Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps), 2480-2482 [2018-00635]
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Federal Register / Vol. 83, No. 11 / Wednesday, January 17, 2018 / Notices
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
September 13, 2017, the Commission
instituted proceedings under Section
19(b)(2)(B) of the Act 7 to determine
whether to approve or disapprove the
proposed rule change.8 The Commission
subsequently received one comment
letter on the proposed rule change.9 On
December 12, 2017, the Commission
designated a longer period for action on
the proposed rule change.10
On January 10, 2018, the Exchange
withdrew the proposed rule change
(SR–BatsBZX–2017–30).
[FR Doc. 2018–00626 Filed 1–16–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82482; File No. SR–
BatsBZX–2017–30]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of
Withdrawal of a Proposed Rule Change
To Permit the Listing and Trading of
Managed Portfolio Shares and To List
and Trade Shares of the Following
Under Proposed Rule 14.11(k):
ClearBridge Appreciation ETF,
ClearBridge Large Cap ETF,
ClearBridge MidCap Growth ETF,
ClearBridge Select ETF, and
ClearBridge All Cap Value ETF
January 10, 2018.
On June 1, 2017, Bats BZX Exchange,
Inc. (‘‘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:
(1) Adopt Rule 14.11(k) (Managed
Portfolio Shares); and (2) list and trade
shares of the ClearBridge Appreciation
ETF, ClearBridge Large Cap ETF,
ClearBridge MidCap Growth ETF,
ClearBridge Select ETF, and ClearBridge
All Cap Value ETF under proposed Rule
14.11(k). The proposed rule change was
published for comment in the Federal
Register on June 19, 2017.3 On July 28,
2017, pursuant to Section 19(b)(2) of the
Act,4 the Commission designated a
longer period within which to approve
the proposed rule change, disapprove
the proposed rule change, or institute
proceedings to determine whether to
disapprove the proposed rule change.5
The Commission received four comment
letters on the proposed rule change.6 On
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 80911
(June 13, 2017), 82 FR 27925.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 81247,
82 FR 36031 (August 2, 2017). The Commission
designated September 17, 2017 as the date by which
the Commission shall approve or disapprove, or
institute proceedings to determine whether to
disapprove, the proposed rule change.
6 See Letter from Gary L. Gastineau, President,
ETF Consultants.com, Inc., to Brent J. Fields,
Secretary, Commission, dated July 7, 2017; Letter
from Todd J. Broms, Chief Executive Officer, Broms
& Company LLC, to Brent J. Fields, Secretary,
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2 17
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–00645 Filed 1–16–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82480; File No. SR–FINRA–
2018–001]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend the Expiration
Date of FINRA Rule 0180 (Application
of Rules to Security-Based Swaps)
January 10, 2018.
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 January 4,
2018, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
Commission, dated July 10, 2017; Letter from James
J. Angel, Associate Professor of Finance,
Georgetown University, McDonough School of
Business, to the Commission, dated July 10, 2017;
and Letter from Terence W. Norman, Founder, Blue
Tractor Group, LLC, to Brent J. Fields, Secretary,
Commission, dated August 1, 2017. The comment
letters are available on the Commission’s website at:
https://www.sec.gov/comments/sr-batsbzx-2017-30/
batsbzx201730.htm.
7 15 U.S.C. 78s(b)(2)(B).
8 See Securities Exchange Act Release No. 81599,
82 FR 43621 (September 18, 2017).
9 See Letter from Terence W. Norman, Founder,
Blue Tractor Group, LLC, to Brent J. Fields,
Secretary, Commission, dated December 5, 2017.
The comment letter is available on the
Commission’s website at: https://www.sec.gov/
comments/sr-batsbzx-2017-30/batsbzx201730.htm.
10 See Securities Exchange Act Release No. 82301,
82 FR 60073 (December 18, 2017). The Commission
designated February 14, 2018 as the date by which
the Commission must either approve or disapprove
the proposed rule change.
11 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
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and III below, which Items have been
prepared by FINRA. FINRA has
designated the proposed rule change as
constituting a ‘‘non-controversial’’ rule
change under paragraph (f)(6) of Rule
19b–4 under the Act,3 which renders
the proposal effective upon receipt of
this filing by the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to extend the
expiration date of FINRA Rule 0180
(Application of Rules to Security-Based
Swaps) to February 12, 2019. FINRA
Rule 0180 temporarily limits, with
certain exceptions, the application of
FINRA rules with respect to securitybased swaps.
