Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.420 Concerning the Order Audit Trail System Requirements To Make Conforming and Technical Changes, 31806-31808 [2018-14551]
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31806
Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
did not receive comment letters
concerning the rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
On June 18, 2018, the CFTC notified
NFA of its determination not to review
the proposed rule change.9 The
proposed rule change will become
effective on July 18, 2018.
At any time within 60 days of the date
of effectiveness of the proposed rule
change, the Commission, after
consultation with the CFTC, may
summarily abrogate the proposed rule
change and require that the proposed
rule change be refiled in accordance
with the provisions of Section 19(b)(1)
of the Exchange Act.10
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 Exchange
Act. Comments may be submitted by
any of the following methods:
sradovich on DSK3GMQ082PROD with NOTICES
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–
NFA–2018–03 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–NFA–2018–03. 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
9 See
10 15
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 NFA. 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
publicly available. All submissions
should refer to File Number SR–NFA–
2018–03 and should be submitted on or
before July 30, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–14669 Filed 7–6–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83586; File No. SR–IEX–
2018–12]
Self-Regulatory Organizations:
Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Amend
Rule 11.420 Concerning the Order
Audit Trail System Requirements To
Make Conforming and Technical
Changes
July 2, 2018.
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 June 21,
2018, the Investors Exchange LLC
(‘‘IEX’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
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 Substance of
the Proposed Rule Change
Pursuant to the provisions of Section
19(b)(1) under the Act,4 and Rule 19b–
4 thereunder,5 the Exchange is filing
Letter, Supra note 3.
U.S.C. 78s(b)(1).
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PO 00000
11 17
CFR 200.30–3(a)(73).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 15 U.S.C. 78s(b)(1).
5 17 CFR 240.19b–4.
1 15
Frm 00092
Fmt 4703
Sfmt 4703
with the Commission a proposed rule
change to amend Rule 11.420
concerning the Order Audit Trail
System (‘‘OATS’’) requirements to make
conforming and technical changes. The
Exchange has designated this rule
change as ‘‘non-controversial’’ under
Section 19(b)(3)(A) of the Act 6 and
provided the Commission with the
notice required by Rule 19b–4(f)(6)
thereunder.7
The text of the proposed rule change
is available at the Exchange’s website at
www.iextrading.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 the
Statutory Basis for, the Proposed Rule
Change
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 these statement [sic] may be
examined at the places specified in Item
IV below. The self-regulatory
organization has prepared summaries,
set forth in Sections A, B, and C below,
of the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to make
three changes to Rule 11.420 related to
OATS reporting requirements to (1)
amend Rule 11.420(a)(13) to permit
members to route orders to two
Reporting Members for a defined period
of time provided certain conditions are
met without losing the exception from
the definition of ‘‘Reporting Member’’ in
conformance to comparable provisions
of the Financial Industry Regulatory
Authority (‘‘FINRA’’) Rule 7410; (2)
amend rule citations in Rule 11.420(c)
to correct [sic] citation to FINRA Rule
7430 to FINRA Rule 4590; and (3)
amend the rule reference in Rule
11.420(g) to correct the reference to
FINRA Rule 7470A to FINRA Rule 7470.
Each proposed change is described
below.
First Change
IEX Rule 11.420 imposes an
obligation on Exchange Members to
record in electronic form and report to
FINRA on a daily basis certain
6 15
7 17
E:\FR\FM\09JYN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4.
09JYN1
sradovich on DSK3GMQ082PROD with NOTICES
Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
information with respect to orders
originated, received, transmitted,
modified, cancelled or executed by
Exchange Members in securities traded
on IEX. FINRA’s OATS captures this
order information and integrates it with
quote and transaction information to
create a time-sequenced record of
orders, quotes and transactions. This
information is used by FINRA staff to
conduct surveillance and investigations
of IEX Members (and members of
FINRA and certain other national
securities exchanges) for potential
violation of Exchange rules (or rules of
another national securities exchange in
the case of a member of such exchange),
federal securities laws, and FINRA
rules.
