Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of Proposed Rule Change To Adopt Rule 16100 (Consolidated Audit Trail-Fee Dispute Resolution) To Establish the Procedures for Resolving Potential Disputes Related to CAT Fees Charged to Industry Members, 26536-26539 [2017-11742]
Download as PDF
26536
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
trading of the Shares subject to the
Exchange’s existing rules governing the
trading of equity securities.
(3) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions.29
(4) The Exchange also has a general
policy prohibiting the distribution of
material, non-public information by its
employees.30
(5) The Index Provider, which is not
affiliated with a broker-dealer, has
adopted policies and procedures
designed to prevent the spread of
material non-public information about
the Indexes.31
(6) Trading in the Shares will be
subject to the existing trading
surveillances administered by the
Exchange, as well as cross-market
surveillances administered by FINRA on
behalf of the Exchange, which are
designed to detect violations of
Exchange rules and applicable federal
securities laws, and that these
procedures are adequate to properly
monitor Exchange trading of the Shares
in all trading sessions and to deter and
detect violations of Exchange rules and
federal securities laws applicable to
trading on the Exchange.32
(7) The Exchange or FINRA, on behalf
of the Exchange, or both, will
communicate as needed regarding
trading in the Shares with other markets
and other entities that are members of
the Intermarket Surveillance Group
(‘‘ISG’’), and the Exchange or FINRA, on
behalf of the Exchange, or both, may
obtain trading information regarding
trading in the Shares from such markets
and other entities. In addition, the
Exchange may obtain information
regarding trading in the Shares from
markets and other entities that are
members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.33
(8) Prior to the commencement of
trading, the Exchange will inform its
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (1) The
procedures for purchases and
redemptions of Shares in Baskets
(including noting that Shares are not
individually redeemable); (2) NYSE
29 See
id. at 24.
id. at 26.
31 See id. at 8.
32 See id. at 25–26. FINRA conducts cross-market
surveillances on behalf of the Exchange pursuant to
a regulatory services agreement. The Exchange is
responsible for FINRA’s performance under this
regulatory services agreement. See id. at 25, n.33.
33 For a list of the current members of ISG, see
www.isgportal.org.
30 See
VerDate Sep<11>2014
16:37 Jun 06, 2017
Jkt 241001
Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its
ETP Holders to learn the essential facts
relating to every customer prior to
trading the Shares; (3) ETP Holders
deliver a prospectus to investors
purchasing newly issued Shares prior to
or concurrently with the confirmation of
a transaction; (4) the possibility that
trading spreads and the resulting
premium or discount on the Shares may
widen as a result of reduced liquidity of
gold trading during the Core and Late
Trading Sessions after the close of the
major world gold markets; and (5)
trading information.
(9) All statements and representations
made in this filing regarding (a) the
description of the applicable Indexes,
portfolios or reference assets, (b)
limitations on Index or portfolio
holdings or reference assets, or (c) the
applicability of Exchange listing rules
specified in this rule filing constitute
continued listing requirements for
listing the Shares on the Exchange.34
(10) The issuer has represented to the
Exchange that it will advise the
Exchange of any failure by the Funds 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. If the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
the 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
Amendment No. 2, and the Exchange’s
description of the Funds.
For the foregoing reasons, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 2, is consistent with Section 6(b)(5)
of the Act 35 and the rules and
regulations thereunder applicable to a
national securities exchange.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,36
that the proposed rule change (SR–
NYSEArca–2017–33), as modified by
Amendment No. 2 be, and it hereby is,
approved.
34 See
Amendment No. 2, supra note 4, at 26.
U.S.C. 78f(b)(5).
36 15 U.S.C. 78s(b)(2).
35 15
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.37
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–11750 Filed 6–6–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80831; File No. SR–BOX–
2017–19]
Self-Regulatory Organizations; BOX
Options Exchange LLC; Notice of
Filing of Proposed Rule Change To
Adopt Rule 16100 (Consolidated Audit
Trail—Fee Dispute Resolution) To
Establish the Procedures for Resolving
Potential Disputes Related to CAT
Fees Charged to Industry Members
June 1, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (‘‘Act’’
or ‘‘Exchange Act’’),1 and Rule 19b–4
thereunder,2 notice is hereby given that
on May 25, 2017, BOX Options
Exchange LLC (the ‘‘Exchange’’ or
‘‘SRO’’) filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) the proposed rule change as
described in Items I and II below, which
Items have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt Rule
16100 (Consolidated Audit Trail—Fee
Dispute Resolution) to establish the
procedures for resolving potential
disputes related to CAT Fees charged to
Industry Members.3 The text of the
proposed rule change is available from
the principal office of the Exchange, at
the Commission’s Public Reference
Room and also on the Exchange’s
Internet Web site at https://
boxexchange.com.
