Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change To Amend Rule 8.15 and To Add the Consolidated Audit Trail Industry Member Compliance Rules to the List of Minor Rule Violations in Rule 8.15.01, 49407-49411 [2020-17670]
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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Notices
activity across all markets, such as
reviews related to position limit
violations and manipulation. Indeed,
the Exchange cannot effectively review
for such conduct without looking at and
evaluating activity regardless of where it
transpires. In addition to its own
surveillance programs, the Exchange
also works with other SROs and
exchanges on intermarket surveillance
related issues. Through its participation
in the Intermarket Surveillance Group
(‘‘ISG’’) 14 the Exchange shares
information and coordinates inquiries
and investigations with other exchanges
designed to address potential
intermarket manipulation and trading
abuses. Accordingly, there is a strong
nexus between the ORF and the
Exchange’s regulatory activities with
respect to its Member’s customer trading
activity.
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. This
proposal does not create an unnecessary
or inappropriate intra-market burden on
competition because the ORF applies to
all customer activity, thereby raising
regulatory revenue to offset regulatory
expenses. It also supplements the
regulatory revenue derived from noncustomer activity. The Exchange notes,
however, the proposed change is not
designed to address any competitive
issues. Indeed, this proposal does not
create an unnecessary or inappropriate
inter-market burden on competition
because it is a regulatory fee that
supports regulation in furtherance of the
purposes of the Act. The Exchange is
obligated to ensure that the amount of
regulatory revenue collected from the
ORF, in combination with its other
regulatory fees and fines, does not
exceed regulatory costs.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
14 ISG is an industry organization formed in 1983
to coordinate intermarket surveillance among the
SROs by cooperatively sharing regulatory
information pursuant to a written agreement
between the parties. The goal of the ISG’s
information sharing is to coordinate regulatory
efforts to address potential intermarket trading
abuses and manipulations.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 15 and paragraph (f) of Rule
19b–4 16 thereunder. 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 will 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 No. SR–
CboeBZX–2020–057 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–CboeBZX–2020–057. 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 No.
SR–CboeBZX–2020–057, and should be
submitted on or before September 3,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–17352 Filed 8–12–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89509; File No. SR–MEMX–
2020–03]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Order
Granting Accelerated Approval of a
Proposed Rule Change To Amend Rule
8.15 and To Add the Consolidated
Audit Trail Industry Member
Compliance Rules to the List of Minor
Rule Violations in Rule 8.15.01
August 7, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 31,
2020, MEMX LLC (‘‘MEMX’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons and approving
the proposal on an accelerated basis.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing with the
Commission a proposed rule change to
add the Consolidated Audit Trail
(‘‘CAT’’) industry member compliance
17 CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
17
15 15
U.S.C. 78s(b)(3)(A).
16 17 CFR 240.19b–4(f).
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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Notices
rules (‘‘CAT Compliance Rules’’) to the
list of minor rule violations in Rule 8.15
and to make an additional change to
paragraph (a) of Rule 8.15. The text of
the proposed rule change is provided in
Exhibit 5.
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
In order to implement the National
Market System Plan Governing the
Consolidated Audit Trail (the ‘‘CAT
NMS Plan’’ or ‘‘Plan’’), the Exchange
codified the CAT Compliance Rules in
Rules 4.5 through 4.16 as part of its
initial Rules.3 The CAT NMS Plan was
filed by the Plan Participants to comply
with Rule 613 of Regulation NMS under
the Act,4 and each Plan Participant
accordingly has adopted the same
compliance rules as in Exchange Rules
4.5 through 4.16. The common
compliance rules adopted by each Plan
Participant are designed to require
industry members to comply with the
provisions of the CAT NMS Plan, which
broadly calls for industry members to
record and report timely and accurate
customer, order, and trade information
relating to activity in NMS Securities
and OTC Equity Securities.
Rule 8.15 provides for disposition of
certain violations through assessment of
fines in lieu of conducting a formal
disciplinary proceeding. Rule 8.15.01,
specifically, sets forth the list of specific
Exchange Rules under which any
member of the Exchange (‘‘Member’’),
associated person of a Member, or
registered or non-registered employee of
a Member may be subject to a fine for
violations of such Rules. The Exchange
3 On May 4, 2020, the Commission approved the
MEMX Form 1 application for registration as a
national securities exchange. See Securities
Exchange Release No. 88806 (May 4, 2020), 85 FR
27451 (May 8, 2020).
