Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Membership Waive-in Process for FINRA Members, 378-380 [2019-28360]
Download as PDF
<![CDATA[
378
Federal Register / Vol. 85, No. 2 / Friday, January 3, 2020 / Notices
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2019–109. 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 the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
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–CboeBZX–2019–109, and
should be submitted on or before
January 24, 2020.
Commission’s headquarters, 100 F
Street NE, Washington, DC 20549.
STATUS: This meeting will begin at 10:00
a.m. (ET) and will be open to the public.
Seating will be on a first-come, firstserved basis. Visitors will be subject to
security checks. The meeting will be
webcast on the Commission’s website at
www.sec.gov.
MATTERS TO BE CONSIDERED: The subject
matter of the Open Meeting will be:
• The Commission will consider
whether to issue for public comment a
proposed order that would require selfregulatory organizations to propose a
single, new national market system
(NMS) plan that would increase
transparency and address inefficiencies,
conflicts of interest and other issues
presented by the current governance
structure of the three NMS plans that
govern the public dissemination of realtime, consolidated equity market data
for NMS stocks.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
CONTACT PERSON FOR MORE INFORMATION:
For further information and to ascertain
what, if any, matters have been added,
deleted or postponed, please contact
Vanessa A. Countryman, Office of the
Secretary, at (202) 551–5400.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.42
J. Matthew DeLesDernier,
Assistant Secretary.
[Release No. 34–87861; File No. SR–LTSE–
2019–05]
[FR Doc. 2019–28362 Filed 1–2–20; 8:45 am]
BILLING CODE 8011–01–P
Sunshine Act Meetings
jbell on DSKJLSW7X2PROD with NOTICES
[FR Doc. 2019–28540 Filed 12–31–19; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; LongTerm Stock Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the
Membership Waive-in Process for
FINRA Members
December 27, 2019.
SECURITIES AND EXCHANGE
COMMISSION
Notice is hereby given,
pursuant to the provisions of the
Government in the Sunshine Act, Public
Law 94–409, that the Securities and
Exchange Commission will hold an
Open Meeting on Wednesday, January
8, 2020 at 10:00 a.m.
PLACE: The meeting will be held in
Auditorium LL–002 at the
TIME AND DATE:
Dated: December 31, 2019.
Vanessa A. Countryman,
Secretary.
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 December
20, 2019, Long-Term Stock Exchange,
Inc. (‘‘LTSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
1 15
42 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:29 Jan 02, 2020
2 17
Jkt 250001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00082
Fmt 4703
Sfmt 4703
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
LTSE proposes a rule change to adopt
‘‘Special Application Procedures’’ for
Exchange applicants that are already
FINRA members and to modify the
Membership Application form to
incorporate these new procedures and
to more generally align the form to be
consistent with other national securities
exchanges.
The text of the proposed rule change
is available at the Exchange’s website at
https://longtermstockexchange.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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 statements 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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Exchange Rule 2.170 prescribes the
application procedures for membership
or to become an associated person of a
member. The Exchange is proposing to
establish a new paragraph (b), entitled
‘‘Special Application Procedures for
Applicants that are FINRA Members.’’ 3
Specifically, the proposed rule change
states that such an applicant will have
the option to ‘‘waive-in’’ to become an
Exchange Member and to register with
the Exchange all persons associated
with it whose registrations FINRA has
approved (in categories recognized by
the Exchange’s rules). The proposed
rule change defines the term ‘‘waive-in’’
to mean that the Exchange will rely
substantially upon FINRA’s prior
determination to approve the applicant
for FINRA membership when the
3 The proposed rule change is modeled on a
similar change adopted by the Nasdaq Stock Market
LLC. See Securities Exchange Act Release No. 34–
85513 (April 4, 2019), 84 FR 14429 (April 10, 2019).
