Self-Regulatory Organizations; Investors Exchange LLC; Order Approving Proposed Rule Change To Adopt Rule 14.602 To Describe the Complimentary Products and Services To Be Made Available to All Listed Companies, 48733-48734 [2017-22644]

Download as PDF Federal Register / Vol. 82, No. 201 / Thursday, October 19, 2017 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81872; File No. SR–IEX– 2017–20] Self-Regulatory Organizations; Investors Exchange LLC; Order Approving Proposed Rule Change To Adopt Rule 14.602 To Describe the Complimentary Products and Services To Be Made Available to All Listed Companies October 13, 2017. rmajette on DSKBCKNHB2PROD with NOTICES I. Introduction On August 10, 2017, the Investors Exchange LLC (‘‘IEX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt Rule 14.602 to describe the complimentary products and services to be made available to all listed companies. The proposed rule change was published for comment in the Federal Register on August 29, 2017.3 No comment letters were received in response to the Notice. This order approves the proposed rule change. II. Description of the Proposed Rule Change The Exchange has proposed to adopt Rule 14.602 to describe the complimentary products and services that will be offered to all listed companies pursuant to a listing program that the Exchange intends to begin in 2017.4 In particular, the Exchange has proposed to provide all listed companies with the same optional complimentary services through access to IEX Issuer, a market information analytics platform consisting of access to a team of market professionals and web-based content.5 As described by the Exchange in its proposal, the team of market professionals will provide market intelligence, fundamental and technical trading analysis, and real-time market information to all listed companies.6 The Exchange also stated that the web-based portion of IEX Issuer will provide similar information that will enable all listed companies to follow their stock’s trading, competitors, and market activity through an online 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 81469 (August 23, 2017), 82 FR 41077 (‘‘Notice’’). 4 See id. at 41078. 5 See proposed Rule 14.602. 6 See id. 2 17 VerDate Sep<11>2014 15:13 Oct 18, 2017 Jkt 244001 interface.7 Further, IEX noted that IEX Issuer may, from time to time, provide information about products and services from third-party vendors that IEX determines may be relevant to listed issuers, without any subsidy or other involvement by the Exchange for such products and services.8 The proposed rule text states that the Exchange will provide a description of all products and services available through IEX Issuer on its Web site.9 The Exchange represented in its proposal that all issuers listed on the Exchange will have access to services through IEX Issuer on the same basis and that the Exchange will not be proposing to offer any additional products and services to listed companies on a tiered or differentiated basis.10 III. Discussion and Commission Findings The Commission has carefully reviewed the proposed rule change and finds that it is consistent with the requirements of Section 6 of the Act.11 Specifically, the Commission finds that the proposal is consistent with Sections 6(b)(4) 12 and 6(b)(5) of the Act 13 in particular, in that the proposed rule is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among Exchange members, issuers, and other persons using the Exchange’s facilities, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Moreover, the Commission finds that the proposed rule change is consistent with Section 6(b)(8) of the Act 14 in that it does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Commission believes that the proposed rule change, which would permit the Exchange to provide complimentary products and services to all listed companies through IEX Issuer, as described above,15 is appropriate and consistent with the Act. The 7 See Notice, supra note 3, at 41078. proposed Rule 14.602. The provision of any products and services from a third-party vendor would need to be effected through arrangements directly between the listed issuer and the thirdparty vendor, without any subsidy or other involvement by the Exchange. See id. 9 See id. 10 See Notice, supra note 3, at 41078. 11 15 U.S.C. 78f. In approving this proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 12 15 U.S.C. 78f(b)(4). 13 15 U.S.C. 78f(b)(5). 14 15 U.S.C. 78f(b)(8). 15 See supra notes 5–7 and accompanying text. 8 See PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 48733 Commission believes that by describing in its Rules the products and services available to listed companies, the Exchange is adding greater transparency to its rules and the fees applicable to such companies.16 This will help to ensure that individual listed companies are not given specially negotiated packages of products and services to list or remain listed that would raise unfair discrimination issues under the Act. The Commission notes that all listed companies will receive access to the same services on the same basis without any differentiation and the Exchange is not proposing to offer any additional products and services to listed companies on a tiered or differentiated basis. Accordingly, the Commission believes that the proposed rule change is consistent with the requirements of the Act and, in particular, that the products and services are equitably allocated among issuers consistent with Section 6(b)(4) of the Act, and the rule does not unfairly discriminate between issuers consistent with Section 6(b)(5) of the Act. As described above, the Exchange will provide all of the products and services and will separately provide information about additional products and services available from third-party vendors that IEX determines may be relevant to listed issuers. As noted by the Exchange in its proposal, listed companies may elect to purchase products and services from other vendors, or not to use any such products and services, rather than accepting the products and services offered by the Exchange.17 The Exchange stated that the provision of any products and services from a thirdparty vendor would need to be effected through arrangements directly between the listed issuer and the third-party vendor, without any subsidy or other involvement by the Exchange.18 The Exchange further stated that it does not have exclusive arrangements with thirdparty vendors with respect to any optional access to discounted products and services from third-party vendors.19 The Exchange has represented that listed companies will not be required to accept any discounted products and 16 The Commission views complimentary products and services provided by exchanges to listed companies as a discount on the ultimate listing fees paid by such companies. See, e.g., Securities Exchange Act Release Nos. 65127 (August 12, 2011), 76 FR 51449 (August 18, 2011) (order approving SR–NYSE–2011–20) and 65963 (December 15, 2011), 76 FR 79262 (December 21, 2011) (order approving SR–NASDAQ–2011–122). 