Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Add the Exchange's Supervision Rules to the List of Minor Rule Violations in Rule 10.9217, 19549-19551 [2020-07234]
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Federal Register / Vol. 85, No. 67 / Tuesday, April 7, 2020 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88541; File No. SR–
NYSENAT–2020–12]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Order Granting Accelerated Approval
of a Proposed Rule Change, as
Modified by Amendment No. 1, To Add
the Exchange’s Supervision Rules to
the List of Minor Rule Violations in
Rule 10.9217
April 1, 2020.
On March 18, 2020, NYSE National,
Inc. (‘‘NYSE National’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
add the Exchange’s supervision rules to
the list of minor rule violations in Rule
10.9217. On March 30, 2020, the
Exchange filed Amendment No. 1 to the
proposed rule change, which
superseded and replaced the proposed
rule change in its entirety, and is
described in Items I and II below, which
Items have been prepared by the selfregulatory organization.3 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as modified by Amendment No.
1, from interested persons, and is
approving the proposed rule change, as
modified by Amendment No. 1, on an
accelerated basis.
I. The Exchange’s Description of the
Proposed Rule Change, as Modified by
Amendment No. 1
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The Exchange proposes to add the
Exchange’s supervision rules to the list
of minor rule violations in Rule 10.9217.
This Amendment No. 1 to SR–
NYSENat–2020–12 replaces SR–
NYSENat–2020–12 as originally filed
and supersedes such filing in its
entirety. The proposed rule change is
available on the Exchange’s website at
www.nyse.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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1, the Exchange clarified the
relationship between its supervisory rules and those
of its affiliate.
2 17
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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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts 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 proposes to add the
Exchange’s supervision rules to the list
of minor rule violations in Rule 10.9217.
Rule 10.9217 sets forth the list of rules
under which an ETP Holder or
Associated Person may be subject to a
fine under a minor rule violation plan
as described in Rule 10.9216(b).
Proposed Rule Change
First, the Exchange proposes to add
the following new paragraph (d) to Rule
10.9217:
Nothing in this Rule shall require the
Exchange to impose a fine for a violation of
any rule under this Minor Rule Plan. If the
Exchange determines that any violation is not
minor in nature, the Exchange may, at its
discretion, proceed under the Rule 10.9000
Series rather than under this Rule.
The language is based on NYSE Arca,
Inc. (‘‘NYSE Arca’’) Rule 10.9217(d).
Existing paragraphs (d) through (f) of
Rule 9217 would become paragraphs (e),
(f) and (g).
Second, the Exchange proposes to add
Rules 11.3.2 (Violations Prohibited),
11.5.1 (Written Procedures) and 11.5.2
(Responsibility of ETP Holders) to the
list of rules in Rule 10.9217 eligible for
disposition pursuant to a fine under
Rule 10.9216(b). Rules 11.3.2, 11.5.1
and 11.5.2 are the Exchange’s
supervision rules for equities trading.
Rule 11.3.2 provides that no ETP
Holder shall engage in conduct in
violation of the Exchange Act, the rules
or regulations thereunder, the By-Laws,
or Exchange Rules, and that every ETP
Holder shall supervise persons
associated with the ETP Holder as to
assure compliance with those
requirements.
Rule 11.5.1 governs written
procedures and requires ETP Holders to
establish, maintain, and enforce written
procedures to supervise properly the
activities of its Associated Persons and
to assure their compliance with
applicable securities laws, rules,
regulations and statements of policy
promulgated thereunder, with the rules
PO 00000
Frm 00128
Fmt 4703
Sfmt 4703
19549
of the designated self-regulatory
organization, where appropriate, and
with Exchange rules.
Rule 11.5.2 provides that final
responsibility for proper supervision
rests with the ETP Holder, and that the
ETP Holder shall designate a partner,
officer or manager in each office of
supervisory jurisdiction, including the
main office, to carry out the written
supervisory procedures.
Rules 11.3.2, 11.5.1 and 11.5.2 are
substantially similar to certain
provisions of the New York Stock
Exchange LLC’s (‘‘NYSE’’) supervision
Rule 3110. Specifically, NYSE Rule
3110(a) requires, in part, that NYSE
member organizations establish and
maintain a system to supervise the
activities of each associated person that
is reasonably designed to achieve
compliance with applicable securities
laws and regulations, and with
applicable NYSE rules and that final
responsibility for proper supervision
rests with the member organization.
