Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change To Amend Phlx Rule 748, Supervision, 76637-76639 [2016-26511]
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Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Notices
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affecting threatened and endangered
species and migratory birds.
The specific manner and mechanism
each Federal agency will use to
implement the Mid-Atlantic Regional
Ocean Action Plan will depend on that
agency’s mission, authorities, and
activities. If the NOC certifies that the
Mid-Atlantic Regional Ocean Action
Plan is consistent with the National
Ocean Policy, the Final
Recommendations, and the Handbook,
each Federal MidA RPB member will
use the Mid-Atlantic Regional Ocean
Action Plan to inform and guide its
planning activities and decision-making
actions, including permitting,
authorizing, and leasing decisions that
involve or affect the Mid-Atlantic
regional ocean planning area.
Specifically, consistent with
applicable statutory authorities,
Executive Order 13547 and the Final
Recommendations, the Federal Agencies
represented on the MidA RPB, and their
relevant components, expressly
including the U.S. Army Corps of
Engineers in its ex officio status for
responsibilities beyond those in Title
10, U.S. Code, will: (1) Identify,
develop, and make publicly available
implementing instructions, such as
internal agency guidance, directives, or
similar organizational or administrative
documents, that describe the way the
agency will use the Plan to inform and
guide its actions and decisions in or
affecting the Mid-Atlantic regional
ocean planning area; (2) ensure that the
agency, through such internal
administrative instructions, will
consider the data products available
from the Data Portal in its decision
making and as it carries out its actions
in or affecting the Mid-Atlantic regional
ocean planning area; and (3) explain its
use of the Plan and Data Portal in its
decisions, activities, or planning
processes that involve or affect the MidAtlantic regional ocean planning area.
IV. Conclusion
The National Ocean Policy provides a
path for Federal Agencies, states and
tribes to work collaboratively and
proactively to manage the many existing
and future uses of the Nation’s oceans,
coasts and Great Lakes. If the NOC
certifies the Mid-Atlantic Regional
Ocean Action plan, MidA RPB members
intend to use the Plan to align their
priorities and share data and technical
information to minimize conflicts
among uses, take actions to promote the
productivity of marine resources,
sustain healthy ecosystems, and
promote the prosperity and security of
the Nation’s ocean and coastal
communities and their economies for
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17:54 Nov 02, 2016
Jkt 241001
the benefit of present and future
generations. The NOC will review the
Mid-Atlantic Regional Ocean Action
Plan for consistency with the National
Ocean Policy, Final Recommendations
of the Interagency Ocean Policy Task
Force, and the Marine Planning
Handbook and make its determination
no sooner than 30 days from the
publication of this Notice.
76637
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.
Authority: Executive Order 13547,
‘‘Stewardship of the Ocean, Our Coasts and
the Great Lakes’’ (July 19, 2010).
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Ted Wackler,
Deputy Chief of Staff and Assistant Director.
1. Purpose
[FR Doc. 2016–26623 Filed 11–2–16; 8:45 am]
BILLING CODE 3270–F7–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79185; File No. SR–Phlx–
2016–104]
Self-Regulatory Organizations;
NASDAQ PHLX LLC; Notice of Filing of
Proposed Rule Change To Amend Phlx
Rule 748, Supervision
October 28, 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 October
14, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to a proposal
[sic] to amend Phlx Rule 748,
Supervision, as explained further below.
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
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00085
Fmt 4703
Sfmt 4703
The Exchange is proposing to amend
several provisions of Rule 748. The
proposed rule change is intended to
modernize, upgrade and strengthen the
Exchange’s rules pertaining to
supervisory obligations of its members
and member organizations.
Rule 748(a)
Rule 748(a) currently provides in the
first paragraph that each office, location,
department, or business activity of a
member or member organization
(including foreign incorporated branch
offices) shall be under the supervision
and control of the member or member
organization establishing it and of an
appropriately qualified supervisor. The
Exchange is amending the first
paragraph of Rule 748(a) to clarify and
state clearly that each trading system
and internal surveillance system of a
member or member organization
(including foreign incorporated branch
offices) shall, inasmuch as they are
aspects of their business activity, be
under the supervision and control of the
member or member organization
establishing it and of an appropriately
qualified supervisor.