37 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Unless otherwise specified, capitalized terms
used in this rule filing are defined as set forth
herein, or in the Consolidated Audit Trail Funding
Fees Rule, the CAT Compliance Rule Series or in
the CAT NMS Plan.
1 15
E:\FR\FM\07JNN1.SGM
07JNN1
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
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
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
sradovich on DSK3GMQ082PROD with NOTICES
1. Purpose
Bats BYX Exchange, Inc., Bats BZX
Exchange, Inc., Bats EDGA Exchange,
Inc., Bats EDGX Exchange, Inc., BOX
Options Exchange LLC, C2 Options
Exchange, Incorporated, Chicago Board
Options Exchange, Incorporated,
Chicago Stock Exchange, Inc., Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’), Investors’ Exchange LLC,
Miami International Securities
Exchange, LLC, MIAX PEARL, LLC,
NASDAQ BX, Inc., Nasdaq GEMX, LLC,
Nasdaq ISE, LLC, Nasdaq MRX, LLC,4
NASDAQ PHLX LLC, The NASDAQ
Stock Market LLC, New York Stock
Exchange LLC, NYSE MKT LLC, NYSE
Arca, Inc. and NYSE National, Inc.5
(collectively, the ‘‘Participants’’) filed
with the Commission, pursuant to
Section 11A of the Exchange Act 6 and
Rule 608 of Regulation NMS
thereunder,7 the National Market
System Plan Governing the
Consolidated Audit Trail (the ‘‘CAT
NMS Plan’’ or ‘‘Plan’’).8 The
Participants filed the Plan to comply
4 ISE Gemini, LLC, ISE Mercury, LLC and
International Securities Exchange, LLC have been
renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
and Nasdaq ISE, LLC, respectively. See Securities
Exchange Act Rel. No. 80248 (Mar. 15, 2017), 82 FR
14547 (Mar. 21, 2017); Securities Exchange Act Rel.
No. 80326 (Mar. 29, 2017), 82 FR 16460 (Apr. 4,
2017); and Securities Exchange Act Rel. No. 80325
(Mar. 29, 2017), 82 FR 16445 (Apr. 4, 2017).
5 National Stock Exchange, Inc. has been renamed
NYSE National, Inc. See Securities Exchange Act
Rel. No. 79902 (Jan. 30, 2017), 82 FR 9258 (Feb. 3,
2017).
6 15 U.S.C. 78k–1.
7 17 CFR 242.608.
8 See Letter from the Participants to Brent J.
Fields, Secretary, Commission, dated September 30,
2014; and Letter from Participants to Brent J. Fields,
Secretary, Commission, dated February 27, 2015.
On December 24, 2015, the Participants submitted
an amendment to the CAT NMS Plan. See Letter
from Participants to Brent J. Fields, Secretary,
Commission, dated December 23, 2015.
VerDate Sep<11>2014
16:37 Jun 06, 2017
Jkt 241001
with Rule 613 of Regulation NMS under
the Exchange Act. The Plan was
published for comment in the Federal
Register on May 17, 2016,9 and
approved by the Commission, as
modified, on November 15, 2016.10 The
Plan is designed to create, implement
and maintain a consolidated audit trail
(‘‘CAT’’) that would capture customer
and order event information for orders
in NMS Securities and OTC Equity
Securities, across all markets, from the
time of order inception through routing,
cancellation, modification, or execution
in a single consolidated data source.
The Plan accomplishes this by creating
CAT NMS, LLC (the ‘‘Company’’), of
which each Participant is a member, to
operate the CAT.11 Under the CAT NMS
Plan, the Operating Committee of the
Company (‘‘Operating Committee’’) has
discretion to establish funding for the
Company to operate the CAT, including
establishing fees that the Participants
will pay, and establishing fees for
Industry Members that will be
implemented by the Participants (‘‘CAT
Fees’’).12 The Participants are required
to file with the SEC under Section 19(b)
of the Exchange Act any such CAT Fees
applicable to Industry Members that the
Operating Committee approves.13
Accordingly, SRO has filed a proposed
rule change with the SEC to adopt the
Consolidated Audit Trail Funding Fees,
which will require Industry Members
that are SRO members to pay the CAT
Fees determined by the Operating
Committee.14 SRO submits this rule
filing to adopt Rule 16100 (Consolidated
Audit Trail—Fee Dispute Resolution) to
establish the procedures for resolving
potential disputes related to CAT Fees
charged to Industry Members. Proposed
Rule 16100 is described below.
(1) Definitions
Paragraph (a) of Proposed Rule 16100
sets forth the definitions for Proposed
Rule 16100. Paragraph (a)(1) of
Proposed Rule 16100 states that, for
purposes of Rule 16100, the terms ‘‘CAT
NMS Plan’’, ‘‘Industry Member’’,
‘‘Operating Committee’’, and
‘‘Participant’’ are defined as set forth in
the Rule 16010 (Consolidated Audit
Trail—Definitions), and the term ‘‘CAT
9 Securities Exchange Act Rel. No. 77724 (Apr.
27, 2016), 81 FR 30614 (May 17, 2016).