17 See Notice, supra note 3, at 41079. 18 This representation is also specifically set forth in the proposed rule text. 19 See Notice, supra note 3, at 41079. E:\FR\FM\19OCN1.SGM 19OCN1 48734 Federal Register / Vol. 82, No. 201 / Thursday, October 19, 2017 / Notices services as a condition to listing.20 The Commission believes that these representations should additionally help to ensure that individual listed companies are not given specially negotiated deals, through Exchange subsidized discounts on products and services from third-party vendors, to list or remain listed that would raise unfair discrimination issues under the Act . The Commission believes that the Exchange is responding to competitive pressures in the market for listings in making this proposal. Specifically, the Exchange stated in its proposal that it expects to face competition as a new entrant in the market for exchange listings and that it believes the complimentary products and services that it offers to listed companies will facilitate its ability to attract and retain listings.21 In particular, the Exchange states that it expects to face significant competition from the New York Stock Exchange (‘‘NYSE’’) and the Nasdaq Stock Market LLC (‘‘Nasdaq’’) for listings, both of which offer complimentary products and services to listed companies.22 Accordingly, the Commission believes that the proposed rule reflects the current competitive environment for exchange listings among national securities exchanges, and is appropriate and consistent with Section 6(b)(8) of the Act.23 IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,24 that the proposed rule change (SR–IEX–2017– 20), be, and hereby is, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Eduardo A. Aleman, Assistant Secretary. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81871; File No. SR–DTC– 2017–018] Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the DTC Distributions Guide Relating to Announcements and Tax Treatment of Certain Corporate Action Events and To Amend the DTC Fee Schedule October 13, 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 October 2, 2017, The Depository Trust Company (‘‘DTC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the clearing agency. DTC filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 and Rules 19b–4(f)(2) and (f)(4) thereunder.4 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Clearing Agency’s Statement of the Terms of Substance of the Proposed Rule Change The proposed rule change 5 would (i) revise the Distributions Guide to (A) enhance the DTC Announcements feature (‘‘Announcements’’) within the DTC Distributions Service (‘‘Distributions Service’’) 6 by adding new corporate action events that do not involve the payment of funds or distribution of Securities through DTC, but which may result in a taxable event for holders (‘‘Tax Event’’), as a type of distribution covered by Announcements (‘‘Distribution Event’’) 7 and (B) make [FR Doc. 2017–22644 Filed 10–18–17; 8:45 am] 1 15 BILLING CODE 8011–01–P U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(2) and (f)(4). 5 Each capitalized term not otherwise defined herein has its respective meaning as set forth in the Rules, By-Laws and Organization Certificate of DTC (the ‘‘DTC Rules’’), available at https:// www.dtcc.com/legal/rules-and-procedures.aspx and the DTC Distributions Service Guide (‘‘Distributions Guide’’), available at https://www.dtcc.com/∼/ media/Files/Downloads/legal/service-guides/ Service%20Guide%20Distributions.pdf. 6 The Distributions Service includes DTC’s announcement, collection, allocation and reporting of dividend, interest and certain principal payments on behalf of Participants holding Securities at DTC. See Distributions Guide, supra note 1 at 9. 7 Distribution Events covered by Announcements include cash dividends, interest, principal, capital gains, sale of rights on American depositary receipts, return of capital, dividend with option, rmajette on DSKBCKNHB2PROD with NOTICES 2 17 20 See id. id. at 41078. 22 See id. See also Section 907.00 of the NYSE Listed Company Manual and Nasdaq Rule IM– 5900–7. 23 15 U.S.C. 78f(b)(8). 24 15 U.S.C. 78s(b)(2). 25 17 CFR 200.30–3(a)(12). 21 See VerDate Sep<11>2014 15:13 Oct 18, 2017 Jkt 244001 PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 technical and conforming changes relating to U.S. tax withholding and information reporting performed by DTC with respect to Tax Events; and (ii) add a fee relating to the announcement of Tax Events (‘‘New Fee’’) to the DTC Fee Schedule (‘‘Fee Schedule’’),8 as discussed below. II. Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. (A) Clearing Agency’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The proposed rule change would (i) revise the Distributions Guide to (A) enhance Announcements by adding Tax Events as a Distribution Event and (B) make technical and conforming changes relating to U.S. tax withholding and information reporting performed by DTC with respect to Tax Events; and (ii) add the New Fee to the Fee Schedule, as discussed below. A. Distributions Service Announcements Feature The Distributions Service includes the announcement, collection, allocation and reporting by DTC, on behalf of its Participants, of dividend, interest and principal payments for Eligible Securities held by Participants at DTC. This centralized processing provides efficiency for Participants for their receipt of (i) payment information and (ii) payments on Distribution Events, from multiple issuers and agents.9 In this regard, Announcements provides Participants with information pertaining to their record date (‘‘Record Date’’) 10 positions for Distribution Events.11 This stock splits, stock dividends, automatic dividend reinvestments, spinoffs, rights distributions, pay in kind, and liquidation. Distributions Guide, supra note 1 at 12. 8 Available at https://www.dtcc.comn/media/Files/ Downloads/legal/fee-guides/dtcfeeguide.pdf?la=en. 9 See Distributions Guide, supra note 5 at 9. 10 The Record Date is the date set by an issuer of a security by which an investor must own the security in order to be eligible to receive an upcoming distribution. 11 See Distributions Guide, supra note 5 at 11–13. E:\FR\FM\19OCN1.SGM 19OCN1