Rule 748(b)
Rule 748(b), Designation of
Supervisor by Member Organizations,
currently provides in relevant part that
the general partners or directors of each
member organization shall provide for
appropriate supervisory control and
shall designate a general partner or
principal executive officer to assume
overall authority and responsibility for
internal supervision and control of the
organization and compliance with
securities’ (sic) laws and regulations,
including the By-Laws and Rules of the
Exchange. It provides that the
designated person shall delegate to
qualified principals or qualified
employees responsibility and authority
for supervision and control of each
office, location, department, or business
activity, (including foreign incorporated
branch offices), and provide for
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Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Notices
appropriate written procedures of
supervision and control. The Exchange
proposes to amend Rule 748(b) to
provide that the delegated person shall
likewise delegate to qualified principals
or qualified employees responsibility
and authority for supervision and
control of each trading system and
internal surveillance system.3
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Rule 748(c)
Rule 748(c) currently provides that
each person with supervisory control, as
described in paragraphs (a) and (b) of
Rule 748, must meet the Exchange’s
qualification requirements for
supervisors, including successful
completion of the appropriate
examination. The Exchange proposes to
add to Rule 748(c) a new requirement
that each member or member
organization must make reasonable
efforts to determine that each person
with supervisory control, as described
in paragraphs (a) and (b) of Rule 748, is
qualified by virtue of experience or
training to carry out his or her assigned
responsibilities.
Rule 748(g)
Rule 748(g), Office Inspections,
currently provides that each member or
member organization for which the
Exchange is the DEA shall inspect each
office or location (including foreign
incorporated branch offices) of the
member or member organization
according to a cycle that shall be
established in its written supervisory
procedures. In establishing such
inspection cycle, the member or
member organization shall give
consideration to the nature and
complexity of the securities activities
for which the office or location is
responsible, the volume of business
done, and the number of registered
representatives, employees, and
associated persons at each office or
location. Rule 748(g) is proposed to be
amended to provide that an inspection
may not be conducted by any person
within that office or location who has
supervisory responsibilities or by any
individual who is directly or indirectly
supervised by such person. The
Exchange also proposes to add language
requiring the examination schedule and
an explanation of the factors considered
in determining the frequency of the
examinations in the cycle to be set forth
in the member or member organization’s
written supervisory procedures. It also
proposes to require that the inspection
be reasonably designed to assist in
preventing and detecting violations of,
3 The Exchange is also deleting the extraneous
apostrophe following the word ‘‘securities’’.
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17:54 Nov 02, 2016
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and achieving compliance with,
applicable securities laws and
regulations, and with applicable
Exchange rules.
Rule 748(h)
Rule 748(h) in the first paragraph
currently requires each member or
member organization to establish,
maintain, and enforce written
supervisory procedures, and a system
for applying such procedures, to
supervise the types of business(es) in
which the member or member
organization engages and to supervise
the activities of all registered
representatives, employees, and
associated persons. The written
supervisory procedures and the system
for applying such procedures shall
reasonably be expected to prevent and
detect, insofar as practicable, violations
of the applicable securities laws and
regulations, including the By-Laws and
Rules of the Exchange. The Exchange
proposes to substitute the word
‘‘designed’’ for the word ‘‘expected.’’
Rule 748(h) in the second paragraph
currently requires that the written
supervisory procedures set forth the
supervisory system established by the
member or member organization and
include the name, title, registration
status, and location of all supervisory
personnel required by this rule, the
dates for which supervisory
designations were or are effective, and
the responsibilities of supervisory
personnel as these relate to the types of
business(es) the member or member
organization engages in, and securities
laws and regulations, including the ByLaws and Rules of the Exchange. The
Exchange proposes to add a requirement
that this record be preserved for a
period of not less than three years, the
first two in an easily accessible place.
Rule 748(h) in the third paragraph
currently requires a copy of the written
supervisory procedures to be kept and
maintained at each location where
supervisory activities are conducted on
behalf of the member or member
organization. It requires each member or
member organization to amend its
written supervisory procedures as
appropriate within a reasonable time
after changes occur in supervisory
personnel or supervisory procedures,
and to communicate such changes
throughout its organization within a
reasonable time. The Exchange proposes
to amend Rule 748(h) to likewise amend
and communicate changes to its written
supervisory procedures as appropriate
within a reasonable time after changes
occur in applicable securities laws and
regulations and Exchange rules.
