Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Shorten the Settlement Cycle From T+3 to T+2, 96545-96550 [2016-31679]
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Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
liquidity is being maintained, and will
consider taking appropriate steps in
order to maintain adequate liquidity if,
through a change in values, net assets,
or other circumstances, more than 15%
of the Fund’s net assets are held in
illiquid assets. Illiquid assets include
securities subject to contractual or other
restrictions on resale and other
instruments that lack readily available
markets as determined in accordance
with Commission staff guidance.
(14) The Fund’s investments,
including derivatives, will be consistent
with the Fund’s investment objective
and will not be used to enhance
leverage (although certain derivatives
may result in leverage). That is, while
the Fund will be permitted to borrow as
permitted under the 1940 Act, the
Fund’s investments will not be used to
seek performance that is the multiple or
inverse multiple (i.e., 2Xs and 3Xs) of
the Fund’s primary broad-based
securities benchmark index (as defined
in Form N–1A).
(15) Investments in derivative
instruments will be made in accordance
with the 1940 Act and consistent with
the Fund’s investment objective and
policies. To limit the potential risk
associated with such transactions, the
Fund will segregate or ‘‘earmark’’ assets
determined to be liquid by the Adviser
in accordance with procedures
established by the Trust’s Board of
Trustees and in accordance with the
1940 Act (or, as permitted by applicable
regulation, enter into certain offsetting
positions) to cover its obligations under
derivative instruments. These
procedures have been adopted
consistent with Section 18 of the 1940
Act and related Commission guidance.
In addition, the Fund will include
appropriate risk disclosure in its
offering documents, including
leveraging risk. Leveraging risk is the
risk that certain transactions of the
Fund, including the Fund’s use of
derivatives, may give rise to leverage,
causing the Fund to be more volatile
than if it had not been leveraged.37
The Exchange also represents that all
statements and representations made in
this filing regarding (a) the description
of the portfolio, (b) limitations on
portfolio holdings or reference assets, or
(c) the applicability of Exchange rules
and surveillance procedures shall
constitute continued listing
requirements for listing the Shares of
the Fund on the Exchange.
37 To mitigate leveraging risk, the Adviser will
segregate or ‘‘earmark’’ liquid assets or otherwise
cover the transactions that may give rise to such
risk.
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The issuer has represented to the
Exchange that it will advise the
Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will monitor for
compliance with the continued listing
requirements.38 If the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Equities Rule 5.5(m).
This approval order is based on all of
the Exchange’s representations,
including those set forth above and in
the Notice,39 Amendment Nos. 1, 2 and
3 to the proposed rule change,40 and the
Exchange’s description of the Fund. The
Commission notes that the Fund and the
Shares must comply with the
requirements of NYSE Arca Equities
Rule 8.600 to be listed and traded on the
Exchange on an initial and continued
basis.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
Nos. 1, 2, and 3 thereto, is consistent
with Section 6(b)(5) of the Act 41 and the
rules and regulations thereunder
applicable to a national securities
exchange.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,42 that the
proposed rule change (SR–NYSEArca–
2016–82), as modified by Amendment
Nos. 1, 2, and 3 thereto, be, and it
hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.43
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–31683 Filed 12–29–16; 8:45 am]
BILLING CODE 8011–01–P
38 The Commission notes that certain other
proposals for the listing and trading of Managed
Fund Shares include a representation that the
exchange will ‘‘surveil’’ for compliance with the
continued listing requirements. See, e.g., Securities
Exchange Act Release No. 78005 (Jun. 7, 2016), 81
FR 38247 (Jun. 13, 2016) (SR–BATS–2015–100). In
the context of this representation, it is the
Commission’s view that ‘‘monitor’’ and ‘‘surveil’’
both mean ongoing oversight of a fund’s compliance
with the continued listing requirements. Therefore,
the Commission does not view ‘‘monitor’’ as a more
or less stringent obligation than ‘‘surveil’’ with
respect to the continued listing requirements.
39 See supra note 3.
40 See supra notes 4, 7, and 8.
41 15 U.S.C. 78f(b)(5).
42 Id.
43 17 CFR 200.30–3(a)(12).
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96545
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79687; File No. SR–
NASDAQ–2016–183]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Shorten the Settlement Cycle From
T+3 to T+2
December 23, 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 December
22, 2016, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’ 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 proposes to amend
Nasdaq Rules 11140 (Transactions in
Securities ‘‘Ex-Dividend,’’ ‘‘Ex-Rights’’
or ‘‘Ex-Warrants’’), 11150 (Transactions
‘‘Ex-Interest’’ in Bonds Which Are Dealt
in ‘‘Flat’’), 11210 (Sent by Each Party),
11320 (Dates of Delivery), 11620
(Computation of Interest), and IM–
11810 (Sample Buy-In Forms), to
conform to the Commission’s proposed
amendment to SEA Rule 15c6–1(a) to
shorten the standard settlement cycle
for most broker-dealer transactions from
three business days after the trade date
(‘‘T+3’’) to two business days after the
trade date (‘‘T+2’’) and the industry-led
initiative to shorten the settlement cycle
from T+3 to T+2.3
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 78962
(September 28, 2016), 81 FR 69240 (October 5,
2016) (Amendment to Securities Transaction
Settlement Cycle) (File No. S7–22–16) (‘‘SEC
Proposing Release’’).
2 17
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Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
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
SEC Proposing Release
On September 28, 2016, the
Commission proposed amending SEA
Rule 15c6–1(a) to shorten the standard
settlement cycle for most broker-dealer
transactions from T+3 to T+2 on the
basis that the shorter settlement cycle
would reduce the risks that arise from
the value and number of unsettled
securities transactions prior to the
completion of settlement, including
credit, market, and liquidity risk
directly faced by U.S. market
participants.4 The proposed rule
amendment was published for comment
in the Federal Register on October 5,
2016.5
srobinson on DSK5SPTVN1PROD with NOTICES
Background
In 1995, the standard U.S. trade
settlement cycle for equities, municipal
and corporate bonds, and unit
investment trusts, and financial
instruments composed of these products
was shortened from five business days
after the trade date (‘‘T+5’’) to T+3.6
Accordingly, Nasdaq and other selfregulatory organizations (‘‘SROs’’)
4 See Securities and Exchange Commission Press
Release 2016–200: ‘‘SEC Proposes Rule Amendment
to Expedite Process for Settling Securities
Transactions’’ (September 28, 2016).
5 See supra note 3.
6 In 1993, the Commission adopted SEA Rule
15c6–1 which became effective in 1995. See
Securities Exchange Act Release Nos. 33023
(October 6, 1993), 58 FR 52891 (October 13, 1993)
and 34952 (November 9, 1994), 59 FR 59137
(November 16, 1994). SEA Rule 15c6–1(a) provides,
in relevant part, that ‘‘a broker or dealer shall not
effect or enter into a contract for the purchase or
sale of a security (other than an exempted security,
government security, municipal security,
commercial paper, bankers’ acceptances, or
commercial bills) that provides for payment of
funds and delivery of securities later than the third
business day after the date of the contract unless
otherwise expressly agreed to by the parties at the
time of the transaction.’’ 17 CFR 240.15c6–1(a).
Although not covered by SEA Rule 15c6–1, in 1995,
the Commission approved the Municipal Securities
Rulemaking Board’s rule change requiring
transactions in municipal securities to settle by
T+3. See Securities Exchange Act Release No.
35427 (February 28, 1995), 60 FR 12798 (March 8,
1995) (Order Approving File No. SR–MSRB–94–10).
