a single
error necessitates the imposition of a
$250.00 fine, for example, where a data
entry error occurred and was corrected
by the firm.
The Exchange proposes to eliminate
the current fine schedule and instead
3 For example in 2016, the Exchange statistically
had .00004% of violations of this minor rule. In
115
2
$250.00.
$500.00.
$1,000.00.
Sanction is discretionary with Business Conduct Committee.
2015, the Exchange statistically had .00003% of
violations of this minor rule.
PO 00000
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Fmt 4703
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70448
Federal Register / Vol. 81, No. 197 / Wednesday, October 12, 2016 / Notices
review for patterns and practices of
manipulative conduct. The Exchange
will continue to review, as it does today,
for instances where a party to a trade
did not enter the complete or an
accurate identifier. Also, the Exchange
would continue to bring violations of
this rule before the Business Conduct
Committee and suggest appropriate
fines given the facts and circumstances
surrounding current and previous
violations of the minor rule. Today, the
Exchange has the ability to bring any
violations before the Business Conduct
Committee.4 The disciplinary rules
provide for a process by which the
Exchange will discipline members for
violations of its rules and the process for
hearings.5 The Exchange’s focus is to
prevent abusive or manipulative
patterns and practices of violations of
OFPA F–1 and also prevent repeated
abuse of this rule. The Exchange intends
to continue to surveil and discipline its
members for violations of this rule.
mstockstill on DSK3G9T082PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 6 in general, and furthers the
objectives of Section 6(b)(5) of the Act 7
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general to protect
investors and the public interest, by
continuing to enforce violations of rules
governing the marking of orders.
Proper identification of orders
protects investors and the public
interest. In cases where human error
4 Any member, member organization, or any
partner, officer, director or person employed by or
associated with any member or member
organization (the Respondent) who is alleged to
have violated or aided and abetted a violation of the
Securities Exchange Act of 1934 (Exchange Act), the
rules and regulations thereunder, the by-laws and
Rules of the Exchange or any interpretation thereof,
and the Rules, Regulations, resolutions and stated
policies of the Board of Directors or any Committee
of the Exchange, shall be subject to the disciplinary
jurisdiction of the Exchange, and after notice and
opportunity for a hearing may be appropriately
disciplined by expulsion, suspension, fine, censure,
limitation or termination as to activities, functions,
operations, or association with a member or
member organization, or any other fitting sanction
in accordance with the provisions of these
disciplinary Rules. See Phlx Rule 960.1(a). Further,
whenever the staff of the Exchange has a reasonable
basis to believe that a violation within the
disciplinary jurisdiction of the Exchange has
occurred, a written report shall be submitted to the
Business Conduct Committee specifying the
violations which are believed to have occurred and
those facts which gave rise to these violations. See
Phlx Rule 960.2(d).
5 See Phlx Rules 960–970.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
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occurred and a member failed to include
the requisite alpha/numeric
identification or submitted an incorrect
alpha/numeric identification, such
information may be corrected posttrade. The Exchange will continue to
enforce the proper identification on
each trade. Regulatory staff will monitor
violations of such rule and bring cases
before the Business Conduct Committee
where a pattern or practice of violation
of such rule exists and suggest
appropriate fines given the facts and
circumstances surrounding current and
previous violations of the minor rule.
Today, the Exchange has the ability to
bring any violations before the Business
Conduct Committee.8
The Exchange is concerned with the
entry of accurate trading information
which identifies counter-parties to each
trade. The trading system requires such
information for each transaction. The
automated process combined with the
surveillance of such information, as
well as counter-party transparency to
the information, ensure that the audit
trail is accurate and complete. The
Exchange understands that human error
may occur from time to time and that
members have the ability to and do
correct such information prior to the
end of the day. Given all of these
circumstances, the proposal is
consistent with the Act because it will
continue to ensure that the information
is maintained accurately and also
discipline members that fail to
consistently abide by this rule.
The Exchange believes it is consistent
with the Act and protects investors and
the general public to amend the rule to
bring disciplinary actions where a
pattern or practice of violating OFPA F–
1 exists versus multiple fines for each
individual violation. The Exchange
notes that it has not observed a large
number of these violations. Where a
number of violations have occurred or
where there has been manipulative
activity in the entry of such trade
information, these actions will be
brought by the Regulatory group to the
Business Conduct Committee for further
action. The Exchange will enumerate
the facts and circumstances surrounding
the violations and present an
appropriate sanction in light of the
circumstances to the Business Conduct
Committee.