E:\FR\FM\03JAN1.SGM
03JAN1
Federal Register / Vol. 85, No. 2 / Friday, January 3, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
Exchange evaluates the applicant for
Exchange membership. That is, the
Exchange will normally permit a FINRA
member to waive-into Exchange
membership without conducting an
independent examination of the
applicant’s qualifications for
membership on the Exchange, provided
that the Exchange is not otherwise
aware of any basis set forth in Rule
2.160 to deny or condition approval of
the application. Additionally,
implementation of the waive-in
application process is facilitated by and
within the scope of the regulatory
services agreement between LTSE and
FINRA; however, in all cases, LTSE will
make the final determination as to
whether or not to approve an applicant.
Procedurally, the proposed rule
change states that a FINRA member that
wishes to waive-into Exchange
membership must do so by submitting
to the Exchange an application form
designated by the Exchange. The
Exchange, in turn, will act upon a duly
submitted waive-in application by
promptly notifying, in writing, the
applicant of the Exchange’s
determination.4 Finally, the proposed
rule change states that a decision issued
under this provision shall have the same
effectiveness as set forth in renumbered
paragraph (d) of Rule 2.170 and shall be
subject to the same procedures as those
for denials of full applications as set
forth in renumbered paragraphs (e) and
(f) of Rule 2.170.
The Exchange does not propose any
additional changes to Rule 2.170, other
than to re-designate paragraphs in the
rule to account for this new paragraph
(b). Additionally, cross-references to
exact paragraphs of Rule 2.170 in
Supplementary Material .02 to Rule
5.160 and in Rule 9.522(a)(1) would be
updated. Specifically, Supplementary
Material .02 to Rule 5.160 would be
updated to reference Rule 2.170(h)
instead of Rule 2.170(g), and Rule
9.522(a)(1) would be updated to
reference Rule 2.170(e) instead of
2.170(d).
The Exchange proposes to amend the
Membership Application to add a
waive-in attestation requirement for
FINRA member firms who are using the
4 The Exchange does not propose to set a deadline
because it will be relying on FINRA to review
waive-in applications on its behalf and there are no
timelines in the regulatory services agreement
covering this function. However, FINRA routinely
provides this service for clients and performs such
services quickly. See id. at 14433 n14 (‘‘[Nasdaq]
proposes this [20 day] time frame to accommodate
FINRA, which will review waive-in applications on
behalf of the [Nasdaq] to verify that the Applicants
are FINRA members in good standing. As a
practical matter, [Nasdaq] expects to act on waivein applications prior to the 20 day deadline.’’).
VerDate Sep<11>2014
17:29 Jan 02, 2020
Jkt 250001
‘‘Special Application Procedures.’’
Additionally, the Exchange proposes
ministerial amendments to the
Membership Application to update the
names of other self-regulatory
organizations. Finally, the Exchange
proposes to amend the Application
Checklist and Instructions to: (i)
Describe the availability of waive-in
process; (ii) streamline the list of
supporting documents required for
waive-in applicants in accordance with
the documents required by other
national securities exchanges that
provide for waive-in membership; and
(iii) update the list of supporting
documents required for non-waive-in
applicants to conform to the list of
materials to those required by other
national securities exchanges.5
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the Act
and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.6 Specifically,
the Exchange believes the proposed rule
change is consistent with Section 6(b)(5)
of the Act,7 in that it is designed 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. It also
is consistent with Section 6(b)(7) of the
Act 8 in that it provides for a fair
procedure for denying Exchange
membership to any person who seeks it,
barring any person from becoming
associated with an Exchange Member,
and prohibiting or limiting any person
with respect to access to services offered
by the Exchange or a Member thereof,
and Section 6(b)(2) of the Act 9 in that
it provides, subject to Section 6(c) and
the rules of the Exchange, that any
broker or dealer may become a member
of the Exchange.
As a general matter, the Exchange
believes that the proposed rule change
to amend its membership rules to
provide for a ‘‘waive-in’’ process for
FINRA is consistent with the
requirements of Section 6(b)(5) of the
Act in that it avoids duplication and
unnecessary burdens associated with
5 See, e.g., Membership Application Form of Cboe
BZX Exchange, Inc., Cboe BYX Exchange, Inc., Cboe
EDGA Exchange, Inc., and Cboe EDGX Exchange,
Inc., available at https://cdn.cboe.com/resources/
membership/BATS_DirectEdge_Membership_
Application.pdf.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
8 15 U.S.C. 78f(b)(7).
