Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Implementation Date for Certain Changes to Exchange Rules 14.11 and 14.12, 46583-46586 [2017-21412]

Download as PDF Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices issuers with additional time to finish developing and testing their internal systems and procedures prior to the implementation date. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange received a copy of a letter from the Investment Company Institute, on behalf of listed ETP issuers, to the SEC.11 As described in Item 3 [sic], above, the Investment Company Institute detailed challenges that listed ETF issuers are facing in developing compliance systems to address the amendments contained in the Proposed Rule Change and have requested that the implementation date for such amendments be extended. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b– 4(f)(6) thereunder.12 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 13 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4 (f)(6)(iii) 14 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission notes that waiver of the operative delay will allow the Exchange to immediately extend the implementation date of the Proposed Rule Change, and avoid the potential confusion and disruption that could result if the extension did not become operative until after October 1, 2017. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the ethrower on DSK3G9T082PROD with NOTICES 11 See Footnote 6, supra. CFR 240.19b–4(f)(6). As required under Rule 19b-4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 13 17 CFR 240.19b–4(f)(6). 14 17 CFR 240.19b–4(f)(6)(iii). 12 17 VerDate Sep<11>2014 19:52 Oct 04, 2017 Jkt 244001 public interest. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.15 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 to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2017–101 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2017–101. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public 15 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 46583 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– NASDAQ–2017–101 and should be submitted on or before October 26, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–21408 Filed 10–4–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81777; File No. SR– BatsBZX–2017–63] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Extend the Implementation Date for Certain Changes to Exchange Rules 14.11 and 14.12 September 29, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 28, 2017, Bats BZX Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ‘‘non-controversial’’ proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6)(iii) thereunder,4 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 16 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6)(iii). 1 15 E:\FR\FM\05OCN1.SGM 05OCN1 46584 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to extend the date on which certain changes to Exchange Rules 14.11 and 14.12 would be implemented. 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 ethrower on DSK3G9T082PROD with NOTICES 1. Purpose On November 18, 2016 the Exchange filed a proposed rule change, as subsequently amended by Amendments No. 1 and 2 thereto (as amended, the ‘‘Proposed Rule Change’’), to adopt certain changes to Exchange Rules 14.11 and 14.12 to add additional continued listing standards for exchange-traded products (‘‘ETP’’) as well as clarify the procedures that the Exchange will undertake when an ETP is noncompliant with applicable rules. Given the scope of the amendments specified in the Proposed Rule Change, the Exchange proposed that such amendments not be implemented until October 1, 2017. On March 7, 2017, the Commission granted approval of the Proposed Rule Change, including the October 1, 2017 implementation date. On September 20, 2017, the Exchange submitted an interpretive filing (the ‘‘Interpretive Filing’’) 5 and on September 21, 2017 published a document that answers a series of frequently asked questions (the ‘‘FAQs’’).6 The Interpretive Filing and 5 See SR–BatsBZX–2017–61, available at: https:// cdn.batstrading.com/resources/regulation/rule_ filings/approved/2017/SR-BatsBZX-2017-61.pdf. 6 The FAQs are available at: https:// cdn.batstrading.com/resources/listings/FAQs%20- VerDate Sep<11>2014 19:52 Oct 04, 2017 Jkt 244001 FAQs are intended to provide guidance as it relates to ETP issuers complying with the Proposed Rule Change upon implementation. The Exchange continues to engage with issuers about the Proposed Rule Change and will update the FAQs as needed based on those conversations. The Exchange now proposes to extend the implementation