Self-Regulatory Organizations; NYSE American, LLC; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Modify the Options Regulatory Fee, 47029-47032 [2019-19219]

Download as PDF jspears on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 84, No. 173 / Friday, September 6, 2019 / Notices Rule 3a1–1(a)(2) exempts from the definition of ‘‘exchange’’ under Section 3(a)(1) an organization, association, or group of persons that complies with Regulation ATS.4 Regulation ATS requires an ATS to, among other things, register as a broker-dealer with the Securities and Exchange Commission (‘‘SEC’’), file a Form ATS with the Commission to notice its operations, and establish written safeguards and procedures to protect subscribers’ confidential trading information. An ATS that complies with Regulation ATS and operates pursuant to the Rule 3a1– 1(a)(2) exemption would not be required by Section 5 to register as a national securities exchange. Rule 302 of Regulation ATS (17 CFR 242.302) describes the recordkeeping requirements for ATSs. Under Rule 302, ATSs are required to make a record of subscribers to the ATS, daily summaries of trading in the ATS, and timesequenced records of order information in the ATS. The information required to be collected under Rule 302 should increase the abilities of the Commission, state securities regulatory authorities, and the self-regulatory organizations (‘‘SROs’’) to ensure that ATSs are in compliance with Regulation ATS as well as other applicable rules and regulations. If the information is not collected or collected less frequently, the regulators would be limited in their ability to comply with their statutory obligations, provide for the protection of investors, and promote the maintenance of fair and orderly markets. Respondents consist of ATSs that choose to operate pursuant to the exemption provided by Regulation ATS from registration as national securities exchanges. There are currently 83 respondents. These respondents will spend approximately 3,735 hours per year (83 respondents at 45 burden hours/respondent) to comply with the recordkeeping requirements of Rule 302. At an average cost per burden hour of $73, the resultant total related internal cost of compliance for these respondents is $272,655 per year (3,735 burden hours multiplied by $73/hour). Compliance with Rule 302 is mandatory. The information required by Rule 302 is available only for the examination of the Commission staff, state securities authorities, and the SROs. Subject to the provisions of the Freedom of Information Act, 5 U.S.C. Act Rule 3b–16]; and (2) [t]hat does not: (i) [s]et rules governing the conduct of subscribers other than the conduct of subscribers’ trading on such [ATS]; or (ii) [d]iscipline subscribers other than by exclusion from trading.’’ 4 See 17 CFR 240.3a1–1(a)(2). VerDate Sep<11>2014 16:53 Sep 05, 2019 Jkt 247001 522 (‘‘FOIA’’), and the Commission’s rules thereunder (17 CFR 200.80(b)(4)(iii)), the Commission does not generally publish or make available information contained in any reports, summaries, analyses, letters, or memoranda arising out of, in anticipation of, or in connection with an examination or inspection of the books and records of any person or any other investigation. ATSs are required to preserve, for at least three years, any records made in the process of complying with the requirements set out in Rule 302. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Lindsay.M.Abate@omb.eop.gov; and (ii) Charles Riddle, Acting Director/Chief Information Officer, Securities and Exchange Commission, c/o Candace Kenner, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: September 3, 2019. Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–19237 Filed 9–5–19; 8:45 am] BILLING CODE 8011–01–P (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change (File No. SR– NYSEAMER–2019–27) to modify the amount of its Options Regulatory Fee (‘‘ORF’’).3 The proposed rule change was immediately effective upon filing with the Commission pursuant to Section 19(b)(3)(A) of the Act.4 The proposed rule change was published for comment in the Federal Register on July 22, 2019.5 The Commission received one comment letter on the proposal.6 Pursuant to Section 19(b)(3)(C) of the Act,7 the Commission is hereby: (1) Temporarily suspending File No. SR– NYSEAMER–2019–27; and (2) instituting proceedings to determine whether to approve or disapprove File No. SR–NYSEAMER–2019–27. II. Description of the Proposed Rule Change The Exchange proposes to amend the amount of its ORF from $0.0055 to $0.0054 per contract.8 The Exchange assesses the ORF on American Trading Permit (‘‘ATP’’) Holders for all options transactions that are cleared by those firms through the Options Clearing Corporation (‘‘OCC’’) in the Customer range, regardless of the exchange on which the transaction occurs.9 The Exchange noted that its ORF ‘‘is designed to recover a material portion, but not all, of the Exchange’s regulatory costs for the supervision and regulation of ATP Holders.’’ 