In general, IEX Rule 11.420 applies to
any IEX Member that is a ‘‘Reporting
Member,’’ which is defined in IEX Rule
11.420(a)(13) as a Member that receives
or originates an order and has an
obligation to record and report
information under IEX Rule 11.420(d)
and 11.420(e). However, under Rule
11.420(a)(13)(A) a Member is not
considered a Reporting Member in
connection with an order if the
following four criteria are met:
• The Member engages in nondiscretionary order routing process,
pursuant to which it immediately
routes, by electronic or other means, all
of its orders to a single receiving
Reporting Member;
• the Member does not direct and
does not maintain control over
subsequent routing or execution by the
receiving Reporting Member;
• the receiving Reporting Member
records and reports all information
required under IEX Rules 11.420(d) and
11.420(e) with respect to the order; and
• the Member has a written
agreement with the receiving Reporting
Member specifying the respective
functions and responsibilities of each
party to effect full compliance with the
requirements of IEX Rules 11.420(d) and
11.420(e).
On May 12, 2014, FINRA amended
FINRA Rule 7410(o)(1)(A) to allow a
member to route its orders to two
receiving Reporting Members, if two
conditions were met.8 First, the orders
are routed by the member to each
receiving Reporting Member on a
predetermined schedule approved by
FINRA. Second, the FINRA member’s
orders are routed to two receiving
Reporting Members pursuant to the
schedule for a time period not to exceed
one year. The rule change permits
8 See Securities Exchange Act Release No. 72191
(May 20, 2014), 79 FR 30219 (May 27, 2014) (SR–
FINRA–2014–024).
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FINRA members to continue to rely on
the exception from the definition of
Reporting Member if, for a limited time,
the member routes orders to two
different Reporting Members, provided
the criteria are met. FINRA noted in
adopting the change that the rule was
intended to accommodate introducing
firms that transition to a different
clearing firm over time and, during the
transition, route their orders two
different clearing firms, both of which
report the introducing firm’s
information to OATS during the
transition time.9 The Nasdaq Stock
Market LLC (‘‘Nasdaq’’) recently
amended its rules to conform to this
FINRA rule change.10 The Exchange
believes that this additional limited
exception is appropriate for its
Members, which likewise may
encounter a transition to a clearing firm
whereby it [sic] would no longer be
eligible for the exception to the
definition of Reporting Member.
Accordingly, the Exchange is proposing
to amend Rule 11.420(a)(13).
Second Change
The Exchange is proposing to correct
a rule citation in Rule 11.420(c), which
specifies the requirements for
synchronization of Member business
clocks, and states that IEX Members
shall comply with FINRA Rule 7430 as
if such Rule were part of IEX’s Rules.
There is no FINRA Rule 7430, but rather
the appropriate FINRA rule to cite to is
FINRA Rule 4590 ‘‘Synchronization of
Member Business Clocks.’’ The
Exchange also notes that Nasdaq
recently made a comparable change to
Nasdaq Rule 7430A.11 Accordingly, the
Exchange proposes to correct the
erroneous citation in Rule 11.420(c).
Third Change
The Exchange is proposing to correct
a rule citation in Rule 11.420(g), which
provides that IEX may grant an
exemption to the OATS order recording
and data transmission requirements to a
Member under specified circumstances.
The title to the rule subsection
incorrectly references FINRA Rule
7470A. There is no FINRA Rule 7470A,
but rather the appropriate FINRA rule to
reference is FINRA Rule 7470
‘‘Exemption to the Order Recording and
Data Transmission Requirement.’’
Accordingly, the Exchange proposes to
correct the erroneous reference in Rule
11.420(g).
At 30220.
Nasdaq Rule 7410A(o)(1)(A)(ii). See also
Securities Exchange Act Release No. 83115 (April
26, 2018), 83 FR 19384 (May 2, 2018) (SR–
NASDAQ–2018–030).