date of the amendments specified in the Proposed Rule Change to January 1, 2018.7 Since the Proposed Rule Change was approved, the Exchange has engaged in extensive conversations with issuers of listed ETPs, industry advocacy groups and index providers to discuss the new rule requirements and offer guidance on rule interpretation and application, and, as noted above, the Exchange recently submitted the Interpretive Filing and distributed the FAQs. As part of these conversations, the Exchange has learned that many issuers have already engaged in building and testing the necessary compliance systems, but that they have been unable to finalize implementation without this additional guidance. As such, ETP issuers have expressed concern about their ability to have in place well-tested systems and procedures to ensure compliance by the current October 1, 2017 implementation date. ETP issuers, and industry advocacy groups on their behalf, have explained that issuers will require time to design and test new compliance systems as well as engage in discussions with third-party providers to source and track new data elements required for rule compliance.8 An additional three months prior to implementation will allow ETP issuers to finish building, more thoroughly test, and enhance the systems and procedures that they’ve already developed in advance of the current October 1, 2017 implementation date. Further, the additional time prior to implementation will further facilitate the ongoing discussion, which will include progress updates, between the Exchange, ETP issuers, and index providers. The Exchange believes it is appropriate to extend the implementation date of the Proposed Rule Change to January 1, 2018 to provide ETP issuers with the time %20New%20Cont%20List%20Standards %20FINAL.pdf. 7 See Securities Exchange Act Release No. 80169 (March 7, 2017), 82 FR 13536 (March 13, 2017) (SR– BatsBZX–2016–80). 8 See, for example, Letter, dated July 11, 2017, from Dorothy Donohue, Acting General Counsel, Investment Company Institute to Brent J. Fields, Secretary, Securities and Exchange Commission, available at https://www.sec.gov/comments/srnasdaq-2016-135/nasdaq2016135-1846208155175.pdf. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 needed to finish developing and test their compliance procedures. In support of its proposal, the Exchange notes that the Proposed Rule Change imposes significant new compliance requirements on issuers that they have not been subject to previously. To meet these new compliance requirements, issuers must develop internal systems as well as coordinate with third-party service providers, such as index providers, to develop procedures by which they can obtain essential data, which includes the form, timing, and means by which such data is conveyed. Listed issuers have informed the Exchange that they are unable to complete and sufficiently test this extensive project by the pending October 1, 2017 implementation date. The Exchange believes that it is critical for ETP issuers to have the appropriate procedures and systems in place to monitor and evidence ETP compliance with the new continued listing rules before such rules are implemented in order to ensure meaningful compliance upon initial implementation, which could help avoid trading disruption in the ETPs. Therefore, the Exchange proposes to extend the implementation date for the Proposed Rule Change until January 1, 2018. 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act 9 in general and Section 6(b)(5) of the Act 10 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 mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange believes that the proposed amendment is consistent with the protection of investors because it will provide additional time for issuers to finish building, more thoroughly test, and enhance the systems and procedures prior to the initial implementation of the Proposed Rule Change which will help ensure compliance upon initial implementation which will further promote the policy goals underlying the Proposed Rule Change and would help avoid trading disruption in the ETPs. Since the Proposed Rule Change was approved, the Exchange has engaged in extensive 9 15 U.S.C. 78f. U.S.C. 78f(b)(5). 