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amended their respective rules to
conform to the T+3 settlement cycle.7
Since that time, the SEC and the
financial services industry have
continued to explore the idea of
shortening the settlement cycle even
further.8
In April 2014, the Depository Trust &
Clearing Corporation (‘‘DTCC’’)
published its formal recommendation to
shorten the standard U.S. trade
settlement cycle to T+2 and announced
that it would partner with market
participants and industry organizations
to devise the necessary approach and
timelines to achieve T+2.9
In an effort to improve the overall
efficiency of the U.S. settlement system
by reducing the attendant risks in T+3
settlement of securities transactions,
and to align U.S. markets with other
major global markets that have already
moved to T+2, DTCC, in collaboration
with the financial services industry,
formed an Industry Steering Committee
(‘‘ISC’’) and an industry working group
and sub-working groups to facilitate the
move to T+2.10 In June 2015, the ISC
published a White Paper outlining the
activities and proposed time frames that
would be required to move to T+2 in the
U.S.11 Concurrently, the Securities
Industry and Financial Markets
Association (‘‘SIFMA’’) and the
Investment Company Institute (‘‘ICI’’)
jointly submitted a letter to SEC Chair
White, expressing support of the
financial services industry’s efforts to
shorten the settlement cycle and
identifying SEA Rule 15c6–1(a) and
several SRO rules that they believed
would require amendments for an
effective transition to T+2.12 In March
Proposed Rule Change
In light of the SEC Proposing Release
that would amend SEA Rule 15c6–1(a)
to require standard settlement no later
than T+2 and similar proposals from
other SROs,14 Nasdaq is proposing
changes to its rules pertaining to
securities settlement by, among other
things, amending the definition of
‘‘standard’’ settlement as occurring on
T+2. SEA Rule 15c6–1(a) currently
establishes ‘‘standard’’ settlement as
occurring no later than T+3 for all
securities, other than an exempt
security, government security,
municipal security, commercial paper,
bankers’ acceptances, or commercial
bills.15 Nasdaq is proposing changes to
rules pertaining to securities settlement
to support the industry-led initiative to
shorten the standard settlement cycle to
two business days. Most of the rules that
Nasdaq has identified for these changes
are successors to provisions under the
legacy NASD Rules of Fair Practice and
NASD Uniform Practice Code (‘‘UPC’’)
that were amended when the
Commission adopted SEA Rule 15c6–
1(a), which established T+3 as the
standard settlement cycle.16 As such,
Nasdaq is proposing to amend Nasdaq
Rules 11140 (Transactions in Securities
‘‘Ex-Dividend,’’ ‘‘Ex-Rights’’ or ‘‘ExWarrants’’), 11150 (Transactions ‘‘ExInterest’’ in Bonds Which Are Dealt in
‘‘Flat’’), 11320 (Dates of Delivery), and
11620 (Computation of Interest). In
addition, Nasdaq is proposing to amend
7 See, e.g., Securities Exchange Act Release No.
35507 (March 17, 1995), 60 FR 15616 (March 24,
1995) (Order Approving File No. SR–NASD–94–56);
Securities Exchange Act Release No. 35506 (March
17, 1995), 60 FR 15618 (March 24, 1995) (Order
Approving File No. SR–NYSE–94–40); and
Securities Exchange Act Release No. 35553 (March
31, 1995), 60 FR 18161 (April 10, 1995) (Order
Approving File No. SR–Amex–94–57).
8 See, e.g., Securities Industry Association
(‘‘SIA’’), ‘‘SIA T+1 Business Case Final Report’’
(July 2000); Concept Release: Securities
Transactions Settlement, Securities Exchange Act
Release No. 49405 (March 11, 2004), 69 FR 12922
(March 18, 2004); and Depository Trust & Clearing
Corporation, ‘‘Proposal to Launch a New CostBenefit Analysis on Shortening the Settlement
Cycle’’ (December 2011).
9 See DTCC, ‘‘DTCC Recommends Shortening the
U.S. Trade Settlement Cycle’’ (April 2014).
10 The ISC includes, among other participants,
DTCC, the Securities Industry and Financial
Markets Association and the Investment Company
Institute.
11 See ‘‘Shortening the Settlement Cycle: The
Move to T+2’’ (June 18, 2015).
12 See Letter from ICI and SIFMA to Mary Jo
White, Chair, SEC, dated June 18, 2015. See also
Letter from Mary Jo White, Chair to Kenneth E.
Bentsen, Jr., President and CEO, SIFMA, and Paul
Schott Stevens, President and CEO, ICI, dated
September 16, 2015 (expressing her strong support
for industry efforts to shorten the trade settlement
cycle to T+2 and commitment to developing a
proposal to amend SEA Rule 15c6–1(a) to require
standard settlement no later than T+2).
13 See ISC Media Alert: ‘‘US T+2 ISC
Recommends Move to Shorter Settlement Cycle On
September 5, 2017’’ (March 7, 2016).
14 See, e.g., Securities Exchange Act Release No.
77744 (April 29, 2016), 81 FR 26851 (May 4, 2016)
(Order Approving File No. SR–MSRB–2016–04).
15 See supra note 7.
16 The legacy NASD rules that were changed to
conform to the move from T+5 to T+3 included
Section 26 (Investment Companies) of the Rules of
Fair Practice, and Section 5 (Transactions in
Securities ‘‘Ex-Dividend,’’ ‘‘Ex-Rights’’ or ‘‘ExWarrants’’), Section 6 (Transactions ‘‘Ex-Interest’’ in
Bonds Which Are Dealt in ‘‘Flat’’), Section 12
(Dates of Delivery), Section 46 (Computation of
Interest) and Section 64 (Acceptance and
Settlement of COD Orders) of the UPC. See
Securities Exchange Act Release No. 35507 (March
17, 1995), 60 FR 15616 (March 24, 1995) (Order
Approving File No. SR–NASD–94–56). See also
Notice to Members 95–36 (May 1995) (enumerating
the various sections under the NASD Rules of Fair
Practice and UPC that were amended to implement
T+3 settlement for securities transactions).
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2016, the ISC announced the industry
target date of September 5, 2017 for the
transition to a T+2 settlement cycle to
occur.13
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Nasdaq Rules 11210 (Sent by Each
Party) and IM–11810 (Sample Buy-In
Forms) to conform provisions, where
appropriate, to the T+2 settlement
cycle.17
The details of the proposed rule
change are described below.
(1) Nasdaq Rule 11140 (Transactions in
Securities ‘‘Ex-Dividend,’’ ‘‘Ex- Rights’’
or ‘‘Ex-Warrants’’)
Rule 11140(b)(1) provides that for
dividends or distributions, and the
issuance or distribution of warrants, that
are less than 25 percent of the value of
the subject security, if definitive
information is received sufficiently in
advance of the record date, the date
designated as the ‘‘ex-dividend date’’
shall be the second business day
preceding the record date if the record
date falls on a business day, or the third
business day preceding the record date
if the record date falls on a day
designated by Nasdaq Regulation as a
non-delivery date. Nasdaq is proposing
to shorten the time frames in Rule
11140(b)(1) by one business day.
srobinson on DSK5SPTVN1PROD with NOTICES
(2) Nasdaq Rule 11150 (‘‘Ex-Interest’’ in
Bonds Which Are Dealt in ‘‘Flat’’)
Rule 11150(a) prescribes the manner
for establishing ‘‘ex-interest dates’’ for
transactions in bonds or other similar
evidences of indebtedness which are
traded ‘‘flat.’’ Such transactions are ‘‘exinterest’’ on the second business day
preceding the record date if the record
date falls on a business day, on the third
business day preceding the record date
if the record date falls on a day other
than a business day, or on the third
business day preceding the date on
which an interest payment is to be made
if no record date has been fixed. Nasdaq
is proposing to shorten the time frames
in Rule 11150(a) by one business day.
(3) Nasdaq Rule 11210 (Sent by Each
Party)
Paragraphs (c) and (d) of Rule 11210
set forth the ‘‘Don’t Know’’ (‘‘DK’’)
voluntary procedures for using ‘‘DK
Notices’’ or other forms of notices,
respectively. Depending upon the notice
used, a confirming member may follow
the ‘‘DK’’ procedures when it sends a
comparison or confirmation of a trade
(other than one that clears through the
National Securities Clearing Corporation
(‘‘NSCC’’) or other registered clearing
agency), but does not receive a
comparison or confirmation or a signed
‘‘DK’’ from the contra-member by the
17 Nasdaq Rules 11210 and IM–11810 are
successors to legacy NASD UPC Section 9 (Sent by
Each Party) and 59 (‘‘Buying-in’’), respectively,
which remained unchanged during the transition
from T+5 to T+3. See supra note 17 [sic].