10 Noting that it adjusts the ORF amount periodically to ensure that the revenue from ORF does not exceed its regulatory costs, the Exchange proposed to decrease the ORF because ‘‘from 2017 to 2018, options transaction volume increased to a level that if the ORF is not adjusted, the ORF revenue to the Exchange year-over-year 1 15 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86833; File No. SR– NYSEAMER–2019–27] Self-Regulatory Organizations; NYSE American, LLC; Suspension of and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Modify the Options Regulatory Fee August 30, 2019. I. Introduction On July 2, 2019, NYSE American, LLC (the ‘‘Exchange’’ or ‘‘NYSE American’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 47029 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 86391 (July 16, 2019), 84 FR 35165 (July 22, 2019) (‘‘Notice’’). 4 15 U.S.C. 78s(b)(3)(A). A proposed rule change may take effect upon filing with the Commission if it is designated by the exchange as ‘‘establishing or changing a due, fee, or other charge imposed by the self-regulatory organization on any person, whether or not the person is a member of the self-regulatory organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). Although the proposed rule change was effective upon filing, the Exchange indicated that it would not implement the fee until August 1, 2019. See Notice, supra note 3, at 35165. 5 See Notice, supra note 3, at 35165. 6 See Letter to Vanessa Countryman, Secretary, Commission, from Ellen Greene, Managing Director, Securities Industry and Financial Markets Association (‘‘SIFMA’’), dated August 27, 2019 (‘‘SIFMA Letter’’). 7 15 U.S.C. 78s(b)(3)(C). 8 See Notice, supra note 3, at 35165. 9 See id. at 35166. 10 Id. at 35165. 2 17 E:\FR\FM\06SEN1.SGM 06SEN1 47030 Federal Register / Vol. 84, No. 173 / Friday, September 6, 2019 / Notices could exceed a material portion of the Exchange’s regulatory costs.’’ 11 jspears on DSK3GMQ082PROD with NOTICES III. Suspension of the Proposed Rule Change Pursuant to Section 19(b)(3)(C) of the Act,12 at any time within 60 days of the date of filing of an immediately effective proposed rule change pursuant to Section 19(b)(1) of the Act,13 the Commission summarily may temporarily suspend the change in the rules of a self-regulatory organization (‘‘SRO’’) 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. As discussed below, the Commission believes a temporary suspension of the proposed rule change is necessary and appropriate to allow for additional analysis of the proposed rule change’s consistency with the Act and the rules thereunder. When exchanges file their proposed rule changes with the Commission, including fee filings like the Exchange’s present proposal, they are required to provide a statement supporting the proposal’s basis under the Act and the rules and regulations thereunder applicable to the exchange.14 The instructions to Form 19b–4, on which exchanges file their proposed rule changes, specify that such statement ‘‘should be sufficiently detailed and specific to support a finding that the proposed rule change is consistent with [those] requirements’’ 15 Section 6 of the Act, including Sections 6(b)(4), (5), and (8), require the rules of an exchange to: (1) Provide for the equitable allocation of reasonable fees among members, issuers, and other persons using the exchange’s facilities; 16 (2) perfect the mechanism of a free and open market and a national market system, protect investors and the public interest, and not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers; 17 and (3) not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.18 In justifying its proposal, the Exchange stated in its 11 See id. at 36166. The Exchange noted that it last changed the ORF in 2014. See id. 12 15 U.S.C. 78s(b)(3)(C). 13 15 U.S.C. 78s(b)(1). 14 See 17 CFR 240.19b–4 (Item 3 entitled ‘‘SelfRegulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change’’). 15 See id. 16 15 U.S.C. 78f(b)(4). 17 15 U.S.C. 78f(b)(5). 18 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 16:53 Sep 05, 2019 Jkt 247001 filing that its proposal ‘‘is reasonable because it would help ensure that revenue collected from the ORF does not exceed a material portion of the Exchange’s regulatory costs.’’ 19 In determining the amount of the proposed ORF, the Exchange said that it considered: (1) The increase in options transaction volume in 2018, (2) the decrease in options transaction volumes in the first five months of 2019, (3) the Exchange’s projection that options transaction volumes will remain stable at best in the future, and (4) the ‘‘estimated projections for [the Exchange’s] regulatory costs.’’ 