9 15 U.S.C. 78f(b)(2).
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
379
the membership application process
while protecting investors and the
public interest through the application
of FINRA’s membership requirements.
The proposed rule change also will
make compliance with the membership
rules simpler and less burdensome for
applicants by providing consistency to
the standards by which a membership
application is judged.
Finally, the proposed rule change is
consistent with the requirements of
Section 6(b)(7) of the Act in that it will
not adversely impact the rights of
applicants to appeal adverse Exchange
decisions under this proposed Rule
2.170(b) or otherwise restrict access to
membership in the Exchange; to the
contrary, providing for a ‘‘waive-in’’
process promotes and facilitates
membership in the Exchange in
accordance with Section 6(b)(2) of the
Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange also does not expect that its
proposed rule change will have any
adverse competitive impact on its
prospective membership. In particular,
the proposed rule change will apply
equally to all similarly situated
applicants. Moreover, the Exchange
does not expect that the proposed rule
change will have an adverse impact on
competition among exchanges for
members; to the contrary, the Exchange
anticipates that by clarifying its
membership rules, and by making the
Exchange’s membership process less
burdensome for applicants, the
Exchange will enhance its competitive
standing relative to other exchanges.
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
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A)(iii) of the Act 10 and Rule
19b–4(f)(6) thereunder.11 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
10 15
11 17
E:\FR\FM\03JAN1.SGM
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
03JAN1
380
Federal Register / Vol. 85, No. 2 / Friday, January 3, 2020 / Notices
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, if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 12 and Rule 19b–4(f)(6)
thereunder.13
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b–4(f)(6)(iii),15 the Commission
may 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 proposed rule change may become
operative immediately. The Exchange
requests that the Commission waive the
30-day operative delay so that the
Exchange may afford the benefits of the
‘‘waive-in’’ membership process earlier
and minimize the burden on FINRA
members in applying to become a
member of the Exchange. According to
the Exchange, relieving this burden as
soon as possible is important to enable
LTSE to promptly establish the
Exchange Board, of which Member
Representative Directors shall be at least
twenty percent of the Board.16 For these
reasons, the Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Accordingly, the Commission hereby
waives the 30-day operative delay and
designates the proposal operative upon
filing.17
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
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
16 See First Amended and Restated Bylaws of
Long-Term Stock Exchange, Inc., art. 3 § 2
(Composition of the Board).
17 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
jbell on DSKJLSW7X2PROD with NOTICES
13 17
VerDate Sep<11>2014
17:29 Jan 02, 2020
Jkt 250001
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
LTSE–2019–05 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–LTSE–2019–05. 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 the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
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–LTSE–2019–05, and should
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
be submitted on or before January 24,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019–28360 Filed 1–2–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87865; File No. SR–
NYSEArca–2019–92]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To Adopt NYSE Arca
Rule 8.601–E To Permit the Listing and
Trading of Managed Portfolio
Securities and To List and Trade Four
Series of Managed Portfolio Securities
Issued by T. Rowe Price ExchangeTraded Funds, Inc. Under Proposed
NYSE Arca Rule 8.601–E
December 30, 2019.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
23, 2019, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. 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
The Exchange proposes to adopt a
new NYSE Arca Rule 8.601–E to permit
the Exchange to list and trade Managed
Portfolio Securities, which are shares of
an actively managed exchange-traded
fund (‘‘ETF’’) for which the portfolio is
disclosed quarterly. In addition, the
Exchange proposes to list and trade
shares of the following Managed
Portfolio Securities under proposed new
NYSE Arca Rule 8.601–E: T. Rowe Price
Blue Chip Growth ETF; T. Rowe Price
Dividend Growth ETF; T. Rowe Price
Growth Stock ETF; and T. Rowe Price
Equity Income ETF. The proposed
change is available on the Exchange’s
website at www.nyse.com, at the
principal office of the Exchange, and at
18 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
E:\FR\FM\03JAN1.SGM
03JAN1
]]>Agencies
[Federal Register Volume 85, Number 2 (Friday, January 3, 2020)]
[Notices]
[Pages 378-380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28360]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87861; File No. SR-LTSE-2019-05]
Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to the Membership Waive-in Process for FINRA Members
December 27, 2019.
