Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend Certain Rules Within Rules 4.5 Through 4.16, Which Contains the Exchange's Compliance Rule (“Compliance Rule”) Regarding the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”), To Be Consistent With Certain Proposed Amendments to and Exemptions From the CAT NMS Plan as Well as To Facilitate the Retirement of Certain Existing Regulatory Systems, 26741-26743 [2020-09523]
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Federal Register / Vol. 85, No. 87 / Tuesday, May 5, 2020 / Notices
Commission’s headquarters, 100 F St.
NE, Washington, DC 20549. Members of
the public may watch the webcast of the
meeting on the Commission’s website at
www.sec.gov.
STATUS: This Sunshine Act notice is
being issued because a majority of the
Commission may attend the meeting.
MATTERS TO BE CONSIDERED: The agenda
for the meeting includes welcome
remarks, approval of previous meeting
minutes, discussion of subcommittee
recommendations, panel discussion
regarding index funds, a non-public
administrative session, panel discussion
regarding credit rating agencies, and
subcommittee reports.
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 from the Office
of the Secretary at (202) 551–5400.
Dated: May 1, 2020.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2020–09710 Filed 5–1–20; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88771; File No. SR–
CboeBZX–2020–011]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change To Amend Certain Rules
Within Rules 4.5 Through 4.16, Which
Contains the Exchange’s Compliance
Rule (‘‘Compliance Rule’’) Regarding
the National Market System Plan
Governing the Consolidated Audit Trail
(the ‘‘CAT NMS Plan’’ or ‘‘Plan’’), To Be
Consistent With Certain Proposed
Amendments to and Exemptions From
the CAT NMS Plan as Well as To
Facilitate the Retirement of Certain
Existing Regulatory Systems
khammond on DSKJM1Z7X2PROD with NOTICES
April 29, 2020.
I. Introduction
On January 22, 2020, Cboe BZX
Exchange, Inc. (‘‘Cboe BZX’’ or
‘‘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
amend the Exchange’s compliance rules
regarding the National Market System
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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19:16 May 04, 2020
Jkt 250001
26741
Plan Governing the Consolidated Audit
Trail (‘‘CAT NMS Plan’’).3 The proposed
rule change was published for comment
in the Federal Register on February 5,
2020.4 On March 20, 2020, the
Commission extended the time period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to approve or
disapprove the proposed rule change, to
May 5, 2020.5 The Commission received
no comments on the proposal. This
order institutes proceedings pursuant to
Exchange Act Section 19(b)(2)(B) to
determine whether to approve or
disapprove File No. SR–CboeBZX–
2020–011.6
Plan filed with the Commission; 10 (2)
amend the dates for required testing and
reporting in the Compliance Rule for
Industry Member reporting; 11 (3) amend
the rules to require Industry Members to
submit trade reports for executions and
cancellations for cancelled trades to the
FINRA’s Trade Reporting Facilities,
FINRA’s OTC Reporting Facility or
FINRA’s Alternative Display Facility; 12
(4) revise the timestamp granularity
requirement to require Industry
Members with order handling or
execution systems that utilize time
stamps in increments finer than
milliseconds to report timestamps up to
nanoseconds when reporting Industry
Member data 13 to the Central
II. Description of the Proposed Rule
Change
10 See Notice, supra note 4, at 6590. See also
Letter to Vanessa Countryman, Secretary, SEC, from
Michael Simon, CAT NMS Plan Operating
Committee Chair re: Notice of Filing of Amendment
to the National Market System Plan Governing the
Consolidated Audit Trail (April 14, 2020). The
Commission has not approved or disapproved the
changes proposed in this amendment.
11 See Notice, supra note 4, at 6593–98. On
February 19, 2020, the Participants submitted a
request for exemptive relief from the reporting dates
required by the CAT NMS Plan. See Letter to
Vanessa Countryman, Secretary, SEC, from Michael
Simon, CAT NMS Plan Operating Committee Chair,
re: Request for Exemption from Provisions of the
National Market System Plan Governing the
Consolidated Audit Trail related to Industry
Member Reporting Dates (Feb. 19, 2020). On April
20, 2020, the Commission granted limited
exemptive relief to allow for the implementation of
phased reporting for Industry Members. See
Securities Exchange Act Release No. 88702 (April
20, 2020), 85 FR 23075 (April 24, 2020).