20 The Exchange also asserted that the ORF is equitably allocated and not unfairly discriminatory because the fees are imposed on clearing firms, who can then choose to pass through all, a portion, or none of the costs of the ORF to their customers.21 In addition, the Exchange stated that the regulatory costs relating to monitoring ATP Holders with respect to Customer trading activity are generally higher than the regulatory costs associated with monitoring ATP Holders that do not engage in Customer trading activity, which tends to be more automated and less labor-intensive.22 As noted above, the Commission received one comment letter on the proposal, in which the commenter argued that the Exchange has not provided sufficient information to satisfy the statutory requirements under the Act.23 Specifically, the commenter stated that the Exchange should ‘‘include quantitative data showing anticipated revenues, costs and profitability’’ and describe the methodology used for any estimations of baseline and expected costs and revenues to support the Exchange’s assertions that the proposed ORF is an equitable allocation of reasonable fees among members.24 The commenter also stated that the Exchange should provide support for its assertions that assessing ORF only on transactions cleared at OCC in the Customer range represents an equitable allocation that is not unfairly discriminatory.25 Lastly, the commenter argued that the Exchange should not be permitted to charge ORF for trades occurring on other exchanges unless the Exchange can support its assertion concerning its ‘‘authority to 19 See Notice, supra note 3, at 35167. id. 21 See id. 22 See id. 23 See SIFMA Letter, supra note 6, at 1–2. 24 See id. at 2. 25 See id. 20 See PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 act on activities occurring outside its own market.’’ 26 In temporarily suspending the Exchange’s proposed rule change, the Commission intends to further consider whether the proposal to modify the amount of the ORF is consistent with the statutory requirements applicable to a national securities exchange under the Act. In particular, the Commission will consider whether the proposed rule change satisfies the standards under the Act and the rules thereunder requiring, among other things, that an exchange’s rules provide for the equitable allocation of reasonable fees among members, issuers, and other persons using its facilities; not permit unfair discrimination between customers, issuers, brokers or dealers; and do not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.27 Therefore, the Commission finds that it is appropriate in the public interest, for the protection of investors, and otherwise in furtherance of the purposes of the Act, to temporarily suspend the proposed rule change.28 IV. Proceedings To Determine Whether To Approve or Disapprove the Proposed Rule Change In addition to temporarily suspending the proposal, the Commission also hereby institutes proceedings pursuant to Sections 19(b)(3)(C) 29 and 19(b)(2)(B) of the Act 30 to determine whether the Exchange’s proposed rule change should be approved or disapproved. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, the Commission seeks and encourages interested persons to provide additional comment on the proposed rule change to inform the Commission’s analysis of whether to approve or disapprove the proposed rule change. Pursuant to Section 19(b)(2)(B) of the Act,31 the Commission is providing 26 See id. 15 U.S.C. 78f(b)(4), (5), and (8), respectively. 28 For purposes of temporarily suspending the 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). 29 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily suspends a proposed rule change, Section 19(b)(3)(C) of the Act requires that the Commission institute proceedings under Section 19(b)(2)(B) to determine whether a proposed rule change should be approved or disapproved. 30 15 U.S.C. 78s(b)(2)(B). 31 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also provides that proceedings to determine whether to disapprove a proposed rule change must be concluded within 180 days of the date of 27 See E:\FR\FM\06SEN1.SGM 06SEN1 jspears on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 84, No. 173 / Friday, September 6, 2019 / Notices notice of the grounds for possible disapproval under consideration: • Whether the Exchange has demonstrated how its proposed fee is consistent with Section 6(b)(4) of the Act, which requires that the rules of a national securities exchange ‘‘provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities;’’ 32 (emphasis added); • Whether the Exchange has demonstrated how its proposed fee is consistent with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange not be ‘‘designed to permit unfair discrimination between customers, issuers, brokers, or dealers’’ 33 (emphasis added); and • Whether the Exchange has demonstrated how its proposed fee is consistent with Section 6(b)(8) of the Act, which requires that the rules of a national securities exchange ‘‘not impose any burden on competition not necessary or appropriate in furtherance of the purposes of [the Act].’’ 