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close of four business days following the
trade date of the transaction (‘‘T+4’’).
The procedures generally provide that
after T+4, the confirming member shall
send a ‘‘DK Notice’’ (or similar notice)
to the contra-member. The contramember then has four business days
after receipt of the confirming member’s
notice to either confirm or ‘‘DK’’ the
transaction.
Nasdaq is proposing to amend
paragraphs (c) and (d) of Rule 11210 to
provide that the ‘‘DK’’ procedures may
be used by the confirming member if it
does not receive a comparison or
confirmation or signed ‘‘DK’’ from the
contra-member by the close of one
business day following the trade date of
the transaction, rather than the current
T+4.18 In addition, Nasdaq is proposing
amendments to paragraphs (c)(2)(A),
(c)(3), and (d)(5) of Rule 11210 to adjust
the time in which a contra-member has
to respond to a ‘‘DK Notice’’ (or similar
notice) from four business days after the
contra-member’s receipt of the notice to
two business days.
(4) Nasdaq Rule 11320 (Dates of
Delivery)
Rule 11320 prescribes delivery dates
for various transactions. Paragraph (b)
states that for a ‘‘regular way’’
transaction, delivery must be made on,
but not before, the third business day
after the date of the transaction. Nasdaq
is proposing to amend Rule 11320(b) to
change the reference to third business
day to second business day. Paragraph
(c) provides that in a ‘‘seller’s option’’
transaction, delivery may be made by
the seller on any business day after the
third business day following the date of
the transaction. Nasdaq is proposing to
amend Rule 11320(c) to change the
reference to third business day to
second business day.
(5) Nasdaq Rule 11620 (Computation of
Interest)
In the settlement of contracts in
interest-paying securities other than for
cash, Rule 11620(a) requires the
calculation of interest at the rate
specified in the security up to, but not
including, the third business day after
the date of the transaction. The
proposed amendment would shorten the
18 As stated above, the time frames in Rule 11210
remained unchanged during the transition from T+5
to T+3. In light of the industry-led initiative to
shorten the standard settlement cycle and the SEC
Proposing Release to amend SEA Rule 15c6–1(a) to
establish T+2 as the standard settlement for most
broker dealer transactions, the Exchange believes
that the current time frames in Rule 11210 are more
protracted than necessary even in a T+3
environment and as such, the Exchange is
proposing to amend these time frames to reflect
more current industry practices.
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time frame to the second business day.
In addition, the proposed amendment
would make non-substantive technical
changes to the title of paragraph (a).
(6) Nasdaq Rule IM–11810 (Sample BuyIn Forms)
Rule IM–11810(i)(1)(A) sets forth the
fail-to-deliver and liability notice
procedures where a securities contract
is for warrants, rights, convertible
securities or other securities which have
been called for redemption; are due to
expire by their terms; are the subject of
a tender or exchange offer; or are subject
to other expiring events such as a record
date for the underlying security and the
last day on which the securities must be
delivered or surrendered is the
settlement date of the contract or later.19
Under Rule IM–11810(i)(1)(A), the
receiving member delivers a liability
notice to the owing counterparty. The
liability notice sets a cutoff date for the
delivery of the securities by the
counterparty and provides notice to the
counterparty of the liability attendant to
its failure to deliver the securities in
time. If the owing counterparty, or
delivering member, delivers the
securities in response to the liability
notice, it has met its delivery obligation.
If the delivering member fails to deliver
the securities on the expiration date, it
will be liable for any damages that may
accrue thereby.
Rule IM–11810(i)(1)(A) further
provides that when both parties to a
contract are participants in a registered
clearing agency that has an automated
liability notification service,
transmission of the liability notice must
be accomplished through such system.20
When the parties to a contract are not
both participants in a registered clearing
agency that has an automated liability
notification service, such notice must be
issued using written or comparable
19 Rule IM–11810(i) is the successor to legacy
NASD UPC Section 59(i) (Failure to Deliver and
Liability Notice Procedures). When this provision
was added to NASD’s existing close-out procedures
in 1984, it was drafted to be similar to the liability
notice provisions adopted by the NSCC so that
members that were also participants in NSCC could
use the same procedures for both ex-clearing and
NSCC cleared transactions, thereby simplifying
members’ back office procedures.
20 In 2007, NYSE Rule 180 was amended to
require that when the parties to a failed contract
were both participants in a registered clearing
agency that had an automated service for notifying
a failing party of the liability that will be attendant
to a failure to deliver and the contract was to be
settled through the facilities of that registered
clearing agency, the transmission of the liability
notification must be accomplished through the use
of the registered clearing agency’s automated
liability notification system. See Securities
Exchange Act Release No. 55132 (January 19, 2007),
72 FR 3896 (January 26, 2007) (Order Approving
File No. SR–NYSE–2006–57).
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electronic media having immediate
receipt capabilities not later than one
business day prior to the latest time and
the date of the offer or other event in
order to obtain the protection provided
by the Rule.21
Given the proposed shortened
settlement cycle, Nasdaq is proposing to
amend Rule IM–11810(i)(1)(A) in
situations where both parties to a
contract are not participants of a
registered clearing agency with an
automated notification service, by
extending the time frame for delivery of
the liability notice. Rule IM–
11810(i)(1)(A) would be amended to
provide that in such cases, the receiving
member must send the liability notice to
the delivering member as soon as
practicable but not later than two hours
prior to the cutoff time set forth in the
instructions on a specific offer or other
event to obtain the protection provided
by the Rule. Nasdaq believes that
extending the time given to the
receiving member to transmit liability
notifications will maintain the
efficiency of the notification process
while mitigating the possible overuse of
such notifications.
Currently, Nasdaq understands that
the identity of the counterparty, or
delivering member, becomes known to
the receiving member by mid-day on the
business day after trade date (‘‘T+1’’),
and by that time, the receiving member
will generally also know which
transactions are subject to an event
identified in Rule IM–11810(i)(1)(A)
that would prompt the receiving
member to issue a liability notice to the
delivering member. Nasdaq believes that
the receiving member regularly issues
liability notices to the seller or other
parties from which the securities
involved are due when the security is
subject to an event identified in Rule
IM–11810(i)(1)(A) during the settlement
cycle as a way to mitigate the risk of a
potential fail-to-deliver. In the current
T+3 settlement environment, the one
business day time frame gives the
receiving member the requisite time
needed to identify the parties involved
and undertake the liability notification
process.
However, Nasdaq believes that the
move to a T+2 settlement environment
will create inefficiencies in the liability
notification process under Rule IM–
21 While Rule IM–11810 has undergone
amendments over the years, the one-day time frame
in paragraph (j) has remained unchanged. The oneday time frame also appears in comparable
provisions of other SROs. See, e.g., NSCC Rules &
Procedures, Procedure X (Execution of Buy-Ins)
(Effective August 10, 2016); NYSE Rule 282.65 (Fail
to Deliver and Liability Notice Procedures). See also
infra note 28 and accompanying text.
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11810(i)(1)(A) when both parties to a
contract are not participants in a
registered clearing agency with an
automated notification service. The
shorter settlement cycle, with the loss of
one business day, would not afford the
receiving member sufficient time to: (1)
ascertain that the securities are subject
to an event listed in Rule IM–
11810(i)(1)(A) during the settlement
cycle; (2) identify the delivering
member and other parties from which
the securities involved are due; and (3)
determine the likelihood that such
parties may fail to deliver. Where the
receiving member has sufficient time
(e.g., one business day after), it can
transmit liability notices as needed to
the right parties. However, as a
consequence of the shortened settlement
cycle, the receiving member would be
compelled to issue liability notices
proactively to all potentially failing
parties as a matter of course to preserve
its rights against such parties without
the benefit of knowing which
transactions would actually necessitate
the delivery of such notice. This would
create a significant increase in the
volume of liability notices members
send and receive, many of which may
be unnecessary. Members would then
have to manage this overabundance of
liability notices, increasing the
possibility of errors, which would
adversely impact the efficiency of the
process. Therefore, Nasdaq believes its
proposal to extend the time for the
receiving member to deliver a liability
notice when the parties to a contract are
not both participants in a registered
clearing agency with an automated
notification service would help alleviate
the potential burden on the liability
notification process in a T+2 settlement
environment.