10 Securities Exchange Act Rel. No. 79318 (Nov.
15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
Order’’).
11 The Plan also serves as the limited liability
company agreement for the Company.
12 Section 11.1(b) of the CAT NMS Plan.
13 Id.
14 Securities Exchange Act Release No. 80721
(May 18, 2017), 82 FR 23864 (May 24, 2017) (Notice
of Filing and Immediate Effectiveness SR–BOX–
2017–16).
PO 00000
Frm 00115
Fmt 4703
Sfmt 4703
26537
Fee’’ is defined as set forth in the
Consolidated Audit Trail Funding Fees.
In addition, SRO proposes to add
paragraph (a)(2) to Proposed Rule
16100. New paragraph (a)(2) would
define the term ‘‘Subcommittee’’ to
mean a subcommittee designated by the
Operating Committee pursuant to the
CAT NMS Plan. This definition is the
same substantive definition as set forth
in Section 1.1 of the CAT NMS Plan.
(2) Fee Dispute Resolution
Section 11.5 of the CAT NMS Plan
requires Participants to adopt rules
requiring that disputes with respect to
fees charged to Industry Members
pursuant to the CAT NMS Plan be
determined by the Operating Committee
or Subcommittee. Section 11.5 of the
CAT NMS Plan also states that decisions
by the Operating Committee or
Subcommittee on such matters shall be
binding on Industry Members, without
prejudice to the right of any Industry
Member to seek redress from the SEC
pursuant to SEC Rule 608 or in any
other appropriate forum. SRO proposes
to adopt paragraph (b) of Proposed Rule
16100. Paragraph (b) of Proposed Rule
16100 states that disputes initiated by
an Industry Member with respect to
CAT Fees charged to such Industry
Member pursuant to the Consolidated
Audit Trail Funding Fees, including
disputes related to the designated tier
and the fee calculated pursuant to such
tier, shall be resolved by the Operating
Committee, or a Subcommittee
designated by the Operating Committee,
of the CAT NMS Plan, pursuant to the
Fee Dispute Resolution Procedures
adopted pursuant to the CAT NMS Plan
and set forth in paragraph (c) of
Proposed Rule 16100. Decisions on such
matters shall be binding on Industry
Members, without prejudice to the
rights of any such Industry Member to
seek redress from the SEC or in any
other appropriate forum.
The Operating Committee has
adopted ‘‘Fee Dispute Resolution
Procedures’’ governing the manner in
which disputes regarding CAT Fees
charged pursuant to the Consolidated
Audit Trail Funding Fees will be
addressed. These Fee Dispute
Resolution Procedures, as they relate to
Industry Members, are set forth in
paragraph (c) of Proposed Rule 16100.
Specifically, the Fee Dispute Resolution
Procedures provide the procedure for
Industry Members that dispute CAT
Fees charged to such Industry Member
pursuant to one or more of the
Participants’ Consolidated Audit Trail
Funding Fees Rules, including disputes
related to the designated tier and the fee
calculated pursuant to such tier, to
E:\FR\FM\07JNN1.SGM
07JNN1
sradovich on DSK3GMQ082PROD with NOTICES
26538
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
apply for an opportunity to be heard
and to have the CAT Fees charged to
such Industry Member reviewed. The
Procedures are modeled after the
adverse action procedures adopted by
various exchanges,15 and will be posted
on the Web site for the CAT NMS Plan
Web site.16
Under these Procedures, an Industry
Member that disputes CAT Fees charged
to such Industry Member and that
desires to have an opportunity to be
heard with respect to such disputed
CAT Fees must file a written application
with the Company within 15 business
days after being notified of such
disputed CAT Fees. The application
must identify the disputed CAT Fees,
state the specific reasons why the
applicant takes exception to such CAT
Fees, and set forth the relief sought. In
addition, if the applicant intends to
submit any additional documents,
statements, arguments or other material
in support of the application, the same
should be so stated and identified.
The Company will refer applications
for hearing and review promptly to the
Subcommittee designated by the
Operating Committee pursuant to
Section 4.12 of the CAT NMS Plan with
responsibility for conducting the
reviews of CAT Fee disputes pursuant
to these Procedures. This Subcommittee
will be referred to as the Fee Review
Subcommittee. The members of the Fee
Review Subcommittee will be subject to
the provisions of Section 4.3(d) of the
CAT NMS Plan regarding recusal and
Conflicts of Interest. The Fee Review
Subcommittee will keep a record of the
proceedings.
The Fee Review Subcommittee will
hold hearings promptly. The Fee
Review Subcommittee will set a hearing
date. The parties to the hearing shall
furnish the Fee Review Subcommittee
with all materials relevant to the
proceedings at least 72 hours prior to
the date of the hearing. Each party will
have the right to inspect and copy the
other party’s materials prior to the
hearing.