NYSE Rule 3110(b)(1) requires NYSE
member organizations to establish,
maintain, and enforce written
procedures to supervise the types of
business in which it engages and the
activities of its associated persons that
are reasonably designed to achieve
compliance with applicable securities
laws and regulations, and with
applicable NYSE rules. Both NYSE
Rules 3110(a) and (b)(1) are separately
eligible for a minor rule fine under the
NYSE’s version of Rule 9217.4
To effectuate this change, the
Exchange proposes to add ‘‘Failure to
comply with the supervision
requirements of Rules 11.3.2 and
11.5.1’’ and ‘‘Failure to comply with the
supervision requirements of Rules
11.3.2 and Rule 11.5.2’’ to the list of rule
violations in current subparagraph (e) of
Rule 9217 titled ‘‘Record Keeping and
Other Minor Rule Violations.’’ As noted
above, subparagraph (e) of Rule 9217
would become new subparagraph (f).
Similarly, the Exchange would add
two new entries to the Fine Schedule in
current Rule 9217(f)(2), which would
become subparagraph (g)(2). First, the
Exchange would add a new number 4 to
the chart in subparagraph (f)(2) titled
‘‘Failure to comply with the supervision
requirements as set forth in Rules 11.3.2
and 11.5.1’’ and corresponding
proposed fine levels of $2,000 for a first
level fine, $4,000 for a second level fine,
and $5,000 for a third level fine.
Second, the Exchange would add a new
number 5 to the chart in subparagraph
(f)(2) titled ‘‘Failure to comply with the
supervision requirements as set forth in
4 See
E:\FR\FM\07APN1.SGM
NYSE Rules 3110 (Supervision) & 9217.
07APN1
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Federal Register / Vol. 85, No. 67 / Tuesday, April 7, 2020 / Notices
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Rules 11.3.2 and 11.5.2’’ and
corresponding proposed fine levels of
$2,000 for a first level fine, $4,000 for
a second level fine, and $5,000 for a
third level fine.
The proposed fine levels are
consistent with current Exchange fine
levels and comparable to those in the
NYSE fine schedule.5
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the Act,6
in general, and furthers the objectives of
Section 6(b)(5),7 in particular, because it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, 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.
Minor rule fines provide a meaningful
sanction for minor or technical
violations of rules. The Exchange
believes that the proposed rule change
will strengthen the Exchange’s ability to
carry out its oversight and enforcement
responsibilities in cases where full
disciplinary proceedings are
unwarranted in view of the minor
nature of the particular violation.
Specifically, the proposed rule change is
designed to prevent fraudulent and
manipulative acts and practices because
it will provide the Exchange the ability
to issue a minor rule fine for violations
of its rules governing supervision
requirements in situations where either
a cautionary action letter or a more
formal disciplinary action may not be
warranted or appropriate.
In addition, the Exchange believes
that adding rules based on the rules of
its affiliate to the Exchange’s minor rule
plan would promote fairness and
consistency in the marketplace by
permitting the Exchange to issue a
minor rule fine for violations of
substantially similar rules that are
eligible for minor rule treatment on the
Exchange’s affiliate, thereby
harmonizing minor rule plan fines
across affiliated exchanges for the same
conduct. As noted above, Rules 11.3.2,
11.5.1 and 11.5.2 are substantially
similar to certain provisions of NYSE
Rule 3110. NYSE Rule 3110(a) and (b)(1)
5 See NYSE 9217. The Exchange notes that it must
provide the Commission prompt notice of any
violation with sanction over $2,500, in accordance
with Securities Exchange Act Rule 19d–1(c). See 17
CFR 240.19d–1(c).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
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are each separately eligible for a minor
rule fine under NYSE Rule 9217.8
The Exchange further believes that the
proposed amendments to Rule 10.9217
are consistent with Section 6(b)(6) of the
Act,9 which provides that members and
persons associated with members shall
be appropriately disciplined for
violation of the provisions of the rules
of the exchange, by expulsion,
suspension, limitation of activities,
functions, and operations, fine, censure,
being suspended or barred from being
associated with a member, or any other
fitting sanction. As noted, the proposed
rule change would provide the
Exchange ability to sanction minor or
technical violations pursuant to the
Exchange’s rules.
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 that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed change is not designed to
address any competitive issue but rather
to update the Exchange’s rules to
strengthen the Exchange’s ability to
carry out its oversight and enforcement
functions and deter potential violative
conduct.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Solicitation of Comments on the
Proposed Rule Change, as Modified by
Amendment No. 1
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as modified by Amendment No.
