Self-Regulatory Organizations; Bats BYX Exchange Inc.; Bats BZX Exchange, Inc.; Bats EDGA Exchange, Inc.; Bats EDGX Exchange, Inc.; BOX Options Exchange LLC; Chicago Board Options Exchange, Incorporated; Investors Exchange LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; Miami International Securities Exchange, LLC; The NASDAQ Stock Market LLC; NASDAQ BX, Inc.; Nasdaq GEMX, LLC; NASDAQ PHLX LLC; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE MKT LLC; Order Approving Proposed Rule Changes, as Modified by Amendments, To Adopt a Consolidated Audit Trail Fee Dispute Resolution Process, 42143-42146 [2017-18794]

Download as PDF Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices To the contrary, the Exchange believes that the proposed pricing structure will increase competition and hopefully draw additional volume to the Exchange for the Opening Process. The Exchange operates in a highly competitive market in which market participants can readily favor competing venues if fee schedules at other venues are viewed as more favorable. Consequently, the Exchange believes that the degree to which IEX fees could impose any burden on competition is extremely limited, and does not believe that such fees would burden competition of Members or competing venues in a manner that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because, while different fees are assessed in some circumstances, these different fees are not based on the type of Member entering the orders that execute in the Opening Process but on the type of order entered and all Members can submit any type of order. Further, the proposed fees are intended to encourage market participants to bring increased volume to the Exchange, which benefits all market participants. 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. asabaliauskas on DSKBBXCHB2PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) 20 of the Act. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 21 of the Act to determine whether the proposed rule change should be approved or disapproved. 20 15 21 15 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– IEX–2017–28 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–IEX–2017–28. 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/ 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–IEX– 2017–28, and should be submitted on or before September 27, 2017. U.S.C. 78s(b)(3)(A)(ii). U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 17:37 Sep 05, 2017 Jkt 241001 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 42143 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–18796 Filed 9–5–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81500; File Nos. SR– BatsBYX–2017–13; SR–BatsBZX–2017–39; SR–BatsEDGA–2017–14; SR–BatsEDGX– 2017–24; SR–BOX–2017–19; SR–CBOE– 2017–043; SR–IEX–2017–21; SR–ISE–2017– 52; SR–MRX–2017–08; SR–MIAX–2017–24; SR–NASDAQ–2017–059; SR–BX–2017–029; SR–GEMX–2017–24; SR–PHLX–2017–47; SR–NYSE–2017–24; SR–NYSEArca–2017– 60; SR–NYSEMKT–2017–31] Self-Regulatory Organizations; Bats BYX Exchange Inc.; Bats BZX Exchange, Inc.; Bats EDGA Exchange, Inc.; Bats EDGX Exchange, Inc.; BOX Options Exchange LLC; Chicago Board Options Exchange, Incorporated; Investors Exchange LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; Miami International Securities Exchange, LLC; The NASDAQ Stock Market LLC; NASDAQ BX, Inc.; Nasdaq GEMX, LLC; NASDAQ PHLX LLC; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE MKT LLC; Order Approving Proposed Rule Changes, as Modified by Amendments, To Adopt a Consolidated Audit Trail Fee Dispute Resolution Process August 30, 2017. I. Introduction On May 16, 2017,1 May 23, 2017,2 May 25, 2017,3 June 6, 2017,4 June 8, 2017 5 and June 9, 2017,6 Bats BYX Exchange, Inc. (‘‘Bats BYX’’), Bats BZX Exchange, Inc. (‘‘Bats BZX’’), Bats EDGA Exchange, Inc. (‘‘Bats EDGA’’), Bats EDGX Exchange, Inc. (‘‘Bats EDGX’’), BOX Options Exchange LLC (‘‘BOX’’), 22 17 CFR 200.30–3(a)(12). York Stock Exchange, LLC, NYSE Arca, Inc., NYSE MKT LLC, and Miami International Securities Exchange LLC filed their proposed rule changes on May 16, 2017. 2 Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc. and Chicago Board Options Exchange, Incorporated filed their proposed rule changes on May 23, 2017. 3 BOX Options Exchange LLC filed its proposed rule change on May 25, 2017. 4 Investors Exchange LLC filed its proposed rule change on June 6, 2017. 5 The NASDAQ Stock Market LLC and NASDAQ PHLX LLC filed their proposed rule changes on June 8, 2017. 6 NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC filed their proposed rule changes on June 9, 2017. 1 New E:\FR\FM\06SEN1.SGM 06SEN1 42144 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), Investors Exchange LLC (‘‘IEX’’), Nasdaq ISE, LLC (‘‘ISE’’), Nasdaq MRX, LLC (‘‘MRX’’), Miami International Securities Exchange, LLC (‘‘MIAX’’), The NASDAQ Stock Market LLC (‘‘Nasdaq’’), NASDAQ BX, Inc. (‘‘BX’’), Nasdaq GEMX, LLC (‘‘GEMX’’), NASDAQ PHLX LLC (‘‘Phlx’’), New York Stock Exchange LLC (‘‘NYSE’’), NYSE Arca, Inc. (‘‘NYSE Arca’’) and NYSE MKT LLC (‘‘NYSE MKT’’) (collectively, the ‘‘Participants’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 7 and Rule 19b–4 thereunder,8 proposed rule changes to establish the procedures for resolving potential disputes related to CAT Fees charged to Industry Members. The proposed rule changes submitted by NYSE, NYSE Arca and NYSE MKT were published for comment in the Federal Register on June 1, 2017.9 The proposed rule changes submitted by MIAX, Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, BOX and CBOE were published for comment in the Federal Register on June 7, 2017.10 The proposed rule change submitted by IEX was published for comment in the Federal Register on June 20, 2017.11 The proposed rule change submitted by Nasdaq was published for comment in the Federal Register on June 22, 2017.12 The proposed rule changes submitted by Phlx, BX, GEMX, ISE and MRX were published for comment in the Federal Register on June 23, 2017.13 Pursuant to Section 19(b)(2) of the Act,14 the Commission designated a longer period within which to approve, disapprove, or institute proceedings to determine whether to approve or disapprove the proposed rule changes.15 The 7 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 9 See Securities Exchange Act Release Nos. 80780 (May 26, 2017), 82 FR 25382; 80781 (May 26, 2017), 82 FR 25369; 80782 (May 26, 2017), 82 FR 25379. 