The parties to the hearing will consist
of the applicant and a representative of
the Company who shall present the
reasons for the action taken by the
Company that allegedly aggrieved the
applicant. The applicant is entitled to be
accompanied, represented and advised
by counsel at all stages of the
proceedings.
The Fee Review Subcommittee will
determine all questions concerning the
15 See, e.g., Chapter X of BATS BZX Exchange,
Inc. (Adverse Action); and Chapter X of NYSE
National, Inc. (Adverse Action).
16 The CAT NMS Plan Web site is
www.catnmsplan.com.
VerDate Sep<11>2014
16:37 Jun 06, 2017
Jkt 241001
admissibility of evidence and will
otherwise regulate the conduct of the
hearing. Each of the parties will be
permitted to make an opening
statement, present witnesses and
documentary evidence, cross examine
opposing witnesses and present closing
arguments orally or in writing as
determined by the Fee Review
Subcommittee. The Fee Review
Subcommittee also will have the right to
question all parties and witnesses to the
proceeding. The Fee Review
Subcommittee must keep a record of the
hearing. The formal rules of evidence
will not apply.
The Fee Review Subcommittee must
set forth its decision in writing and send
the written decision to the parties to the
proceeding. Such decisions will contain
the reasons supporting the conclusions
of the Fee Review Subcommittee.
The decision of the Fee Review
Subcommittee will be subject to review
by the Operating Committee either on
its own motion within 20 business days
after issuance of the decision or upon
written request submitted by the
applicant within 15 business days after
issuance of the decision. The applicant’s
petition must be in writing and must
specify the findings and conclusions to
which the applicant objects, together
with the reasons for such objections.
Any objection to a decision not
specified in writing will be considered
to have been abandoned and may be
disregarded. Parties may petition to
submit a written argument to the
Operating Committee and may request
an opportunity to make an oral
argument before the Operating
Committee. The Operating Committee
will have sole discretion to grant or
deny either request.
The Operating Committee will
conduct the review. The review will be
made upon the record and will be made
after such further proceedings, if any, as
the Operating Committee may order.
Based upon such record, the Operating
Committee may affirm, reverse or
modify, in whole or in part, the decision
of the Fee Review Subcommittee. The
decision of the Operating Committee
will be in writing, will be sent to the
parties to the proceeding and will be
final.
The Procedures state that a final
decision regarding the disputed CAT
Fees by the Operating Committee, or the
Fee Review Subcommittee (if there is no
review by the Operating Committee),
must be provided within 90 days of the
date on which the Industry Member
filed a written application regarding
disputed CAT Fees with the Company.
The Operating Committee may extend
the 90-day time limit at its discretion.
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
In addition, the Procedures state that
any notices or other documents may be
served upon the applicant either
personally or by leaving the same at its,
his or her place of business or by
deposit in the United States post office,
postage prepaid, by registered or
certified mail, addressed to the
applicant at its, his or her last known
business or residence address. The
Procedures also state that any time
limits imposed under the Procedures for
the submission of answers, petitions or
other materials may be extended by
permission of the Operating Committee.
All papers and documents relating to
review by the Fee Review Subcommittee
or the Operating Committee must be
submitted to the Fee Review
Subcommittee or Operating Committee,
as applicable.
The Procedures also note that
decisions on such CAT Fee disputes
made pursuant to these Procedures will
be binding on Industry Members,
without prejudice to the rights of any
such Industry Member to seek redress
from the SEC or in any other
appropriate forum.
Finally, an Industry Member that files
a written application with the Company
regarding disputed CAT Fees in
accordance with these Procedures is not
required to pay such disputed CAT Fees
until the dispute is resolved in
accordance with these Procedures,
including any review by the SEC or in
any other appropriate forum. For these
purposes, the disputed CAT Fees means
the amount of the invoiced CAT Fees
that the Industry Member has asserted
pursuant to these Procedures that such
Industry Member does not owe to the
Company. The Industry Member must
pay any invoiced CAT Fees that are not
disputed CAT Fees when due as set
forth in the original invoice.
Once the dispute regarding CAT Fees
is resolved pursuant to these
Procedures, if it is determined that the
Industry Member owes any of the
disputed CAT Fees, then the Industry
Member must pay such disputed CAT
Fees that are owed as well as interest on
such disputed CAT Fees from the
original due date (that is, 30 days after
receipt of the original invoice of such
CAT Fees) until such disputed CAT
Fees are paid at a per annum rate equal
to the lesser of (i) the Prime Rate plus
300 basis points, or (ii) the maximum
rate permitted by applicable law.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6(b)(5) of the
E:\FR\FM\07JNN1.SGM
07JNN1
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
Act,17 which require, among other
things, that the SRO rules must be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, and, in general, to protect
investors and the public interest, and
not designed to permit unfair
discrimination between customers,
issuers, brokers and dealer, and Section
15A(b)(5) [sic] of the Act,18 which
requires that SRO rules provide for the
equitable allocation of reasonable dues,
fees, and other charges among members
and issuers and other persons using its
facilities.