PO 00000
Frm 00086
Fmt 4703
Sfmt 4703
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,4 in general, and furthers the
objectives of Section 6(b)(5) of the Act,5
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
enhancing its rules relating to
supervision as set forth in Rule 748.
Requiring increased comprehensive
supervision by members and member
organizations of their activities should
promote the Exchange’s ability to
enforce compliance by members and
member organizations with the Act and
the regulations thereunder.
Amending Rules 748(a) and (b) to
require trading systems and internal
surveillance systems to be under the
supervision and control of the member
or member organization establishing
them and of an appropriately qualified
supervisor, and requiring the general
partner or principal executive officer
with overall authority and responsibility
for internal supervision and control of
the organization and compliance with
securities laws and regulations to
delegate responsibility and authority for
supervision and control of each trading
system and internal surveillance system
to qualified principals or qualified
employees, should protect investors and
the public interest by specifically
requiring supervision and control of
these aspects of the member or member
organization’s business by an
appropriately qualified individual.
The proposed amendment to Rule
748(c) should protect investors and the
public interest by requiring that each
person with supervisory control as
described in Rules 748(a) and (b) to be
qualified by virtue of experience or
training to carry out his or her assigned
responsibilities, such that the individual
has the actual capacity to fulfill those
responsibilities.
The proposed amendments to Rule
748(g) regarding office inspections
should protect investors and the public
interest by minimizing the potential for
conflicts of interest in the conduct of
office inspections. The amendments
would prohibit the required inspections
from being conducted by any person
within that office or location who has
supervisory responsibilities or by any
individual who is directly or indirectly
supervised by such a person who may
4 15
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Federal Register / Vol. 81, No. 213 / Thursday, November 3, 2016 / Notices
be incentivized to minimize any
compliance issues identified in the
inspection. The proposed amendments
to Rule 748(g) concerning the
examination schedule and specifically
requiring that the inspection be
reasonably designed to assist in
preventing and detecting violations of,
and achieving compliance with,
applicable securities laws and
regulations and with applicable
Exchange rules should assure that
inspections take place with a
predictable and adequate frequency and
are reasonably designed to identify
violations of applicable law and rules.
The proposed amendments to Rule
748(h) are also designed to protect
investors and the public interest, by
requiring the written supervisory
procedures to be preserved for a period
of not less than three years, the first two
in an easily accessible place, in order to
facilitate identification of instances
where the procedures were not
followed. Stating that the written
supervisory procedures and the system
for applying such procedures shall
reasonably be ‘‘designed’’ rather than
‘‘expected’’ to prevent and detect
violations clarifies the affirmative
nature of the member or member
organization’s obligations under the rule
when creating such procedures.
Finally, the Rule 748(h) amendment
requiring members or member
organizations to update their written
supervisory procedures following
changes in applicable securities laws
and regulations, and Exchange rules
should promote the continued
usefulness of the procedures in the
context of ongoing changes in the
regulatory environment in which
members and member organizations
conduct their business.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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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
amendments will apply to all members
and member organizations subject to
Rule 748.
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.
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17:54 Nov 02, 2016
Jkt 241001
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the Exchange consents,
the Commission shall: (a) By order
approve or disapprove such proposed
rule change, or (b) institute proceedings
to determine whether the proposed rule
change should be 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–
Phlx–2016–104 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–2016–104. 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
Frm 00087
Fmt 4703
Sfmt 4703
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–2016–104 and should
be submitted on or before November 25,
2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Brent J. Fields,
Secretary.
[FR Doc. 2016–26511 Filed 11–2–16; 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:
PO 00000
76639
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79182; File No. SR–MIAX–
2016–40]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Adopt Exchange Rule 322,
Disruptive Quoting and Trading
Activity Prohibited and Exchange Rule
1018, Expedited Suspension
Proceeding
October 28, 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 October
20, 2016, Miami International Securities
Exchange LLC (‘‘MIAX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘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
The Exchange is filing a proposal to
adopt Exchange Rule 322, Disruptive
Quoting and Trading Activity
Prohibited, to clearly prohibit disruptive
quoting and trading activity on the
Exchange as described below. The
Exchange also proposes to adopt new
Exchange Rule 1018, Expedited
Suspension Proceeding, to permit the
Exchange to take prompt action to
6 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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]]>Agencies
[Federal Register Volume 81, Number 213 (Thursday, November 3, 2016)]
[Notices]
[Pages 76637-76639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26511]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79185; File No. SR-Phlx-2016-104]
Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
of Proposed Rule Change To Amend Phlx Rule 748, Supervision
October 28, 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 October 14, 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 a proposal [sic] to amend Phlx Rule 748,
Supervision, as explained further below.