1, 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–
NYSENAT–2020–12 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
8 See
9 15
PO 00000
note 4, supra.
U.S.C. 78f(b)(6).
Frm 00129
Fmt 4703
Sfmt 4703
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSENAT–2020–12. 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–NYSENAT–2020–12 and
should be submitted on or before April
28, 2020.
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds that the
proposed rule change, as modified by
Amendment No. 1, is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange.10 In particular, the
Commission finds that the proposed
rule change, as modified by Amendment
No. 1, is consistent with Section 6(b)(5)
of the Act,11 which requires that the
rules of an exchange be designed to
promote just and equitable principles of
trade, to remove impediments and to
perfect the mechanism of a free and
10 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
11 15 U.S.C. 78f(b)(5).
E:\FR\FM\07APN1.SGM
07APN1
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Federal Register / Vol. 85, No. 67 / Tuesday, April 7, 2020 / Notices
open market and a national market
system, and, in general, to protect
investors and the public interest. The
Commission also believes that the
proposed rule change, as modified by
Amendment No. 1, is consistent with
Sections 6(b)(1) and 6(b)(6) of the Act 12
which require that the rules of an
exchange enforce compliance with, and
provide appropriate discipline for,
violations of Commission and Exchange
rules. Finally, the Commission finds
that the proposal, as modified by
Amendment 1, is consistent with the
public interest, the protection of
investors, or otherwise in furtherance of
the purposes of the Act, as required by
Rule 19d–1(c)(2) under the Act,13 which
governs minor rule violation plans.
As stated above, the Exchange
proposes to add the Exchange’s
supervision rules to the list of Minor
Rule violations. Similar supervision
rules are eligible for a minor rule fine
under an affiliated exchange. The
Commission believes that the proposed
rule, as modified by Amendment No. 1,
provides a reasonable means of
addressing violations that do not rise to
the level of requiring formal
disciplinary proceedings, while
providing greater flexibility in handling
certain violations. However, the
Commission expects, as suggested by
the Exchange’s proposed introduction to
its Rule 10.9217, that the Exchange will
continue to conduct surveillance with
due diligence and make determinations
based on its findings, on a case-by-case
basis, regarding whether a sanction
under the rule is appropriate, or
whether a violation requires formal
disciplinary action. The Commission
further notes that, as before, the
Exchange must give the Commission
prompt notice of any violation with
sanction over $2,500, in accordance
with Securities Exchange Act Rule 19d–
1(c).14 Accordingly, the Commission
believes the proposal, as modified by
Amendment No. 1 raises no novel or
significant issues.
For the same reasons discussed above,
the Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,15 for approving the proposed rule
change, as modified by Amendment No.
1, prior to the thirtieth day after the date
of publication of the notice of the filing
thereof in the Federal Register. The
proposal merely adds rules and
language already in use at affiliated
exchanges. Accordingly, the
Commission believes that a full notice12 15
U.S.C. 78f(b)(1) and 78f(b)(6).
13 17 CFR 240.19d–1(c)(2).
14 See 17 CFR 240.19d–1(c).
15 15 U.S.C. 78s(b)(2).
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18:22 Apr 06, 2020
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and-comment period is not necessary
before approving the proposal.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 16 and Rule
19d–1(c)(2) thereunder,17 that the
proposed rule change (SR–NYSENAT–
2020–12), as modified by Amendment
No. 1 be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–07234 Filed 4–6–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88537; File No. SR–ICC–
2020–003]
Self-Regulatory Organizations; ICE
Clear Credit LLC; Notice of Filing of
Proposed Rule Change Relating to the
Clearance of Additional Credit Default
Swap Contracts
April 1, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934,1 and
Rule 19b–4,2 notice is hereby given that
on March 26, 2020, ICE Clear Credit LLC
(‘‘ICC’’) filed with the Securities and
Exchange Commission (‘‘SEC’’ or the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared primarily by ICC. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The principal purpose of the
proposed rule change is to revise the
ICC Rulebook (the ‘‘Rules’’) to provide
for the clearance of an additional
Standard Emerging Market Sovereign
CDS contract (the ‘‘EM Contract’’) and
additional Standard Western European
Sovereign CDS contracts (collectively,
the ‘‘SWES Contracts’’).
16 15
U.S.C. 78s(b)(2).
CFR 240.19d–1(c)(2).