The text of the proposed rule change
is available on FINRA’s website at
https://www.finra.org, at the principal
office of FINRA 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,
FINRA 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. FINRA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On July 1, 2011, the SEC issued an
Order granting temporary exemptive
relief (the ‘‘Temporary Exemptions’’)
from compliance with certain
provisions of the Exchange Act in
connection with the revision, pursuant
to Title VII of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act (the ‘‘Dodd-Frank Act’’),4 of the
Exchange Act definition of ‘‘security’’ to
encompass security-based swaps.5
3 17
CFR 240.19b–4(f)(6).
Law 111–203, 124 Stat. 1376 (2010).
5 See Securities Exchange Act Release No. 64795
(July 1, 2011), 76 FR 39927 (July 7, 2011) (Order
Granting Temporary Exemptions Under the
Securities Exchange Act of 1934 in Connection
With the Pending Revision of the Definition of
‘‘Security’’ To Encompass Security-Based Swaps,
4 Public
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Federal Register / Vol. 83, No. 11 / Wednesday, January 17, 2018 / Notices
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Consistent with the Commission’s
action, on July 8, 2011, FINRA filed for
immediate effectiveness FINRA Rule
0180,6 which, with certain exceptions,
is intended to temporarily limit the
application of FINRA rules 7 with
respect to security-based swaps, thereby
helping to avoid undue market
disruptions resulting from the change to
the definition of ‘‘security’’ under the
Act.8
The Commission, noting the need to
avoid a potential unnecessary
disruption to the security-based swap
market in the absence of an extension of
the Temporary Exemptions, and the
need for additional time to consider the
potential impact of the revision of the
Exchange Act definition of ‘‘security’’ in
light of ongoing Commission
rulemaking efforts under Title VII of the
Dodd-Frank Act, issued an Order which
extended and refined the applicable
expiration dates for the previously
granted Temporary Exemptions.9 The
and Request for Comment) (the ‘‘Exemptive
Release’’). The term ‘‘security-based swap’’ is
defined in Section 761 of the Dodd-Frank Act. See
also Securities Exchange Act Release No. 67453
(July 18, 2012), 77 FR 48207 (August 13, 2012)
(Further Definition of ‘‘Swap,’’ ‘‘Security-Based
Swap,’’ and ‘‘Security-Based Swap Agreement’’;
Mixed Swaps; Security-Based Swap Agreement
Recordkeeping).
6 See Securities Exchange Act Release No. 64884
(July 14, 2011), 76 FR 42755 (July 19, 2011) (Notice
of Filing and Immediate Effectiveness of Proposed
Rule Change; File No. SR–FINRA–2011–033)
(‘‘FINRA Rule 0180 Notice of Filing’’). See also
Securities Exchange Act Release No. 79752 (January
6, 2017), 82 FR 3824 (January 12, 2017) (Notice of
Filing and Immediate Effectiveness of Proposed
Rule Change; File No. SR–FINRA–2017–001)
(extending the expiration date of FINRA Rule 0180
to February 12, 2018).
7 The current FINRA rulebook consists of: (1)
FINRA Rules; (2) NASD Rules; and (3) rules
incorporated from NYSE (‘‘Incorporated NYSE
Rules’’). While the NASD Rules generally apply to
all FINRA members, the Incorporated NYSE Rules
apply only to those members of FINRA that are also
members of the NYSE. The FINRA Rules apply to
all FINRA members, unless such rules have a more
limited application by their terms. For more
information about the rulebook consolidation
process, see Information Notice, March 12, 2008
(Rulebook Consolidation Process).
8 In its Exemptive Release, the Commission noted
that the relief is targeted and does not include, for
instance, relief from the Act’s antifraud and antimanipulation provisions. FINRA has noted that
FINRA Rule 0180 is similarly targeted. For instance,
paragraph (a) of FINRA Rule 0180 provides that
FINRA rules shall not apply to members’ activities
and positions with respect to security-based swaps,
except for FINRA Rules 2010 (Standards of
Commercial Honor and Principles of Trade), 2020
(Use of Manipulative, Deceptive or Other
Fraudulent Devices), 3310 (Anti-Money Laundering
Compliance Program) and 4240 (Margin
Requirements for Credit Default Swaps). See also
paragraphs (b) and (c) of FINRA Rule 0180
(addressing the applicability of additional rules)
and FINRA Rule 0180 Notice of Filing.