11 See supra note 8.
PO 00000
9 Id.
10 See
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31807
2. Statutory Basis
IEX believes that the proposed rule
change is consistent with the provisions
of Section 6(b) 12 of the Act in general,
and furthers the objectives of Section
6(b)(5) of the Act 13 in particular, in that
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest by
harmonizing the Exchange’s OATS rules
with those of FINRA, on which they are
based. Consequently, the proposed
changes will conform Exchange rules to
changes made to corresponding FINRA
rules, thus promoting application of
consistent regulatory standards with
respect to rules that FINRA enforces
pursuant to its regulatory services
agreement with the Exchange. With
respect to the proposed amendment to
Rule 11.420(a)(13)(A), the exemption
will provide Exchange members the
same flexibility to transition to a new
clearing firm that FINRA members
enjoy. The rule is intended to
accommodate introducing firms that
transition to a different clearing firm
over time and, during the transition,
route their orders to two different
clearing firms, both of which report the
introducing firm’s information to OATS
during the transition time. Further, the
change will also align the Exchange
rulebook with FINRA’s in this regard,
thereby eliminating potential
complexity from FINRA’s work under a
regulatory services agreement with the
Exchange.
With respect to the technical
corrections to Rules 11.420(c) and
11.420(g), the Exchange believes that
these changes are consistent with the
Act because they will prevent investor
confusion that may be caused by
incorrect rule citations in the Rules.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
IEX does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed changes align the Exchange’s
rules with those of FINRA, which will
assist it in its oversight work done
pursuant to a regulatory services
agreement, and makes [sic] technical
corrections to the rules. Consequently,
the Exchange does not believe that the
12 15
13 15
E:\FR\FM\09JYN1.SGM
U.S.C. 78f.
U.S.C. 78f(b)(5).
09JYN1
31808
Federal Register / Vol. 83, No. 131 / Monday, July 9, 2018 / Notices
proposed changes implicate competition
at all.
change should be approved or
disapproved.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
IV. Solicitation of Comments
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
sradovich on DSK3GMQ082PROD with NOTICES
Because the 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 14 and Rule 19b–
4(f)(6) thereunder.15
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 16 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 17
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 upon filing. The
Commission does not believe that any
new or novel issues are raised by the
proposal; the proposal aligns IEX’s rule
with the rule of Nasdaq and FINRA. The
Commission believes the waiver of the
operative delay is consistent with the
protection of investors and the public
interest. Therefore, the Commission
hereby waives the operative delay and
designates the proposal operative upon
filing.18
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
14 15
15 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
16 Id.
17 17
CFR 240.19b–4(f)(6)(iii).
purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
18 For
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Jkt 244001
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:
• 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–
IEX–2018–12 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number SR–IEX–2018–12. This file
number should be included in 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. Copies of the
filing will also be available for
inspection and copying at the IEX’s
principal office and on its internet
website at www.iextrading.com. 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–IEX–2018–12 and
should be submitted on or before July
30, 2018.
Frm 00094
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[FR Doc. 2018–14551 Filed 7–6–18; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33146; 812–14921]
Electronic Comments
PO 00000
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Eduardo A. Aleman,
Assistant Secretary.
Altaba Inc.
July 3, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of application for an order
under section 17(b) of the Investment
Company Act of 1940 (the ‘‘Act’’) for an
exemption from section 17(a) of the Act.
SUMMARY OF APPLICATION: Applicant
seeks an order that would permit inkind repurchases of shares of the Fund
held by certain affiliated stockholders of
the Fund.
APPLICANT: Altaba Inc. (the ‘‘Fund’’).
FILING DATES: The application was filed
on June 14, 2018, and amended on June
28, 2018.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on July 30, 2018, and
should be accompanied by proof of
service on applicant, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
Applicant, 140 East 45th Street, 15th
Floor, New York, New York 10017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth G. Miller, Senior Counsel, at
(202) 551–8707 or Aaron T. Gilbride,
Branch Chief, at (202) 551–6825 (Chief
19 17
E:\FR\FM\09JYN1.SGM
CFR 200.30–3(a)(12).
09JYN1
]]>Agencies
[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)]
[Notices]
[Pages 31806-31808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14551]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83586; File No. SR-IEX-2018-12]
Self-Regulatory Organizations: Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 11.420 Concerning the Order Audit Trail System Requirements To
Make Conforming and Technical Changes
July 2, 2018.