34 As noted above, the proposal purports to modify the amount of the ORF in response to changes in options transaction volume in a manner that is designed to recover a material portion, but not all, of the Exchange’s regulatory costs for the supervision and regulation of its options participants. However, the Exchange’s statements in support of the proposed rule change are general in nature and lack detail and specificity.35 For example, the Exchange provides only broad information on options transaction volume trends, but does not provide any information on the Exchange’s historic or projected options regulatory costs (including the costs of regulating activity that clears in the Customer range and the costs of regulating activity that occurs away from the Exchange), the amount of regulatory revenue it has generated and expects to generate from the ORF as well as other sources, or the ‘‘material portion’’ of options regulatory expenses that it seeks to recover from the ORF. Similarly, the Exchange has not provided information to support its assertion that regulating customer activity is ‘‘generally more laborintensive’’ and therefore, more costly.36 As the commenter stated, without more information in the filing on the Exchange’s regulatory revenues attributable to ORF as well as regulatory revenue from other sources, and more information on the Exchange’s regulatory costs to supervise and regulate ATP Holders, including, e.g., Customer versus non-Customer activity and on-exchange versus off-exchange activity, the proposal lacks information that can speak to whether the proposed ORF is reasonable, equitably allocated, and not unfairly discriminatory, particularly given that the ORF is assessed only on transactions that clear in the Customer range and regardless of the exchange on which the transaction occurs, and that the ORF is designed to recover a material portion, but not all, of the Exchange’s regulatory costs for the supervision and regulation of activity across all ATP Holders.37 Under the Commission’s Rules of Practice, the ‘‘burden to demonstrate that a proposed rule change is consistent with the [Act] and the rules and regulations issued thereunder . . . is on the [SRO] that proposed the rule change.’’ 38 The description of a proposed rule change, its purpose and operation, its effect, and a legal analysis of its consistency with applicable requirements must all be sufficiently detailed and specific to support an affirmative Commission finding,39 and any failure of an SRO to provide this information may result in the Commission not having a sufficient basis to make an affirmative finding that a proposed rule change is consistent with the Act and the applicable rules and regulations.40 The Commission is instituting proceedings to allow for additional consideration and comment on the issues raised herein, including as to whether the proposed fees are consistent with the Act, and specifically, with its requirements that exchange fees be reasonable and equitably allocated and not be unfairly discriminatory.41 publication of notice of the filing of the proposed rule change. See id. The time for conclusion of the proceedings may be extended for up to 60 days if the Commission finds good cause for such extension and publishes its reasons for so finding, or if the exchange consents to the longer period. See id. 32 15 U.S.C. 78f(b)(4). 33 15 U.S.C. 78f(b)(5). 34 15 U.S.C. 78f(b)(8). 35 See, e.g., SIFMA Letter, supra note 6, at 2 (arguing that the Exchange has ‘‘not provided enough information . . . to satisfy the Exchange Act standards’’). V. Commission’s Solicitation of Comments The Commission requests written views, data, and arguments with respect VerDate Sep<11>2014 16:53 Sep 05, 2019 Jkt 247001 36 See id. See also SIFMA Letter, supra note 6, at 2. 37 See SIFMA Letter, supra note 6, at 2. CFR 201.700(b)(3). 39 See id. 40 See id. 41 See 15 U.S.C. 78f(b)(4), (5), and (8). 38 17 PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 47031 to the concerns identified above as well as any other relevant concerns. Such comments should be submitted by September 27, 2019. Rebuttal comments should be submitted by October 11, 2019. Although there do not appear to be any issues relevant to approval or disapproval which would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.42 The Commission asks that commenters address the sufficiency and merit of the Exchange’s statements in support of the proposal, in addition to any other comments they may wish to submit about the proposed rule change. Interested persons are invited to submit written data, views, and arguments concerning the proposed rule changes, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File No. SR– NYSEAMER–2019–27 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 No. SR–NYSEAMER–2019–27. The 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 42 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the Commission flexibility to determine what type of proceeding—either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by an SRO. See Securities Acts Amendments of 1975, Report of the Senate Committee on Banking, Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). E:\FR\FM\06SEN1.SGM 06SEN1 47032 Federal Register / Vol. 84, No. 173 / Friday, September 6, 2019 / Notices 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 the Exchange. 