10 See Securities Exchange Act Release Nos. 80837 (June 1, 2017), 82 FR 26526; 80836 (June 1, 2017), 82 FR 26539; 80834 (June 1, 2017), 82 FR 26542; 80835 (June 1, 2017), 82 FR 26549; 80833 (June 1, 2017), 82 FR 26529; 80831 (June 1, 2017), 82 FR 26536; and 80832 (June 1, 2017), 82 FR 26523. 11 See Securities Exchange Act Release No. 80936 (June 15, 2017), 82 FR 28153. 12 See Securities Exchange Act Release No. 80952 (June 16, 2017), 82 FR 28540 (‘‘Notice’’). 13 See Securities Exchange Act Release Nos. 80967 (June 19, 2017), 82 FR 28719; 80968 (June 19, 2017), 82 FR 28705; 80970 (June 19, 2017), 82 FR 28708; 80971 (June 19, 2017), 82 FR 28698; 80966 (June 19, 2017), 82 FR 28702. 14 15 U.S.C. 78s(b)(2). 15 See Securities Exchange Act Release No. 81110 (July 10, 2017), 82 FR 32598 (July 14, 2017); 81112 (July 10, 2017), 82 FR 32592 (July 14, 2017); 81113 asabaliauskas on DSKBBXCHB2PROD with NOTICES 8 17 VerDate Sep<11>2014 17:37 Sep 05, 2017 Jkt 241001 Commission received no comments in response to the proposed rule changes. On August 23, 2017,16 August 24, 2017 17 and August 25, 2017,18 the Participants filed Amendments to the proposed rule change.19 This order (July 10, 2017), 82 FR 32596 (July 14, 2017); 81156 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81157 (July 18, 2017), 82 FR 34338 (July 24, 2017); 81158 (July 18, 2017), 82 FR 34339 (July 24, 2017); 81159 (July 18, 2017), 82 FR 34338 (July 24, 2017); 81161 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81162 (July 18, 2017), 82 FR 34336 (July 24, 2017); 81164 (July 18, 2017), 82 FR 34346 (July 24, 2017); 81165 (July 18, 2017), 82 FR 34345 (July 24, 2017); 81166 (July 18, 2017), 82 FR 34345 (July 24, 2017); 81167 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81178 (July 20, 2017), 82 FR 34715 (July 26, 2017); 81179 (July 20, 2017), 82 FR 34716 (July 26, 2017); 81180 (July 20, 2017), 82 FR 34728 (July 26, 2017); and 81181 (July 20, 2017), 82 FR 34727 (July 26, 2017). 16 NYSE, NYSE Arca and NYSE MKT filed Amendment No. 1 to their proposed rule changes on August 23, 2017. Amendment No. 1 is available on the Commission’s Web site for NYSE, NYSE Arca, and NYSE MKT, respectively, at: https:// www.sec.gov/comments/sr-nyse-2017-24/ nyse201724-2241267-160850.pdf; https:// www.sec.gov/comments/sr-nysearca-2017-60/ nysearca201760-2241265-160861.pdf; and https:// www.sec.gov/comments/sr-nysemkt-2017-31/ nysemkt201731-2241266-160862.pdf. 17 Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, CBOE and BOX filed Amendment No. 1 to their proposed rule changes on August 24, 2017. Amendment No. 1 is available on the Commission’s Web site for Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, CBOE and BOX, respectively, at: https:// www.sec.gov/comments/sr-batsbyx-2017-13/ batsbyx201713-2253932-160942.pdf; https:// www.sec.gov/comments/sr-batsbzx-2017-39/ batsbzx201739-2251466-160921.pdf; https:// www.sec.gov/comments/sr-batsedga-2017-14/ batsedga201714-2251458-160938.pdf; https:// www.sec.gov/comments/sr-batsedgx-2017-24/ batsedgx201724-2251462-160919.pdf; https:// www.sec.gov/comments/sr-cboe-2017-043/ cboe2017043-2251469-160922.pdf; and https:// www.sec.gov/comments/sr-box-2017-19/box2017192250011-160918.pdf. MIAX filed Amendment No. 1 on August 22, 2017, but withdrew it on August 24, 2017. MIAX then filed Amendment No. 2 on August 24, 2017. Amendment No. 2 for MIAX is available on the Commission’s Web site at: https:// www.sec.gov/comments/sr-miax-2017-24/ miax201724-2243335-160869.pdf. 18 IEX, Phlx, Nasdaq, BX, GEMX, ISE and MRX filed Amendment No. 1 to their proposed rule changes on August 25, 2017. Amendment No. 1 is available on the Commission’s Web site for IEX, Phlx, Nasdaq, BX, GEMX, ISE and MRX, respectively, at: https://www.sec.gov/comments/sriex-2017-21/iex201721-2243778-160880.pdf; https://www.sec.gov/comments/sr-phlx-2017-47/ phlx201747-2257687-160924.pdf; https:// www.sec.gov/comments/sr-nasdaq-2017-059/ nasdaq2017059-2257689-160925.pdf; https:// www.sec.gov/comments/sr-bx-2017-029/bx20170292251461-160940.pdf; https://www.sec.gov/ comments/sr-gemx-2017-24/gemx201724-2244452160897.pdf; https://www.sec.gov/comments/sr-ise2017-52/ise201752-2244293-160891.pdf; and https://www.sec.gov/comments/sr-mrx-2017-08/ mrx201708-2251467-160941.pdf. 19 The Amendments amended the original filings to make technical changes to the proposed rule changes. Specifically, each Participant amended the proposed rule text to remove references to proposed ‘‘Consolidated Audit Trail Funding Fees,’’ as such fees are currently suspended, and replaced such term with the phrase ‘‘any fees contemplated by the CAT NMS Plan and imposed on Industry Members PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 approves the proposed rule changes, as modified by the Amendments.20 II. Description of the Proposed Rule Changes, as Modified by the Amendments The Participants, along with C2 Options Exchange, Inc., Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., MIAX PEARL, LLC, and NYSE National, Inc., filed with the Commission, pursuant to Section 11A of the Act 21 and Rule 608 of Regulation NMS thereunder,22 the National Market System Plan Governing the Consolidated Audit Trail (‘‘CAT NMS Plan’’ or ‘‘Plan’’).23 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 (‘‘Company’’), of which each Participant is a member, to operate the CAT. Under the CAT NMS Plan, the Operating Committee of the Company (‘‘Operating Committee’’) has the discretion to establish funding for the Company to operate the CAT, including establishing fees that the Participants pursuant to Exchange Rules.’’ See infra note 24. Each Participant also removed references to ‘‘Consolidated Audit Trail Funding Fees’’ from paragraphs (a)(1), (b) and (c)(1) of the proposed rule text. In addition, in connection with the merger of NYSE Arca Equities with and into NYSE Arca, Amendment No. 1 for NYSE Arca also combines NYSE Arca Equities Rule 6.6900 and NYSE Arca Rule 11.6900 into a single rule NYSE Rule 11.6900. See Securities Exchange Act Release No. 80781 (May 26, 2017), 82 FR 25369. See also Securities Exchange Act Release No. 81419 (August 17, 2017), 82 FR 40044 (August 23, 2017). The Amendments are not subject to notice and comment because they are technical amendments that do not materially alter the substance of the proposed rule changes or raise any novel regulatory issues. 