This filing is non-controversial
because the Exchange will continue to
regulate members for violations of Rule
OFPA F–1, albeit in a slightly different
matter. The result may be the
imposition of the same fines by the
Business Conduct Committee.
8 See
PO 00000
note 4 above.
Frm 00063
Fmt 4703
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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 not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that no undue burden
on competition arises with this rule
change as the rule will be uniformly
applied to all members. The Exchange
will continue to monitor the activity of
all members, and where a number of
violations has occurred or where there
has been manipulative activity in the
entry of such trade information, these
actions will be brought by the
Regulatory group to the Business
Conduct Committee for further action.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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, it has
become effective pursuant to Section
19(b)(3)(A)(iii) of the Act 9 and
subparagraph (f)(6) of Rule 19b–4
thereunder.10
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: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) 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,
9 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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.
10 17
E:\FR\FM\12OCN1.SGM
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Federal Register / Vol. 81, No. 197 / Wednesday, October 12, 2016 / Notices
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–
Phlx–2016–96 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.
mstockstill on DSK3G9T082PROD with NOTICES
All submissions should refer to File
Number SR–Phlx–2016–96. 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–Phlx–
2016–96 and should be submitted on or
before November 2, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Brent J. Fields,
Secretary.
[FR Doc. 2016–24572 Filed 10–11–16; 8:45 am]
BILLING CODE 8011–01–P
11 17
CFR 200.30–3(a)(12).
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20:13 Oct 11, 2016
Jkt 241001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79051; File No. SR–NYSE–
2016–55]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Designation of a Longer Period for
Commission Action on Proposed Rule
Change Adopting Maximum Fees
Member Organizations May Charge in
Connection With the Distribution of
Investment Company Shareholder
Reports Pursuant to Any Electronic
Delivery Rules Adopted by the
Securities and Exchange Commission
October 5, 2016.
On August 15, 2016, New York Stock
Exchange (‘‘NYSE’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt maximum fees NYSE member
organizations may charge in connection
with the distribution of investment
company shareholder reports pursuant
to any notice and access delivery rules
adopted by the Commission. The
proposed rule change was published for
comment in the Federal Register on
August 22, 2016.3 The Commission
received fourteen comment letters on
the proposal.4
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 78589
(August 16, 2016), 81 FR 56717.
4 See letters to Brent J. Fields, Secretary,
Commission from: James R. Rooney, Chief Financial
Officer and Treasurer, Aril Investment Trust, dated
September 8, 2016; Mortimer J. Buckley, Chief
Investment Officer, Vanguard, dated September 12,
2016; Barbara Novick, Vice Chairman, and
Benjamin Archibald, Managing Director, BlackRock,
Inc., dated September 12, 2016; Charles V. Callan,
SVP Regulatory Affairs, Broadridge Financial
Solutions, Inc., dated September 12, 2016; John
Zerr, Managing Director and General Counsel,
Invesco Advisers, Inc., dated September 12, 2016;
Amy B.R. Lancellotta, Managing Director,
Independent Directors Council, dated September
12, 2016; David G. Booth, President and Co-Chief
Executive Officer, Dimensional Fund Advisers LP,
dated September 12, 2016; David W. Blass, General
Counsel, Investment Company Institute, dated
September 12, 2016; Darrell N. Braman, Vice
President & Managing Counsel, T. Rowe Price
Associates, Inc., dated September 12, 2016; Mark N.
Polebaum, Executive Vice President and General
Counsel, MFS Investment Management, dated
September 12, 2016; Thomas E. Faust Jr., Chairman
and Chief Executive Officer, Eaton Vance Corp.,
dated September 12, 2016; Ellen Greene, Managing
Director, Securities Industry and Financial Markets
Association, dated September 15, 2016; Christopher
O. Petersen, President, Columbia Mutual Funds,
Columbia Threadneedle Investments, dated
September 15, 2016 (‘‘Columbia Letter’’); and
Rodney D. Johnson, Chairman, The Independent
Directors of the Blackrock Equity-Liquidity Funds,
dated September 27, 2016 (‘‘Blackrock Directors
Letter’’).
2 17
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70449
Section 19(b)(2) of the Act 5 provides
that, within 45 days of the publication
of notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is October 6, 2016.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the Exchange’s proposal, as
described above. Accordingly, pursuant
to Section 19(b)(2) of the Act,6 and for
the reason noted above, the Commission
designates November 20, 2016, as the
date by which the Commission shall
either approve or disapprove or institute
proceedings to determine whether to
disapprove the proposed rule change
(File No. SR–NYSE–2016–55).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Brent J. Fields,
Secretary.