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 June 21, 2018, the Investors Exchange LLC (``IEX'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under the Act,\4\
and Rule 19b-4 thereunder,\5\ the Exchange is filing with the
Commission a proposed rule change to amend Rule 11.420 concerning the
Order Audit Trail System (``OATS'') requirements to make conforming and
technical changes. The Exchange has designated this rule change as
``non-controversial'' under Section 19(b)(3)(A) of the Act \6\ and
provided the Commission with the notice required by Rule 19b-4(f)(6)
thereunder.\7\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CFR 240.19b-4.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
website at www.iextrading.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 the
Statutory Basis for, the Proposed Rule Change
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 these statement [sic] may be examined
at the places specified in Item IV below. The self-regulatory
organization has prepared summaries, set forth in Sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to make three changes to Rule 11.420
related to OATS reporting requirements to (1) amend Rule 11.420(a)(13)
to permit members to route orders to two Reporting Members for a
defined period of time provided certain conditions are met without
losing the exception from the definition of ``Reporting Member'' in
conformance to comparable provisions of the Financial Industry
Regulatory Authority (``FINRA'') Rule 7410; (2) amend rule citations in
Rule 11.420(c) to correct [sic] citation to FINRA Rule 7430 to FINRA
Rule 4590; and (3) amend the rule reference in Rule 11.420(g) to
correct the reference to FINRA Rule 7470A to FINRA Rule 7470. Each
proposed change is described below.
First Change
IEX Rule 11.420 imposes an obligation on Exchange Members to record
in electronic form and report to FINRA on a daily basis certain
[[Page 31807]]
information with respect to orders originated, received, transmitted,
modified, cancelled or executed by Exchange Members in securities
traded on IEX. FINRA's OATS captures this order information and
integrates it with quote and transaction information to create a time-
sequenced record of orders, quotes and transactions. This information
is used by FINRA staff to conduct surveillance and investigations of
IEX Members (and members of FINRA and certain other national securities
exchanges) for potential violation of Exchange rules (or rules of
another national securities exchange in the case of a member of such
exchange), federal securities laws, and FINRA rules.
In general, IEX Rule 11.420 applies to any IEX Member that is a
``Reporting Member,'' which is defined in IEX Rule 11.420(a)(13) as a
Member that receives or originates an order and has an obligation to
record and report information under IEX Rule 11.420(d) and 11.420(e).
However, under Rule 11.420(a)(13)(A) a Member is not considered a
Reporting Member in connection with an order if the following four
criteria are met:
The Member engages in non-discretionary order routing
process, pursuant to which it immediately routes, by electronic or
other means, all of its orders to a single receiving Reporting Member;
the Member does not direct and does not maintain control
over subsequent routing or execution by the receiving Reporting Member;
the receiving Reporting Member records and reports all
information required under IEX Rules 11.420(d) and 11.420(e) with
respect to the order; and
the Member has a written agreement with the receiving
Reporting Member specifying the respective functions and
responsibilities of each party to effect full compliance with the
requirements of IEX Rules 11.420(d) and 11.420(e).
On May 12, 2014, FINRA amended FINRA Rule 7410(o)(1)(A) to allow a
member to route its orders to two receiving Reporting Members, if two
conditions were met.\8\ First, the orders are routed by the member to
each receiving Reporting Member on a predetermined schedule approved by
FINRA. Second, the FINRA member's orders are routed to two receiving
Reporting Members pursuant to the schedule for a time period not to
exceed one year. The rule change permits FINRA members to continue to
rely on the exception from the definition of Reporting Member if, for a
limited time, the member routes orders to two different Reporting
Members, provided the criteria are met. FINRA noted in adopting the
change that the rule was intended to accommodate introducing firms that
transition to a different clearing firm over time and, during the
transition, route their orders two different clearing firms, both of
which report the introducing firm's information to OATS during the
transition time.\9\ The Nasdaq Stock Market LLC (``Nasdaq'') recently
amended its rules to conform to this FINRA rule change.\10\ The
Exchange believes that this additional limited exception is appropriate
for its Members, which likewise may encounter a transition to a
clearing firm whereby it [sic] would no longer be eligible for the
exception to the definition of Reporting Member. Accordingly, the
Exchange is proposing to amend Rule 11.420(a)(13).