20 The Commission notes that for purposes of this Order, unless otherwise specified, capitalized terms used in this Order are defined as set forth in the proposals, as modified by the Amendments, or in the CAT NMS Plan. See supra notes 16–18; see also infra note 23. 21 15 U.S.C. 78k–1. 22 17 CFR 242.608. 23 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. The Plan was published for comment in the Federal Register on May 17, 2016, and approved by the Commission, as modified, on November 15, 2016. See Securities Exchange Act Release Nos. 77724 (April 27, 2016), 81 FR 30614 (May 17, 2016); 79318 (November 15, 2016), 81 FR 84696 (November 23, 2016). E:\FR\FM\06SEN1.SGM 06SEN1 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices and Industry Members will pay (‘‘CAT Fees’’).24 Section 11.5 of the CAT NMS Plan requires the 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 a designated Subcommittee. Section 11.5 of the CAT NMS Plan also states that decisions by the Operating Committee or a designated Subcommittee on such matters shall be binding on Industry Members, without prejudice to the right of any Industry Member to seek redress from the Commission pursuant to Rule 608 25 or in any other appropriate forum. The Participants filed the proposed rule changes to establish the procedures for resolving potential disputes related to CAT Fees charged to Industry Members. asabaliauskas on DSKBBXCHB2PROD with NOTICES Fee Dispute Resolution The proposals state that disputes initiated by an Industry Member with respect to CAT Fees charged to such Industry Member, 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, pursuant to the Fee Dispute Resolution Procedures adopted by the Operating Committee pursuant to the CAT NMS Plan.26 The 24 Section 11.1(b) of the CAT NMS Plan. The Commission notes that the Participants filed proposed rule changes to adopt fees to be charged to Industry Members, including Industry Members that are Execution Venues. See Securities Exchange Act Release Nos. 80675 (May 15, 2017), 82 FR 23100 (May 19, 2017) (SR–MIAX–2017–18); 80697 (May 16, 2017), 82 FR 23398 (May 22, 2017) (SR– BX–2017–023); 80692 (May 16, 2017), 82 FR 23325 (May 22, 2017) (SR–IEX–2017–16); 80696 (May 16, 2017), 82 FR 23439 (May 22, 2017) (SR–NASDAQ– 2017–046); 80693 (May 16, 2017), 82 FR 23363 (May 22, 2017) (SR–NYSE–2017–22); 80698 (May 16, 2017), 82 FR 23457 (May 22, 2017) (SR– NYSEArca–2017–52); 80694 (May 16, 2017), 82 FR 23416 (May 22, 2017) (SR–NYSEMKT–2017–26); 80721 (May 18, 2017), 82 FR 23864 (May 24, 2017) (SR–BOX–2017–16); 80713 (May 18, 2017), 82 FR 23956 (May 24, 2017) (SR–GEMX–2017–17); 80715 (May 18, 2017), 82 FR 23895 (May 24, 2017) (SR– ISE–2017–45); 80726 (May 18, 2017), 82 FR 23915 (May 24, 2017) (SR–MRX–2017–04); 80725 (May 18, 2017), 82 FR 23935 (May 24, 2017) (SR–PHLX– 2017–37); 80785 (May 26, 2017), 82 FR 25404 (June 1, 2017) (SR–CBOE–2017–040); 80784 (May 26, 2017), 82 FR 25448 (June 1, 2017) (SR–BatsEDGA– 2017–13); 80809 (May 30, 2017), 82 FR 25837 (June 5, 2017) (SR–BatsBYX–2017–11); 80822 (May 31, 2017), 82 FR 26148 (June 6, 2017) (SR–BatsBZX– 2017–38); and 80821 (May 31, 2017), 82 FR 26177 (June 6, 2017) (SR-BatsEDGX–2017–22). On June 30, 2017, the Commission temporarily suspended the proposed rule changes and instituted proceedings to determine whether to approve or disapprove the proposed rule changes. See Securities Exchange Act Release No. 81067, 82 FR 31656 (July 7, 2017). 25 17 CFR 242.608. 26 See, e.g., Notice, supra note 12, at 28541–42. The Participants also represent that the Fee Dispute VerDate Sep<11>2014 17:37 Sep 05, 2017 Jkt 241001 proposals further indicate that 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 Commission or in any other appropriate forum.27 Under the Fee Dispute Resolution 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.28 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.29 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 under the Fee Dispute Resolution Procedures.30 The Participants state that the Company will refer applications for hearing and review promptly to the Fee Review Subcommittee designated by the Operating Committee with responsibility for conducting the reviews of CAT Fee disputes pursuant to these Fee Dispute Resolution Procedures.31 The proposals note that the Fee Review Subcommittee will keep a record of the proceedings.32 The proposals further specify that the Fee Review Subcommittee will hold hearings promptly and will set a hearing date.33 Under the proposed rule changes, 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 hearing, and each party will have the right to inspect and copy the other party’s materials prior to the hearing.34 The Participants state that 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 Resolution Procedures were modeled after the adverse action procedures adopted by various exchanges and that such Procedures will be posted on the CAT NMS Plan Web site (www.catnmsplan.com). See, e.g., id. at 28542. 27 See, e.g., id. at 28541. 28 See, e.g., id. at 28542. 29 See, e.g., id. 30 See, e.g., id. 31 See, e.g., id. The Participants further indicate that 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. See, e.g., id. 32 See, e.g., id. 33 See, e.g., id. 34 See, e.g., id. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 42145 that allegedly aggrieved the applicant.35 The applicant is entitled to be accompanied, represented and advised by counsel at all stages of the proceedings under the proposed rule changes.36 The proposals further indicate that the Fee Review Subcommittee will determine all questions concerning the admissibility of evidence and will otherwise regulate the conduct of the hearing.37 Each of the parties will be permitted, under the proposed rule changes, 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.38 In addition, the Fee Review Subcommittee will have the right to question all parties and witnesses to the proceeding.39 The proposals require the Fee Review Subcommittee to keep a record of the hearing, to set forth its decision in writing, and to send the written decision to the parties to the proceeding.40 Such decisions must contain the reasons supporting the conclusions of the Fee Review Subcommittee under the proposed rule changes.41 The Participants state that 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.42 The applicant’s petition for review must be in writing and must specify the findings and conclusions to which the applicant objects, together with the reasons for such objections.43 According to the proposed rule changes, any objection to a decision not specified in writing will be considered to have been abandoned and may be disregarded.44 The proposed rule changes allow parties to petition to submit a written argument to the Operating Committee and to request an opportunity to make an oral argument before the Operating 35 See, e.g., id. e.g., id. 37 See, e.g., id. The proposed rule changes note, however, that the formal rules of evidence will not apply. 