Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Adopt Exchange Rule 1713 Consolidated Audit Trail-Fee Dispute Resolution, 26526-26529 [2017-11748]

Download as PDF 26526 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 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–CBOE– 2017–043, 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. 2017–11743 Filed 6–6–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80837; File No. SR–MIAX– 2017–24] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing of a Proposed Rule Change To Adopt Exchange Rule 1713 Consolidated Audit Trail—Fee Dispute Resolution June 1, 2017. sradovich on DSK3GMQ082PROD with NOTICES Pursuant to the provisions of section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or the ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that, on May 23, 2017, Miami International Securities Exchange, LLC (‘‘MIAX Options’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or the ‘‘Commission’’) a proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing a proposal to adopt Exchange Rule 1713 (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 on the Exchange’s 21 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 VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 Web site at http:// www.miaxoptions.com/rule-filings, 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 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 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 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, PO 00000 Frm 00104 Fmt 4703 Sfmt 4703 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, the Exchange has filed with the SEC to adopt the Consolidated Audit Trail Funding Fees, which will require Industry Members that are Exchange members to pay the CAT Fees determined by the Operating Committee.14 The Exchange submits this rule filing to adopt Rule 1713 (Consolidated Audit Trail—Fee Dispute Resolution) to establish the procedures for resolving potential disputes related to CAT Fees charged to Industry Members. Proposed Rule 1713 is described below. (1) Definitions Paragraph (a) of Proposed Rule 1713 sets forth the definitions for Proposed Rule 1713. Paragraph (a)(1) of Proposed Rule 1713 states that, for purposes of 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 See Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81 FR 30614 (May 17, 2016). 10 See 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 See Securities Exchange Act Rel. No. 80675 (May 15, 2017), 82 FR 23100 (May 19, 2017) (SR– MIAX–2017–18). E:\FR\FM\07JNN1.SGM 07JNN1 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Rule 1713, the terms ‘‘CAT NMS Plan’’, ‘‘Industry Member’’, ‘‘Operating Committee’’, and ‘‘Participant’’ are defined as set forth in the Rule 1701 (Consolidated Audit Trail Compliance Rule—Definitions), and the term ‘‘CAT Fee’’ is defined as set forth in the Consolidated Audit Trail Funding Fees. In addition, the Exchange proposes to add paragraph (a)(2) to Proposed Rule 1713. 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. The Exchange proposes to adopt paragraph (b) of Proposed Rule 1713. Paragraph (b) of Proposed Rule 1713 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 1713. 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 1713. Specifically, the Fee Dispute Resolution Procedures provide the procedure for VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 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 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 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. PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 26527 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 E:\FR\FM\07JNN1.SGM 07JNN1 sradovich on DSK3GMQ082PROD with NOTICES 26528 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 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 VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 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 section 6(b) of the Act 17 in general, and furthers the provisions of section 6(b)(5) of the Act 18 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanisms of a free and open market and a national market system and, in general, to protect investors and the public interest, and is not designed to permit unfair discrimination between customers, issuers, brokers and dealers. The Exchange believes that the proposed rule change is consistent with the provisions of section 6(b)(4) of the Act,19 which requires that Exchange rules provide for the equitable allocation of reasonable dues, fees, and other charges among members, 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.’’ 20 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 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 17 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 19 15 U.S.C. 78f(b)(4). 20 Approval Order at 84697. 18 15 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 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. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– MIAX–2017–24 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–MIAX–2017–24. 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 (http://www.sec.gov/ E:\FR\FM\07JNN1.SGM 07JNN1 Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Notices 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–MIAX– 2017–24, 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. 2017–11748 Filed 6–6–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80833; File No. SR– BatsEDGX–2017–24] Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Adopt Rule 4.17, Consolidated Audit Trail— Fee Dispute Resolution sradovich on DSK3GMQ082PROD with NOTICES 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 EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) 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 21 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 16:37 Jun 06, 2017 Jkt 241001 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 potential disputes related to CAT Fees charged to Industry Members.3 The text of the proposed rule change is available at the Exchange’s Web site at www.bats.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts 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 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. 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). PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 26529 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, the Exchange has filed a proposed rule change with the SEC to adopt the Consolidated Audit Trail Funding Fees, which will require Industry Members that are Members of the Exchange to pay the CAT Fees 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. E:\FR\FM\07JNN1.SGM 07JNN1

Agencies

[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Notices]
[Pages 26526-26529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11748]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80837; File No. SR-MIAX-2017-24]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing of a Proposed Rule Change To Adopt 
Exchange Rule 1713 Consolidated Audit Trail--Fee Dispute Resolution

June 1, 2017.
    Pursuant to the provisions of section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or the ``Exchange Act'') \1\ and Rule 
19b-4 thereunder,\2\ notice is hereby given that, on May 23, 2017, 
Miami International Securities Exchange, LLC (``MIAX Options'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or the ``Commission'') a 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 is filing a proposal to adopt Exchange Rule 1713 
(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 on the Exchange's Web site at http://www.miaxoptions.com/rule-filings, at MIAX's principal office, and at the Commission's 
Public Reference Room.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
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, the Exchange has filed with the SEC to adopt 
the Consolidated Audit Trail Funding Fees, which will require Industry 
Members that are Exchange members to pay the CAT Fees determined by the 
Operating Committee.\14\ The Exchange submits this rule filing to adopt 
Rule 1713 (Consolidated Audit Trail--Fee Dispute Resolution) to 
establish the procedures for resolving potential disputes related to 
CAT Fees charged to Industry Members. Proposed Rule 1713 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\ See Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 
81 FR 30614 (May 17, 2016).
    \10\ See 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\ See Securities Exchange Act Rel. No. 80675 (May 15, 2017), 
82 FR 23100 (May 19, 2017) (SR-MIAX-2017-18).
---------------------------------------------------------------------------

(1) Definitions
    Paragraph (a) of Proposed Rule 1713 sets forth the definitions for 
Proposed Rule 1713. Paragraph (a)(1) of Proposed Rule 1713 states that, 
for purposes of

[[Page 26527]]

Rule 1713, the terms ``CAT NMS Plan'', ``Industry Member'', ``Operating 
Committee'', and ``Participant'' are defined as set forth in the Rule 
1701 (Consolidated Audit Trail Compliance Rule--Definitions), and the 
term ``CAT Fee'' is defined as set forth in the Consolidated Audit 
Trail Funding Fees. In addition, the Exchange proposes to add paragraph 
(a)(2) to Proposed Rule 1713. 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. The Exchange proposes 
to adopt paragraph (b) of Proposed Rule 1713. Paragraph (b) of Proposed 
Rule 1713 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 1713. 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 1713. 
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 
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

[[Page 26528]]

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 section 6(b) of the Act \17\ in general, and furthers the 
provisions of section 6(b)(5) of the Act \18\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers and dealers. The Exchange believes that the proposed rule 
change is consistent with the provisions of section 6(b)(4) of the 
Act,\19\ which requires that Exchange rules provide for the equitable 
allocation of reasonable dues, fees, and other charges among members, 
issuers and other persons using its facilities.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    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.'' \20\ 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.
---------------------------------------------------------------------------

    \20\ Approval Order at 84697.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MIAX-2017-24 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-MIAX-2017-24. 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 (http://www.sec.gov/

[[Page 26529]]

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-
MIAX-2017-24, 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. 2017-11748 Filed 6-6-17; 8:45 am]
BILLING CODE 8011-01-P