10 15 E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices ethrower on DSK3G9T082PROD with NOTICES conversations with issuers of listed ETPs, industry advocacy groups and index providers to discuss the new rule requirements and offer guidance on rule interpretation and application, and, as noted above, the Exchange recently submitted the Interpretive Filing and distributed the FAQs. As a result of these conversations and the recent distribution of interpretive guidance, ETP issuers have expressed concern about their ability to have in place welltested systems and procedures to ensure compliance by the current October 1, 2017 implementation date. ETP issuers, and industry advocacy groups on their behalf, have explained that issuers will require time to design and test new compliance systems as well as engage in discussions with third-party providers to source and track new data elements required for rule compliance.11 An additional three months prior to implementation will allow ETP issuers to more thoroughly test and enhance the systems and procedures that they’ve already developed in advance of the current October 1, 2017 implementation date. Further, the additional time prior to implementation will further facilitate the ongoing dialogue between the Exchange, ETP issuers, and index providers. Providing listed issuers with additional time before the implementation of the Proposed Rule Change furthers the protection of investors and the public interest because it will enhance investor confidence that listed issuers are complying with Exchange rules by providing sufficient time to finish building, more thoroughly test, and enhance the systems and procedures prior to the initial implementation, which could help avoid trading disruption in the ETPs. For the above reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate ETP issuers’ ability to monitor and evidence compliance with 11 See, for example, Letter, dated July 11, 2017, from Dorothy Donohue, Acting General Counsel, Investment Company Institute to Brent J. Fields, Secretary, Securities and Exchange Commission, available at https://www.sec.gov/comments/srnasdaq-2016-135/nasdaq2016135-1846208155175.pdf. VerDate Sep<11>2014 19:52 Oct 04, 2017 Jkt 244001 approved continued listing rules by providing issuers with additional time to finish developing and testing their internal systems and procedures prior to the implementation date. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange received a copy of a letter from the Investment Company Institute, on behalf of ETP issuers, to the Securities [sic] Exchange Commission.12 As described in Item 3 [sic], above, the Investment Company Institute detailed challenges that ETP issuers are facing in developing compliance systems to address the amendments contained in the Proposed Rule Change and have requested that the implementation date for such amendments be extended. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b– 4(f)(6) thereunder.13 A proposed rule change filed pursuant to Rule 19b–4(f)(6) under the Act 14 normally does not become operative for 30 days after the date of its filing. However, Rule 19b–4(f)(6)(iii) 15 permits the Commission to designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission notes that waiver of the operative delay will allow the Exchange to immediately extend the implementation date of the Proposed Rule Change, and avoid the potential confusion and disruption that could result if the extension did not become operative until after October 1, 2017. The Commission believes that waiver of the 30-day operative delay is consistent 12 See Footnote 5, infra [sic]. CFR 240.19b–4(f)(6). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 14 17 CFR 240.19b–4(f)(6). 15 17 CFR 240.19b–4(f)(6)(iii). 13 17 PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 46585 with the protection of investors and the public interest. Therefore, the Commission hereby waives the 30-day operative delay and designates the proposal operative upon filing.16 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 to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– BatsBZX–2017–63 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–BatsBZX–2017–63. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and 16 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\05OCN1.SGM 05OCN1 46586 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices 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– BatsBZX–2017–63 and should be submitted on or before October 26, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–21412 Filed 10–4–17; 8:45 am] SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Rules To Establish a Rule Numbering Framework in Connection With the ReLaunch of Trading on the Exchange September 29, 2017. ethrower on DSK3G9T082PROD with NOTICES Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on September 28, 2017, NYSE National, Inc. (the ‘‘Exchange’’ or ‘‘NYSE National’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. 