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 is proposing to amend several provisions of Rule 748.
The proposed rule change is intended to modernize, upgrade and
strengthen the Exchange's rules pertaining to supervisory obligations
of its members and member organizations.
Rule 748(a)
Rule 748(a) currently provides in the first paragraph that each
office, location, department, or business activity of a member or
member organization (including foreign incorporated branch offices)
shall be under the supervision and control of the member or member
organization establishing it and of an appropriately qualified
supervisor. The Exchange is amending the first paragraph of Rule 748(a)
to clarify and state clearly that each trading system and internal
surveillance system of a member or member organization (including
foreign incorporated branch offices) shall, inasmuch as they are
aspects of their business activity, be under the supervision and
control of the member or member organization establishing it and of an
appropriately qualified supervisor.
Rule 748(b)
Rule 748(b), Designation of Supervisor by Member Organizations,
currently provides in relevant part that the general partners or
directors of each member organization shall provide for appropriate
supervisory control and shall designate a general partner or principal
executive officer to assume overall authority and responsibility for
internal supervision and control of the organization and compliance
with securities' (sic) laws and regulations, including the By-Laws and
Rules of the Exchange. It provides that the designated person shall
delegate to qualified principals or qualified employees responsibility
and authority for supervision and control of each office, location,
department, or business activity, (including foreign incorporated
branch offices), and provide for
[[Page 76638]]
appropriate written procedures of supervision and control. The Exchange
proposes to amend Rule 748(b) to provide that the delegated person
shall likewise delegate to qualified principals or qualified employees
responsibility and authority for supervision and control of each
trading system and internal surveillance system.\3\
---------------------------------------------------------------------------
\3\ The Exchange is also deleting the extraneous apostrophe
following the word ``securities''.
---------------------------------------------------------------------------
Rule 748(c)
Rule 748(c) currently provides that each person with supervisory
control, as described in paragraphs (a) and (b) of Rule 748, must meet
the Exchange's qualification requirements for supervisors, including
successful completion of the appropriate examination. The Exchange
proposes to add to Rule 748(c) a new requirement that each member or
member organization must make reasonable efforts to determine that each
person with supervisory control, as described in paragraphs (a) and (b)
of Rule 748, is qualified by virtue of experience or training to carry
out his or her assigned responsibilities.
Rule 748(g)
Rule 748(g), Office Inspections, currently provides that each
member or member organization for which the Exchange is the DEA shall
inspect each office or location (including foreign incorporated branch
offices) of the member or member organization according to a cycle that
shall be established in its written supervisory procedures. In
establishing such inspection cycle, the member or member organization
shall give consideration to the nature and complexity of the securities
activities for which the office or location is responsible, the volume
of business done, and the number of registered representatives,
employees, and associated persons at each office or location. Rule
748(g) is proposed to be amended to provide that an inspection may not
be conducted by any person within that office or location who has
supervisory responsibilities or by any individual who is directly or
indirectly supervised by such person. The Exchange also proposes to add
language requiring the examination schedule and an explanation of the
factors considered in determining the frequency of the examinations in
the cycle to be set forth in the member or member organization's
written supervisory procedures. It also proposes to require that the
inspection be reasonably designed to assist in preventing and detecting
violations of, and achieving compliance with, applicable securities
laws and regulations, and with applicable Exchange rules.
Rule 748(h)
Rule 748(h) in the first paragraph currently requires each member
or member organization to establish, maintain, and enforce written
supervisory procedures, and a system for applying such procedures, to
supervise the types of business(es) in which the member or member
organization engages and to supervise the activities of all registered
representatives, employees, and associated persons. The written
supervisory procedures and the system for applying such procedures
shall reasonably be expected to prevent and detect, insofar as
practicable, violations of the applicable securities laws and
regulations, including the By-Laws and Rules of the Exchange. The
Exchange proposes to substitute the word ``designed'' for the word
``expected.''