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 No. SR–NYSEAMER–2019–27 and should be submitted on or before September 27, 2019. Rebuttal comments should be submitted by October 11, 2019. VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(3)(C) of the Act,43 that File No. SR–NYSEAMER–2019–27, be and hereby is, temporarily suspended. In addition, the Commission is instituting proceedings to determine whether the proposed rule change should be approved or disapproved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.44 Jill M. Peterson, Assistant Secretary. [FR Doc. 2019–19219 Filed 9–5–19; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice: 10862] 60-Day Notice of Proposed Information Collection: Adoptive Family Relief Act Refund Application Notice of request for public comment. ACTION: The Department of State is seeking Office of Management and Budget (OMB) approval for the information collection described below. In accordance with the Paperwork Reduction Act of 1995, we are requesting comments on this collection from all interested individuals and organizations. The purpose of this notice is to allow 60 days for public comment preceding submission of the collection to OMB. jspears on DSK3GMQ082PROD with NOTICES SUMMARY: 43 15 U.S.C. 78s(b)(3)(C). 44 17 CFR 200.30–3(a)(57) and (58). VerDate Sep<11>2014 16:53 Sep 05, 2019 Jkt 247001 The Department will accept comments from the public up to November 5, 2019. ADDRESSES: You may submit comments by any of the following methods: • Web: Persons with access to the internet may comment on this notice by going to www.Regulations.gov. You can search for the document by entering ‘‘Docket Number: DOS–2019–0029’’ in the Search field. Then click the ‘‘Comment Now’’ button and complete the comment form. • Email: fees@state.gov. You must include the DS form number (DS–7781), information collection title, and the OMB control number in any correspondence. DATES: FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to Jorge Abudei, who may be reached at 202–485–8915 or at fees@state.gov. SUPPLEMENTARY INFORMATION: • Title of Information Collection: Adoptive Family Relief Act Refund Application. • OMB Control Number: 1405–0223. • Type of Request: Extension of a Currently Approved Collection. • Originating Office: CA/C. • Form Number: DS–7781. • Respondents: Immigrant Visa Petitioners. • Estimated Number of Respondents: 20. • Estimated Number of Responses: 20. • Average Time per Response: 5 Minutes. • Total Estimated Burden Time: 1.6 Hours. • Frequency: On Occasion. • Obligation to Respond: Required to Obtain or Retain a Benefit. We are soliciting public comments to permit the Department to: • Evaluate whether the proposed information collection is necessary for the proper functions of the Department. • Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used. • Enhance the quality, utility, and clarity of the information to be collected. • Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology. Please note that comments submitted in response to this Notice are public PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 record. Before including any detailed personal information, you should be aware that your comments as submitted, including your personal information, will be available for public review. Abstract of Proposed Collection The Adoptive Family Relief Act (Pub. L. 114–70) amended Section 221(c) of the Immigration and Nationality Act (INA), 8 U.S.C. 1201(c), to allow for the waiver or refund certain immigrant visa fees for a lawfully adopted child, or a child coming to the United States to be adopted by a United States citizen, subject to criteria prescribed by the Secretary of State. Over 350 American families have successfully adopted children from the Democratic Republic of the Congo. However, since September 25, 2013, they have not been able to bring their adoptive children home to the United States because the Democratic Republic of the Congo suspended the issuance of ‘‘exit permits’’ for these children. As the permit suspension drags on, however, American families are repeatedly paying visa renewal and related fees, while also continuing to be separated from their adopted children. The waiver or refund provides support and relief to American families seeking to bring their adoptive children home to the United States from the Democratic Republic of the Congo and families in situations similar to the one stipulated above. This form collects information to determine the extra fees these families have paid and refund them in accordance with the Adoptive Family Relief Act. Methodology The collection will be hosted on the Department of State website to be printed, filled out, and eventually sent to the consular section where the adoption case was originally processed. Douglass R. Benning, Deputy Assistant Secretary. [FR Doc. 2019–19292 Filed 9–5–19; 8:45 am] BILLING CODE 4710–06–P SURFACE TRANSPORTATION BOARD [Docket No. FD 36343] Stephens Pioneer Rail LLC—Control Exemption—BRX Transportation Holdings, LLC Stephens Pioneer Rail LLC (Stephens Pioneer),1 a noncarrier, filed a verified 1 Stephens Pioneer states that it is an affiliate of Stephens Capital Partners LLC, which is also a noncarrier. E:\FR\FM\06SEN1.SGM 06SEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 84, Number 173 (Friday, September 6, 2019)]
[Notices]
[Pages 47029-47032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19219]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86833; File No. SR-NYSEAMER-2019-27]