12 See Notice, supra note 4, at 6598. On February
12, 2020, the Participants submitted a request for
exemptive relief from the requirement in Sections
6.4(d)(ii)(A)(2) and (B) of the CAT NMS Plan to
require Industry Members to record and report, if
an order is executed, the SRO-Assigned Market
Participant Identifier of the clearing broker, and if
a trade is cancelled, the cancelled trade indicator.
See Letter to Vanessa Countryman, Secretary, SEC,
from Michael Simon, CAT NMS Plan Operating
Committee Chair, re: Request for Exemption from
Certain Provisions of the National Market System
Plan Governing the Consolidated Audit Trail
related to FINRA Facility Data Linkage (Feb. 12,
2020). If granted, the exemptive relief would revise
CAT reporting requirements regarding cancelled
trades and SRO-Assigned Market Participant
Identifiers of clearing brokers, if applicable, in
connection with order executions, as such
information would be available from FINRA’s trade
reports submitted to CAT.
13 See Notice, supra note 4, at 6598. On February
3, 2020, the Participants filed a request for
exemptive relief from the current CAT NMS Plan
requirement to record and report Industry Member
Data with time stamps consistent with their system,
a requirement from which the Exchange requests an
exemption. See Letter to Vanessa Countryman,
Secretary, SEC, from Michael Simon, CAT NMS
Plan Operating Committee Chair, re: Request for
Exemption from Certain Provisions of the National
Market System Plan Governing the Consolidated
Audit Trail related to Granularity of Timestamps
and Relationship Identifiers (Feb. 3, 2020). On April
8, 2020, the Commission granted the exemptive
relief for timestamp granularity. See Securities
Exchange Act Release No. 88608 (April 8, 2020), 85
FR 20743 (April 14, 2020).
The Exchange proposes to amend
certain rules within Rules 4.5 through
4.16 of the Exchange’s rulebook
(‘‘Compliance Rule’’), which sets forth
rules regarding Industry Member 7
compliance with the CAT NMS Plan.
Specifically, the proposed rule change
would make the following changes to
the Compliance Rule to be consistent
with certain proposed amendments to
and exemption requests submitted by
the Participants 8 of the CAT NMS Plan:
(1) Revise data reporting requirements
for the Firm Designated ID 9 based on a
proposed amendment to the CAT NMS
3 The CAT NMS Plan was approved by the
Commission, as modified, on November 15, 2016.
See Securities Exchange Act Release No. 79318
(November 15, 2016), 81 FR 84696 (November 23,
2016).
4 See Securities Exchange Act Release No. 88101
(January 30, 2020), 85 FR 6589 (‘‘Notice’’).
5 See Securities Exchange Act Release No. 88440,
85 FR 17141 (March 26, 2020).
6 15 U.S.C. 78(s)(b)(2)(B).
7 Industry Member means a member of a national
securities exchange or a member of a national
securities association. See CAT NMS Plan, supra
note 3, at Section 1.1.
8 The Participants include BOX Exchange LLC,
Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc.,
Cboe C2 Exchange, Inc., Cboe EDGA Exchange, Inc.,
Cboe EDGX Exchange, Inc., Cboe Exchange, Inc.,
Financial Industry Regulatory Authority, Inc.,
Investors’ Exchange LLC, Long-Term Stock
Exchange, Inc., Miami International Securities
Exchange LLC, MIAX Emerald, LLC, MIAX PEARL,
LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq
ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC,
The Nasdaq Stock Market LLC, New York Stock
Exchange LLC, NYSE American LLC, NYSE Arca,
Inc., NYSE Chicago, Inc., and NYSE National, Inc.
9 As proposed, ‘‘Firm Designated ID’’ would mean
a unique and persistent identifier for each trading
account designated by Industry Members for
purposes of providing data to the Central
Repository, where each such identifier is unique
among all identifiers from any given Industry
Member; provided, however, such identifier may
not be the account number for such trading account
if the trading account is not a proprietary account.
See proposed Exchange Rule 4.5(r).