18 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
17 17
PO 00000
Frm 00130
Fmt 4703
Sfmt 4703
19551
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission, ICC
included statements concerning the
purpose of and basis for the proposed
rule change, security-based swap
submission, or advance notice and
discussed any comments it received on
the proposed rule change, securitybased swap submission, or advance
notice. The text of these statements may
be examined at the places specified in
Item IV below. ICC has prepared
summaries, set forth in sections (A), (B),
and (C) below, of the most significant
aspects of these statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
(a) Purpose
The purpose of the proposed rule
change is to adopt rules that will
provide the basis for ICC to clear
additional credit default swap contracts.
ICC proposes to make such changes
effective following Commission
approval of the proposed rule change.
ICC believes the addition of these
contracts will benefit the market for
credit default swaps by providing
market participants the benefits of
clearing, including reduction in
counterparty risk and safeguarding of
margin assets pursuant to clearing house
rules. Clearing of the additional EM
Contract and the additional SWES
Contracts (collectively, the ‘‘EM and
SWES Contracts’’) will not require any
changes to ICC’s Risk Management
Framework or other policies and
procedures constituting rules within the
meaning of the Securities Exchange Act
of 1934 (‘‘Act’’).
ICC proposes amending Subchapter
26D of its Rules to provide for the
clearance of the additional EM Contract,
namely the Republic of Croatia. This
additional EM Contract has terms
consistent with the other EM Contracts
approved for clearing at ICC and
governed by Subchapter 26D of the
Rules. Minor revisions to Subchapter
26D (Standard Emerging Market
Sovereign (‘‘SES’’) Single Name) are
made to provide for clearing the
additional EM Contract. Specifically, in
Rule 26D–102 (Definitions), ‘‘Eligible
SES Reference Entities’’ is modified to
include the Republic of Croatia in the
list of specific Eligible SES Reference
Entities to be cleared by ICC.
Additionally, ICC proposes amending
Subchapter 26I of its Rules to provide
for the clearance of the additional SWES
Contracts, namely the Republic of
Finland and the Hellenic Republic.
E:\FR\FM\07APN1.SGM
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]]>Agencies
[Federal Register Volume 85, Number 67 (Tuesday, April 7, 2020)]
[Notices]
[Pages 19549-19551]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07234]
[[Page 19549]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88541; File No. SR-NYSENAT-2020-12]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Order Granting Accelerated Approval of a Proposed Rule
Change, as Modified by Amendment No. 1, To Add the Exchange's
Supervision Rules to the List of Minor Rule Violations in Rule 10.9217
April 1, 2020.
On March 18, 2020, NYSE National, Inc. (``NYSE National'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to add the Exchange's supervision rules to the
list of minor rule violations in Rule 10.9217. On March 30, 2020, the
Exchange filed Amendment No. 1 to the proposed rule change, which
superseded and replaced the proposed rule change in its entirety, and
is described in Items I and II below, which Items have been prepared by
the self-regulatory organization.\3\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as modified by
Amendment No. 1, from interested persons, and is approving the proposed
rule change, as modified by Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange clarified the relationship
between its supervisory rules and those of its affiliate.
---------------------------------------------------------------------------
I. The Exchange's Description of the Proposed Rule Change, as Modified
by Amendment No. 1
The Exchange proposes to add the Exchange's supervision rules to
the list of minor rule violations in Rule 10.9217. This Amendment No. 1
to SR-NYSENat-2020-12 replaces SR-NYSENat-2020-12 as originally filed
and supersedes such filing in its entirety. The proposed rule change is
available on the Exchange's website at www.nyse.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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts 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 proposes to add the Exchange's supervision rules to
the list of minor rule violations in Rule 10.9217. Rule 10.9217 sets
forth the list of rules under which an ETP Holder or Associated Person
may be subject to a fine under a minor rule violation plan as described
in Rule 10.9216(b).
Proposed Rule Change
First, the Exchange proposes to add the following new paragraph (d)
to Rule 10.9217:
Nothing in this Rule shall require the Exchange to impose a fine
for a violation of any rule under this Minor Rule Plan. If the
Exchange determines that any violation is not minor in nature, the
Exchange may, at its discretion, proceed under the Rule 10.9000
Series rather than under this Rule.
The language is based on NYSE Arca, Inc. (``NYSE Arca'') Rule
10.9217(d). Existing paragraphs (d) through (f) of Rule 9217 would
become paragraphs (e), (f) and (g).
Second, the Exchange proposes to add Rules 11.3.2 (Violations
Prohibited), 11.5.1 (Written Procedures) and 11.5.2 (Responsibility of
ETP Holders) to the list of rules in Rule 10.9217 eligible for
disposition pursuant to a fine under Rule 10.9216(b). Rules 11.3.2,
11.5.1 and 11.5.2 are the Exchange's supervision rules for equities
trading.