The Exchange believes that this
proposal is consistent with the Act
because it implements, interprets or
clarifies Section 11.5 of the Plan, and is
designed to assist the Exchange and its
Industry Members in meeting regulatory
obligations pursuant to the Plan. In
approving the Plan, the SEC noted that
the Plan ‘‘is necessary and appropriate
in the public interest, for the protection
of investors and the maintenance of fair
and orderly markets, to remove
impediments to, and perfect the
mechanism of a national market system,
or is otherwise in furtherance of the
purposes of the Act.’’ 19 To the extent
that this proposal implements,
interprets or clarifies the Plan and
applies specific requirements to
Industry Members, the Exchange
believes that this proposal furthers the
objectives of the Plan, as identified by
the SEC, and is therefore consistent with
the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Section 6(b)(8) of the Act 20 require
[sic] that Exchange rules not impose any
burden on competition that is not
necessary or appropriate. The Exchange
does not believe that the proposed rule
change will result in any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. The Exchange notes
that the proposed rule change
implements Section 11.5 of the CAT
NMS Plan approved by the Commission,
and is designed to assist the Exchange
in meeting its regulatory obligations
pursuant to the Plan. Similarly, all
national securities exchanges and
FINRA are proposing this proposed rule
to implement the requirements of the
CAT NMS Plan. Therefore, this is not a
competitive rule filing and, therefore, it
does not raise competition issues
17 15
U.S.C. 78f(b)(5).
U.S.C. 78o–3(b)(5) [sic].
19 Approval Order at 84697.
20 5 U.S.C. 78f(b)(8)
18 15
VerDate Sep<11>2014
16:37 Jun 06, 2017
Jkt 241001
between and among the exchanges and
FINRA.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received comments on the proposed
rule change.
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
will:
(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–
BOX–2017–19 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–BOX–2017–19. 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
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
26539
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–BOX–
2017–19, and should be submitted on or
before June 28, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–11742 Filed 6–6–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80836; File No. SR–
BatsBYX–2017–13]
Self-Regulatory Organizations; Bats
BYX Exchange, Inc.; Notice of Filing of
a Proposed Rule Change To Adopt
Rule 4.17, Consolidated Audit Trail—
Fee Dispute Resolution
June 1, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’ or ‘‘Exchange Act’’),1 and Rule
19b–4 thereunder,2 notice is hereby
given that on May 23, 2017, Bats BYX
Exchange, Inc. (the ‘‘Exchange’’ or
‘‘BYX’’) filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) 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 filed a proposal to
adopt Rule 4.17 (Consolidated Audit
Trail—Fee Dispute Resolution) to
establish the procedures for resolving
21 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\07JNN1.SGM
07JNN1
Agencies
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26536-26539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11742]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80831; File No. SR-BOX-2017-19]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing of Proposed Rule Change To Adopt Rule 16100 (Consolidated
Audit Trail--Fee Dispute Resolution) To Establish the Procedures for
Resolving Potential Disputes Related to CAT Fees Charged to Industry
Members
June 1, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on May 25, 2017, BOX Options Exchange LLC (the
``Exchange'' or ``SRO'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') the proposed rule change as
described in Items I and II below, which Items have been prepared by
the self-regulatory organization. The Commission is publishing this
notice to solicit comments on the proposed rule 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 adopt Rule 16100 (Consolidated Audit
Trail--Fee Dispute Resolution) to establish the procedures for
resolving potential disputes related to CAT Fees charged to Industry
Members.\3\ The text of the proposed rule change is available from the
principal office of the Exchange, at the Commission's Public Reference
Room and also on the Exchange's Internet Web site at https://boxexchange.com.
---------------------------------------------------------------------------
\3\ Unless otherwise specified, capitalized terms used in this
rule filing are defined as set forth herein, or in the Consolidated
Audit Trail Funding Fees Rule, the CAT Compliance Rule Series or in
the CAT NMS Plan.