Implementation
Nasdaq will announce the effective
date of the proposed rule change in an
Equity Regulatory Alert, which date
would correspond with the industry-led
transition to a T+2 standard settlement,
and the effective date of the
Commission’s proposed amendment to
SEA Rule 15c6–1(a) to require standard
settlement no later than T+2.22
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,23 in general, and furthers the
objectives of Section 6(b)(5) of the Act,24
in particular, in that it is designed to
promote just and equitable principles of
22 See
supra note 3.
U.S.C. 78f(b).
24 15 U.S.C. 78f(b)(5).
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities,
and, in general, to protect investors and
the public interest. The Exchange
believes that the proposed rule change
supports the supports [sic] the industryled initiative to shorten the settlement
cycle to two business days. Moreover,
the proposed rule change is consistent
with the SEC’s proposed amendment to
SEA Rule 15c6–1(a) to require standard
settlement no later than T+2. Nasdaq
believes that the proposed rule change
will provide the regulatory certainty to
facilitate the industry-led move to a T+2
settlement cycle. As noted herein, upon
approval, Nasdaq will announce the
effective date of the proposed rule
change in an Equity Regulatory Alert,
which date would correspond with the
industry-led transition to a T+2
standard settlement, and the effective
date of the Commission’s proposed
amendment to SEA Rule 15c6–1(a) to
require standard settlement no later
than T+2.
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
proposed rule change makes changes to
rules pertaining to securities settlement
and is intended to facilitate the
implementation of the industry-led
transition to a T+2 settlement cycle.
Moreover, the proposed rule changes are
consistent with the SEC’s proposed
amendment to SEA Rule 15c6–1(a) to
require standard settlement no later
than T+2. Accordingly, Nasdaq believes
that the proposed changes do not
impose any burdens on the industry in
addition to those necessary to
implement amendments to SEA Rule
15c6–1(a) as described and enumerated
in the SEC Proposing Release.25
These conforming changes include
changes to rules that specifically
establish the settlement cycle as well as
rules that establish time frames based on
settlement dates, including for certain
post-settlement rights and obligations.
Nasdaq believes that the proposed
changes set forth in the filing are
necessary to support a standard
settlement cycle across the U.S. for
secondary market transactions in
equities, corporate and municipal
bonds, unit investment trusts, and
financial instruments composed of these
23 15
PO 00000
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Fmt 4703
25 See
Sfmt 4703
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supra note 3.
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Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
products, among other things.26 A
standard U.S. settlement cycle for such
products is critical for the operation of
fair and orderly markets.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
A previous version of the proposed
rule change was published for comment
in Equity Regulatory Alert 2016–4 on
May 18, 2016. Two comments were
received in response to the Regulatory
Alert.27 A copy of the Regulatory Alert
is attached as Exhibit 2a. A list of
comments is attached as Exhibit 2b [sic]
and copies of the comment letters
received in response to the Regulatory
Notice are attached as Exhibits 2c [sic].
Both of the letters received expressed
support for the industry led move to
T+2 stating, among other benefits, that
the move will align U.S. markets with
international markets that already work
in the T+2 environment, improve the
overall efficiency and liquidity of the
securities markets, and the stability of
the financial system by reducing
counterparty risk and pro-cyclical and
liquidity demands, and decreasing
clearing capital requirements. SIFMA
also provided their view on the
proposed amendments to two rules
under the Nasdaq Rule 11800 Series
(Buying In).
Nasdaq Rule IM–11810(i)—Sample BuyIn Forms
srobinson on DSK5SPTVN1PROD with NOTICES
In its comment letter, SIFMA raised a
concern with the one-day time frame in
Rule IM–11810(i)(1)(A), asserting that
the requirement for the delivering
member to deliver a liability notice to
the receiving member no later than one
business day prior to the latest time and
the date of the offer or other event in
order to obtain the protection provided
by the Rule may no longer be
appropriate in a T+2 environment in
some situations such as where the
delivery obligation is transferred to
another party as a result of continuous
net settlement, settlements outside of
the NSCC, and settlements involving a
third party that is not a Nasdaq member
firm. SIFMA noted that NYSE Rule 180
(Failure to Deliver) includes a similar
requirement for NYSE member firms
that are participants in a registered
26 See
supra note 3.
Letter from Martin A. Burns, Chief Industry
Operations Officer, Investment Company Institute
to John Zecca, Senior Vice President, Marketwatch
dated June 8, 2016 (‘‘ICI’’); letter from Thomas F.
Price, Managing Director, Operations, Securities
Industry and Financial Markets Association, to John
Zecca, Senior Vice President Market Watch dated
June 8, 2016 (‘‘SIFMA’’).
27 See
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19:18 Dec 29, 2016
Jkt 241001
clearing agency to transmit liability
notification through an automated
notification service and proposed
amending Rule IM–11810(i)(1)(A) to
omit the reference to a notification time
frame, which would align with NYSE
Rule 180.28 In the alternative, SIFMA
proposed amending Rule IM–
11810(i)(1)(A) to require that the
liability notice be delivered in a
‘‘reasonable amount of time’’ ahead of
the settlement obligation in light of facts
and circumstances. SIFMA maintained
that under either proposed amendment
to paragraph (j), the delivering member
would be liable for any damages caused
by its failure to deliver in a timely
fashion.
While Nasdaq did not initially
propose amendments to Rule IM–11810
for the T+2 initiative,29 in light of
SIFMA’s concern regarding Rule IM–
11810(i)(1)(A), Nasdaq is proposing to
amend the Rule to provide that, where
both parties to a contract are not
participants of a registered clearing
agency with an automated notification
service, the receiving member must
send the liability notice to the
delivering member as soon as
practicable but not later than two hours
prior to the cutoff time set forth in the
instructions on a specific offer or other
event to obtain the protection provided
by the Rule.30
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
up to 90 days (i) as the Commission may
designate 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
28 See NYSE Rule 180 (Failure to Deliver)
providing in part that ‘‘[w]hen the parties to a
contract are both participants in a registered
clearing agency which has an automated service for
notifying a failing party of the liability that will be
attendant to a failure to deliver and that contract
was to be settled through the facilities of said
registered clearing agency, the transmission of the
liability notification must be accomplished through
use of said automated notification service.’’ Nasdaq
notes that NYSE Rule 180 does not address the
transmission of the liability notification for parties
to a contract that are not both participants in a
registered clearing agency (or non-participants). The
transmission of the liability notification for nonparticipants is addressed under NYSE Rule 282.65
(Failure to Deliver and Liability Notice Procedures).
See supra note 22.
29 See Equity Regulatory Alert 2016–4.
30 Nasdaq expects similar amendments to other
comparable SRO provisions in NYSE Rule 282.65
(Fail to Deliver and Liability Notice Procedures)
and FINRA Rule 11810 (Buying-in), and NSCC
Rules & Procedures, Procedure X (Execution of BuyIns) to address SIFMA’s concern about the one-day
notification time frame.
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
96549
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–
NASDAQ–2016–183 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2016–183. 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
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–
E:\FR\FM\30DEN1.SGM
30DEN1
96550
Federal Register / Vol. 81, No. 251 / Friday, December 30, 2016 / Notices
NASDAQ–2016–183 and should be
submitted on or before January 20, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–31679 Filed 12–29–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79685; File No. SR–MIAX–
2016–48]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule To
Modify the Exchange’s Other Market
Participant Transaction Fees
December 23, 2016.