Rule 11.3.2 provides that no ETP Holder shall engage in conduct in
violation of the Exchange Act, the rules or regulations thereunder, the
By-Laws, or Exchange Rules, and that every ETP Holder shall supervise
persons associated with the ETP Holder as to assure compliance with
those requirements.
Rule 11.5.1 governs written procedures and requires ETP Holders to
establish, maintain, and enforce written procedures to supervise
properly the activities of its Associated Persons and to assure their
compliance with applicable securities laws, rules, regulations and
statements of policy promulgated thereunder, with the rules of the
designated self-regulatory organization, where appropriate, and with
Exchange rules.
Rule 11.5.2 provides that final responsibility for proper
supervision rests with the ETP Holder, and that the ETP Holder shall
designate a partner, officer or manager in each office of supervisory
jurisdiction, including the main office, to carry out the written
supervisory procedures.
Rules 11.3.2, 11.5.1 and 11.5.2 are substantially similar to
certain provisions of the New York Stock Exchange LLC's (``NYSE'')
supervision Rule 3110. Specifically, NYSE Rule 3110(a) requires, in
part, that NYSE member organizations establish and maintain a system to
supervise the activities of each associated person that is reasonably
designed to achieve compliance with applicable securities laws and
regulations, and with applicable NYSE rules and that final
responsibility for proper supervision rests with the member
organization. NYSE Rule 3110(b)(1) requires NYSE member organizations
to establish, maintain, and enforce written procedures to supervise the
types of business in which it engages and the activities of its
associated persons that are reasonably designed to achieve compliance
with applicable securities laws and regulations, and with applicable
NYSE rules. Both NYSE Rules 3110(a) and (b)(1) are separately eligible
for a minor rule fine under the NYSE's version of Rule 9217.\4\
---------------------------------------------------------------------------
\4\ See NYSE Rules 3110 (Supervision) & 9217.
---------------------------------------------------------------------------
To effectuate this change, the Exchange proposes to add ``Failure
to comply with the supervision requirements of Rules 11.3.2 and
11.5.1'' and ``Failure to comply with the supervision requirements of
Rules 11.3.2 and Rule 11.5.2'' to the list of rule violations in
current subparagraph (e) of Rule 9217 titled ``Record Keeping and Other
Minor Rule Violations.'' As noted above, subparagraph (e) of Rule 9217
would become new subparagraph (f).
Similarly, the Exchange would add two new entries to the Fine
Schedule in current Rule 9217(f)(2), which would become subparagraph
(g)(2). First, the Exchange would add a new number 4 to the chart in
subparagraph (f)(2) titled ``Failure to comply with the supervision
requirements as set forth in Rules 11.3.2 and 11.5.1'' and
corresponding proposed fine levels of $2,000 for a first level fine,
$4,000 for a second level fine, and $5,000 for a third level fine.
Second, the Exchange would add a new number 5 to the chart in
subparagraph (f)(2) titled ``Failure to comply with the supervision
requirements as set forth in
[[Page 19550]]
Rules 11.3.2 and 11.5.2'' and corresponding proposed fine levels of
$2,000 for a first level fine, $4,000 for a second level fine, and
$5,000 for a third level fine.
The proposed fine levels are consistent with current Exchange fine
levels and comparable to those in the NYSE fine schedule.\5\
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\5\ See NYSE 9217. The Exchange notes that it must provide the
Commission prompt notice of any violation with sanction over $2,500,
in accordance with Securities Exchange Act Rule 19d-1(c). See 17 CFR
240.19d-1(c).
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\6\ in general, and furthers the objectives of Section 6(b)(5),\7\
in particular, because it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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Minor rule fines provide a meaningful sanction for minor or
technical violations of rules. The Exchange believes that the proposed
rule change will strengthen the Exchange's ability to carry out its
oversight and enforcement responsibilities in cases where full
disciplinary proceedings are unwarranted in view of the minor nature of
the particular violation. Specifically, the proposed rule change is
designed to prevent fraudulent and manipulative acts and practices
because it will provide the Exchange the ability to issue a minor rule
fine for violations of its rules governing supervision requirements in
situations where either a cautionary action letter or a more formal
disciplinary action may not be warranted or appropriate.