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26742
Federal Register / Vol. 85, No. 87 / Tuesday, May 5, 2020 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES
Repository; 14 (5) revise the reporting
requirements for circumstances in
which an Industry Member uses an
established trading relationship for an
individual Customer, instead of an
account, on the order reported to
CAT; 15 and (6) revise the CAT reporting
requirements so Industry Members
would not be required to report to the
Central Repository dates of birth, social
security numbers, or account numbers
for individuals.16
The Exchange also proposes to amend
the Exchange’s Compliance Rule to
facilitate the retirement of certain
existing regulatory systems, specifically
the Financial Industry Regulatory
Authority, Inc.’s (‘‘FINRA’’) Order Audit
Trail System, by adding additional data
elements to the CAT reporting
requirements for Industry Members,17
additional reporting requirements for
alternative trading systems,18 and
additional data elements related to OTC
Equity Securities 19 that FINRA
14 The Central Repository, as defined in the CAT
NMS Plan, means ‘‘the repository responsible for
the receipt, consolidation, and retention of all
information reported to the CAT pursuant to SEC
Rule 613 and this Agreement.’’ See CAT NMS Plan,
supra note 3, at Section 1.1.
15 See Notice, supra note 4, at 6598–99. On
February 3, 2020, the Participants filed a request for
exemptive relief from the CAT NMS Plan
requirement that Participants, through their
Compliance Rules, require Industry Members to
record and report to the Central Repository the
account number, the date account opened, and the
account type for individual customers in
circumstances in which an Industry Member uses
an established trading relationship for the
individual customer. Instead, the Participant would
require Industry Members to record and report to
the Central Repository for the original receipt or
origination of an order: (i) The relationship
identifier instead of the account number, (ii) the
‘‘account type’’ as a ‘‘relationship’’, and (3) the
account effective date instead of the ‘‘date account
opened.’’ See Letter to Vanessa Countryman,
Secretary, SEC, from Michael Simon, CAT NMS
Plan Operating Committee Chair, re: Request for
Exemption from Certain Provisions of the National
Market System Plan Governing the Consolidated
Audit Trail related to Granularity of Timestamps
and Relationship Identifiers (Feb. 3, 2020).
16 See Notice, supra note 4, at 6599. The
Participants requested and have received exemptive
relief from the requirement of Section 6.4(d)(ii)(C)
of the CAT NMS Plan for the Participants, in their
Compliance Rules, to require their members to
provide dates of birth, account numbers and social
security numbers for individuals to the CAT. See
Securities Exchange Act Release No. 88393 (March
17, 2020), 85 FR 16152 (March 20, 2020). See also
Letter to Vanessa Countryman, Secretary, SEC, from
Michael Simon, CAT NMS Plan Operating
Committee Chair, re: Request for Exemptive Relief
from Certain Provisions of the CAT NMS Plan
related to Social Security Numbers, Dates of Birth
and Account Numbers (Jan. 29, 2020).
17 See Notice, supra note 4, at 6590–91.
18 See Notice, supra note 4, at 6591–93.
19 OTC Equity Security, as defined in the CAT
NMS Plan, means any equity security, other than
an NMS Security, subject to prompt last sale
reporting rules of a registered national securities
association and reported to one of such
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19:16 May 04, 2020
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currently receives from alternative
trading systems that trade OTC Equity
Securities.20
III. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Rule Change
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 21 to determine
whether the 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,22 the Commission is providing
notice of the grounds for possible
disapproval under consideration. The
Commission is instituting proceedings
to allow for additional analysis of the
proposed rule change’s consistency with
Section 6(b)(5) of the Act,23 which
requires, among other things, that the
rules of a national securities exchange
be ‘‘designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade,’’ and ‘‘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.’’ 24
The Commission believes that several of
the proposed rule changes are not
consistent with the CAT NMS Plan or
exemptive relief that has been granted
as of the date of this Order.
IV. Commission’s Solicitation of
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) 25 or any other provision of the
Act, or the rules and regulations
thereunder. Although there do not
association’s equity trade reporting facilities. See
CAT NMS Plan, supra note 3, at Section 1.1.
20 Id. at 6593.
21 15 U.S.C. 78s(b)(2)(B).
22 15 U.S.C. 78s(b)(2)(B).
23 15 U.S.C. 78f(b)(5).
24 15 U.S.C. 78f(b)(5).
25 15 U.S.C. 78f(b)(5).