[FR Doc. 2016–24576 Filed 10–11–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79056; File No. SR–
NYSEMKT–2016–62]
Self-Regulatory Organizations; NYSE
MKT LLC; Order Granting Approval of
Proposed Rule Change Amending
Section 146 of the NYSE MKT
Company Guide To Adjust the
Entitlement to Services of Special
Purpose Acquisition Companies
October 6, 2016.
I. Introduction
On August 2, 2016, NYSE MKT LLC
(‘‘NYSE MKT’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
5 15
U.S.C. 78s(b)(2).
6 Id.
7 17
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CFR 200.30–3(a)(31).
12OCN1
]]>Agencies
[Federal Register Volume 81, Number 197 (Wednesday, October 12, 2016)]
[Notices]
[Pages 70447-70449]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24572]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79047; File No. SR-Phlx-2016-96]
Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Options
Floor Procedure Advice F-1, Entitled ``Use of Identification Letters
and Numbers.''
October 5, 2016.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 23, 2016, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III, below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Options Floor Procedure Advice F-1,
entitled ``Use of Identification Letters and Numbers.''
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqphlx.cchwallstreet.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 aspects 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 amend Options Floor Procedure Advice
(``OFPA'') F-1, entitled ``Use of Identification Letters and Numbers''
to eliminate the current fine schedule. Pursuant to this OFPA F-1,
today, all Specialists, ROTs, and Floor Brokers must use the complete
alpha/numeric identification assigned by the Exchange. Specifically,
all Floor Brokers or their employees must indicate their complete
alpha/numeric identifiers on the Options Floor Broker Management System
(``FBMS'') for each order they receive and represent in the trading
crowd. The FMBS system is automated and requires this field to be
completed before the transaction may be submitted. These numbers are
important because they represent the parties to the particular
transaction for purposes of audit trail, clearance and settlement of
that transaction. This information is submitted to The Options Clearing
Corporation at the end of the day to complete the back-office portion
of the transaction. The information is available to and reviewed by
both parties to the transaction. The Exchange currently has a fine
schedule for violations of OFPA F-1 as follows:
Fine Schedule
[Implemented on a two-year running calendar basis]
------------------------------------------------------------------------
------------------------------------------------------------------------
1st Occurrence......................... $250.00.
2nd Occurrence......................... $500.00.
3rd Occurrence......................... $1,000.00.
4th Occurrence and Thereafter.......... Sanction is discretionary with
Business Conduct Committee.
------------------------------------------------------------------------
The Exchange notes that the violations of this rule today consist
of inadvertent failures to include the requisite alpha/numeric
identification.\3\ These errors are corrected post-trade, by end of day
by the party in error. The Floor Brokers receive inter-day reports
which allow them to review this information and determine if any errors
occurred. Also, the contra-party to the transaction may alert the Floor
Broker that an error occurred. The Exchange notes that where errors
have been identified through surveillance, it has not witnessed any
manipulative conduct, rather the error was an inadvertent data entry
error, which was subsequently corrected.
---------------------------------------------------------------------------
\3\ For example in 2016, the Exchange statistically had .00004%
of violations of this minor rule. In 2015, the Exchange
statistically had .00003% of violations of this minor rule.
---------------------------------------------------------------------------
By way of background, the Exchange notes that when the floor
operated with more manual procedures and inter-day reports were not
available, these types of error occurred with more frequency. The
Exchange at that time employed a greater number of staff employees on
the Exchange floor when the population on the floor was also at greater
numbers. The amount of time that staff was devoted to assisting with
these types of errors placed an administrative burden on the Exchange
and presented an administrative cost to the Exchange to employ staff to
assist with clerical errors. The fine at that time was justified to
prevent a greater number of violations and also to support the amount
of regulatory resources that were required to surveil for such
violations and assist in the correction of errors.
Today, the automated processes and inter-day reports alleviate many
of the issues that previously existed, including the burden on staff to
correct errors. The Exchange does not believe that a single error
necessitates the imposition of a $250.00 fine, for example, where a
data entry error occurred and was corrected by the firm.