9 See Securities Exchange Act Release No. 71485
(February 5, 2014), 79 FR 7731 (February 10, 2014)
(Order Extending Temporary Exemptions Under the
Securities Exchange Act of 1934 in Connection
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17:14 Jan 16, 2018
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Commission previously noted that
extending the Temporary Exemptions
would facilitate a coordinated
consideration of these issues with the
relief provided pursuant to FINRA Rule
0180.10 In establishing Rule 0180, and
in extending the rule’s expiration date,
FINRA noted its intent, pending the
implementation of any SEC rules and
guidance that would provide greater
regulatory clarity in relation to securitybased swap activities, to align the
expiration date of FINRA Rule 0180
with the termination of relevant
provisions of the Temporary
Exemptions.11
The Commission’s rulemaking and
development of guidance in relation to
security-based swap activities is
ongoing. As such, FINRA believes it is
appropriate and in the public interest,
in light of the Commission’s goals as set
forth in the Exemptive Release, the 2014
Extension Release and the 2017
Extension Release, to extend FINRA
Rule 0180 for a limited period, to
February 12, 2019, so as to avoid undue
market disruptions resulting from the
change to the definition of ‘‘security’’
under the Act.12
FINRA has filed the proposed rule
change for immediate effectiveness.
FINRA is proposing that the
With the Revision of the Definition of ‘‘Security’’
to Encompass Security-Based Swaps, and Request
for Comment) (‘‘2014 Extension Release’’) stating
that, for those expiring Temporary Exemptions
‘‘that are not directly linked to pending securitybased swap rulemakings, the Commission is
extending the expiration date until the earlier of
such time as the Commission issues an order or rule
determining whether any continuing exemptive
relief is appropriate for security-based swap
activities with respect to any of these Exchange Act
provisions or until three years following the
effective date of this Order.’’ The 2014 Extension
Release further stated that for each expiring
Temporary Exemption ‘‘that is related to pending
security-based swap rulemakings, the Commission
is extending the expiration date until the
compliance date for the related security-based
swap-specific rulemaking.’’ On January 18, 2017,
the Commission further extended the Temporary
Exemptions that are not directly linked to a
security-based swap rulemaking, which otherwise
would have expired on February 5, 2017, three
years from the effective date of the 2014 Extension
Release. See Securities Exchange Act Release No.
79833 (January 18, 2017), 82 FR 8467 (January 25,
2017) (Order Extending Certain Temporary
Exemptions Under the Securities Exchange Act of
1934 in Connection With the Revision of the
Definition of ‘‘Security’’ to Encompass SecurityBased Swaps and Request for Comment) (‘‘2017
Extension Release’’).
10 See Securities Exchange Act Release No. 68864
(February 7, 2013), 78 FR 10218 (February 13, 2013)
(Order Extending Temporary Exemptions Under the
Securities Exchange Act of 1934 in Connection
With the Revision of the Definition of ‘‘Security’’
to Encompass Security-Based Swaps, and Request
for Comment).
11 See note 6 supra.
12 FINRA may amend the expiration date of
FINRA Rule 0180 based on any related Commission
action.
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2481
implementation date of the proposed
rule change will be February 12, 2018.
2. Statutory Basis
FINRA believes that the proposed rule
change is consistent with the provisions
of Section 15A(b)(6) of the Act,13 which
requires, among other things, that
FINRA rules must be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. FINRA believes that the
proposed rule change would further the
purposes of the Act because, consistent
with the goals set forth by the
Commission in the Exemptive Release,
the 2014 Extension Release and the
2017 Extension Release, the proposed
rule change will help to avoid undue
market disruption that could result if
FINRA Rule 0180 expires before the
implementation of any SEC rules and
guidance that would provide greater
regulatory clarity in relation to securitybased swap activities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. FINRA
believes that the proposed rule change
would prevent undue market disruption
that would otherwise result if securitybased swaps were, by virtue of the
expansion of the Act’s definition of
‘‘security’’ to encompass security-based
swaps, subject to the application of all
FINRA rules before the implementation
of any SEC rules and guidance that
would provide greater regulatory clarity
in relation to security-based swap
activities. FINRA believes that, by
extending the expiration of FINRA Rule
0180, the proposed rule change will
serve to promote regulatory clarity and
consistency, thereby reducing burdens
on the marketplace and facilitating
investor protection.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
13 15
E:\FR\FM\17JAN1.SGM
U.S.C. 78o–3(b)(6).