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Fmt 4703
Sfmt 4703
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4 under the Act,26 any request
for an opportunity to make an oral
presentation.27
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by May 26, 2020. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by June 9, 2020. 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 Numbers
SR–CboeBZX–2020–011 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–CboeBZX–2020–011. 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
26 17
CFR 240.19b–4.
19(b)(2) of the Exchange Act, as
amended by the Securities Act Amendments of
1975, Public Law 94–29 (June 4, 1975), 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 a selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
27 Section
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Federal Register / Vol. 85, No. 87 / Tuesday, May 5, 2020 / Notices
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–2020–011 and
should be submitted on or before May
26, 2020. Rebuttal comments should be
submitted by June 9, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–09523 Filed 5–4–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–88767; File No. SR–MIAX–
2020–08]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To List and Trade Options
That Overlie Five Advanced
Fundamentals LLC Commercial Real
Estate Indexes
April 29, 2020.
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 April 17,
2020, Miami International Securities
Exchange, LLC (‘‘MIAX’’ or the
‘‘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.
khammond on DSKJM1Z7X2PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
list and trade options that overlie five
Advanced Fundamentals LLC
(‘‘Advanced Fundamentals’’)
28 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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19:16 May 04, 2020
Jkt 250001
Commercial Real Estate Indexes (the
‘‘AF CRE Indexes’’).
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/ at MIAX’s principal office, 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
Exchange 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
Exchange 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
The purpose of this proposed rule
change is to amend certain of the
Exchange’s rules in connection with the
Exchange’s plan to list and trade options
on five AF CRE Indexes 3—the AF CRE
Residential Index, AF CRE Retail Index,
AF CRE Office Index, AF CRE
Hospitality Index 4 and AF CRE
Composite Index. The AF CRE Indexes
measure real-time real estate returns
representing the performance of real
estate investment trusts (‘‘REITs’’) and/
or publicly listed equity companies
across various sectors. The AF CRE
Sector Indexes measure real-time real
estate returns representing the
performance of REITs and/or publicly
listed equity companies within one of
the following sectors:
Sector
Residential
Retail ........
Office ........
Hospitality
Symbol 5
Number of
components 6
MXAFR
MXAFT
MXAFO
MXAFH
15
15
14
14
Each constituent of an AF CRE Index
is a REIT or equity company listed on
3 On April 16, 2020, the Exchange filed a Form
19b–4(e) with the Commission pursuant to Rule
19b–4(e) of the Act for the AF CRE Indexes.
4 The AF CRE Residential Index, AF CRE Retail
Index, AF CRE Office Index and AF CRE Hospitality
Index are collectively referred to herein as the ‘‘AF
CRE Sector Indexes.’’
5 These symbols represent each AF CRE Index.
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Fmt 4703
Sfmt 4703
26743
a U.S. securities exchange. The
individual components of each AF CRE
Sector Index are determined from the
REITs/equity companies that have the
largest enterprise value (‘‘Enterprise
Value’’) 7 within each individual sector
and that also meet certain minimum
eligibility requirements.8 The
components of the AF CRE Sector
Indexes are each an NMS stock as
defined in Rule 600 of Regulation NMS
(‘‘Reg NMS’’) under the Act. The AF
CRE Composite Index measures the
weighted average returns of the four AF
CRE Sector Indexes and consists of up
to 60 publicly traded REITs and/or
equity companies, which comprise the
four underlying sector returns that are
listed on a U.S. securities exchange.9
Refinitiv monitors and maintains each
AF CRE Index and rebalances each AF
CRE Index quarterly.
Initial and Maintenance Listing Criteria
The AF CRE Composite Index meets
the definition of a broad-based index as
set forth in Exchange Rule 1802(d) (an
index designed to be representative of a
stock market as a whole or of a range of
companies in unrelated industries).
Additionally, the AF CRE Composite
Index option satisfies the initial listing
criteria of a broad-based index, as set
forth in Exchange Rule 1802(d):
(1) Options will be A.M.-settled index
options;
(2) the index is capitalizationweighted, price-weighted, equal dollarweighted, or modified capitalizationweighted, and consists of 50 or more
component securities (the AF CRE
Composite Index is modified
capitalization-weighted);
(3) the component securities that
account for at least ninety-five percent
6 If less than 15 components are eligible, the AF
CRE Sector Indexes are calculated using less than
15 components, but no fewer than 10 components.