The Exchange proposes to eliminate the current fine schedule and
instead
[[Page 70448]]
review for patterns and practices of manipulative conduct. The Exchange
will continue to review, as it does today, for instances where a party
to a trade did not enter the complete or an accurate identifier. Also,
the Exchange would continue to bring violations of this rule before the
Business Conduct Committee and suggest appropriate fines given the
facts and circumstances surrounding current and previous violations of
the minor rule. Today, the Exchange has the ability to bring any
violations before the Business Conduct Committee.\4\ The disciplinary
rules provide for a process by which the Exchange will discipline
members for violations of its rules and the process for hearings.\5\
The Exchange's focus is to prevent abusive or manipulative patterns and
practices of violations of OFPA F-1 and also prevent repeated abuse of
this rule. The Exchange intends to continue to surveil and discipline
its members for violations of this rule.
---------------------------------------------------------------------------
\4\ Any member, member organization, or any partner, officer,
director or person employed by or associated with any member or
member organization (the Respondent) who is alleged to have violated
or aided and abetted a violation of the Securities Exchange Act of
1934 (Exchange Act), the rules and regulations thereunder, the by-
laws and Rules of the Exchange or any interpretation thereof, and
the Rules, Regulations, resolutions and stated policies of the Board
of Directors or any Committee of the Exchange, shall be subject to
the disciplinary jurisdiction of the Exchange, and after notice and
opportunity for a hearing may be appropriately disciplined by
expulsion, suspension, fine, censure, limitation or termination as
to activities, functions, operations, or association with a member
or member organization, or any other fitting sanction in accordance
with the provisions of these disciplinary Rules. See Phlx Rule
960.1(a). Further, whenever the staff of the Exchange has a
reasonable basis to believe that a violation within the disciplinary
jurisdiction of the Exchange has occurred, a written report shall be
submitted to the Business Conduct Committee specifying the
violations which are believed to have occurred and those facts which
gave rise to these violations. See Phlx Rule 960.2(d).
\5\ See Phlx Rules 960-970.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \6\ in general, and furthers the objectives of Section
6(b)(5) of the Act \7\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest,
by continuing to enforce violations of rules governing the marking of
orders.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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Proper identification of orders protects investors and the public
interest. In cases where human error occurred and a member failed to
include the requisite alpha/numeric identification or submitted an
incorrect alpha/numeric identification, such information may be
corrected post-trade. The Exchange will continue to enforce the proper
identification on each trade. Regulatory staff will monitor violations
of such rule and bring cases before the Business Conduct Committee
where a pattern or practice of violation of such rule exists and
suggest appropriate fines given the facts and circumstances surrounding
current and previous violations of the minor rule. Today, the Exchange
has the ability to bring any violations before the Business Conduct
Committee.\8\
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\8\ See note 4 above.
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The Exchange is concerned with the entry of accurate trading
information which identifies counter-parties to each trade. The trading
system requires such information for each transaction. The automated
process combined with the surveillance of such information, as well as
counter-party transparency to the information, ensure that the audit
trail is accurate and complete. The Exchange understands that human
error may occur from time to time and that members have the ability to
and do correct such information prior to the end of the day. Given all
of these circumstances, the proposal is consistent with the Act because
it will continue to ensure that the information is maintained
accurately and also discipline members that fail to consistently abide
by this rule.
The Exchange believes it is consistent with the Act and protects
investors and the general public to amend the rule to bring
disciplinary actions where a pattern or practice of violating OFPA F-1
exists versus multiple fines for each individual violation. The
Exchange notes that it has not observed a large number of these
violations. Where a number of violations have occurred or where there
has been manipulative activity in the entry of such trade information,
these actions will be brought by the Regulatory group to the Business
Conduct Committee for further action. The Exchange will enumerate the
facts and circumstances surrounding the violations and present an
appropriate sanction in light of the circumstances to the Business
Conduct Committee.
This filing is non-controversial because the Exchange will continue
to regulate members for violations of Rule OFPA F-1, albeit in a
slightly different matter. The result may be the imposition of the same
fines by the Business Conduct Committee.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that no
undue burden on competition arises with this rule change as the rule
will be uniformly applied to all members. The Exchange will continue to
monitor the activity of all members, and where a number of violations
has occurred or where there has been manipulative activity in the entry
of such trade information, these actions will be brought by the
Regulatory group to the Business Conduct Committee for further action.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing 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, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \9\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\10\
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\9\ 15 U.S.C. 78s(b)(3)(A)(iii).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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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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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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,
[[Page 70449]]
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-Phlx-2016-96 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-Phlx-2016-96. 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-Phlx-2016-96 and should be
submitted on or before November 2, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-24572 Filed 10-11-16; 8:45 am]
BILLING CODE 8011-01-P