---------------------------------------------------------------------------
[[Page 26537]]
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 self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA
Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2
Options Exchange, Incorporated, Chicago Board Options Exchange,
Incorporated, Chicago Stock Exchange, Inc., Financial Industry
Regulatory Authority, Inc. (``FINRA''), Investors' Exchange LLC, Miami
International Securities Exchange, LLC, MIAX PEARL, LLC, NASDAQ BX,
Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,\4\ NASDAQ
PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC,
NYSE MKT LLC, NYSE Arca, Inc. and NYSE National, Inc.\5\ (collectively,
the ``Participants'') filed with the Commission, pursuant to Section
11A of the Exchange Act \6\ and Rule 608 of Regulation NMS
thereunder,\7\ the National Market System Plan Governing the
Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan'').\8\ The
Participants filed the Plan to comply with Rule 613 of Regulation NMS
under the Exchange Act. The Plan was published for comment in the
Federal Register on May 17, 2016,\9\ and approved by the Commission, as
modified, on November 15, 2016.\10\ The Plan is designed to create,
implement and maintain a consolidated audit trail (``CAT'') that would
capture customer and order event information for orders in NMS
Securities and OTC Equity Securities, across all markets, from the time
of order inception through routing, cancellation, modification, or
execution in a single consolidated data source. The Plan accomplishes
this by creating CAT NMS, LLC (the ``Company''), of which each
Participant is a member, to operate the CAT.\11\ Under the CAT NMS
Plan, the Operating Committee of the Company (``Operating Committee'')
has discretion to establish funding for the Company to operate the CAT,
including establishing fees that the Participants will pay, and
establishing fees for Industry Members that will be implemented by the
Participants (``CAT Fees'').\12\ The Participants are required to file
with the SEC under Section 19(b) of the Exchange Act any such CAT Fees
applicable to Industry Members that the Operating Committee
approves.\13\ Accordingly, SRO has filed a proposed rule change with
the SEC to adopt the Consolidated Audit Trail Funding Fees, which will
require Industry Members that are SRO members to pay the CAT Fees
determined by the Operating Committee.\14\ SRO submits this rule filing
to adopt Rule 16100 (Consolidated Audit Trail--Fee Dispute Resolution)
to establish the procedures for resolving potential disputes related to
CAT Fees charged to Industry Members. Proposed Rule 16100 is described
below.
---------------------------------------------------------------------------
\4\ ISE Gemini, LLC, ISE Mercury, LLC and International
Securities Exchange, LLC have been renamed Nasdaq GEMX, LLC, Nasdaq
MRX, LLC, and Nasdaq ISE, LLC, respectively. See Securities Exchange
Act Rel. No. 80248 (Mar. 15, 2017), 82 FR 14547 (Mar. 21, 2017);
Securities Exchange Act Rel. No. 80326 (Mar. 29, 2017), 82 FR 16460
(Apr. 4, 2017); and Securities Exchange Act Rel. No. 80325 (Mar. 29,
2017), 82 FR 16445 (Apr. 4, 2017).
\5\ National Stock Exchange, Inc. has been renamed NYSE
National, Inc. See Securities Exchange Act Rel. No. 79902 (Jan. 30,
2017), 82 FR 9258 (Feb. 3, 2017).
\6\ 15 U.S.C. 78k-1.
\7\ 17 CFR 242.608.
\8\ See Letter from the Participants to Brent J. Fields,
Secretary, Commission, dated September 30, 2014; and Letter from
Participants to Brent J. Fields, Secretary, Commission, dated
February 27, 2015. On December 24, 2015, the Participants submitted
an amendment to the CAT NMS Plan. See Letter from Participants to
Brent J. Fields, Secretary, Commission, dated December 23, 2015.
\9\ Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81
FR 30614 (May 17, 2016).
\10\ Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81
FR 84696 (Nov. 23, 2016) (``Approval Order'').
\11\ The Plan also serves as the limited liability company
agreement for the Company.
\12\ Section 11.1(b) of the CAT NMS Plan.
\13\ Id.
\14\ Securities Exchange Act Release No. 80721 (May 18, 2017),
82 FR 23864 (May 24, 2017) (Notice of Filing and Immediate
Effectiveness SR-BOX-2017-16).
---------------------------------------------------------------------------
(1) Definitions
Paragraph (a) of Proposed Rule 16100 sets forth the definitions for
Proposed Rule 16100. Paragraph (a)(1) of Proposed Rule 16100 states
that, for purposes of Rule 16100, the terms ``CAT NMS Plan'',
``Industry Member'', ``Operating Committee'', and ``Participant'' are
defined as set forth in the Rule 16010 (Consolidated Audit Trail--
Definitions), and the term ``CAT Fee'' is defined as set forth in the
Consolidated Audit Trail Funding Fees. In addition, SRO proposes to add
paragraph (a)(2) to Proposed Rule 16100. New paragraph (a)(2) would
define the term ``Subcommittee'' to mean a subcommittee designated by
the Operating Committee pursuant to the CAT NMS Plan. This definition
is the same substantive definition as set forth in Section 1.1 of the
CAT NMS Plan.