17JAN1
2482
Federal Register / Vol. 83, No. 11 / Wednesday, January 17, 2018 / Notices
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 14 and Rule 19b–
4(f)(6) thereunder.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
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:
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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–
FINRA–2018–001 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–FINRA–2018–001. 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 website (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 website viewing and
14 15
15 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
VerDate Sep<11>2014
17:14 Jan 16, 2018
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 such
filing also will be available for
inspection and copying at the principal
office of FINRA. All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–FINRA–
2018–001 and should be submitted on
or before February 7, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018–00635 Filed 1–16–18; 8:45 am]
BILLING CODE 8011–01–P
FOR FURTHER INFORMATION CONTACT:
Marcus Lee, Presidential Permit
Coordinator, Energy Resources Bureau,
Office of Policy Analysis and Public
Diplomacy, United States Department of
State, 2201 C St. NW, Suite 4422,
Washington, DC 20520. Tel: 202–485–
1522.
Richard W. Westerdale II,
Senior Advisor, Bureau of Energy Resources,
Department of State.
[FR Doc. 2018–00648 Filed 1–16–18; 8:45 am]
BILLING CODE 4710–AE–P
DEPARTMENT OF STATE
[Public Notice 10269]
Notice of Determinations; Culturally
Significant Objects Imported for
Exhibition Determinations: ‘‘Adrian
Piper: A Synthesis of Intuitions 1965–
2016’’ Exhibition
Notice is hereby given of the
following determinations: I hereby
determine that certain objects to be
included in the exhibition ‘‘Adrian
Piper: A Synthesis of Intuitions 1965–
2016,’’ imported from abroad for
temporary exhibition within the United
States, are of cultural significance. The
objects are imported pursuant to loan
agreements with the foreign owners or
custodians. I also determine that the
exhibition or display of the exhibit
objects at The Museum of Modern Art,
New York, New York, from on or about
March 31, 2018, until on or about July
22, 2018, at the Hammer Museum, Los
Angeles, California, from on or about
September 30, 2018, until on or about
January 6, 2019, and at possible
additional exhibitions or venues yet to
be determined, is in the national
interest.
SUMMARY:
DEPARTMENT OF STATE
[Public Notice 10268]
Notice of Change of Ownership of
Permit Holder of Presidential Permit
for Express Pipeline Facilities on the
Border of the United States and
Canada
Department of State.
Notice.
AGENCY:
ACTION:
Notice is hereby given of a
change in ownership of Express
Pipeline LLC (‘‘Express US’’), which
owns, operates, and maintains pipeline
facilities (‘‘Express Pipeline’’)
authorized under a Presidential permit
issued on July 9, 2015 (80 FR 45695).
SUPPLEMENTARY INFORMATION: On May
25, 2017, the Department published a
Federal Register Notice providing
notice of its receipt of a notification
from the current permit holder
regarding this change in ownership (82
FR 24200). Consistent with the
procedures set forth in Public Notice
10111 (82 FR 42410, Sept. 7, 2017), the
Department has reviewed that
notification and has determined that the
change in ownership does not affect the
prior national interest determination
that resulted in issuance of the
Presidential permit issued to Express
US on July 9, 2015. That permit,
therefore, remains valid, subject to its
terms and conditions. Additional
information concerning the Express
SUMMARY:
16 17
Jkt 244001
Pipeline is available at https://
www.state.gov/e/enr/applicant/.
PO 00000
CFR 200.30–3(a)(12).
Frm 00061
Fmt 4703
Sfmt 4703
FOR FURTHER INFORMATION CONTACT:
Elliot Chiu in the Office of the Legal
Adviser, U.S. Department of State
(telephone: 202–632–6471; email:
section2459@state.gov). The mailing
address is U.S. Department of State, L/
PD, SA–5, Suite 5H03, Washington, DC
20522–0505.
SUPPLEMENTARY INFORMATION: The
foregoing determinations were made
pursuant to the authority vested in me
by the Act of October 19, 1965 (79 Stat.
985; 22 U.S.C. 2459), E.O. 12047 of
March 27, 1978, the Foreign Affairs
Reform and Restructuring Act of 1998
(112 Stat. 2681, et seq.; 22 U.S.C. 6501
note, et seq.), Delegation of Authority
No. 234 of October 1, 1999, Delegation
of Authority No. 236–3 of August 28,
E:\FR\FM\17JAN1.SGM
17JAN1
]]>Agencies
[Federal Register Volume 83, Number 11 (Wednesday, January 17, 2018)]
[Notices]
[Pages 2480-2482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00635]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82480; File No. SR-FINRA-2018-001]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180
(Application of Rules to Security-Based Swaps)
January 10, 2018.