Pursuant to the provisions of 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 December 15, 2016, Miami
International Securities Exchange LLC
(‘‘MIAX Options’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) a
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.
srobinson on DSK5SPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the MIAX Options Fee Schedule
(the ‘‘Fee Schedule’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.miaxoptions.com/filter/
wotitle/rule_filing, at MIAX’s principal
office, 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
31 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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19:18 Dec 29, 2016
Jkt 241001
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Fee Schedule to increase the fees
charged to Exchange Members 3 for
simple and complex order executions in
standard options classes in the Penny
Pilot Program 4 (‘‘Penny Pilot’’) for
Firms.5 Specifically, the Exchange
proposes to increase the fees charged to
Members for simple and complex order
executions in standard options in the
Penny Pilot for Firms from $0.45 to
$0.47 per contract executed. The
Exchange believes that this proposed fee
increase is reasonable, equitable and not
unfairly discriminatory because it
makes the transaction fee consistent
among the Exchange’s market
participants who are not Priority
Customers 6 or MIAX Options Market
Makers 7 by charging all such
participants the same rate for
transactions for simple and complex
order executions in standard options in
the Penny Pilot. The Exchange has
historically kept the Firm transaction
fee at a lower rate than the transaction
fee for other market participants who
are not Priority Customers or MIAX
3 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
4 See Securities Exchange Act Release Nos. 78080
(June 15, 2016), 81 FR 40377 (June 21, 2016) (SR–
MIAX–2016–16); 79432 (November 30, 2016), 81 FR
87990 (December 6, 2016) (SR–MIAX–2016–45).
5 A ‘‘Firm’’ transaction fee is assessed on a MIAX
Options Electronic Exchange Member ‘‘EEM’’ that
enters an order that is executed for an account
identified by the EEM for clearing in the Options
Clearing Corporation (‘‘OCC’’) ‘‘Firm’’ range. See
Fee Schedule, Section 1)a)ii.
6 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
A ‘‘Priority Customer Order’’ means an order for the
account of a Priority Customer. See Exchange Rule
100.
7 The term ‘‘Market Makers’’ refers to Lead Market
Makers (‘‘LMMs’’), Primary Lead Market Makers
(‘‘PLMMs’’), and Registered Market Makers
(‘‘RMMs’’) collectively. See Exchange Rule 100. A
Directed Order Lead Market Maker (‘‘DLMM’’) and
Directed Primary Lead Market Maker (‘‘DPLMM’’) is
a party to a transaction being allocated to the LMM
or PLMM and is the result of an order that has been
directed to the LMM or PLMM. See Fee Schedule
note 2.
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
Options Market Makers, primarily as a
competitive measure to attract Firm
order flow. The Exchange believes that
this measure is no longer necessary, and
thus believes it is appropriate to
increase the Firm transaction fee rate to
the same rate charged for other market
participants who are not Priority
Customers or MIAX Options Market
Makers. This proposed change brings
the Exchange’s Firm transaction fee in
line and comparable with similar fees of
other competing options exchanges.8
In addition, the Exchange proposes to
continue to offer Members the
opportunity to reduce their Firm
transaction fees by $0.02 per executed
contract resulting from simple order
executions in standard options in the
Penny Pilot.9 In order to accomplish
this reduction, any Member, including
any Affiliate 10 of the Member, that
qualifies for the Priority Customer
Rebate Program (‘‘PCRP’’) volume tiers 3
or higher,11 will be assessed a reduced
Firm transaction fee of $0.45 per
contract resulting from simple order
executions in standard options in the
Penny Pilot. The Exchange believes that
this continuing incentive will encourage
Members to send their Firm order flow
to the Exchange.
The Exchange proposes to implement
the proposed change to the Fee
Schedule effective as of January 1, 2017.
2. Statutory Basis
The Exchange proposes to amend its
Fee Schedule to increase the fees
charged to Exchange Members 12 for
simple and complex order executions in
standard options classes in the Penny
Pilot Program 13 (‘‘Penny Pilot’’) for
8 See, for example, NASDAQ PHLX LLC Pricing
Schedule, Section II.
9 See Securities Exchange Release Nos. 72988
(September 4, 2014), 79 FR 53808 (September 10,
2014) (SR–MIAX–2014–46); 72989 (September 4,
2014), 79 FR 53792 (September 10, 2014) (SR–
MIAX–2014–47); 74478 (March 11, 2015), 80 FR
13938 (March 17, 2015) (SR–MIAX–2015–16);
76674 (December 17, 2015), 80 FR 79986 (December
23, 2015) (SR–MIAX–2015–70); 79157 (October 28,
2016), 81 FR 75885 (November 1, 2016) (SR–MIAX–
2016–38).
10 For purposes of the MIAX Options Fee
Schedule, the term ‘‘Affiliate’’ means an affiliate of
a Member of at least 75% common ownership
between the firms as reflected on each firm’s Form
BD, Schedule A (‘‘Affiliate’’). See Fee Schedule note
1.
11 Under the PCRP, a Member receives certain
transaction fee discounts provided the Member
meets certain percentage thresholds in a month as
described in the PCRP table. See Fee Schedule,
Section (1)(a)(iii).
12 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
13 See Securities Exchange Act Release Nos.
78080 (June 15, 2016), 81 FR 40377 (June 21, 2016)
E:\FR\FM\30DEN1.SGM
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]]>Agencies
[Federal Register Volume 81, Number 251 (Friday, December 30, 2016)]
[Notices]
[Pages 96545-96550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31679]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79687; File No. SR-NASDAQ-2016-183]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change To Shorten the Settlement
Cycle From T+3 to T+2
December 23, 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 December 22, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' 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.
---------------------------------------------------------------------------
\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 Nasdaq Rules 11140 (Transactions in
Securities ``Ex-Dividend,'' ``Ex-Rights'' or ``Ex-Warrants''), 11150
(Transactions ``Ex-Interest'' in Bonds Which Are Dealt in ``Flat''),
11210 (Sent by Each Party), 11320 (Dates of Delivery), 11620
(Computation of Interest), and IM-11810 (Sample Buy-In Forms), to
conform to the Commission's proposed amendment to SEA Rule 15c6-1(a) to
shorten the standard settlement cycle for most broker-dealer
transactions from three business days after the trade date (``T+3'') to
two business days after the trade date (``T+2'') and the industry-led
initiative to shorten the settlement cycle from T+3 to T+2.\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 78962 (September 28,
2016), 81 FR 69240 (October 5, 2016) (Amendment to Securities
Transaction Settlement Cycle) (File No. S7-22-16) (``SEC Proposing
Release'').
---------------------------------------------------------------------------
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaq.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
[[Page 96546]]
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
SEC Proposing Release
On September 28, 2016, the Commission proposed amending SEA Rule
15c6-1(a) to shorten the standard settlement cycle for most broker-
dealer transactions from T+3 to T+2 on the basis that the shorter
settlement cycle would reduce the risks that arise from the value and
number of unsettled securities transactions prior to the completion of
settlement, including credit, market, and liquidity risk directly faced
by U.S. market participants.\4\ The proposed rule amendment was
published for comment in the Federal Register on October 5, 2016.\5\
---------------------------------------------------------------------------
\4\ See Securities and Exchange Commission Press Release 2016-
200: ``SEC Proposes Rule Amendment to Expedite Process for Settling
Securities Transactions'' (September 28, 2016).
\5\ See supra note 3.