Self-Regulatory Organizations; NYSE American, LLC; Suspension of 
and Order Instituting Proceedings To Determine Whether To Approve or 
Disapprove a Proposed Rule Change To Modify the Options Regulatory Fee

August 30, 2019.

I. Introduction

    On July 2, 2019, NYSE American, LLC (the ``Exchange'' or ``NYSE 
American'') filed with the Securities and Exchange Commission (the 
``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 (File No. SR-NYSEAMER-2019-27) to modify the 
amount of its Options Regulatory Fee (``ORF'').\3\ The proposed rule 
change was immediately effective upon filing with the Commission 
pursuant to Section 19(b)(3)(A) of the Act.\4\ The proposed rule change 
was published for comment in the Federal Register on July 22, 2019.\5\ 
The Commission received one comment letter on the proposal.\6\ Pursuant 
to Section 19(b)(3)(C) of the Act,\7\ the Commission is hereby: (1) 
Temporarily suspending File No. SR-NYSEAMER-2019-27; and (2) 
instituting proceedings to determine whether to approve or disapprove 
File No. SR-NYSEAMER-2019-27.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 86391 (July 16, 
2019), 84 FR 35165 (July 22, 2019) (``Notice'').
    \4\ 15 U.S.C. 78s(b)(3)(A). A proposed rule change may take 
effect upon filing with the Commission if it is designated by the 
exchange as ``establishing or changing a due, fee, or other charge 
imposed by the self-regulatory organization on any person, whether 
or not the person is a member of the self-regulatory organization.'' 
15 U.S.C. 78s(b)(3)(A)(ii). Although the proposed rule change was 
effective upon filing, the Exchange indicated that it would not 
implement the fee until August 1, 2019. See Notice, supra note 3, at 
35165.
    \5\ See Notice, supra note 3, at 35165.
    \6\ See Letter to Vanessa Countryman, Secretary, Commission, 
from Ellen Greene, Managing Director, Securities Industry and 
Financial Markets Association (``SIFMA''), dated August 27, 2019 
(``SIFMA Letter'').
    \7\ 15 U.S.C. 78s(b)(3)(C).
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II. Description of the Proposed Rule Change