Agencies

[Federal Register Volume 82, Number 201 (Thursday, October 19, 2017)]
[Notices]
[Pages 48733-48734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22644]



[[Page 48733]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81872; File No. SR-IEX-2017-20]


Self-Regulatory Organizations; Investors Exchange LLC; Order 
Approving Proposed Rule Change To Adopt Rule 14.602 To Describe the 
Complimentary Products and Services To Be Made Available to All Listed 
Companies

October 13, 2017.

I. Introduction

    On August 10, 2017, the Investors Exchange LLC (``IEX'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to adopt Rule 14.602 to describe the complimentary 
products and services to be made available to all listed companies. The 
proposed rule change was published for comment in the Federal Register 
on August 29, 2017.\3\ No comment letters were received in response to 
the Notice. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 81469 (August 23, 
2017), 82 FR 41077 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange has proposed to adopt Rule 14.602 to describe the 
complimentary products and services that will be offered to all listed 
companies pursuant to a listing program that the Exchange intends to 
begin in 2017.\4\
---------------------------------------------------------------------------

    \4\ See id. at 41078.
---------------------------------------------------------------------------

    In particular, the Exchange has proposed to provide all listed 
companies with the same optional complimentary services through access 
to IEX Issuer, a market information analytics platform consisting of 
access to a team of market professionals and web-based content.\5\ As 
described by the Exchange in its proposal, the team of market 
professionals will provide market intelligence, fundamental and 
technical trading analysis, and real-time market information to all 
listed companies.\6\ The Exchange also stated that the web-based 
portion of IEX Issuer will provide similar information that will enable 
all listed companies to follow their stock's trading, competitors, and 
market activity through an online interface.\7\ Further, IEX noted that 
IEX Issuer may, from time to time, provide information about products 
and services from third-party vendors that IEX determines may be 
relevant to listed issuers, without any subsidy or other involvement by 
the Exchange for such products and services.\8\ The proposed rule text 
states that the Exchange will provide a description of all products and 
services available through IEX Issuer on its Web site.\9\
---------------------------------------------------------------------------

    \5\ See proposed Rule 14.602.
    \6\ See id.
    \7\ See Notice, supra note 3, at 41078.
    \8\ See proposed Rule 14.602. The provision of any products and 
services from a third-party vendor would need to be effected through 
arrangements directly between the listed issuer and the third-party 
vendor, without any subsidy or other involvement by the Exchange. 
See id.
    \9\ See id.
---------------------------------------------------------------------------

    The Exchange represented in its proposal that all issuers listed on 
the Exchange will have access to services through IEX Issuer on the 
same basis and that the Exchange will not be proposing to offer any 
additional products and services to listed companies on a tiered or 
differentiated basis.\10\
---------------------------------------------------------------------------