38 See, e.g., id. 39 See, e.g., id. 40 See, e.g., id. 41 See, e.g., id. 42 See, e.g., id. 43 See, e.g., id. 44 See, e.g., id. 36 See, E:\FR\FM\06SEN1.SGM 06SEN1 42146 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices Committee.45 The Operating Committee will then have sole discretion to grant or deny either request.46 Under the proposed rule changes, any review conducted by the Operating Committee will be made upon the record and will be made after such further proceedings, if any, as the Operating Committee may order.47 Based upon such record, the Operating Committee may affirm, reverse or modify, in whole or in part, the decision of the Fee Review Subcommittee.48 The Participants state that the decision of the Operating Committee will be in writing, will be sent to the parties to the proceeding, and will be final.49 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.50 The proposed rule changes indicate, however, that the Operating Committee may extend the 90-day time limit at its discretion.51 The Fee Dispute Resolution Procedures also state that any time limits for the submission of answers, petitions or other materials may be extended by permission of the Operating Committee.52 Finally, the Participants state that an Industry Member that files a written application with the Company disputing CAT Fees in accordance with the Fee Dispute Resolution Procedures is not required to pay such CAT Fees until the dispute is resolved in accordance with the Procedures, including any review by the Commission or in any other appropriate forum.53 The Participants state that, 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 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 45 See, e.g., id. e.g., id. 47 See, e.g., id. 48 See, e.g., id. 49 See, e.g., id. 50 See, e.g., id. 51 See, e.g., id. 52 See, e.g., id. 53 See, e.g., id. The Participants clarify that the Industry Member may only withhold any invoiced CAT Fees that the Industry Member has disputed; under the proposed rule changes, the Industry Member must pay any invoiced CAT Fees that are not disputed when such fees are due, as set forth in the invoice. See, e.g., id. asabaliauskas on DSKBBXCHB2PROD with NOTICES 46 See, VerDate Sep<11>2014 17:37 Sep 05, 2017 Jkt 241001 maximum rate permitted by applicable law.54 III. Discussion and Commission Findings After carefully considering the proposed rule changes, the Commission finds that the proposals, as modified by the Amendments, are consistent with the requirements of the Act and the rules and regulations thereunder applicable to national securities exchanges.55 Specifically, the Commission finds that the proposed rule changes are consistent with Section 6(b)(5) 56 of the Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest, and are not designed to permit unfair discrimination between customers, issuers, brokers or dealers. In addition, the Commission finds that the proposed rule changes are consistent with Section 6(b)(8) 57 of the Act, which requires that the rules of a national securities exchange not impose any burden on competition that is not necessary or appropriate. The Commission believes that the proposals are consistent with Section 6(b) 58 of the Act in general, and furthers the objectives of Section 6(b)(5) 59 of the Act 60 in particular, because they are designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest, by providing a uniform mechanism by which Industry Members may dispute CAT Fees and receive a timely review of such disputes. The Commission notes that the Fee Dispute Resolution Procedures provide for a hearing before the Fee Review Subcommittee, and if the Industry Member is not satisfied with the decision of the Fee Review Subcommittee, it may request a review of the decision by the Operating e.g., id. at 28542–43. approving these proposed rule changes, the Commission has considered the proposed rules’ impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 56 15 U.S.C. 78f(b)(5). 57 15 U.S.C. 78f(b)(8). 58 15 U.S.C. 78f(b). 59 15 U.S.C. 78f(b)(5). 60 15 U.S.C. 78f(b)(5). Committee. Further, the proposals provide that, although the decisions of the Operating Committee or Fee Review Subcommittee are binding on an Industry Member, the Industry Member may seek redress from the Commission or in any other appropriate forum. The Commission also notes that the proposals implement Section 11.5 of the CAT NMS Plan.61 Specifically, Section 11.5 states that the Participants will adopt rules requiring that disputes with respect to fees charged to Industry Members pursuant to Article XI of the CAT NMS Plan be determined by the Operating Committee or a designated Subcommittee. Section 11.5 further provides that such fee disputes will be determined by the Operating Committee or a designated Subcommittee, and that decisions on such matters will be binding on Industry Members without prejudice to the rights of any Industry Member to seek redress from the Commission pursuant to Rule 608 of Regulation NMS or in any other appropriate forum. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule changes (SR–BatsBYX– 2017–13; SR–BatsBZX–2017–39; SR– BatsEDGA–2017–14; SR–BatsEDGX– 2017–24; SR–BOX–2017–19; SR–CBOE– 2017–043; SR–IEX–2017–21; SR–ISE– 2017–52; SR–MRX–2017–08; SR– MIAX–2017–24; SR–NASDAQ–2017– 059; SR–BX–2017–029; SR–GEMX– 2017–24; SR–PHLX–2017–47; SR– NYSE–2017–24; SR–NYSEArca–2017– 60; SR–NYSEMKT–2017–31), as modified by the Amendments, are approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.62 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–18794 Filed 9–5–17; 8:45 am] BILLING CODE 8011–01–P 54 See, 55 In PO 00000 Frm 00091 Fmt 4703 Sfmt 9990 61 The Commission previously approved the CAT NMS Plan. See supra note 23. 62 17 CFR 200.30–3(a)(12). E:\FR\FM\06SEN1.SGM 06SEN1