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 the Substance of the Proposed Rule Change The Exchange proposes to adopt rules to establish a rule numbering framework in connection with the re-launch of CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. VerDate Sep<11>2014 19:52 Oct 04, 2017 Jkt 244001 In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those 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. 1. Purpose [Release No. 34–81782; File No. SR– NYSENat–2017–04] 1 15 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P 17 17 trading on the Exchange. The proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. NYSE National, in connection with the re-launch of its trading operations, proposes to adopt rules to establish a rule numbering framework. The Exchange proposes to establish this framework in order to facilitate the amendment and re-publication of its new rule book in advance of the relaunch of trading operations on the Exchange. On January 31, 2017, Intercontinental Exchange, Inc. (‘‘ICE’’), through its wholly-owned subsidiary NYSE Group, acquired all of the outstanding capital stock of the Exchange (the ‘‘Acquisition’’).4 Immediately following the closing of the Acquisition, effective February 1, 2017, NYSE National ceased trading operations.5 NYSE National continues to be registered as a national securities exchange and has rules that are distinct from the rules of the three other registered national securities exchanges owned by NYSE Group, namely, NYSE, NYSE American LLC, and NYSE Arca, 4 See Securities Exchange Act Release No. 79902 (January 30, 2017), 82 FR 9258 (February 3, 2017) (SR–NSX–2016–16). Prior to the Acquisition, the Exchange was named ‘‘National Stock Exchange, Inc.’’ NYSE Group is a wholly-owned subsidiary of NYSE Holdings LLC, which is wholly owned by Intercontinental Exchange Holdings, Inc., a direct wholly-owned subsidiary of ICE. ICE is a public company listed on the New York Stock Exchange LLC (the ‘‘NYSE’’). 5 See Securities Exchange Act Release No. 80018 (February 10, 2017), 82 FR 10947 (February 16, 2017) (SR–NSX–2017–04). PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 Inc. (‘‘NYSE Arca’’, and together, the ‘‘NYSE Exchanges’’).6 In connection with the Acquisition, NYSE Group announced its plans to migrate NYSE National to the NYSE Pillar platform, which is an integrated trading technology platform designed to use a single specification for connecting to the equities and options markets operated by the NYSE Exchanges.7 The Exchange now proposes to re-launch trading using the NYSE Pillar platform. To that end, in connection with the re-launch of trading operations following the migration to Pillar, the Exchange proposes to adopt the rule numbering framework of the rules governing the NYSE Arca equities market. The Exchange believes that if it and its affiliates are operating on the same trading platform, using the same rule numbering scheme across all markets using the NYSE Pillar platform will make it easier for members, the public and the Commission to navigate the rules of each market. The Exchange therefore proposes to adopt a framework of rule numbering that is based on the current rules governing the NYSE Arca equities market: NYSE Arca Rules 0 through 3, 4–E through 9–E, and 10 through 14.8 As proposed, this framework would use the current rule numbering scheme of the rules governing the NYSE Arca equities market, and would consist of the following proposed rules: RULE 0 REGULATION OF THE EXCHANGE AND ETP HOLDERS RULE 1 DEFINITIONS RULE 2 TRADING PERMITS RULE 3 ORGANIZATION AND ADMINISTRATION RULE 4 CAPITAL REQUIREMENTS, FINANCIAL REPORTS, MARGIN RULE 5 EQUITIES LISTINGS RULE 6 ORDER AUDIT TRAIL SYSTEM RULE 7 EQUITIES TRADING RULE 8 TRADING OF CERTAIN EXCHANGE DERIVATIVES RULE 9 CONDUCTING BUSINESS WITH THE PUBLIC RULE 10 DISCIPLINARY PROCEEDINGS, OTHER HEARINGS AND APPEALS RULE 11 BUSINESS CONDUCT RULE 12 ARBITRATION 6 See 82 FR 9258, supra note 4. Trader Update dated January 18, 2017, available here: https://www.nyse.com/publicdocs/ nyse/markets/nyse/NYSE_Group_NSX_Member_ Notice.pdf. 8 See Securities Exchange Act Release No. 81419 (August 17, 2017), 82 FR 40044 (August 23, 2017) (SR–NYSEArca–2017–40), at 40046. Because the Exchange only has an equities market, the proposed rule framework would not require the ‘‘–E’’ designation for Rules 4 through 9. 7 See E:\FR\FM\05OCN1.SGM 05OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 192 (Thursday, October 5, 2017)]
[Notices]
[Pages 46583-46586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21412]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81777; File No. SR-BatsBZX-2017-63]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
the Implementation Date for Certain Changes to Exchange Rules 14.11 and
14.12