---------------------------------------------------------------------------
Background
In 1995, the standard U.S. trade settlement cycle for equities,
municipal and corporate bonds, and unit investment trusts, and
financial instruments composed of these products was shortened from
five business days after the trade date (``T+5'') to T+3.\6\
Accordingly, Nasdaq and other self-regulatory organizations (``SROs'')
amended their respective rules to conform to the T+3 settlement
cycle.\7\ Since that time, the SEC and the financial services industry
have continued to explore the idea of shortening the settlement cycle
even further.\8\
---------------------------------------------------------------------------
\6\ In 1993, the Commission adopted SEA Rule 15c6-1 which became
effective in 1995. See Securities Exchange Act Release Nos. 33023
(October 6, 1993), 58 FR 52891 (October 13, 1993) and 34952
(November 9, 1994), 59 FR 59137 (November 16, 1994). SEA Rule 15c6-
1(a) provides, in relevant part, that ``a broker or dealer shall not
effect or enter into a contract for the purchase or sale of a
security (other than an exempted security, government security,
municipal security, commercial paper, bankers' acceptances, or
commercial bills) that provides for payment of funds and delivery of
securities later than the third business day after the date of the
contract unless otherwise expressly agreed to by the parties at the
time of the transaction.'' 17 CFR 240.15c6-1(a). Although not
covered by SEA Rule 15c6-1, in 1995, the Commission approved the
Municipal Securities Rulemaking Board's rule change requiring
transactions in municipal securities to settle by T+3. See
Securities Exchange Act Release No. 35427 (February 28, 1995), 60 FR
12798 (March 8, 1995) (Order Approving File No. SR-MSRB-94-10).
\7\ See, e.g., Securities Exchange Act Release No. 35507 (March
17, 1995), 60 FR 15616 (March 24, 1995) (Order Approving File No.
SR-NASD-94-56); Securities Exchange Act Release No. 35506 (March 17,
1995), 60 FR 15618 (March 24, 1995) (Order Approving File No. SR-
NYSE-94-40); and Securities Exchange Act Release No. 35553 (March
31, 1995), 60 FR 18161 (April 10, 1995) (Order Approving File No.
SR-Amex-94-57).
\8\ See, e.g., Securities Industry Association (``SIA''), ``SIA
T+1 Business Case Final Report'' (July 2000); Concept Release:
Securities Transactions Settlement, Securities Exchange Act Release
No. 49405 (March 11, 2004), 69 FR 12922 (March 18, 2004); and
Depository Trust & Clearing Corporation, ``Proposal to Launch a New
Cost-Benefit Analysis on Shortening the Settlement Cycle'' (December
2011).
---------------------------------------------------------------------------
In April 2014, the Depository Trust & Clearing Corporation
(``DTCC'') published its formal recommendation to shorten the standard
U.S. trade settlement cycle to T+2 and announced that it would partner
with market participants and industry organizations to devise the
necessary approach and timelines to achieve T+2.\9\
---------------------------------------------------------------------------
\9\ See DTCC, ``DTCC Recommends Shortening the U.S. Trade
Settlement Cycle'' (April 2014).
---------------------------------------------------------------------------
In an effort to improve the overall efficiency of the U.S.
settlement system by reducing the attendant risks in T+3 settlement of
securities transactions, and to align U.S. markets with other major
global markets that have already moved to T+2, DTCC, in collaboration
with the financial services industry, formed an Industry Steering
Committee (``ISC'') and an industry working group and sub-working
groups to facilitate the move to T+2.\10\ In June 2015, the ISC
published a White Paper outlining the activities and proposed time
frames that would be required to move to T+2 in the U.S.\11\
Concurrently, the Securities Industry and Financial Markets Association
(``SIFMA'') and the Investment Company Institute (``ICI'') jointly
submitted a letter to SEC Chair White, expressing support of the
financial services industry's efforts to shorten the settlement cycle
and identifying SEA Rule 15c6-1(a) and several SRO rules that they
believed would require amendments for an effective transition to
T+2.\12\ In March 2016, the ISC announced the industry target date of
September 5, 2017 for the transition to a T+2 settlement cycle to
occur.\13\
---------------------------------------------------------------------------
\10\ The ISC includes, among other participants, DTCC, the
Securities Industry and Financial Markets Association and the
Investment Company Institute.
\11\ See ``Shortening the Settlement Cycle: The Move to T+2''
(June 18, 2015).
\12\ See Letter from ICI and SIFMA to Mary Jo White, Chair, SEC,
dated June 18, 2015. See also Letter from Mary Jo White, Chair to
Kenneth E. Bentsen, Jr., President and CEO, SIFMA, and Paul Schott
Stevens, President and CEO, ICI, dated September 16, 2015
(expressing her strong support for industry efforts to shorten the
trade settlement cycle to T+2 and commitment to developing a
proposal to amend SEA Rule 15c6-1(a) to require standard settlement
no later than T+2).
\13\ See ISC Media Alert: ``US T+2 ISC Recommends Move to
Shorter Settlement Cycle On September 5, 2017'' (March 7, 2016).
---------------------------------------------------------------------------
Proposed Rule Change
In light of the SEC Proposing Release that would amend SEA Rule
15c6-1(a) to require standard settlement no later than T+2 and similar
proposals from other SROs,\14\ Nasdaq is proposing changes to its rules
pertaining to securities settlement by, among other things, amending
the definition of ``standard'' settlement as occurring on T+2. SEA Rule
15c6-1(a) currently establishes ``standard'' settlement as occurring no
later than T+3 for all securities, other than an exempt security,
government security, municipal security, commercial paper, bankers'
acceptances, or commercial bills.\15\ Nasdaq is proposing changes to
rules pertaining to securities settlement to support the industry-led
initiative to shorten the standard settlement cycle to two business
days. Most of the rules that Nasdaq has identified for these changes
are successors to provisions under the legacy NASD Rules of Fair
Practice and NASD Uniform Practice Code (``UPC'') that were amended
when the Commission adopted SEA Rule 15c6-1(a), which established T+3
as the standard settlement cycle.\16\ As such, Nasdaq is proposing to
amend Nasdaq Rules 11140 (Transactions in Securities ``Ex-Dividend,''
``Ex-Rights'' or ``Ex-Warrants''), 11150 (Transactions ``Ex- Interest''
in Bonds Which Are Dealt in ``Flat''), 11320 (Dates of Delivery), and
11620 (Computation of Interest). In addition, Nasdaq is proposing to
amend
[[Page 96547]]
Nasdaq Rules 11210 (Sent by Each Party) and IM-11810 (Sample Buy-In
Forms) to conform provisions, where appropriate, to the T+2 settlement
cycle.\17\
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\14\ See, e.g., Securities Exchange Act Release No. 77744 (April
29, 2016), 81 FR 26851 (May 4, 2016) (Order Approving File No. SR-
MSRB-2016-04).
\15\ See supra note 7.
\16\ The legacy NASD rules that were changed to conform to the
move from T+5 to T+3 included Section 26 (Investment Companies) of
the Rules of Fair Practice, and Section 5 (Transactions in
Securities ``Ex-Dividend,'' ``Ex-Rights'' or ``Ex- Warrants''),
Section 6 (Transactions ``Ex-Interest'' in Bonds Which Are Dealt in
``Flat''), Section 12 (Dates of Delivery), Section 46 (Computation
of Interest) and Section 64 (Acceptance and Settlement of COD
Orders) of the UPC. See Securities Exchange Act Release No. 35507
(March 17, 1995), 60 FR 15616 (March 24, 1995) (Order Approving File
No. SR-NASD-94-56). See also Notice to Members 95-36 (May 1995)
(enumerating the various sections under the NASD Rules of Fair
Practice and UPC that were amended to implement T+3 settlement for
securities transactions).
\17\ Nasdaq Rules 11210 and IM-11810 are successors to legacy
NASD UPC Section 9 (Sent by Each Party) and 59 (``Buying-in''),
respectively, which remained unchanged during the transition from
T+5 to T+3. See supra note 17 [sic].
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The details of the proposed rule change are described below.
(1) Nasdaq Rule 11140 (Transactions in Securities ``Ex-Dividend,''
``Ex- Rights'' or ``Ex-Warrants'')
Rule 11140(b)(1) provides that for dividends or distributions, and
the issuance or distribution of warrants, that are less than 25 percent
of the value of the subject security, if definitive information is
received sufficiently in advance of the record date, the date
designated as the ``ex-dividend date'' shall be the second business day
preceding the record date if the record date falls on a business day,
or the third business day preceding the record date if the record date
falls on a day designated by Nasdaq Regulation as a non-delivery date.