(2) Fee Dispute Resolution
Section 11.5 of the CAT NMS Plan requires Participants to adopt
rules requiring that disputes with respect to fees charged to Industry
Members pursuant to the CAT NMS Plan be determined by the Operating
Committee or Subcommittee. Section 11.5 of the CAT NMS Plan also states
that decisions by the Operating Committee or Subcommittee on such
matters shall be binding on Industry Members, without prejudice to the
right of any Industry Member to seek redress from the SEC pursuant to
SEC Rule 608 or in any other appropriate forum. SRO proposes to adopt
paragraph (b) of Proposed Rule 16100. Paragraph (b) of Proposed Rule
16100 states that disputes initiated by an Industry Member with respect
to CAT Fees charged to such Industry Member pursuant to the
Consolidated Audit Trail Funding Fees, including disputes related to
the designated tier and the fee calculated pursuant to such tier, shall
be resolved by the Operating Committee, or a Subcommittee designated by
the Operating Committee, of the CAT NMS Plan, pursuant to the Fee
Dispute Resolution Procedures adopted pursuant to the CAT NMS Plan and
set forth in paragraph (c) of Proposed Rule 16100. Decisions on such
matters shall be binding on Industry Members, without prejudice to the
rights of any such Industry Member to seek redress from the SEC or in
any other appropriate forum.
The Operating Committee has adopted ``Fee Dispute Resolution
Procedures'' governing the manner in which disputes regarding CAT Fees
charged pursuant to the Consolidated Audit Trail Funding Fees will be
addressed. These Fee Dispute Resolution Procedures, as they relate to
Industry Members, are set forth in paragraph (c) of Proposed Rule
16100. Specifically, the Fee Dispute Resolution Procedures provide the
procedure for Industry Members that dispute CAT Fees charged to such
Industry Member pursuant to one or more of the Participants'
Consolidated Audit Trail Funding Fees Rules, including disputes related
to the designated tier and the fee calculated pursuant to such tier, to
[[Page 26538]]
apply for an opportunity to be heard and to have the CAT Fees charged
to such Industry Member reviewed. The Procedures are modeled after the
adverse action procedures adopted by various exchanges,\15\ and will be
posted on the Web site for the CAT NMS Plan Web site.\16\
---------------------------------------------------------------------------
\15\ See, e.g., Chapter X of BATS BZX Exchange, Inc. (Adverse
Action); and Chapter X of NYSE National, Inc. (Adverse Action).
\16\ The CAT NMS Plan Web site is www.catnmsplan.com.
---------------------------------------------------------------------------
Under these Procedures, an Industry Member that disputes CAT Fees
charged to such Industry Member and that desires to have an opportunity
to be heard with respect to such disputed CAT Fees must file a written
application with the Company within 15 business days after being
notified of such disputed CAT Fees. The application must identify the
disputed CAT Fees, state the specific reasons why the applicant takes
exception to such CAT Fees, and set forth the relief sought. In
addition, if the applicant intends to submit any additional documents,
statements, arguments or other material in support of the application,
the same should be so stated and identified.
The Company will refer applications for hearing and review promptly
to the Subcommittee designated by the Operating Committee pursuant to
Section 4.12 of the CAT NMS Plan with responsibility for conducting the
reviews of CAT Fee disputes pursuant to these Procedures. This
Subcommittee will be referred to as the Fee Review Subcommittee. The
members of the Fee Review Subcommittee will be subject to the
provisions of Section 4.3(d) of the CAT NMS Plan regarding recusal and
Conflicts of Interest. The Fee Review Subcommittee will keep a record
of the proceedings.
The Fee Review Subcommittee will hold hearings promptly. The Fee
Review Subcommittee will set a hearing date. The parties to the hearing
shall furnish the Fee Review Subcommittee with all materials relevant
to the proceedings at least 72 hours prior to the date of the hearing.
Each party will have the right to inspect and copy the other party's
materials prior to the hearing.
The parties to the hearing will consist of the applicant and a
representative of the Company who shall present the reasons for the
action taken by the Company that allegedly aggrieved the applicant. The
applicant is entitled to be accompanied, represented and advised by
counsel at all stages of the proceedings.
The Fee Review Subcommittee will determine all questions concerning
the admissibility of evidence and will otherwise regulate the conduct
of the hearing. Each of the parties will be permitted to make an
opening statement, present witnesses and documentary evidence, cross
examine opposing witnesses and present closing arguments orally or in
writing as determined by the Fee Review Subcommittee. The Fee Review
Subcommittee also will have the right to question all parties and
witnesses to the proceeding. The Fee Review Subcommittee must keep a
record of the hearing. The formal rules of evidence will not apply.
The Fee Review Subcommittee must set forth its decision in writing
and send the written decision to the parties to the proceeding. Such
decisions will contain the reasons supporting the conclusions of the
Fee Review Subcommittee.
The decision of the Fee Review Subcommittee will be subject to
review by the Operating Committee either on its own motion within 20
business days after issuance of the decision or upon written request
submitted by the applicant within 15 business days after issuance of
the decision. The applicant's petition must be in writing and must
specify the findings and conclusions to which the applicant objects,
together with the reasons for such objections. Any objection to a
decision not specified in writing will be considered to have been
abandoned and may be disregarded. Parties may petition to submit a
written argument to the Operating Committee and may request an
opportunity to make an oral argument before the Operating Committee.