September 29, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 28, 2017, Bats BZX Exchange, Inc. (``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
has designated this proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6)(iii).

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[[Page 46584]]

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange filed a proposal to extend the date on which certain
changes to Exchange Rules 14.11 and 14.12 would be implemented.
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
On November 18, 2016 the Exchange filed a proposed rule change, as
subsequently amended by Amendments No. 1 and 2 thereto (as amended, the
``Proposed Rule Change''), to adopt certain changes to Exchange Rules
14.11 and 14.12 to add additional continued listing standards for
exchange-traded products (``ETP'') as well as clarify the procedures
that the Exchange will undertake when an ETP is noncompliant with
applicable rules. Given the scope of the amendments specified in the
Proposed Rule Change, the Exchange proposed that such amendments not be
implemented until October 1, 2017. On March 7, 2017, the Commission
granted approval of the Proposed Rule Change, including the October 1,
2017 implementation date. On September 20, 2017, the Exchange submitted
an interpretive filing (the ``Interpretive Filing'') \5\ and on
September 21, 2017 published a document that answers a series of
frequently asked questions (the ``FAQs'').\6\ The Interpretive Filing
and FAQs are intended to provide guidance as it relates to ETP issuers
complying with the Proposed Rule Change upon implementation. The
Exchange continues to engage with issuers about the Proposed Rule
Change and will update the FAQs as needed based on those conversations.
The Exchange now proposes to extend the implementation date of the
amendments specified in the Proposed Rule Change to January 1, 2018.\7\
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\5\ See SR-BatsBZX-2017-61, available at: https://cdn.batstrading.com/resources/regulation/rule_filings/approved/2017/SR-BatsBZX-2017-61.pdf.
\6\ The FAQs are available at: https://cdn.batstrading.com/resources/listings/FAQs%20-%20New%20Cont%20List%20Standards%20FINAL.pdf.
\7\ See Securities Exchange Act Release No. 80169 (March 7,
2017), 82 FR 13536 (March 13, 2017) (SR-BatsBZX-2016-80).
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Since the Proposed Rule Change was approved, the Exchange has
engaged in extensive conversations with issuers of listed ETPs,
industry advocacy groups and index providers to discuss the new rule
requirements and offer guidance on rule interpretation and application,
and, as noted above, the Exchange recently submitted the Interpretive
Filing and distributed the FAQs. As part of these conversations, the
Exchange has learned that many issuers have already engaged in building
and testing the necessary compliance systems, but that they have been
unable to finalize implementation without this additional guidance. As
such, ETP issuers have expressed concern about their ability to have in
place well-tested systems and procedures to ensure compliance by the
current October 1, 2017 implementation date. ETP issuers, and industry
advocacy groups on their behalf, have explained that issuers will
require time to design and test new compliance systems as well as
engage in discussions with third-party providers to source and track
new data elements required for rule compliance.\8\ An additional three
months prior to implementation will allow ETP issuers to finish
building, more thoroughly test, and enhance the systems and procedures
that they've already developed in advance of the current October 1,
2017 implementation date. Further, the additional time prior to
implementation will further facilitate the ongoing discussion, which
will include progress updates, between the Exchange, ETP issuers, and
index providers.
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\8\ See, for example, Letter, dated July 11, 2017, from Dorothy
Donohue, Acting General Counsel, Investment Company Institute to
Brent J. Fields, Secretary, Securities and Exchange Commission,
available at https://www.sec.gov/comments/sr-nasdaq-2016-135/nasdaq2016135-1846208-155175.pdf.
---------------------------------------------------------------------------

The Exchange believes it is appropriate to extend the
implementation date of the Proposed Rule Change to January 1, 2018 to
provide ETP issuers with the time needed to finish developing and test
their compliance procedures. In support of its proposal, the Exchange
notes that the Proposed Rule Change imposes significant new compliance
requirements on issuers that they have not been subject to previously.
To meet these new compliance requirements, issuers must develop
internal systems as well as coordinate with third-party service
providers, such as index providers, to develop procedures by which they
can obtain essential data, which includes the form, timing, and means
by which such data is conveyed. Listed issuers have informed the
Exchange that they are unable to complete and sufficiently test this
extensive project by the pending October 1, 2017 implementation date.
The Exchange believes that it is critical for ETP issuers to have the
appropriate procedures and systems in place to monitor and evidence ETP
compliance with the new continued listing rules before such rules are
implemented in order to ensure meaningful compliance upon initial
implementation, which could help avoid trading disruption in the ETPs.
Therefore, the Exchange proposes to extend the implementation date for
the Proposed Rule Change until January 1, 2018.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act \9\ in general and Section 6(b)(5) of the Act \10\ 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 mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed amendment is consistent
with the protection of investors because it will provide additional
time for issuers to finish building, more thoroughly test, and enhance
the systems and procedures prior to the initial implementation of the
Proposed Rule Change which will help ensure compliance upon initial
implementation which will further promote the policy goals underlying
the Proposed Rule Change and would help avoid trading disruption in the
ETPs. Since the Proposed Rule Change was approved, the Exchange has
engaged in extensive