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 December 20, 2019, Long-Term Stock Exchange, Inc. (``LTSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
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.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
LTSE proposes a rule change to adopt ``Special Application
Procedures'' for Exchange applicants that are already FINRA members and
to modify the Membership Application form to incorporate these new
procedures and to more generally align the form to be consistent with
other national securities exchanges.
The text of the proposed rule change is available at the Exchange's
website at https://longtermstockexchange.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the 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 statements 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
Exchange Rule 2.170 prescribes the application procedures for
membership or to become an associated person of a member. The Exchange
is proposing to establish a new paragraph (b), entitled ``Special
Application Procedures for Applicants that are FINRA Members.'' \3\
Specifically, the proposed rule change states that such an applicant
will have the option to ``waive-in'' to become an Exchange Member and
to register with the Exchange all persons associated with it whose
registrations FINRA has approved (in categories recognized by the
Exchange's rules). The proposed rule change defines the term ``waive-
in'' to mean that the Exchange will rely substantially upon FINRA's
prior determination to approve the applicant for FINRA membership when
the
[[Page 379]]
Exchange evaluates the applicant for Exchange membership. That is, the
Exchange will normally permit a FINRA member to waive-into Exchange
membership without conducting an independent examination of the
applicant's qualifications for membership on the Exchange, provided
that the Exchange is not otherwise aware of any basis set forth in Rule
2.160 to deny or condition approval of the application. Additionally,
implementation of the waive-in application process is facilitated by
and within the scope of the regulatory services agreement between LTSE
and FINRA; however, in all cases, LTSE will make the final
determination as to whether or not to approve an applicant.
---------------------------------------------------------------------------
\3\ The proposed rule change is modeled on a similar change
adopted by the Nasdaq Stock Market LLC. See Securities Exchange Act
Release No. 34-85513 (April 4, 2019), 84 FR 14429 (April 10, 2019).
---------------------------------------------------------------------------
Procedurally, the proposed rule change states that a FINRA member
that wishes to waive-into Exchange membership must do so by submitting
to the Exchange an application form designated by the Exchange. The
Exchange, in turn, will act upon a duly submitted waive-in application
by promptly notifying, in writing, the applicant of the Exchange's
determination.\4\ Finally, the proposed rule change states that a
decision issued under this provision shall have the same effectiveness
as set forth in renumbered paragraph (d) of Rule 2.170 and shall be
subject to the same procedures as those for denials of full
applications as set forth in renumbered paragraphs (e) and (f) of Rule
2.170.
---------------------------------------------------------------------------
\4\ The Exchange does not propose to set a deadline because it
will be relying on FINRA to review waive-in applications on its
behalf and there are no timelines in the regulatory services
agreement covering this function. However, FINRA routinely provides
this service for clients and performs such services quickly. See id.
at 14433 n14 (``[Nasdaq] proposes this [20 day] time frame to
accommodate FINRA, which will review waive-in applications on behalf
of the [Nasdaq] to verify that the Applicants are FINRA members in
good standing. As a practical matter, [Nasdaq] expects to act on
waive-in applications prior to the 20 day deadline.'').
---------------------------------------------------------------------------
The Exchange does not propose any additional changes to Rule 2.170,
other than to re-designate paragraphs in the rule to account for this
new paragraph (b). Additionally, cross-references to exact paragraphs
of Rule 2.170 in Supplementary Material .02 to Rule 5.160 and in Rule
9.522(a)(1) would be updated. Specifically, Supplementary Material .02
to Rule 5.160 would be updated to reference Rule 2.170(h) instead of
Rule 2.170(g), and Rule 9.522(a)(1) would be updated to reference Rule
2.170(e) instead of 2.170(d).