Nasdaq is proposing to shorten the time frames in Rule 11140(b)(1) by
one business day.
(2) Nasdaq Rule 11150 (``Ex-Interest'' in Bonds Which Are Dealt in
``Flat'')
Rule 11150(a) prescribes the manner for establishing ``ex-interest
dates'' for transactions in bonds or other similar evidences of
indebtedness which are traded ``flat.'' Such transactions are ``ex-
interest'' on the second business day preceding the record date if the
record date falls on a business day, on the third business day
preceding the record date if the record date falls on a day other than
a business day, or on the third business day preceding the date on
which an interest payment is to be made if no record date has been
fixed. Nasdaq is proposing to shorten the time frames in Rule 11150(a)
by one business day.
(3) Nasdaq Rule 11210 (Sent by Each Party)
Paragraphs (c) and (d) of Rule 11210 set forth the ``Don't Know''
(``DK'') voluntary procedures for using ``DK Notices'' or other forms
of notices, respectively. Depending upon the notice used, a confirming
member may follow the ``DK'' procedures when it sends a comparison or
confirmation of a trade (other than one that clears through the
National Securities Clearing Corporation (``NSCC'') or other registered
clearing agency), but does not receive a comparison or confirmation or
a signed ``DK'' from the contra-member by the close of four business
days following the trade date of the transaction (``T+4''). The
procedures generally provide that after T+4, the confirming member
shall send a ``DK Notice'' (or similar notice) to the contra-member.
The contra-member then has four business days after receipt of the
confirming member's notice to either confirm or ``DK'' the transaction.
Nasdaq is proposing to amend paragraphs (c) and (d) of Rule 11210
to provide that the ``DK'' procedures may be used by the confirming
member if it does not receive a comparison or confirmation or signed
``DK'' from the contra-member by the close of one business day
following the trade date of the transaction, rather than the current
T+4.\18\ In addition, Nasdaq is proposing amendments to paragraphs
(c)(2)(A), (c)(3), and (d)(5) of Rule 11210 to adjust the time in which
a contra-member has to respond to a ``DK Notice'' (or similar notice)
from four business days after the contra-member's receipt of the notice
to two business days.
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\18\ As stated above, the time frames in Rule 11210 remained
unchanged during the transition from T+5 to T+3. In light of the
industry-led initiative to shorten the standard settlement cycle and
the SEC Proposing Release to amend SEA Rule 15c6-1(a) to establish
T+2 as the standard settlement for most broker dealer transactions,
the Exchange believes that the current time frames in Rule 11210 are
more protracted than necessary even in a T+3 environment and as
such, the Exchange is proposing to amend these time frames to
reflect more current industry practices.
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(4) Nasdaq Rule 11320 (Dates of Delivery)
Rule 11320 prescribes delivery dates for various transactions.
Paragraph (b) states that for a ``regular way'' transaction, delivery
must be made on, but not before, the third business day after the date
of the transaction. Nasdaq is proposing to amend Rule 11320(b) to
change the reference to third business day to second business day.
Paragraph (c) provides that in a ``seller's option'' transaction,
delivery may be made by the seller on any business day after the third
business day following the date of the transaction. Nasdaq is proposing
to amend Rule 11320(c) to change the reference to third business day to
second business day.
(5) Nasdaq Rule 11620 (Computation of Interest)
In the settlement of contracts in interest-paying securities other
than for cash, Rule 11620(a) requires the calculation of interest at
the rate specified in the security up to, but not including, the third
business day after the date of the transaction. The proposed amendment
would shorten the time frame to the second business day. In addition,
the proposed amendment would make non-substantive technical changes to
the title of paragraph (a).
(6) Nasdaq Rule IM-11810 (Sample Buy-In Forms)
Rule IM-11810(i)(1)(A) sets forth the fail-to-deliver and liability
notice procedures where a securities contract is for warrants, rights,
convertible securities or other securities which have been called for
redemption; are due to expire by their terms; are the subject of a
tender or exchange offer; or are subject to other expiring events such
as a record date for the underlying security and the last day on which
the securities must be delivered or surrendered is the settlement date
of the contract or later.\19\
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\19\ Rule IM-11810(i) is the successor to legacy NASD UPC
Section 59(i) (Failure to Deliver and Liability Notice Procedures).
When this provision was added to NASD's existing close-out
procedures in 1984, it was drafted to be similar to the liability
notice provisions adopted by the NSCC so that members that were also
participants in NSCC could use the same procedures for both ex-
clearing and NSCC cleared transactions, thereby simplifying members'
back office procedures.
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Under Rule IM-11810(i)(1)(A), the receiving member delivers a
liability notice to the owing counterparty. The liability notice sets a
cutoff date for the delivery of the securities by the counterparty and
provides notice to the counterparty of the liability attendant to its
failure to deliver the securities in time. If the owing counterparty,
or delivering member, delivers the securities in response to the
liability notice, it has met its delivery obligation. If the delivering
member fails to deliver the securities on the expiration date, it will
be liable for any damages that may accrue thereby.
Rule IM-11810(i)(1)(A) further provides that when both parties to a
contract are participants in a registered clearing agency that has an
automated liability notification service, transmission of the liability
notice must be accomplished through such system.\20\ When the parties
to a contract are not both participants in a registered clearing agency
that has an automated liability notification service, such notice must
be issued using written or comparable
[[Page 96548]]
electronic media having immediate receipt capabilities not later than
one business day prior to the latest time and the date of the offer or
other event in order to obtain the protection provided by the Rule.\21\
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\20\ In 2007, NYSE Rule 180 was amended to require that when the
parties to a failed contract were both participants in a registered
clearing agency that had an automated service for notifying a
failing party of the liability that will be attendant to a failure
to deliver and the contract was to be settled through the facilities
of that registered clearing agency, the transmission of the
liability notification must be accomplished through the use of the
registered clearing agency's automated liability notification
system. See Securities Exchange Act Release No. 55132 (January 19,
2007), 72 FR 3896 (January 26, 2007) (Order Approving File No. SR-
NYSE-2006-57).
\21\ While Rule IM-11810 has undergone amendments over the
years, the one-day time frame in paragraph (j) has remained
unchanged. The one-day time frame also appears in comparable
provisions of other SROs. See, e.g., NSCC Rules & Procedures,
Procedure X (Execution of Buy-Ins) (Effective August 10, 2016); NYSE
Rule 282.65 (Fail to Deliver and Liability Notice Procedures). See
also infra note 28 and accompanying text.
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Given the proposed shortened settlement cycle, Nasdaq is proposing
to amend Rule IM-11810(i)(1)(A) in situations where both parties to a
contract are not participants of a registered clearing agency with an
automated notification service, by extending the time frame for
delivery of the liability notice. Rule IM-11810(i)(1)(A) would be
amended to provide that in such cases, the receiving member must send
the liability notice to the delivering member as soon as practicable
but not later than two hours prior to the cutoff time set forth in the
instructions on a specific offer or other event to obtain the
protection provided by the Rule. Nasdaq believes that extending the
time given to the receiving member to transmit liability notifications
will maintain the efficiency of the notification process while
mitigating the possible overuse of such notifications.
Currently, Nasdaq understands that the identity of the
counterparty, or delivering member, becomes known to the receiving
member by mid-day on the business day after trade date (``T+1''), and
by that time, the receiving member will generally also know which
transactions are subject to an event identified in Rule IM-
11810(i)(1)(A) that would prompt the receiving member to issue a
liability notice to the delivering member. Nasdaq believes that the
receiving member regularly issues liability notices to the seller or
other parties from which the securities involved are due when the
security is subject to an event identified in Rule IM-11810(i)(1)(A)
during the settlement cycle as a way to mitigate the risk of a
potential fail-to-deliver. In the current T+3 settlement environment,
the one business day time frame gives the receiving member the
requisite time needed to identify the parties involved and undertake
the liability notification process.