7 The term ‘‘Enterprise Value’’ refers to the
measure of a company’s total value, calculated by
adding the company’s market capitalization, total
liabilities and preferred equity, then subtracting all
cash and cash equivalents. See https://
www.investopedia.com/terms/e/
enterprisevalue.asp.
8 Refinitiv is the reporting authority for each of
the AF CRE Indexes. See proposed Exchange Rule
1801, Interpretation and Policy .01. Thomson
Reuters’ Financial & Risk (‘‘F&R’’) business unit was
rebranded under the name ‘‘Refinitiv’’ in 2018
when Thomson Reuters sold a majority stake in its
F&R business unit to private equity firm Blackstone
Group LP. Refinitiv provides financial markets data
and infrastructure in over 150 countries. Part of
Refinitiv’s services include, but are not limited to,
the calculation of various indexes. See Thomson
Reuters Financial & Risk Business Announces New
Company Name: Refinitiv (July 27, 2018), available
at https://www.thomsonreuters.com/en/pressreleases/2018/july/thomson-reuters-financial-andrisk-business-announces-new-company-namerefinitiv.html.
9 The symbol for the AF CRE Composite Index is
‘‘MXAFC.’’
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Agencies
[Federal Register Volume 85, Number 87 (Tuesday, May 5, 2020)]
[Notices]
[Pages 26741-26743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09523]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88771; File No. SR-CboeBZX-2020-011]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To Amend Certain Rules Within Rules 4.5 Through
4.16, Which Contains the Exchange's Compliance Rule (``Compliance
Rule'') Regarding the National Market System Plan Governing the
Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan''), To Be
Consistent With Certain Proposed Amendments to and Exemptions From the
CAT NMS Plan as Well as To Facilitate the Retirement of Certain
Existing Regulatory Systems
April 29, 2020.
I. Introduction
On January 22, 2020, Cboe BZX Exchange, Inc. (``Cboe BZX'' or
``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 amend the Exchange's compliance rules regarding
the National Market System Plan Governing the Consolidated Audit Trail
(``CAT NMS Plan'').\3\ The proposed rule change was published for
comment in the Federal Register on February 5, 2020.\4\ On March 20,
2020, the Commission extended the time period within which to approve
the proposed rule change, disapprove the proposed rule change, or
institute proceedings to determine whether to approve or disapprove the
proposed rule change, to May 5, 2020.\5\ The Commission received no
comments on the proposal. This order institutes proceedings pursuant to
Exchange Act Section 19(b)(2)(B) to determine whether to approve or
disapprove File No. SR-CboeBZX-2020-011.\6\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The CAT NMS Plan was approved by the Commission, as
modified, on November 15, 2016. See Securities Exchange Act Release
No. 79318 (November 15, 2016), 81 FR 84696 (November 23, 2016).
\4\ See Securities Exchange Act Release No. 88101 (January 30,
2020), 85 FR 6589 (``Notice'').
\5\ See Securities Exchange Act Release No. 88440, 85 FR 17141
(March 26, 2020).
\6\ 15 U.S.C. 78(s)(b)(2)(B).
---------------------------------------------------------------------------
II. Description of the Proposed Rule Change
The Exchange proposes to amend certain rules within Rules 4.5
through 4.16 of the Exchange's rulebook (``Compliance Rule''), which
sets forth rules regarding Industry Member \7\ compliance with the CAT
NMS Plan. Specifically, the proposed rule change would make the
following changes to the Compliance Rule to be consistent with certain
proposed amendments to and exemption requests submitted by the
Participants \8\ of the CAT NMS Plan: (1) Revise data reporting
requirements for the Firm Designated ID \9\ based on a proposed
amendment to the CAT NMS Plan filed with the Commission; \10\ (2) amend
the dates for required testing and reporting in the Compliance Rule for
Industry Member reporting; \11\ (3) amend the rules to require Industry
Members to submit trade reports for executions and cancellations for
cancelled trades to the FINRA's Trade Reporting Facilities, FINRA's OTC
Reporting Facility or FINRA's Alternative Display Facility; \12\ (4)
revise the timestamp granularity requirement to require Industry
Members with order handling or execution systems that utilize time
stamps in increments finer than milliseconds to report timestamps up to
nanoseconds when reporting Industry Member data \13\ to the Central
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Repository; \14\ (5) revise the reporting requirements for
circumstances in which an Industry Member uses an established trading
relationship for an individual Customer, instead of an account, on the
order reported to CAT; \15\ and (6) revise the CAT reporting
requirements so Industry Members would not be required to report to the
Central Repository dates of birth, social security numbers, or account
numbers for individuals.\16\
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\7\ Industry Member means a member of a national securities
exchange or a member of a national securities association. See CAT
NMS Plan, supra note 3, at Section 1.1.