The Exchange proposes to amend the Membership Application to add a
waive-in attestation requirement for FINRA member firms who are using
the ``Special Application Procedures.'' Additionally, the Exchange
proposes ministerial amendments to the Membership Application to update
the names of other self-regulatory organizations. Finally, the Exchange
proposes to amend the Application Checklist and Instructions to: (i)
Describe the availability of waive-in process; (ii) streamline the list
of supporting documents required for waive-in applicants in accordance
with the documents required by other national securities exchanges that
provide for waive-in membership; and (iii) update the list of
supporting documents required for non-waive-in applicants to conform to
the list of materials to those required by other national securities
exchanges.\5\
---------------------------------------------------------------------------
\5\ See, e.g., Membership Application Form of Cboe BZX Exchange,
Inc., Cboe BYX Exchange, Inc., Cboe EDGA Exchange, Inc., and Cboe
EDGX Exchange, Inc., available at https://cdn.cboe.com/resources/membership/BATS_DirectEdge_Membership_Application.pdf.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\6\ Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(5) of the Act,\7\ in that it is designed
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. It also is consistent with Section 6(b)(7) of the Act
\8\ in that it provides for a fair procedure for denying Exchange
membership to any person who seeks it, barring any person from becoming
associated with an Exchange Member, and prohibiting or limiting any
person with respect to access to services offered by the Exchange or a
Member thereof, and Section 6(b)(2) of the Act \9\ in that it provides,
subject to Section 6(c) and the rules of the Exchange, that any broker
or dealer may become a member of the Exchange.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ 15 U.S.C. 78f(b)(7).
\9\ 15 U.S.C. 78f(b)(2).
---------------------------------------------------------------------------
As a general matter, the Exchange believes that the proposed rule
change to amend its membership rules to provide for a ``waive-in''
process for FINRA is consistent with the requirements of Section
6(b)(5) of the Act in that it avoids duplication and unnecessary
burdens associated with the membership application process while
protecting investors and the public interest through the application of
FINRA's membership requirements. The proposed rule change also will
make compliance with the membership rules simpler and less burdensome
for applicants by providing consistency to the standards by which a
membership application is judged.
Finally, the proposed rule change is consistent with the
requirements of Section 6(b)(7) of the Act in that it will not
adversely impact the rights of applicants to appeal adverse Exchange
decisions under this proposed Rule 2.170(b) or otherwise restrict
access to membership in the Exchange; to the contrary, providing for a
``waive-in'' process promotes and facilitates membership in the
Exchange in accordance with Section 6(b)(2) of the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange also does not
expect that its proposed rule change will have any adverse competitive
impact on its prospective membership. In particular, the proposed rule
change will apply equally to all similarly situated applicants.
Moreover, the Exchange does not expect that the proposed rule change
will have an adverse impact on competition among exchanges for members;
to the contrary, the Exchange anticipates that by clarifying its
membership rules, and by making the Exchange's membership process less
burdensome for applicants, the Exchange will enhance its competitive
standing relative to other exchanges.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii)
[[Page 380]]
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, if consistent with the
protection of investors and the public interest, the proposed rule
change has become effective pursuant to Section 19(b)(3)(A) of the Act
\12\ and Rule 19b-4(f)(6) thereunder.\13\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------
A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission may
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 proposed
rule change may become operative immediately. The Exchange requests
that the Commission waive the 30-day operative delay so that the
Exchange may afford the benefits of the ``waive-in'' membership process
earlier and minimize the burden on FINRA members in applying to become
a member of the Exchange. According to the Exchange, relieving this
burden as soon as possible is important to enable LTSE to promptly
establish the Exchange Board, of which Member Representative Directors
shall be at least twenty percent of the Board.\16\ For these reasons,
the Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposal operative upon filing.\17\
---------------------------------------------------------------------------
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ See First Amended and Restated Bylaws of Long-Term Stock
Exchange, Inc., art. 3 Sec. 2 (Composition of the Board).
\17\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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-LTSE-2019-05 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-LTSE-2019-05. 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 the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. 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-LTSE-2019-05, and should be submitted on
or before January 24, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-28360 Filed 1-2-20; 8:45 am]
BILLING CODE 8011-01-P