    The Exchange proposes to amend the amount of its ORF from $0.0055 
to $0.0054 per contract.\8\ The Exchange assesses the ORF on American 
Trading Permit (``ATP'') Holders for all options transactions that are 
cleared by those firms through the Options Clearing Corporation 
(``OCC'') in the Customer range, regardless of the exchange on which 
the transaction occurs.\9\ The Exchange noted that its ORF ``is 
designed to recover a material portion, but not all, of the Exchange's 
regulatory costs for the supervision and regulation of ATP Holders.'' 
\10\ Noting that it adjusts the ORF amount periodically to ensure that 
the revenue from ORF does not exceed its regulatory costs, the Exchange 
proposed to decrease the ORF because ``from 2017 to 2018, options 
transaction volume increased to a level that if the ORF is not 
adjusted, the ORF revenue to the Exchange year-over-year

[[Page 47030]]

could exceed a material portion of the Exchange's regulatory costs.'' 
\11\
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    \8\ See Notice, supra note 3, at 35165.
    \9\ See id. at 35166.
    \10\ Id. at 35165.
    \11\ See id. at 36166. The Exchange noted that it last changed 
the ORF in 2014. See id.
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III. Suspension of the Proposed Rule Change

    Pursuant to Section 19(b)(3)(C) of the Act,\12\ at any time within 
60 days of the date of filing of an immediately effective proposed rule 
change pursuant to Section 19(b)(1) of the Act,\13\ the Commission 
summarily may temporarily suspend the change in the rules of a self-
regulatory organization (``SRO'') 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. As discussed below, the Commission believes a temporary 
suspension of the proposed rule change is necessary and appropriate to 
allow for additional analysis of the proposed rule change's consistency 
with the Act and the rules thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(C).
    \13\ 15 U.S.C. 78s(b)(1).
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    When exchanges file their proposed rule changes with the 
Commission, including fee filings like the Exchange's present proposal, 
they are required to provide a statement supporting the proposal's 
basis under the Act and the rules and regulations thereunder applicable 
to the exchange.\14\ The instructions to Form 19b-4, on which exchanges 
file their proposed rule changes, specify that such statement ``should 
be sufficiently detailed and specific to support a finding that the 
proposed rule change is consistent with [those] requirements'' \15\
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    \14\ See 17 CFR 240.19b-4 (Item 3 entitled ``Self-Regulatory 
Organization's Statement of the Purpose of, and Statutory Basis for, 
the Proposed Rule Change'').
    \15\ See id.
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    Section 6 of the Act, including Sections 6(b)(4), (5), and (8), 
require the rules of an exchange to: (1) Provide for the equitable 
allocation of reasonable fees among members, issuers, and other persons 
using the exchange's facilities; \16\ (2) perfect the mechanism of a 
free and open market and a national market system, protect investors 
and the public interest, and not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers; \17\ 
and (3) not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.\18\ In 
justifying its proposal, the Exchange stated in its filing that its 
proposal ``is reasonable because it would help ensure that revenue 
collected from the ORF does not exceed a material portion of the 
Exchange's regulatory costs.'' \19\ In determining the amount of the 
proposed ORF, the Exchange said that it considered: (1) The increase in 
options transaction volume in 2018, (2) the decrease in options 
transaction volumes in the first five months of 2019, (3) the 
Exchange's projection that options transaction volumes will remain 
stable at best in the future, and (4) the ``estimated projections for 
[the Exchange's] regulatory costs.'' \20\ The Exchange also asserted 
that the ORF is equitably allocated and not unfairly discriminatory 
because the fees are imposed on clearing firms, who can then choose to 
pass through all, a portion, or none of the costs of the ORF to their 
customers.\21\ In addition, the Exchange stated that the regulatory 
costs relating to monitoring ATP Holders with respect to Customer 
trading activity are generally higher than the regulatory costs 
associated with monitoring ATP Holders that do not engage in Customer 
trading activity, which tends to be more automated and less labor-
intensive.\22\
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    \16\ 15 U.S.C. 78f(b)(4).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ 15 U.S.C. 78f(b)(8).
    \19\ See Notice, supra note 3, at 35167.
    \20\ See id.
    \21\ See id.
    \22\ See id.
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    As noted above, the Commission received one comment letter on the 
proposal, in which the commenter argued that the Exchange has not 
provided sufficient information to satisfy the statutory requirements 
under the Act.\23\ Specifically, the commenter stated that the Exchange 
should ``include quantitative data showing anticipated revenues, costs 
and profitability'' and describe the methodology used for any 
estimations of baseline and expected costs and revenues to support the 
Exchange's assertions that the proposed ORF is an equitable allocation 
of reasonable fees among members.\24\ The commenter also stated that 
the Exchange should provide support for its assertions that assessing 
ORF only on transactions cleared at OCC in the Customer range 
represents an equitable allocation that is not unfairly 
discriminatory.\25\ Lastly, the commenter argued that the Exchange 
should not be permitted to charge ORF for trades occurring on other 
exchanges unless the Exchange can support its assertion concerning its 
``authority to act on activities occurring outside its own market.'' 
\26\
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    \23\ See SIFMA Letter, supra note 6, at 1-2.
    \24\ See id. at 2.
    \25\ See id.
    \26\ See id.
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    In temporarily suspending the Exchange's proposed rule change, the 
Commission intends to further consider whether the proposal to modify 
the amount of the ORF is consistent with the statutory requirements 
applicable to a national securities exchange under the Act. In 
particular, the Commission will consider whether the proposed rule 
change satisfies the standards under the Act and the rules thereunder 
requiring, among other things, that an exchange's rules provide for the 
equitable allocation of reasonable fees among members, issuers, and 
other persons using its facilities; not permit unfair discrimination 
between customers, issuers, brokers or dealers; and do not impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.\27\
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    \27\ See 15 U.S.C. 78f(b)(4), (5), and (8), respectively.
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    Therefore, the Commission finds that it is appropriate in the 
public interest, for the protection of investors, and otherwise in 
furtherance of the purposes of the Act, to temporarily suspend the 
proposed rule change.\28\
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    \28\ For purposes of temporarily suspending the 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).
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IV. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Rule Change