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 January 4, 2018, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. FINRA has
designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to extend the expiration date of FINRA Rule 0180
(Application of Rules to Security-Based Swaps) to February 12, 2019.
FINRA Rule 0180 temporarily limits, with certain exceptions, the
application of FINRA rules with respect to security-based swaps.
The text of the proposed rule change is available on FINRA's
website at https://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On July 1, 2011, the SEC issued an Order granting temporary
exemptive relief (the ``Temporary Exemptions'') from compliance with
certain provisions of the Exchange Act in connection with the revision,
pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the ``Dodd-Frank Act''),\4\ of the Exchange Act
definition of ``security'' to encompass security-based swaps.\5\
[[Page 2481]]
Consistent with the Commission's action, on July 8, 2011, FINRA filed
for immediate effectiveness FINRA Rule 0180,\6\ which, with certain
exceptions, is intended to temporarily limit the application of FINRA
rules \7\ with respect to security-based swaps, thereby helping to
avoid undue market disruptions resulting from the change to the
definition of ``security'' under the Act.\8\
---------------------------------------------------------------------------
\4\ Public Law 111-203, 124 Stat. 1376 (2010).
\5\ See Securities Exchange Act Release No. 64795 (July 1,
2011), 76 FR 39927 (July 7, 2011) (Order Granting Temporary
Exemptions Under the Securities Exchange Act of 1934 in Connection
With the Pending Revision of the Definition of ``Security'' To
Encompass Security-Based Swaps, and Request for Comment) (the
``Exemptive Release''). The term ``security-based swap'' is defined
in Section 761 of the Dodd-Frank Act. See also Securities Exchange
Act Release No. 67453 (July 18, 2012), 77 FR 48207 (August 13, 2012)
(Further Definition of ``Swap,'' ``Security-Based Swap,'' and
``Security-Based Swap Agreement''; Mixed Swaps; Security-Based Swap
Agreement Recordkeeping).
\6\ See Securities Exchange Act Release No. 64884 (July 14,
2011), 76 FR 42755 (July 19, 2011) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change; File No. SR-FINRA-2011-033)
(``FINRA Rule 0180 Notice of Filing''). See also Securities Exchange
Act Release No. 79752 (January 6, 2017), 82 FR 3824 (January 12,
2017) (Notice of Filing and Immediate Effectiveness of Proposed Rule
Change; File No. SR-FINRA-2017-001) (extending the expiration date
of FINRA Rule 0180 to February 12, 2018).
\7\ The current FINRA rulebook consists of: (1) FINRA Rules; (2)
NASD Rules; and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules''). While the NASD Rules generally apply to all FINRA
members, the Incorporated NYSE Rules apply only to those members of
FINRA that are also members of the NYSE. The FINRA Rules apply to
all FINRA members, unless such rules have a more limited application
by their terms. For more information about the rulebook
consolidation process, see Information Notice, March 12, 2008
(Rulebook Consolidation Process).
\8\ In its Exemptive Release, the Commission noted that the
relief is targeted and does not include, for instance, relief from
the Act's antifraud and anti-manipulation provisions. FINRA has
noted that FINRA Rule 0180 is similarly targeted. For instance,
paragraph (a) of FINRA Rule 0180 provides that FINRA rules shall not
apply to members' activities and positions with respect to security-
based swaps, except for FINRA Rules 2010 (Standards of Commercial
Honor and Principles of Trade), 2020 (Use of Manipulative, Deceptive
or Other Fraudulent Devices), 3310 (Anti-Money Laundering Compliance
Program) and 4240 (Margin Requirements for Credit Default Swaps).
See also paragraphs (b) and (c) of FINRA Rule 0180 (addressing the
applicability of additional rules) and FINRA Rule 0180 Notice of
Filing.