Agencies

[Federal Register Volume 82, Number 171 (Wednesday, September 6, 2017)]
[Notices]
[Pages 42143-42146]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18794]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81500; File Nos. SR-BatsBYX-2017-13; SR-BatsBZX-2017-
39; SR-BatsEDGA-2017-14; SR-BatsEDGX-2017-24; SR-BOX-2017-19; SR-CBOE-
2017-043; SR-IEX-2017-21; SR-ISE-2017-52; SR-MRX-2017-08; SR-MIAX-2017-
24; SR-NASDAQ-2017-059; SR-BX-2017-029; SR-GEMX-2017-24; SR-PHLX-2017-
47; SR-NYSE-2017-24; SR-NYSEArca-2017-60; SR-NYSEMKT-2017-31]


Self-Regulatory Organizations; Bats BYX Exchange Inc.; Bats BZX 
Exchange, Inc.; Bats EDGA Exchange, Inc.; Bats EDGX Exchange, Inc.; BOX 
Options Exchange LLC; Chicago Board Options Exchange, Incorporated; 
Investors Exchange LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; Miami 
International Securities Exchange, LLC; The NASDAQ Stock Market LLC; 
NASDAQ BX, Inc.; Nasdaq GEMX, LLC; NASDAQ PHLX LLC; New York Stock 
Exchange LLC; NYSE Arca, Inc.; NYSE MKT LLC; Order Approving Proposed 
Rule Changes, as Modified by Amendments, To Adopt a Consolidated Audit 
Trail Fee Dispute Resolution Process

August 30, 2017.

I. Introduction

    On May 16, 2017,\1\ May 23, 2017,\2\ May 25, 2017,\3\ June 6, 
2017,\4\ June 8, 2017 \5\ and June 9, 2017,\6\ Bats BYX Exchange, Inc. 
(``Bats BYX''), Bats BZX Exchange, Inc. (``Bats BZX''), Bats EDGA 
Exchange, Inc. (``Bats EDGA''), Bats EDGX Exchange, Inc. (``Bats 
EDGX''), BOX Options Exchange LLC (``BOX''),

[[Page 42144]]