Rule 748(h) in the second paragraph currently requires that the
written supervisory procedures set forth the supervisory system
established by the member or member organization and include the name,
title, registration status, and location of all supervisory personnel
required by this rule, the dates for which supervisory designations
were or are effective, and the responsibilities of supervisory
personnel as these relate to the types of business(es) the member or
member organization engages in, and securities laws and regulations,
including the By-Laws and Rules of the Exchange. The Exchange proposes
to add a requirement that this record be preserved for a period of not
less than three years, the first two in an easily accessible place.
Rule 748(h) in the third paragraph currently requires a copy of the
written supervisory procedures to be kept and maintained at each
location where supervisory activities are conducted on behalf of the
member or member organization. It requires each member or member
organization to amend its written supervisory procedures as appropriate
within a reasonable time after changes occur in supervisory personnel
or supervisory procedures, and to communicate such changes throughout
its organization within a reasonable time. The Exchange proposes to
amend Rule 748(h) to likewise amend and communicate changes to its
written supervisory procedures as appropriate within a reasonable time
after changes occur in applicable securities laws and regulations and
Exchange rules.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\4\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\5\ 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 enhancing its rules relating to supervision as set forth in Rule
748. Requiring increased comprehensive supervision by members and
member organizations of their activities should promote the Exchange's
ability to enforce compliance by members and member organizations with
the Act and the regulations thereunder.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Amending Rules 748(a) and (b) to require trading systems and
internal surveillance systems to be under the supervision and control
of the member or member organization establishing them and of an
appropriately qualified supervisor, and requiring the general partner
or principal executive officer with overall authority and
responsibility for internal supervision and control of the organization
and compliance with securities laws and regulations to delegate
responsibility and authority for supervision and control of each
trading system and internal surveillance system to qualified principals
or qualified employees, should protect investors and the public
interest by specifically requiring supervision and control of these
aspects of the member or member organization's business by an
appropriately qualified individual.
The proposed amendment to Rule 748(c) should protect investors and
the public interest by requiring that each person with supervisory
control as described in Rules 748(a) and (b) to be qualified by virtue
of experience or training to carry out his or her assigned
responsibilities, such that the individual has the actual capacity to
fulfill those responsibilities.
The proposed amendments to Rule 748(g) regarding office inspections
should protect investors and the public interest by minimizing the
potential for conflicts of interest in the conduct of office
inspections. The amendments would prohibit the required inspections
from being conducted by any person within that office or location who
has supervisory responsibilities or by any individual who is directly
or indirectly supervised by such a person who may
[[Page 76639]]
be incentivized to minimize any compliance issues identified in the
inspection. The proposed amendments to Rule 748(g) concerning the
examination schedule and specifically requiring that the inspection be
reasonably designed to assist in preventing and detecting violations
of, and achieving compliance with, applicable securities laws and
regulations and with applicable Exchange rules should assure that
inspections take place with a predictable and adequate frequency and
are reasonably designed to identify violations of applicable law and
rules.
The proposed amendments to Rule 748(h) are also designed to protect
investors and the public interest, by requiring the written supervisory
procedures to be preserved for a period of not less than three years,
the first two in an easily accessible place, in order to facilitate
identification of instances where the procedures were not followed.
Stating that the written supervisory procedures and the system for
applying such procedures shall reasonably be ``designed'' rather than
``expected'' to prevent and detect violations clarifies the affirmative
nature of the member or member organization's obligations under the
rule when creating such procedures.
Finally, the Rule 748(h) amendment requiring members or member
organizations to update their written supervisory procedures following
changes in applicable securities laws and regulations, and Exchange
rules should promote the continued usefulness of the procedures in the
context of ongoing changes in the regulatory environment in which
members and member organizations conduct their business.
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 amendments will apply to
all members and member organizations subject to Rule 748.
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
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be 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-Phlx-2016-104 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-2016-104. 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-2016-104 and
should be submitted on or before November 25, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-26511 Filed 11-2-16; 8:45 am]
BILLING CODE 8011-01-P