\8\ The Participants include BOX Exchange LLC, Cboe BYX
Exchange, Inc., Cboe BZX Exchange, Inc., Cboe C2 Exchange, Inc.,
Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange,
Inc., Financial Industry Regulatory Authority, Inc., Investors'
Exchange LLC, Long-Term Stock Exchange, Inc., Miami International
Securities Exchange LLC, MIAX Emerald, LLC, MIAX PEARL, LLC, Nasdaq
BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq
PHLX LLC, The Nasdaq Stock Market LLC, New York Stock Exchange LLC,
NYSE American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE
National, Inc.
\9\ As proposed, ``Firm Designated ID'' would mean a unique and
persistent identifier for each trading account designated by
Industry Members for purposes of providing data to the Central
Repository, where each such identifier is unique among all
identifiers from any given Industry Member; provided, however, such
identifier may not be the account number for such trading account if
the trading account is not a proprietary account. See proposed
Exchange Rule 4.5(r).
\10\ See Notice, supra note 4, at 6590. See also Letter to
Vanessa Countryman, Secretary, SEC, from Michael Simon, CAT NMS Plan
Operating Committee Chair re: Notice of Filing of Amendment to the
National Market System Plan Governing the Consolidated Audit Trail
(April 14, 2020). The Commission has not approved or disapproved the
changes proposed in this amendment.
\11\ See Notice, supra note 4, at 6593-98. On February 19, 2020,
the Participants submitted a request for exemptive relief from the
reporting dates required by the CAT NMS Plan. See Letter to Vanessa
Countryman, Secretary, SEC, from Michael Simon, CAT NMS Plan
Operating Committee Chair, re: Request for Exemption from Provisions
of the National Market System Plan Governing the Consolidated Audit
Trail related to Industry Member Reporting Dates (Feb. 19, 2020). On
April 20, 2020, the Commission granted limited exemptive relief to
allow for the implementation of phased reporting for Industry
Members. See Securities Exchange Act Release No. 88702 (April 20,
2020), 85 FR 23075 (April 24, 2020).
\12\ See Notice, supra note 4, at 6598. On February 12, 2020,
the Participants submitted a request for exemptive relief from the
requirement in Sections 6.4(d)(ii)(A)(2) and (B) of the CAT NMS Plan
to require Industry Members to record and report, if an order is
executed, the SRO-Assigned Market Participant Identifier of the
clearing broker, and if a trade is cancelled, the cancelled trade
indicator. See Letter to Vanessa Countryman, Secretary, SEC, from
Michael Simon, CAT NMS Plan Operating Committee Chair, re: Request
for Exemption from Certain Provisions of the National Market System
Plan Governing the Consolidated Audit Trail related to FINRA
Facility Data Linkage (Feb. 12, 2020). If granted, the exemptive
relief would revise CAT reporting requirements regarding cancelled
trades and SRO-Assigned Market Participant Identifiers of clearing
brokers, if applicable, in connection with order executions, as such
information would be available from FINRA's trade reports submitted
to CAT.
\13\ See Notice, supra note 4, at 6598. On February 3, 2020, the
Participants filed a request for exemptive relief from the current
CAT NMS Plan requirement to record and report Industry Member Data
with time stamps consistent with their system, a requirement from
which the Exchange requests an exemption. See Letter to Vanessa
Countryman, Secretary, SEC, from Michael Simon, CAT NMS Plan
Operating Committee Chair, re: Request for Exemption from Certain
Provisions of the National Market System Plan Governing the
Consolidated Audit Trail related to Granularity of Timestamps and
Relationship Identifiers (Feb. 3, 2020). On April 8, 2020, the
Commission granted the exemptive relief for timestamp granularity.
See Securities Exchange Act Release No. 88608 (April 8, 2020), 85 FR
20743 (April 14, 2020).