    \10\ See Notice, supra note 3, at 41078.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of Section 6 of the 
Act.\11\ Specifically, the Commission finds that the proposal is 
consistent with Sections 6(b)(4) \12\ and 6(b)(5) of the Act \13\ in 
particular, in that the proposed rule is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
Exchange members, issuers, and other persons using the Exchange's 
facilities, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. Moreover, the Commission finds 
that the proposed rule change is consistent with Section 6(b)(8) of the 
Act \14\ in that it does not impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f. In approving this proposed rule change, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
    \14\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change, which would 
permit the Exchange to provide complimentary products and services to 
all listed companies through IEX Issuer, as described above,\15\ is 
appropriate and consistent with the Act. The Commission believes that 
by describing in its Rules the products and services available to 
listed companies, the Exchange is adding greater transparency to its 
rules and the fees applicable to such companies.\16\ This will help to 
ensure that individual listed companies are not given specially 
negotiated packages of products and services to list or remain listed 
that would raise unfair discrimination issues under the Act.
---------------------------------------------------------------------------

    \15\ See supra notes 5-7 and accompanying text.
    \16\ The Commission views complimentary products and services 
provided by exchanges to listed companies as a discount on the 
ultimate listing fees paid by such companies. See, e.g., Securities 
Exchange Act Release Nos. 65127 (August 12, 2011), 76 FR 51449 
(August 18, 2011) (order approving SR-NYSE-2011-20) and 65963 
(December 15, 2011), 76 FR 79262 (December 21, 2011) (order 
approving SR-NASDAQ-2011-122).
---------------------------------------------------------------------------

    The Commission notes that all listed companies will receive access 
to the same services on the same basis without any differentiation and 
the Exchange is not proposing to offer any additional products and 
services to listed companies on a tiered or differentiated basis. 
Accordingly, the Commission believes that the proposed rule change is 
consistent with the requirements of the Act and, in particular, that 
the products and services are equitably allocated among issuers 
consistent with Section 6(b)(4) of the Act, and the rule does not 
unfairly discriminate between issuers consistent with Section 6(b)(5) 
of the Act.
    As described above, the Exchange will provide all of the products 
and services and will separately provide information about additional 
products and services available from third-party vendors that IEX 
determines may be relevant to listed issuers. As noted by the Exchange 
in its proposal, listed companies may elect to purchase products and 
services from other vendors, or not to use any such products and 
services, rather than accepting the products and services offered by 
the Exchange.\17\ The Exchange stated that the provision of any 
products and services from a third-party vendor would need to be 
effected through arrangements directly between the listed issuer and 
the third-party vendor, without any subsidy or other involvement by the 
Exchange.\18\ The Exchange further stated that it does not have 
exclusive arrangements with third-party vendors with respect to any 
optional access to discounted products and services from third-party 
vendors.\19\ The Exchange has represented that listed companies will 
not be required to accept any discounted products and

[[Page 48734]]

services as a condition to listing.\20\ The Commission believes that 
these representations should additionally help to ensure that 
individual listed companies are not given specially negotiated deals, 
through Exchange subsidized discounts on products and services from 
third-party vendors, to list or remain listed that would raise unfair 
discrimination issues under the Act .
---------------------------------------------------------------------------

    \17\ See Notice, supra note 3, at 41079.
    \18\ This representation is also specifically set forth in the 
proposed rule text.
    \19\ See Notice, supra note 3, at 41079.
    \20\ See id.
---------------------------------------------------------------------------

    The Commission believes that the Exchange is responding to 
competitive pressures in the market for listings in making this 
proposal. Specifically, the Exchange stated in its proposal that it 
expects to face competition as a new entrant in the market for exchange 
listings and that it believes the complimentary products and services 
that it offers to listed companies will facilitate its ability to 
attract and retain listings.\21\ In particular, the Exchange states 
that it expects to face significant competition from the New York Stock 
Exchange (``NYSE'') and the Nasdaq Stock Market LLC (``Nasdaq'') for 
listings, both of which offer complimentary products and services to 
listed companies.\22\ Accordingly, the Commission believes that the 
proposed rule reflects the current competitive environment for exchange 
listings among national securities exchanges, and is appropriate and 
consistent with Section 6(b)(8) of the Act.\23\
---------------------------------------------------------------------------

    \21\ See id. at 41078.
    \22\ See id. See also Section 907.00 of the NYSE Listed Company 
Manual and Nasdaq Rule IM-5900-7.
    \23\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\24\ that the proposed rule change (SR-IEX-2017-20), be, and hereby 
is, approved.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
---------------------------------------------------------------------------

    \25\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22644 Filed 10-18-17; 8:45 am]
BILLING CODE 8011-01-P
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