Chicago Board Options Exchange, Incorporated (``CBOE''), Investors 
Exchange LLC (``IEX''), Nasdaq ISE, LLC (``ISE''), Nasdaq MRX, LLC 
(``MRX''), Miami International Securities Exchange, LLC (``MIAX''), The 
NASDAQ Stock Market LLC (``Nasdaq''), NASDAQ BX, Inc. (``BX''), Nasdaq 
GEMX, LLC (``GEMX''), NASDAQ PHLX LLC (``Phlx''), New York Stock 
Exchange LLC (``NYSE''), NYSE Arca, Inc. (``NYSE Arca'') and NYSE MKT 
LLC (``NYSE MKT'') (collectively, the ``Participants'') filed with the 
Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \7\ 
and Rule 19b-4 thereunder,\8\ proposed rule changes to establish the 
procedures for resolving potential disputes related to CAT Fees charged 
to Industry Members. The proposed rule changes submitted by NYSE, NYSE 
Arca and NYSE MKT were published for comment in the Federal Register on 
June 1, 2017.\9\ The proposed rule changes submitted by MIAX, Bats BYX, 
Bats BZX, Bats EDGA, Bats EDGX, BOX and CBOE were published for comment 
in the Federal Register on June 7, 2017.\10\ The proposed rule change 
submitted by IEX was published for comment in the Federal Register on 
June 20, 2017.\11\ The proposed rule change submitted by Nasdaq was 
published for comment in the Federal Register on June 22, 2017.\12\ The 
proposed rule changes submitted by Phlx, BX, GEMX, ISE and MRX were 
published for comment in the Federal Register on June 23, 2017.\13\ 
Pursuant to Section 19(b)(2) of the Act,\14\ the Commission designated 
a longer period within which to approve, disapprove, or institute 
proceedings to determine whether to approve or disapprove the proposed 
rule changes.\15\ The Commission received no comments in response to 
the proposed rule changes. On August 23, 2017,\16\ August 24, 2017 \17\ 
and August 25, 2017,\18\ the Participants filed Amendments to the 
proposed rule change.\19\ This order approves the proposed rule 
changes, as modified by the Amendments.\20\
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    \1\ New York Stock Exchange, LLC, NYSE Arca, Inc., NYSE MKT LLC, 
and Miami International Securities Exchange LLC filed their proposed 
rule changes on May 16, 2017.
    \2\ Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA 
Exchange, Inc., Bats EDGX Exchange, Inc. and Chicago Board Options 
Exchange, Incorporated filed their proposed rule changes on May 23, 
2017.
    \3\ BOX Options Exchange LLC filed its proposed rule change on 
May 25, 2017.
    \4\ Investors Exchange LLC filed its proposed rule change on 
June 6, 2017.
    \5\ The NASDAQ Stock Market LLC and NASDAQ PHLX LLC filed their 
proposed rule changes on June 8, 2017.
    \6\ NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq 
MRX, LLC filed their proposed rule changes on June 9, 2017.
    \7\ 15 U.S.C. 78s(b)(1).
    \8\ 17 CFR 240.19b-4.
    \9\ See Securities Exchange Act Release Nos. 80780 (May 26, 
2017), 82 FR 25382; 80781 (May 26, 2017), 82 FR 25369; 80782 (May 
26, 2017), 82 FR 25379.
    \10\ See Securities Exchange Act Release Nos. 80837 (June 1, 
2017), 82 FR 26526; 80836 (June 1, 2017), 82 FR 26539; 80834 (June 
1, 2017), 82 FR 26542; 80835 (June 1, 2017), 82 FR 26549; 80833 
(June 1, 2017), 82 FR 26529; 80831 (June 1, 2017), 82 FR 26536; and 
80832 (June 1, 2017), 82 FR 26523.
    \11\ See Securities Exchange Act Release No. 80936 (June 15, 
2017), 82 FR 28153.
    \12\ See Securities Exchange Act Release No. 80952 (June 16, 
2017), 82 FR 28540 (``Notice'').
    \13\ See Securities Exchange Act Release Nos. 80967 (June 19, 
2017), 82 FR 28719; 80968 (June 19, 2017), 82 FR 28705; 80970 (June 
19, 2017), 82 FR 28708; 80971 (June 19, 2017), 82 FR 28698; 80966 
(June 19, 2017), 82 FR 28702.
    \14\ 15 U.S.C. 78s(b)(2).
    \15\ See Securities Exchange Act Release No. 81110 (July 10, 
2017), 82 FR 32598 (July 14, 2017); 81112 (July 10, 2017), 82 FR 
32592 (July 14, 2017); 81113 (July 10, 2017), 82 FR 32596 (July 14, 
2017); 81156 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81157 
(July 18, 2017), 82 FR 34338 (July 24, 2017); 81158 (July 18, 2017), 
82 FR 34339 (July 24, 2017); 81159 (July 18, 2017), 82 FR 34338 
(July 24, 2017); 81161 (July 18, 2017), 82 FR 34337 (July 24, 2017); 
81162 (July 18, 2017), 82 FR 34336 (July 24, 2017); 81164 (July 18, 
2017), 82 FR 34346 (July 24, 2017); 81165 (July 18, 2017), 82 FR 
34345 (July 24, 2017); 81166 (July 18, 2017), 82 FR 34345 (July 24, 
2017); 81167 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81178 
(July 20, 2017), 82 FR 34715 (July 26, 2017); 81179 (July 20, 2017), 
82 FR 34716 (July 26, 2017); 81180 (July 20, 2017), 82 FR 34728 
(July 26, 2017); and 81181 (July 20, 2017), 82 FR 34727 (July 26, 
2017).
    \16\ NYSE, NYSE Arca and NYSE MKT filed Amendment No. 1 to their 
proposed rule changes on August 23, 2017. Amendment No. 1 is 
available on the Commission's Web site for NYSE, NYSE Arca, and NYSE 
MKT, respectively, at: https://www.sec.gov/comments/sr-nyse-2017-24/nyse201724-2241267-160850.pdf; https://www.sec.gov/comments/sr-nysearca-2017-60/nysearca201760-2241265-160861.pdf; and https://www.sec.gov/comments/sr-nysemkt-2017-31/nysemkt201731-2241266-160862.pdf.
    \17\ Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, CBOE and BOX 
filed Amendment No. 1 to their proposed rule changes on August 24, 
2017. Amendment No. 1 is available on the Commission's Web site for 
Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, CBOE and BOX, 
respectively, at: https://www.sec.gov/comments/sr-batsbyx-2017-13/batsbyx201713-2253932-160942.pdf; https://www.sec.gov/comments/sr-batsbzx-2017-39/batsbzx201739-2251466-160921.pdf; https://www.sec.gov/comments/sr-batsedga-2017-14/batsedga201714-2251458-160938.pdf; https://www.sec.gov/comments/sr-batsedgx-2017-24/batsedgx201724-2251462-160919.pdf; https://www.sec.gov/comments/sr-cboe-2017-043/cboe2017043-2251469-160922.pdf; and https://www.sec.gov/comments/sr-box-2017-19/box201719-2250011-160918.pdf. 
MIAX filed Amendment No. 1 on August 22, 2017, but withdrew it on 
August 24, 2017. MIAX then filed Amendment No. 2 on August 24, 2017. 
Amendment No. 2 for MIAX is available on the Commission's Web site 
at: https://www.sec.gov/comments/sr-miax-2017-24/miax201724-2243335-160869.pdf.
    \18\ IEX, Phlx, Nasdaq, BX, GEMX, ISE and MRX filed Amendment 
No. 1 to their proposed rule changes on August 25, 2017. Amendment 
No. 1 is available on the Commission's Web site for IEX, Phlx, 
Nasdaq, BX, GEMX, ISE and MRX, respectively, at: https://www.sec.gov/comments/sr-iex-2017-21/iex201721-2243778-160880.pdf; 
https://www.sec.gov/comments/sr-phlx-2017-47/phlx201747-2257687-160924.pdf; https://www.sec.gov/comments/sr-nasdaq-2017-059/nasdaq2017059-2257689-160925.pdf; https://www.sec.gov/comments/sr-bx-2017-029/bx2017029-2251461-160940.pdf; https://www.sec.gov/comments/sr-gemx-2017-24/gemx201724-2244452-160897.pdf; https://www.sec.gov/comments/sr-ise-2017-52/ise201752-2244293-160891.pdf; 
and https://www.sec.gov/comments/sr-mrx-2017-08/mrx201708-2251467-160941.pdf.
    \19\ The Amendments amended the original filings to make 
technical changes to the proposed rule changes. Specifically, each 
Participant amended the proposed rule text to remove references to 
proposed ``Consolidated Audit Trail Funding Fees,'' as such fees are 
currently suspended, and replaced such term with the phrase ``any 
fees contemplated by the CAT NMS Plan and imposed on Industry 
Members pursuant to Exchange Rules.'' See infra note 24. Each 
Participant also removed references to ``Consolidated Audit Trail 
Funding Fees'' from paragraphs (a)(1), (b) and (c)(1) of the 
proposed rule text. In addition, in connection with the merger of 
NYSE Arca Equities with and into NYSE Arca, Amendment No. 1 for NYSE 
Arca also combines NYSE Arca Equities Rule 6.6900 and NYSE Arca Rule 
11.6900 into a single rule NYSE Rule 11.6900. See Securities 
Exchange Act Release No. 80781 (May 26, 2017), 82 FR 25369. See also 
Securities Exchange Act Release No. 81419 (August 17, 2017), 82 FR 
40044 (August 23, 2017). The Amendments are not subject to notice 
and comment because they are technical amendments that do not 
materially alter the substance of the proposed rule changes or raise 
any novel regulatory issues.
    \20\ The Commission notes that for purposes of this Order, 
unless otherwise specified, capitalized terms used in this Order are 
defined as set forth in the proposals, as modified by the 
Amendments, or in the CAT NMS Plan. See supra notes 16-18; see also 
infra note 23.
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II. Description of the Proposed Rule Changes, as Modified by the 
Amendments

    The Participants, along with C2 Options Exchange, Inc., Chicago 
Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., 
MIAX PEARL, LLC, and NYSE National, Inc., filed with the Commission, 
pursuant to Section 11A of the Act \21\ and Rule 608 of Regulation NMS 
thereunder,\22\ the National Market System Plan Governing the 
Consolidated Audit Trail (``CAT NMS Plan'' or ``Plan'').\23\ 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 
(``Company''), of which each Participant is a member, to operate the 
CAT.
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    \21\ 15 U.S.C. 78k-1.
    \22\ 17 CFR 242.608.
    \23\ 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. The 
Plan was published for comment in the Federal Register on May 17, 
2016, and approved by the Commission, as modified, on November 15, 
2016. See Securities Exchange Act Release Nos. 77724 (April 27, 
2016), 81 FR 30614 (May 17, 2016); 79318 (November 15, 2016), 81 FR 
84696 (November 23, 2016).
---------------------------------------------------------------------------