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 72191 (May 20,
2014), 79 FR 30219 (May 27, 2014) (SR-FINRA-2014-024).
\9\ Id. At 30220.
\10\ See Nasdaq Rule 7410A(o)(1)(A)(ii). See also Securities
Exchange Act Release No. 83115 (April 26, 2018), 83 FR 19384 (May 2,
2018) (SR-NASDAQ-2018-030).
---------------------------------------------------------------------------
Second Change
The Exchange is proposing to correct a rule citation in Rule
11.420(c), which specifies the requirements for synchronization of
Member business clocks, and states that IEX Members shall comply with
FINRA Rule 7430 as if such Rule were part of IEX's Rules. There is no
FINRA Rule 7430, but rather the appropriate FINRA rule to cite to is
FINRA Rule 4590 ``Synchronization of Member Business Clocks.'' The
Exchange also notes that Nasdaq recently made a comparable change to
Nasdaq Rule 7430A.\11\ Accordingly, the Exchange proposes to correct
the erroneous citation in Rule 11.420(c).
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\11\ See supra note 8.
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Third Change
The Exchange is proposing to correct a rule citation in Rule
11.420(g), which provides that IEX may grant an exemption to the OATS
order recording and data transmission requirements to a Member under
specified circumstances. The title to the rule subsection incorrectly
references FINRA Rule 7470A. There is no FINRA Rule 7470A, but rather
the appropriate FINRA rule to reference is FINRA Rule 7470 ``Exemption
to the Order Recording and Data Transmission Requirement.''
Accordingly, the Exchange proposes to correct the erroneous reference
in Rule 11.420(g).
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \12\ of the Act in general, and furthers the
objectives of Section 6(b)(5) of the Act \13\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest by harmonizing the Exchange's OATS rules with those of
FINRA, on which they are based. Consequently, the proposed changes will
conform Exchange rules to changes made to corresponding FINRA rules,
thus promoting application of consistent regulatory standards with
respect to rules that FINRA enforces pursuant to its regulatory
services agreement with the Exchange. With respect to the proposed
amendment to Rule 11.420(a)(13)(A), the exemption will provide Exchange
members the same flexibility to transition to a new clearing firm that
FINRA members enjoy. The rule is intended to accommodate introducing
firms that transition to a different clearing firm over time and,
during the transition, route their orders to two different clearing
firms, both of which report the introducing firm's information to OATS
during the transition time. Further, the change will also align the
Exchange rulebook with FINRA's in this regard, thereby eliminating
potential complexity from FINRA's work under a regulatory services
agreement with the Exchange.
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\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(5).
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With respect to the technical corrections to Rules 11.420(c) and
11.420(g), the Exchange believes that these changes are consistent with
the Act because they will prevent investor confusion that may be caused
by incorrect rule citations in the Rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
IEX does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed changes align the
Exchange's rules with those of FINRA, which will assist it in its
oversight work done pursuant to a regulatory services agreement, and
makes [sic] technical corrections to the rules. Consequently, the
Exchange does not believe that the
[[Page 31808]]
proposed changes implicate competition at all.
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 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 \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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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \16\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ 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 upon filing. The Commission does not
believe that any new or novel issues are raised by the proposal; the
proposal aligns IEX's rule with the rule of Nasdaq and FINRA. The
Commission believes the waiver of the operative delay is consistent
with the protection of investors and the public interest. Therefore,
the Commission hereby waives the operative delay and designates the
proposal operative upon filing.\18\
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\16\ Id.
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 [email protected]. Please include
File Number SR-IEX-2018-12 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-IEX-2018-12. This file
number should be included in 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. Copies of the filing will also be available for inspection and
copying at the IEX's principal office and on its internet website at
www.iextrading.com. 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-IEX-2018-12
and should be submitted on or before July 30, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14551 Filed 7-6-18; 8:45 am]
BILLING CODE P