4 17 CFR 242.613.
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proposes to amend Rule 8.15.01 to add
the CAT Compliance Rules in Rules 4.5
through 4.16 to the list of rules in Rule
8.15.01 eligible for disposition pursuant
to a minor fine; specifically, under
proposed Rule 8.15.01(h).5 Proposed
Rule 8.15.01(h) provides that for failures
to comply with the Consolidated Audit
Trail Compliance Rule requirements of
Rules 4.5 through 4.16, the Exchange
may impose a minor rule violation fine
of up to $2,500. The Exchange may seek
other disciplinary action for more
serious violations.
The Exchange is coordinating with
the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and other
Plan Participants to promote
harmonized and consistent enforcement
of all the Plan Participants’ CAT
Compliance Rules. The Commission
recently approved a Rule 17d–2 Plan
under which the regulation of CAT
Compliance Rules will be allocated
among Plan Participants to reduce
regulatory duplication for industry
members that are members of more than
one Participant (‘‘common members’’).6
Under the Rule 17d–2 Plan, the
regulation of CAT Compliance Rules
with respect to common members that
are members of FINRA is allocated to
FINRA. Similarly, under the Rule 17d–
2 Plan, responsibility for common
members of multiple other Plan
Participants and not a member of FINRA
will be allocated among those other Plan
Participants, including to the Exchange.
For those non-common members who
are allocated to MEMX pursuant to the
Rule 17d–2 Plan, the Exchange and
FINRA have entered into a Regulatory
Services Agreement (‘‘RSA’’) pursuant
to which FINRA will assist the
Exchange with conducting surveillance,
investigation, examination, and
enforcement activity in connection with
the CAT Compliance Rules on the
Exchange’s behalf. The Exchange
5 FINRA’s maximum fine for minor rule
violations under FINRA Rule 9216(b) is $2,500. The
Exchange will apply an identical maximum fine
amount for eligible violations of Rules 4.5 through
4.16 to achieve consistency with FINRA and also
amend its minor rule violation plan (‘‘MRVP’’) to
include such fines. Like FINRA, the Exchange
would be able to pursue a fine greater than $2,500
for violations of Rules 4.5 through 4.16 in a regular
disciplinary proceeding or a letter of consent under
Chapter 8 as appropriate. Any fine imposed in
excess of $2,500 or not otherwise covered by Rule
19d–1(c)(2) of the Act would be subject to prompt
notice to the Commission pursuant to Rule 19d–1
under the Act. As noted below, in assessing the
appropriateness of a minor rule fine with respect to
CAT Compliance Rules, the Exchange will be
guided by the same factors that FINRA utilizes. See
text accompanying notes 9–10, infra.
6 See Securities Exchange Act Release No. 88366
(March 12, 2020), 85 FR 15238 (March 17, 2020).
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expects that the other exchanges will be
entering into similar RSAs.
The Exchange notes that this proposal
is based upon the FINRA filing to
amend FINRA Rule 9217 in order to add
FINRA’s corresponding CAT
Compliance Rules to FINRA’s list of
rules that are eligible for minor rule
violation plan treatment.7 The Exchange
also notes that the New York Stock
Exchange LLC (‘‘NYSE’’) submitted a
filing to amend its Minor Rule Violation
Plan (‘‘MRVP’’) to add its CAT
Compliance Rules in a manner
consistent with FINRA’s proposal,8 and
other Plan Participants intend to submit
the same. Thus, in order to achieve
consistency with FINRA and the other
Plan Participants, the Exchange
proposes to adopt fines up to $2,500 in
connection with minor rule fines for
violations of the CAT Compliance Rules
(Rules 4.5 through 4.16) in proposed
Rule 8.15.01(h) under the Exchange’s
MRVP. In connection with FINRA’s
proposed amendment to FINRA Rule
9217 to make FINRA’s CAT Compliance
Rules MRVP eligible, FINRA has stated
that it will apply the minor fines for
CAT Compliance Rules in the same
manner that FINRA has for its similar
existing audit trail-related rules.9
Accordingly, in order to promote
regulatory consistency, the Exchange
plans to do the same. Specifically,
application of a minor fine with respect
to CAT Compliance Rule violations will
be guided by the same factors that
FINRA references in its filing. However,
more formal disciplinary proceedings
may be warranted instead of minor rule
dispositions in certain circumstances
such as where violations prevent
regulatory users of the CAT from
performing their regulatory functions.