    Under the CAT NMS Plan, the Operating Committee of the Company 
(``Operating Committee'') has the discretion to establish funding for 
the Company to operate the CAT, including establishing fees that the 
Participants

[[Page 42145]]

and Industry Members will pay (``CAT Fees'').\24\ Section 11.5 of the 
CAT NMS Plan requires the 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 a 
designated Subcommittee. Section 11.5 of the CAT NMS Plan also states 
that decisions by the Operating Committee or a designated Subcommittee 
on such matters shall be binding on Industry Members, without prejudice 
to the right of any Industry Member to seek redress from the Commission 
pursuant to Rule 608 \25\ or in any other appropriate forum. The 
Participants filed the proposed rule changes to establish the 
procedures for resolving potential disputes related to CAT Fees charged 
to Industry Members.
---------------------------------------------------------------------------

    \24\ Section 11.1(b) of the CAT NMS Plan. The Commission notes 
that the Participants filed proposed rule changes to adopt fees to 
be charged to Industry Members, including Industry Members that are 
Execution Venues. See Securities Exchange Act Release Nos. 80675 
(May 15, 2017), 82 FR 23100 (May 19, 2017) (SR-MIAX-2017-18); 80697 
(May 16, 2017), 82 FR 23398 (May 22, 2017) (SR-BX-2017-023); 80692 
(May 16, 2017), 82 FR 23325 (May 22, 2017) (SR-IEX-2017-16); 80696 
(May 16, 2017), 82 FR 23439 (May 22, 2017) (SR-NASDAQ-2017-046); 
80693 (May 16, 2017), 82 FR 23363 (May 22, 2017) (SR-NYSE-2017-22); 
80698 (May 16, 2017), 82 FR 23457 (May 22, 2017) (SR-NYSEArca-2017-
52); 80694 (May 16, 2017), 82 FR 23416 (May 22, 2017) (SR-NYSEMKT-
2017-26); 80721 (May 18, 2017), 82 FR 23864 (May 24, 2017) (SR-BOX-
2017-16); 80713 (May 18, 2017), 82 FR 23956 (May 24, 2017) (SR-GEMX-
2017-17); 80715 (May 18, 2017), 82 FR 23895 (May 24, 2017) (SR-ISE-
2017-45); 80726 (May 18, 2017), 82 FR 23915 (May 24, 2017) (SR-MRX-
2017-04); 80725 (May 18, 2017), 82 FR 23935 (May 24, 2017) (SR-PHLX-
2017-37); 80785 (May 26, 2017), 82 FR 25404 (June 1, 2017) (SR-CBOE-
2017-040); 80784 (May 26, 2017), 82 FR 25448 (June 1, 2017) (SR-
BatsEDGA-2017-13); 80809 (May 30, 2017), 82 FR 25837 (June 5, 2017) 
(SR-BatsBYX-2017-11); 80822 (May 31, 2017), 82 FR 26148 (June 6, 
2017) (SR-BatsBZX-2017-38); and 80821 (May 31, 2017), 82 FR 26177 
(June 6, 2017) (SR-BatsEDGX-2017-22). On June 30, 2017, the 
Commission temporarily suspended the proposed rule changes and 
instituted proceedings to determine whether to approve or disapprove 
the proposed rule changes. See Securities Exchange Act Release No. 
81067, 82 FR 31656 (July 7, 2017).
    \25\ 17 CFR 242.608.
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Fee Dispute Resolution

    The proposals state that disputes initiated by an Industry Member 
with respect to CAT Fees charged to such Industry Member, 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, pursuant to the Fee 
Dispute Resolution Procedures adopted by the Operating Committee 
pursuant to the CAT NMS Plan.\26\ The proposals further indicate that 
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 Commission or in any other appropriate forum.\27\
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    \26\ See, e.g., Notice, supra note 12, at 28541-42. The 
Participants also represent that the Fee Dispute Resolution 
Procedures were modeled after the adverse action procedures adopted 
by various exchanges and that such Procedures will be posted on the 
CAT NMS Plan Web site (www.catnmsplan.com). See, e.g., id. at 28542.
    \27\ See, e.g., id. at 28541.
---------------------------------------------------------------------------

    Under the Fee Dispute Resolution 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.\28\ 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.\29\ 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 under the Fee Dispute Resolution Procedures.\30\
---------------------------------------------------------------------------

    \28\ See, e.g., id. at 28542.
    \29\ See, e.g., id.
    \30\ See, e.g., id.
---------------------------------------------------------------------------

    The Participants state that the Company will refer applications for 
hearing and review promptly to the Fee Review Subcommittee designated 
by the Operating Committee with responsibility for conducting the 
reviews of CAT Fee disputes pursuant to these Fee Dispute Resolution 
Procedures.\31\ The proposals note that the Fee Review Subcommittee 
will keep a record of the proceedings.\32\
---------------------------------------------------------------------------

    \31\ See, e.g., id. The Participants further indicate that 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. See, e.g., id.
    \32\ See, e.g., id.
---------------------------------------------------------------------------

    The proposals further specify that the Fee Review Subcommittee will 
hold hearings promptly and will set a hearing date.\33\ Under the 
proposed rule changes, 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 hearing, and each party will have the right 
to inspect and copy the other party's materials prior to the 
hearing.\34\
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    \33\ See, e.g., id.
    \34\ See, e.g., id.
---------------------------------------------------------------------------

    The Participants state that 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.\35\ The applicant is entitled to be 
accompanied, represented and advised by counsel at all stages of the 
proceedings under the proposed rule changes.\36\
---------------------------------------------------------------------------

    \35\ See, e.g., id.
    \36\ See, e.g., id.
---------------------------------------------------------------------------

    The proposals further indicate that the Fee Review Subcommittee 
will determine all questions concerning the admissibility of evidence 
and will otherwise regulate the conduct of the hearing.\37\ Each of the 
parties will be permitted, under the proposed rule changes, 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.\38\ In addition, 
the Fee Review Subcommittee will have the right to question all parties 
and witnesses to the proceeding.\39\ The proposals require the Fee 
Review Subcommittee to keep a record of the hearing, to set forth its 
decision in writing, and to send the written decision to the parties to 
the proceeding.\40\ Such decisions must contain the reasons supporting 
the conclusions of the Fee Review Subcommittee under the proposed rule 
changes.\41\
---------------------------------------------------------------------------