    In addition to temporarily suspending the proposal, the Commission 
also hereby institutes proceedings pursuant to Sections 19(b)(3)(C) 
\29\ and 19(b)(2)(B) of the Act \30\ to determine whether the 
Exchange's proposed rule change should be approved or disapproved. 
Institution of proceedings does not indicate that the Commission has 
reached any conclusions with respect to any of the issues involved. 
Rather, the Commission seeks and encourages interested persons to 
provide additional comment on the proposed rule change to inform the 
Commission's analysis of whether to approve or disapprove the proposed 
rule change.
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    \29\ 15 U.S.C. 78s(b)(3)(C). Once the Commission temporarily 
suspends a proposed rule change, Section 19(b)(3)(C) of the Act 
requires that the Commission institute proceedings under Section 
19(b)(2)(B) to determine whether a proposed rule change should be 
approved or disapproved.
    \30\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\31\ the Commission is 
providing

[[Page 47031]]

notice of the grounds for possible disapproval under consideration:
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    \31\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act also 
provides that proceedings to determine whether to disapprove a 
proposed rule change must be concluded within 180 days of the date 
of publication of notice of the filing of the proposed rule change. 
See id. The time for conclusion of the proceedings may be extended 
for up to 60 days if the Commission finds good cause for such 
extension and publishes its reasons for so finding, or if the 
exchange consents to the longer period. See id.
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     Whether the Exchange has demonstrated how its proposed fee 
is consistent with Section 6(b)(4) of the Act, which requires that the 
rules of a national securities exchange ``provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities;'' \32\ 
(emphasis added);
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    \32\ 15 U.S.C. 78f(b)(4).
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     Whether the Exchange has demonstrated how its proposed fee 
is consistent with Section 6(b)(5) of the Act, which requires, among 
other things, that the rules of a national securities exchange not be 
``designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers'' \33\ (emphasis added); and
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    \33\ 15 U.S.C. 78f(b)(5).
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     Whether the Exchange has demonstrated how its proposed fee 
is consistent with Section 6(b)(8) of the Act, which requires that the 
rules of a national securities exchange ``not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of [the Act].'' \34\
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    \34\ 15 U.S.C. 78f(b)(8).
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    As noted above, the proposal purports to modify the amount of the 
ORF in response to changes in options transaction volume in a manner 
that is designed to recover a material portion, but not all, of the 
Exchange's regulatory costs for the supervision and regulation of its 
options participants. However, the Exchange's statements in support of 
the proposed rule change are general in nature and lack detail and 
specificity.\35\ For example, the Exchange provides only broad 
information on options transaction volume trends, but does not provide 
any information on the Exchange's historic or projected options 
regulatory costs (including the costs of regulating activity that 
clears in the Customer range and the costs of regulating activity that 
occurs away from the Exchange), the amount of regulatory revenue it has 
generated and expects to generate from the ORF as well as other 
sources, or the ``material portion'' of options regulatory expenses 
that it seeks to recover from the ORF. Similarly, the Exchange has not 
provided information to support its assertion that regulating customer 
activity is ``generally more labor-intensive'' and therefore, more 
costly.\36\
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    \35\ See, e.g., SIFMA Letter, supra note 6, at 2 (arguing that 
the Exchange has ``not provided enough information . . . to satisfy 
the Exchange Act standards'').
    \36\ See id. See also SIFMA Letter, supra note 6, at 2.
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    As the commenter stated, without more information in the filing on 
the Exchange's regulatory revenues attributable to ORF as well as 
regulatory revenue from other sources, and more information on the 
Exchange's regulatory costs to supervise and regulate ATP Holders, 
including, e.g., Customer versus non-Customer activity and on-exchange 
versus off-exchange activity, the proposal lacks information that can 
speak to whether the proposed ORF is reasonable, equitably allocated, 
and not unfairly discriminatory, particularly given that the ORF is 
assessed only on transactions that clear in the Customer range and 
regardless of the exchange on which the transaction occurs, and that 
the ORF is designed to recover a material portion, but not all, of the 
Exchange's regulatory costs for the supervision and regulation of 
activity across all ATP Holders.\37\
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    \37\ See SIFMA Letter, supra note 6, at 2.
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    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a proposed rule change is consistent with the [Act] 
and the rules and regulations issued thereunder . . . is on the [SRO] 
that proposed the rule change.'' \38\ The description of a proposed 
rule change, its purpose and operation, its effect, and a legal 
analysis of its consistency with applicable requirements must all be 
sufficiently detailed and specific to support an affirmative Commission 
finding,\39\ and any failure of an SRO to provide this information may 
result in the Commission not having a sufficient basis to make an 
affirmative finding that a proposed rule change is consistent with the 
Act and the applicable rules and regulations.\40\
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    \38\ 17 CFR 201.700(b)(3).
    \39\ See id.
    \40\ See id.
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    The Commission is instituting proceedings to allow for additional 
consideration and comment on the issues raised herein, including as to 
whether the proposed fees are consistent with the Act, and 
specifically, with its requirements that exchange fees be reasonable 
and equitably allocated and not be unfairly discriminatory.\41\
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    \41\ See 15 U.S.C. 78f(b)(4), (5), and (8).
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V. Commission's Solicitation of Comments

    The Commission requests written views, data, and arguments with 
respect to the concerns identified above as well as any other relevant 
concerns. Such comments should be submitted by September 27, 2019. 
Rebuttal comments should be submitted by October 11, 2019. Although 
there do not appear to be any issues relevant to approval or 
disapproval which would be facilitated by an oral presentation of 
views, data, and arguments, the Commission will consider, pursuant to 
Rule 19b-4, any request for an opportunity to make an oral 
presentation.\42\
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    \42\ 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by an SRO. See Securities 
Acts Amendments of 1975, Report of the Senate Committee on Banking, 
Housing and Urban Affairs to Accompany S. 249, S. Rep. No. 75, 94th 
Cong., 1st Sess. 30 (1975).
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    The Commission asks that commenters address the sufficiency and 
merit of the Exchange's statements in support of the proposal, in 
addition to any other comments they may wish to submit about the 
proposed rule change.
    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule changes, 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 No. SR-NYSEAMER-2019-27 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 No. SR-NYSEAMER-2019-27. The 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

[[Page 47032]]

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 the Exchange. 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 No. SR-
NYSEAMER-2019-27 and should be submitted on or before September 27, 
2019. Rebuttal comments should be submitted by October 11, 2019.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(3)(C) of the 
Act,\43\ that File No. SR-NYSEAMER-2019-27, be and hereby is, 
temporarily suspended. In addition, the Commission is instituting 
proceedings to determine whether the proposed rule change should be 
approved or disapproved.
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    \43\ 15 U.S.C. 78s(b)(3)(C).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\44\
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    \44\ 17 CFR 200.30-3(a)(57) and (58).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-19219 Filed 9-5-19; 8:45 am]
BILLING CODE 8011-01-P

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