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The Commission, noting the need to avoid a potential unnecessary
disruption to the security-based swap market in the absence of an
extension of the Temporary Exemptions, and the need for additional time
to consider the potential impact of the revision of the Exchange Act
definition of ``security'' in light of ongoing Commission rulemaking
efforts under Title VII of the Dodd-Frank Act, issued an Order which
extended and refined the applicable expiration dates for the previously
granted Temporary Exemptions.\9\ The Commission previously noted that
extending the Temporary Exemptions would facilitate a coordinated
consideration of these issues with the relief provided pursuant to
FINRA Rule 0180.\10\ In establishing Rule 0180, and in extending the
rule's expiration date, FINRA noted its intent, pending the
implementation of any SEC rules and guidance that would provide greater
regulatory clarity in relation to security-based swap activities, to
align the expiration date of FINRA Rule 0180 with the termination of
relevant provisions of the Temporary Exemptions.\11\
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\9\ See Securities Exchange Act Release No. 71485 (February 5,
2014), 79 FR 7731 (February 10, 2014) (Order Extending Temporary
Exemptions Under the Securities Exchange Act of 1934 in Connection
With the Revision of the Definition of ``Security'' to Encompass
Security-Based Swaps, and Request for Comment) (``2014 Extension
Release'') stating that, for those expiring Temporary Exemptions
``that are not directly linked to pending security-based swap
rulemakings, the Commission is extending the expiration date until
the earlier of such time as the Commission issues an order or rule
determining whether any continuing exemptive relief is appropriate
for security-based swap activities with respect to any of these
Exchange Act provisions or until three years following the effective
date of this Order.'' The 2014 Extension Release further stated that
for each expiring Temporary Exemption ``that is related to pending
security-based swap rulemakings, the Commission is extending the
expiration date until the compliance date for the related security-
based swap-specific rulemaking.'' On January 18, 2017, the
Commission further extended the Temporary Exemptions that are not
directly linked to a security-based swap rulemaking, which otherwise
would have expired on February 5, 2017, three years from the
effective date of the 2014 Extension Release. See Securities
Exchange Act Release No. 79833 (January 18, 2017), 82 FR 8467
(January 25, 2017) (Order Extending Certain Temporary Exemptions
Under the Securities Exchange Act of 1934 in Connection With the
Revision of the Definition of ``Security'' to Encompass Security-
Based Swaps and Request for Comment) (``2017 Extension Release'').
\10\ See Securities Exchange Act Release No. 68864 (February 7,
2013), 78 FR 10218 (February 13, 2013) (Order Extending Temporary
Exemptions Under the Securities Exchange Act of 1934 in Connection
With the Revision of the Definition of ``Security'' to Encompass
Security-Based Swaps, and Request for Comment).
\11\ See note 6 supra.
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The Commission's rulemaking and development of guidance in relation
to security-based swap activities is ongoing. As such, FINRA believes
it is appropriate and in the public interest, in light of the
Commission's goals as set forth in the Exemptive Release, the 2014
Extension Release and the 2017 Extension Release, to extend FINRA Rule
0180 for a limited period, to February 12, 2019, so as to avoid undue
market disruptions resulting from the change to the definition of
``security'' under the Act.\12\
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\12\ FINRA may amend the expiration date of FINRA Rule 0180
based on any related Commission action.
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FINRA has filed the proposed rule change for immediate
effectiveness. FINRA is proposing that the implementation date of the
proposed rule change will be February 12, 2018.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\13\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the proposed rule change would
further the purposes of the Act because, consistent with the goals set
forth by the Commission in the Exemptive Release, the 2014 Extension
Release and the 2017 Extension Release, the proposed rule change will
help to avoid undue market disruption that could result if FINRA Rule
0180 expires before the implementation of any SEC rules and guidance
that would provide greater regulatory clarity in relation to security-
based swap activities.
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\13\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. FINRA believes that the
proposed rule change would prevent undue market disruption that would
otherwise result if security-based swaps were, by virtue of the
expansion of the Act's definition of ``security'' to encompass
security-based swaps, subject to the application of all FINRA rules
before the implementation of any SEC rules and guidance that would
provide greater regulatory clarity in relation to security-based swap
activities. FINRA believes that, by extending the expiration of FINRA
Rule 0180, the proposed rule change will serve to promote regulatory
clarity and consistency, thereby reducing burdens on the marketplace
and facilitating investor protection.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
[[Page 2482]]
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 \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6).
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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 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 [email protected]. Please include
File Number SR-FINRA-2018-001 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-FINRA-2018-001. 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 website (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 website 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 such filing also will be available for inspection
and copying at the principal office of FINRA. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-FINRA-2018-001 and should be submitted
on or before February 7, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018-00635 Filed 1-16-18; 8:45 am]
BILLING CODE 8011-01-P