The Operating Committee will have sole discretion to grant or deny
either request.
The Operating Committee will conduct the review. The review will be
made upon the record and will be made after such further proceedings,
if any, as the Operating Committee may order. Based upon such record,
the Operating Committee may affirm, reverse or modify, in whole or in
part, the decision of the Fee Review Subcommittee. The decision of the
Operating Committee will be in writing, will be sent to the parties to
the proceeding and will be final.
The Procedures state that a final decision regarding the disputed
CAT Fees by the Operating Committee, or the Fee Review Subcommittee (if
there is no review by the Operating Committee), must be provided within
90 days of the date on which the Industry Member filed a written
application regarding disputed CAT Fees with the Company. The Operating
Committee may extend the 90-day time limit at its discretion.
In addition, the Procedures state that any notices or other
documents may be served upon the applicant either personally or by
leaving the same at its, his or her place of business or by deposit in
the United States post office, postage prepaid, by registered or
certified mail, addressed to the applicant at its, his or her last
known business or residence address. The Procedures also state that any
time limits imposed under the Procedures for the submission of answers,
petitions or other materials may be extended by permission of the
Operating Committee. All papers and documents relating to review by the
Fee Review Subcommittee or the Operating Committee must be submitted to
the Fee Review Subcommittee or Operating Committee, as applicable.
The Procedures also note that decisions on such CAT Fee disputes
made pursuant to these Procedures will be binding on Industry Members,
without prejudice to the rights of any such Industry Member to seek
redress from the SEC or in any other appropriate forum.
Finally, an Industry Member that files a written application with
the Company regarding disputed CAT Fees in accordance with these
Procedures is not required to pay such disputed CAT Fees until the
dispute is resolved in accordance with these Procedures, including any
review by the SEC or in any other appropriate forum. For these
purposes, the disputed CAT Fees means the amount of the invoiced CAT
Fees that the Industry Member has asserted pursuant to these Procedures
that such Industry Member does not owe to the Company. The Industry
Member must pay any invoiced CAT Fees that are not disputed CAT Fees
when due as set forth in the original invoice.
Once the dispute regarding CAT Fees is resolved pursuant to these
Procedures, if it is determined that the Industry Member owes any of
the disputed CAT Fees, then the Industry Member must pay such disputed
CAT Fees that are owed as well as interest on such disputed CAT Fees
from the original due date (that is, 30 days after receipt of the
original invoice of such CAT Fees) until such disputed CAT Fees are
paid at a per annum rate equal to the lesser of (i) the Prime Rate plus
300 basis points, or (ii) the maximum rate permitted by applicable law.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b)(5) of the
[[Page 26539]]
Act,\17\ which require, among other things, that the SRO rules must be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest, and not designed to permit
unfair discrimination between customers, issuers, brokers and dealer,
and Section 15A(b)(5) [sic] of the Act,\18\ which requires that SRO
rules provide for the equitable allocation of reasonable dues, fees,
and other charges among members and issuers and other persons using its
facilities.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78f(b)(5).
\18\ 15 U.S.C. 78o-3(b)(5) [sic].
---------------------------------------------------------------------------
The Exchange believes that this proposal is consistent with the Act
because it implements, interprets or clarifies Section 11.5 of the
Plan, and is designed to assist the Exchange and its Industry Members
in meeting regulatory obligations pursuant to the Plan. In approving
the Plan, the SEC noted that the Plan ``is necessary and appropriate in
the public interest, for the protection of investors and the
maintenance of fair and orderly markets, to remove impediments to, and
perfect the mechanism of a national market system, or is otherwise in
furtherance of the purposes of the Act.'' \19\ To the extent that this
proposal implements, interprets or clarifies the Plan and applies
specific requirements to Industry Members, the Exchange believes that
this proposal furthers the objectives of the Plan, as identified by the
SEC, and is therefore consistent with the Act.
---------------------------------------------------------------------------
\19\ Approval Order at 84697.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
Section 6(b)(8) of the Act \20\ require [sic] that Exchange rules
not impose any burden on competition that is not necessary or
appropriate. The Exchange does not believe that the proposed rule
change will result in any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Act. The Exchange
notes that the proposed rule change implements Section 11.5 of the CAT
NMS Plan approved by the Commission, and is designed to assist the
Exchange in meeting its regulatory obligations pursuant to the Plan.
Similarly, all national securities exchanges and FINRA are proposing
this proposed rule to implement the requirements of the CAT NMS Plan.
Therefore, this is not a competitive rule filing and, therefore, it
does not raise competition issues between and among the exchanges and
FINRA.
---------------------------------------------------------------------------
\20\ 5 U.S.C. 78f(b)(8)
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
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 will:
(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-BOX-2017-19 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-BOX-2017-19. 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-BOX-2017-19, and should be
submitted on or before June 28, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------
\21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11742 Filed 6-6-17; 8:45 am]
BILLING CODE 8011-01-P