However, Nasdaq believes that the move to a T+2 settlement
environment will create inefficiencies in the liability notification
process under Rule IM-11810(i)(1)(A) when both parties to a contract
are not participants in a registered clearing agency with an automated
notification service. The shorter settlement cycle, with the loss of
one business day, would not afford the receiving member sufficient time
to: (1) ascertain that the securities are subject to an event listed in
Rule IM-11810(i)(1)(A) during the settlement cycle; (2) identify the
delivering member and other parties from which the securities involved
are due; and (3) determine the likelihood that such parties may fail to
deliver. Where the receiving member has sufficient time (e.g., one
business day after), it can transmit liability notices as needed to the
right parties. However, as a consequence of the shortened settlement
cycle, the receiving member would be compelled to issue liability
notices proactively to all potentially failing parties as a matter of
course to preserve its rights against such parties without the benefit
of knowing which transactions would actually necessitate the delivery
of such notice. This would create a significant increase in the volume
of liability notices members send and receive, many of which may be
unnecessary. Members would then have to manage this overabundance of
liability notices, increasing the possibility of errors, which would
adversely impact the efficiency of the process. Therefore, Nasdaq
believes its proposal to extend the time for the receiving member to
deliver a liability notice when the parties to a contract are not both
participants in a registered clearing agency with an automated
notification service would help alleviate the potential burden on the
liability notification process in a T+2 settlement environment.
Implementation
Nasdaq will announce the effective date of the proposed rule change
in an Equity Regulatory Alert, which date would correspond with the
industry-led transition to a T+2 standard settlement, and the effective
date of the Commission's proposed amendment to SEA Rule 15c6-1(a) to
require standard settlement no later than T+2.\22\
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\22\ See supra note 3.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\23\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\24\ in particular, in that it is designed to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, and, in general, to protect investors and
the public interest. The Exchange believes that the proposed rule
change supports the supports [sic] the industry-led initiative to
shorten the settlement cycle to two business days. Moreover, the
proposed rule change is consistent with the SEC's proposed amendment to
SEA Rule 15c6-1(a) to require standard settlement no later than T+2.
Nasdaq believes that the proposed rule change will provide the
regulatory certainty to facilitate the industry-led move to a T+2
settlement cycle. As noted herein, upon approval, Nasdaq will announce
the effective date of the proposed rule change in an Equity Regulatory
Alert, which date would correspond with the industry-led transition to
a T+2 standard settlement, and the effective date of the Commission's
proposed amendment to SEA Rule 15c6-1(a) to require standard settlement
no later than T+2.
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\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change makes
changes to rules pertaining to securities settlement and is intended to
facilitate the implementation of the industry-led transition to a T+2
settlement cycle. Moreover, the proposed rule changes are consistent
with the SEC's proposed amendment to SEA Rule 15c6-1(a) to require
standard settlement no later than T+2. Accordingly, Nasdaq believes
that the proposed changes do not impose any burdens on the industry in
addition to those necessary to implement amendments to SEA Rule 15c6-
1(a) as described and enumerated in the SEC Proposing Release.\25\
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\25\ See supra note 3.
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These conforming changes include changes to rules that specifically
establish the settlement cycle as well as rules that establish time
frames based on settlement dates, including for certain post-settlement
rights and obligations. Nasdaq believes that the proposed changes set
forth in the filing are necessary to support a standard settlement
cycle across the U.S. for secondary market transactions in equities,
corporate and municipal bonds, unit investment trusts, and financial
instruments composed of these
[[Page 96549]]
products, among other things.\26\ A standard U.S. settlement cycle for
such products is critical for the operation of fair and orderly
markets.
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\26\ See supra note 3.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
A previous version of the proposed rule change was published for
comment in Equity Regulatory Alert 2016-4 on May 18, 2016. Two comments
were received in response to the Regulatory Alert.\27\ A copy of the
Regulatory Alert is attached as Exhibit 2a. A list of comments is
attached as Exhibit 2b [sic] and copies of the comment letters received
in response to the Regulatory Notice are attached as Exhibits 2c [sic].
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\27\ See Letter from Martin A. Burns, Chief Industry Operations
Officer, Investment Company Institute to John Zecca, Senior Vice
President, Marketwatch dated June 8, 2016 (``ICI''); letter from
Thomas F. Price, Managing Director, Operations, Securities Industry
and Financial Markets Association, to John Zecca, Senior Vice
President Market Watch dated June 8, 2016 (``SIFMA'').
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Both of the letters received expressed support for the industry led
move to T+2 stating, among other benefits, that the move will align
U.S. markets with international markets that already work in the T+2
environment, improve the overall efficiency and liquidity of the
securities markets, and the stability of the financial system by
reducing counterparty risk and pro-cyclical and liquidity demands, and
decreasing clearing capital requirements. SIFMA also provided their
view on the proposed amendments to two rules under the Nasdaq Rule
11800 Series (Buying In).
Nasdaq Rule IM-11810(i)--Sample Buy-In Forms
In its comment letter, SIFMA raised a concern with the one-day time
frame in Rule IM-11810(i)(1)(A), asserting that the requirement for the
delivering member to deliver a liability notice to the receiving member
no later than one business day prior to the latest time and the date of
the offer or other event in order to obtain the protection provided by
the Rule may no longer be appropriate in a T+2 environment in some
situations such as where the delivery obligation is transferred to
another party as a result of continuous net settlement, settlements
outside of the NSCC, and settlements involving a third party that is
not a Nasdaq member firm. SIFMA noted that NYSE Rule 180 (Failure to
Deliver) includes a similar requirement for NYSE member firms that are
participants in a registered clearing agency to transmit liability
notification through an automated notification service and proposed
amending Rule IM-11810(i)(1)(A) to omit the reference to a notification
time frame, which would align with NYSE Rule 180.\28\ In the
alternative, SIFMA proposed amending Rule IM-11810(i)(1)(A) to require
that the liability notice be delivered in a ``reasonable amount of
time'' ahead of the settlement obligation in light of facts and
circumstances. SIFMA maintained that under either proposed amendment to
paragraph (j), the delivering member would be liable for any damages
caused by its failure to deliver in a timely fashion.
---------------------------------------------------------------------------
\28\ See NYSE Rule 180 (Failure to Deliver) providing in part
that ``[w]hen the parties to a contract are both participants in a
registered clearing agency which has an automated service for
notifying a failing party of the liability that will be attendant to
a failure to deliver and that contract was to be settled through the
facilities of said registered clearing agency, the transmission of
the liability notification must be accomplished through use of said
automated notification service.'' Nasdaq notes that NYSE Rule 180
does not address the transmission of the liability notification for
parties to a contract that are not both participants in a registered
clearing agency (or non-participants). The transmission of the
liability notification for non-participants is addressed under NYSE
Rule 282.65 (Failure to Deliver and Liability Notice Procedures).
See supra note 22.
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While Nasdaq did not initially propose amendments to Rule IM-11810
for the T+2 initiative,\29\ in light of SIFMA's concern regarding Rule
IM-11810(i)(1)(A), Nasdaq is proposing to amend the Rule to provide
that, where both parties to a contract are not participants of a
registered clearing agency with an automated notification service, the
receiving member must send the liability notice to the delivering
member as soon as practicable but not later than two hours prior to the
cutoff time set forth in the instructions on a specific offer or other
event to obtain the protection provided by the Rule.\30\
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\29\ See Equity Regulatory Alert 2016-4.
\30\ Nasdaq expects similar amendments to other comparable SRO
provisions in NYSE Rule 282.65 (Fail to Deliver and Liability Notice
Procedures) and FINRA Rule 11810 (Buying-in), and NSCC Rules &
Procedures, Procedure X (Execution of Buy-Ins) to address SIFMA's
concern about the one-day notification time frame.
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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 up to 90 days (i) as the
Commission may designate 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-NASDAQ-2016-183 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2016-183. 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 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-
[[Page 96550]]
NASDAQ-2016-183 and should be submitted on or before January 20, 2017.
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\31\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-31679 Filed 12-29-16; 8:45 am]
BILLING CODE 8011-01-P