[[Page 46585]]

conversations with issuers of listed ETPs, industry advocacy groups and
index providers to discuss the new rule requirements and offer guidance
on rule interpretation and application, and, as noted above, the
Exchange recently submitted the Interpretive Filing and distributed the
FAQs. As a result of these conversations and the recent distribution of
interpretive guidance, ETP issuers have expressed concern about their
ability to have in place well-tested systems and procedures to ensure
compliance by the current October 1, 2017 implementation date. ETP
issuers, and industry advocacy groups on their behalf, have explained
that issuers will require time to design and test new compliance
systems as well as engage in discussions with third-party providers to
source and track new data elements required for rule compliance.\11\ An
additional three months prior to implementation will allow ETP issuers
to more thoroughly test and enhance the systems and procedures that
they've already developed in advance of the current October 1, 2017
implementation date. Further, the additional time prior to
implementation will further facilitate the ongoing dialogue between the
Exchange, ETP issuers, and index providers.
---------------------------------------------------------------------------

\11\ See, for example, Letter, dated July 11, 2017, from Dorothy
Donohue, Acting General Counsel, Investment Company Institute to
Brent J. Fields, Secretary, Securities and Exchange Commission,
available at https://www.sec.gov/comments/sr-nasdaq-2016-135/nasdaq2016135-1846208-155175.pdf.
---------------------------------------------------------------------------

Providing listed issuers with additional time before the
implementation of the Proposed Rule Change furthers the protection of
investors and the public interest because it will enhance investor
confidence that listed issuers are complying with Exchange rules by
providing sufficient time to finish building, more thoroughly test, and
enhance the systems and procedures prior to the initial implementation,
which could help avoid trading disruption in the ETPs.
For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.

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

The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate ETP issuers' ability to monitor
and evidence compliance with approved continued listing rules by
providing issuers with additional time to finish developing and testing
their internal systems and procedures prior to the implementation date.

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

The Exchange received a copy of a letter from the Investment
Company Institute, on behalf of ETP issuers, to the Securities [sic]
Exchange Commission.\12\ As described in Item 3 [sic], above, the
Investment Company Institute detailed challenges that ETP issuers are
facing in developing compliance systems to address the amendments
contained in the Proposed Rule Change and have requested that the
implementation date for such amendments be extended.
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\12\ See Footnote 5, infra [sic].
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6) thereunder.\13\
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\13\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \14\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The
Commission notes that waiver of the operative delay will allow the
Exchange to immediately extend the implementation date of the Proposed
Rule Change, and avoid the potential confusion and disruption that
could result if the extension did not become operative until after
October 1, 2017. The Commission believes that waiver of the 30-day
operative delay is consistent with the protection of investors and the
public interest. Therefore, the Commission hereby waives the 30-day
operative delay and designates the proposal operative upon filing.\16\
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 to
determine whether the proposed rule change should be approved or
disapproved.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-BatsBZX-2017-63 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-BatsBZX-2017-63. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and

[[Page 46586]]

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-BatsBZX-2017-63 and should
be submitted on or before October 26, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21412 Filed 10-4-17; 8:45 am]
BILLING CODE 8011-01-P

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