\14\ The Central Repository, as defined in the CAT NMS Plan,
means ``the repository responsible for the receipt, consolidation,
and retention of all information reported to the CAT pursuant to SEC
Rule 613 and this Agreement.'' See CAT NMS Plan, supra note 3, at
Section 1.1.
\15\ See Notice, supra note 4, at 6598-99. On February 3, 2020,
the Participants filed a request for exemptive relief from the CAT
NMS Plan requirement that Participants, through their Compliance
Rules, require Industry Members to record and report to the Central
Repository the account number, the date account opened, and the
account type for individual customers in circumstances in which an
Industry Member uses an established trading relationship for the
individual customer. Instead, the Participant would require Industry
Members to record and report to the Central Repository for the
original receipt or origination of an order: (i) The relationship
identifier instead of the account number, (ii) the ``account type''
as a ``relationship'', and (3) the account effective date instead of
the ``date account opened.'' See Letter to Vanessa Countryman,
Secretary, SEC, from Michael Simon, CAT NMS Plan Operating Committee
Chair, re: Request for Exemption from Certain Provisions of the
National Market System Plan Governing the Consolidated Audit Trail
related to Granularity of Timestamps and Relationship Identifiers
(Feb. 3, 2020).
\16\ See Notice, supra note 4, at 6599. The Participants
requested and have received exemptive relief from the requirement of
Section 6.4(d)(ii)(C) of the CAT NMS Plan for the Participants, in
their Compliance Rules, to require their members to provide dates of
birth, account numbers and social security numbers for individuals
to the CAT. See Securities Exchange Act Release No. 88393 (March 17,
2020), 85 FR 16152 (March 20, 2020). See also Letter to Vanessa
Countryman, Secretary, SEC, from Michael Simon, CAT NMS Plan
Operating Committee Chair, re: Request for Exemptive Relief from
Certain Provisions of the CAT NMS Plan related to Social Security
Numbers, Dates of Birth and Account Numbers (Jan. 29, 2020).
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The Exchange also proposes to amend the Exchange's Compliance Rule
to facilitate the retirement of certain existing regulatory systems,
specifically the Financial Industry Regulatory Authority, Inc.'s
(``FINRA'') Order Audit Trail System, by adding additional data
elements to the CAT reporting requirements for Industry Members,\17\
additional reporting requirements for alternative trading systems,\18\
and additional data elements related to OTC Equity Securities \19\ that
FINRA currently receives from alternative trading systems that trade
OTC Equity Securities.\20\
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\17\ See Notice, supra note 4, at 6590-91.
\18\ See Notice, supra note 4, at 6591-93.
\19\ OTC Equity Security, as defined in the CAT NMS Plan, means
any equity security, other than an NMS Security, subject to prompt
last sale reporting rules of a registered national securities
association and reported to one of such association's equity trade
reporting facilities. See CAT NMS Plan, supra note 3, at Section
1.1.
\20\ Id. at 6593.
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III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Rule Change
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \21\ to determine whether the 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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\21\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\22\ the Commission is
providing notice of the grounds for possible disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of the proposed rule change's consistency with
Section 6(b)(5) of the Act,\23\ which requires, among other things,
that the rules of a national securities exchange be ``designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade,'' and ``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.'' \24\ The Commission believes that several of the proposed
rule changes are not consistent with the CAT NMS Plan or exemptive
relief that has been granted as of the date of this Order.
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\22\ 15 U.S.C. 78s(b)(2)(B).
\23\ 15 U.S.C. 78f(b)(5).
\24\ 15 U.S.C. 78f(b)(5).
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IV. Commission's Solicitation of Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) \25\ or any other provision of the Act,
or the rules and regulations thereunder. Although there do not appear
to be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4 under the Act,\26\ any
request for an opportunity to make an oral presentation.\27\
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\25\ 15 U.S.C. 78f(b)(5).
\26\ 17 CFR 240.19b-4.
\27\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
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 a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by May 26, 2020. Any person who wishes to file a rebuttal
to any other person's submission must file that rebuttal by June 9,
2020. 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 Numbers SR-CboeBZX-2020-011 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-CboeBZX-2020-011. 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
[[Page 26743]]
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-2020-011 and should be submitted on or before May 26, 2020.
Rebuttal comments should be submitted by June 9, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09523 Filed 5-4-20; 8:45 am]
BILLING CODE 8011-01-P