    \37\ See, e.g., id. The proposed rule changes note, however, 
that the formal rules of evidence will not apply.
    \38\ See, e.g., id.
    \39\ See, e.g., id.
    \40\ See, e.g., id.
    \41\ See, e.g., id.
---------------------------------------------------------------------------

    The Participants state that 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.\42\ The applicant's 
petition for review must be in writing and must specify the findings 
and conclusions to which the applicant objects, together with the 
reasons for such objections.\43\ According to the proposed rule 
changes, any objection to a decision not specified in writing will be 
considered to have been abandoned and may be disregarded.\44\ The 
proposed rule changes allow parties to petition to submit a written 
argument to the Operating Committee and to request an opportunity to 
make an oral argument before the Operating

[[Page 42146]]

Committee.\45\ The Operating Committee will then have sole discretion 
to grant or deny either request.\46\
---------------------------------------------------------------------------

    \42\ See, e.g., id.
    \43\ See, e.g., id.
    \44\ See, e.g., id.
    \45\ See, e.g., id.
    \46\ See, e.g., id.
---------------------------------------------------------------------------

    Under the proposed rule changes, any review conducted by the 
Operating Committee will be made upon the record and will be made after 
such further proceedings, if any, as the Operating Committee may 
order.\47\ Based upon such record, the Operating Committee may affirm, 
reverse or modify, in whole or in part, the decision of the Fee Review 
Subcommittee.\48\ The Participants state that the decision of the 
Operating Committee will be in writing, will be sent to the parties to 
the proceeding, and will be final.\49\
---------------------------------------------------------------------------

    \47\ See, e.g., id.
    \48\ See, e.g., id.
    \49\ See, e.g., id.
---------------------------------------------------------------------------

    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.\50\ The proposed rule changes 
indicate, however, that the Operating Committee may extend the 90-day 
time limit at its discretion.\51\ The Fee Dispute Resolution Procedures 
also state that any time limits for the submission of answers, 
petitions or other materials may be extended by permission of the 
Operating Committee.\52\
---------------------------------------------------------------------------

    \50\ See, e.g., id.
    \51\ See, e.g., id.
    \52\ See, e.g., id.
---------------------------------------------------------------------------

    Finally, the Participants state that an Industry Member that files 
a written application with the Company disputing CAT Fees in accordance 
with the Fee Dispute Resolution Procedures is not required to pay such 
CAT Fees until the dispute is resolved in accordance with the 
Procedures, including any review by the Commission or in any other 
appropriate forum.\53\ The Participants state that, 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 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.\54\
---------------------------------------------------------------------------

    \53\ See, e.g., id. The Participants clarify that the Industry 
Member may only withhold any invoiced CAT Fees that the Industry 
Member has disputed; under the proposed rule changes, the Industry 
Member must pay any invoiced CAT Fees that are not disputed when 
such fees are due, as set forth in the invoice. See, e.g., id.
    \54\ See, e.g., id. at 28542-43.
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III. Discussion and Commission Findings

    After carefully considering the proposed rule changes, the 
Commission finds that the proposals, as modified by the Amendments, are 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to national securities exchanges.\55\ 
Specifically, the Commission finds that the proposed rule changes are 
consistent with Section 6(b)(5) \56\ of the Act, which requires, among 
other things, that the rules of a national securities exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest, and are not designed to permit unfair discrimination between 
customers, issuers, brokers or dealers. In addition, the Commission 
finds that the proposed rule changes are consistent with Section 
6(b)(8) \57\ of the Act, which requires that the rules of a national 
securities exchange not impose any burden on competition that is not 
necessary or appropriate.
---------------------------------------------------------------------------

    \55\ In approving these proposed rule changes, the Commission 
has considered the proposed rules' impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \56\ 15 U.S.C. 78f(b)(5).
    \57\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Commission believes that the proposals are consistent with 
Section 6(b) \58\ of the Act in general, and furthers the objectives of 
Section 6(b)(5) \59\ of the Act \60\ in particular, because they are 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general to protect investors and the 
public interest, by providing a uniform mechanism by which Industry 
Members may dispute CAT Fees and receive a timely review of such 
disputes. The Commission notes that the Fee Dispute Resolution 
Procedures provide for a hearing before the Fee Review Subcommittee, 
and if the Industry Member is not satisfied with the decision of the 
Fee Review Subcommittee, it may request a review of the decision by the 
Operating Committee. Further, the proposals provide that, although the 
decisions of the Operating Committee or Fee Review Subcommittee are 
binding on an Industry Member, the Industry Member may seek redress 
from the Commission or in any other appropriate forum.
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    \58\ 15 U.S.C. 78f(b).
    \59\ 15 U.S.C. 78f(b)(5).
    \60\ 15 U.S.C. 78f(b)(5).
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    The Commission also notes that the proposals implement Section 11.5 
of the CAT NMS Plan.\61\ Specifically, Section 11.5 states that the 
Participants will adopt rules requiring that disputes with respect to 
fees charged to Industry Members pursuant to Article XI of the CAT NMS 
Plan be determined by the Operating Committee or a designated 
Subcommittee. Section 11.5 further provides that such fee disputes will 
be determined by the Operating Committee or a designated Subcommittee, 
and that decisions on such matters will be binding on Industry Members 
without prejudice to the rights of any Industry Member to seek redress 
from the Commission pursuant to Rule 608 of Regulation NMS or in any 
other appropriate forum.
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    \61\ The Commission previously approved the CAT NMS Plan. See 
supra note 23.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule changes (SR-BatsBYX-2017-13; SR-BatsBZX-2017-39; 
SR-BatsEDGA-2017-14; SR-BatsEDGX-2017-24; SR-BOX-2017-19; SR-CBOE-2017-
043; SR-IEX-2017-21; SR-ISE-2017-52; SR-MRX-2017-08; SR-MIAX-2017-24; 
SR-NASDAQ-2017-059; SR-BX-2017-029; SR-GEMX-2017-24; SR-PHLX-2017-47; 
SR-NYSE-2017-24; SR-NYSEArca-2017-60; SR-NYSEMKT-2017-31), as modified 
by the Amendments, are approved.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\62\
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    \62\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-18794 Filed 9-5-17; 8:45 am]
 BILLING CODE 8011-01-P