In addition, the Exchange believes that adding rules based on the
rules of its affiliate to the Exchange's minor rule plan would promote
fairness and consistency in the marketplace by permitting the Exchange
to issue a minor rule fine for violations of substantially similar
rules that are eligible for minor rule treatment on the Exchange's
affiliate, thereby harmonizing minor rule plan fines across affiliated
exchanges for the same conduct. As noted above, Rules 11.3.2, 11.5.1
and 11.5.2 are substantially similar to certain provisions of NYSE Rule
3110. NYSE Rule 3110(a) and (b)(1) are each separately eligible for a
minor rule fine under NYSE Rule 9217.\8\
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\8\ See note 4, supra.
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The Exchange further believes that the proposed amendments to Rule
10.9217 are consistent with Section 6(b)(6) of the Act,\9\ which
provides that members and persons associated with members shall be
appropriately disciplined for violation of the provisions of the rules
of the exchange, by expulsion, suspension, limitation of activities,
functions, and operations, fine, censure, being suspended or barred
from being associated with a member, or any other fitting sanction. As
noted, the proposed rule change would provide the Exchange ability to
sanction minor or technical violations pursuant to the Exchange's
rules.
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\9\ 15 U.S.C. 78f(b)(6).
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed change is not
designed to address any competitive issue but rather to update the
Exchange's rules to strengthen the Exchange's ability to carry out its
oversight and enforcement functions and deter potential violative
conduct.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Solicitation of Comments on the Proposed Rule Change, as Modified
by Amendment No. 1
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as modified by Amendment No. 1, 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-NYSENAT-2020-12 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-NYSENAT-2020-12. 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-NYSENAT-2020-12 and should be submitted
on or before April 28, 2020.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change, as Modified by Amendment No. 1
The Commission finds that the proposed rule change, as modified by
Amendment No. 1, is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\10\ In particular, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act,\11\ which requires that the rules of an exchange be
designed to promote just and equitable principles of trade, to remove
impediments and to perfect the mechanism of a free and
[[Page 19551]]
open market and a national market system, and, in general, to protect
investors and the public interest. The Commission also believes that
the proposed rule change, as modified by Amendment No. 1, is consistent
with Sections 6(b)(1) and 6(b)(6) of the Act \12\ which require that
the rules of an exchange enforce compliance with, and provide
appropriate discipline for, violations of Commission and Exchange
rules. Finally, the Commission finds that the proposal, as modified by
Amendment 1, is consistent with the public interest, the protection of
investors, or otherwise in furtherance of the purposes of the Act, as
required by Rule 19d-1(c)(2) under the Act,\13\ which governs minor
rule violation plans.
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\10\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\11\ 15 U.S.C. 78f(b)(5).
\12\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\13\ 17 CFR 240.19d-1(c)(2).
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As stated above, the Exchange proposes to add the Exchange's
supervision rules to the list of Minor Rule violations. Similar
supervision rules are eligible for a minor rule fine under an
affiliated exchange. The Commission believes that the proposed rule, as
modified by Amendment No. 1, provides a reasonable means of addressing
violations that do not rise to the level of requiring formal
disciplinary proceedings, while providing greater flexibility in
handling certain violations. However, the Commission expects, as
suggested by the Exchange's proposed introduction to its Rule 10.9217,
that the Exchange will continue to conduct surveillance with due
diligence and make determinations based on its findings, on a case-by-
case basis, regarding whether a sanction under the rule is appropriate,
or whether a violation requires formal disciplinary action. The
Commission further notes that, as before, the Exchange must give the
Commission prompt notice of any violation with sanction over $2,500, in
accordance with Securities Exchange Act Rule 19d-1(c).\14\ Accordingly,
the Commission believes the proposal, as modified by Amendment No. 1
raises no novel or significant issues.
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\14\ See 17 CFR 240.19d-1(c).
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For the same reasons discussed above, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Act,\15\ for approving the
proposed rule change, as modified by Amendment No. 1, prior to the
thirtieth day after the date of publication of the notice of the filing
thereof in the Federal Register. The proposal merely adds rules and
language already in use at affiliated exchanges. Accordingly, the
Commission believes that a full notice-and-comment period is not
necessary before approving the proposal.
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\15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\16\ and Rule 19d-1(c)(2) thereunder,\17\ that the proposed rule change
(SR-NYSENAT-2020-12), as modified by Amendment No. 1 be, and hereby is,
approved on an accelerated basis.
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\16\ 15 U.S.C. 78s(b)(2).
\17\ 17 CFR 240.19d-1(c)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07234 Filed 4-6-20; 8:45 am]
BILLING CODE 8011-01-P