Where minor rule dispositions are
appropriate, the following factors help
guide the determination of fine
amounts:
• Total number of reports that are not
submitted or submitted late;
• The timeframe over which the
violations occur;
• Whether violations are batched;
• Whether the violations are the
result of the actions of one individual or
the result of faulty systems or
procedures;
7 See Securities Exchange Act Release No. 88870
(May 14, 2020), 85 FR 30768 (May 20, 2020) (SR–
FINRA–2020–013).
8 See Securities Exchange Act Release No. 89123
(June 23, 2020), 85 FR 39016 (June 29, 2020) (SR–
NYSE–2020–51).
9 See supra note 7; see also FINRA Notice to
Members 04–19 (March 2004) available at https://
www.finra.org/rules-guidance/notices/04-19
(providing specific factors used to inform
dispositions for violations of OATS reporting rules).
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• Whether the firm has taken
remedial measures to correct the
violations;
• Prior minor rule violations within
the past 24 months;
• Collateral effects that the failure has
on customers; and
• Collateral effects that the failure has
on the Exchange’s ability to perform its
regulatory function.10
Upon effectiveness of this rule
change, the Exchange will publish a
regulatory notice notifying its Members
of the rule change and the specific
factors that will be considered in
connection with assessing minor rule
fines described above.
For the foregoing reasons, the
Exchange believes that the proposed
rule change will result in a coordinated,
harmonized approach to CAT
Compliance Rule enforcement across
Plan Participants that will be consistent
with the approach FINRA has taken
with the CAT rules.
In addition to the changes set forth
above, the Exchange proposes to remove
a sentence from its current Rule 8.15(a)
given the possibility that it may cause
confusion. Specifically, as set forth
above, the provisions of Rule 8.15 are
intended to provide for a way to resolve
violations of Exchange Rules that are
minor in nature. However, current
paragraph (a) of Rule 8.15 states that the
Exchange may, if no exceptional
circumstances are present, impose a fine
based upon a determination that there
exists a pattern or practice of violative
conduct. Given the fact that most
violations involving a ‘‘pattern or
practice’’ of violative conduct are not
considered to be minor in nature, the
Exchange believes this language might
cause confusion and proposes to delete
this sentence.
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.11 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 12 requirements that the rules of
an exchange be 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 regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
10 See
id.
U.S.C. 78f(b).
12 15 U.S.C. 78f(b)(5).
11 15
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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.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 13 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
Minor rule fines provide a meaningful
sanction for minor or technical
violations of rules when the conduct at
issue does not warrant stronger,
immediately reportable disciplinary
sanctions. The inclusion of a rule in the
Exchange’s MRVP does not minimize
the importance of compliance with the
rule, nor does it preclude the Exchange
from choosing to pursue violations of
eligible rules through a letter of consent
if the nature of the violations or prior
disciplinary history warrants more
significant sanctions. Rather, 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. The
Exchange believes the option to impose
a minor rule sanction gives the
Exchange additional flexibility to
administer its enforcement program in
the most effective and efficient manner
while still fully meeting the Exchange’s
remedial objectives in addressing
violative conduct.14 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 the
CAT Compliance Rules in Rules 4.5
through 4.16 where a more formal
disciplinary action may not be
warranted or appropriate consistent
with the approach of other Plan
Participants for the same conduct. For
the same reason, the Exchange believes
its proposal to amend Rule 8.15(a) is
consistent with the Act as it is designed
to prevent fraudulent and manipulative
acts and practices because it would
remove a reference to an action brought
under the Exchange’s MRVP when the
13 Id.
14 Pursuant to Rule 8.15(a) and (e), the Exchange
has the discretion to impose a fine in lieu of
commencing a disciplinary proceeding for a
violation that is minor in nature. Rule 8.15(e) states
specifically that nothing in Rule 8.15 requires the
Exchange to impose a fine pursuant to Rule 8.15
with respect to the violation of any Rule included
in any such listing.
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49409
applicable violation is a pattern or
practice violation.
In connection with the fine level
specified in the proposed rule change,
adding proposed Rule 8.15.01(h) to
specifically provide that for violations
of the CAT Compliance Rules in Rules
4.5 through 4.16 the Exchange may
impose a fine not to exceed $2,500
would further the goal of transparency
within the Exchange’s rules. Adopting
the same cap as FINRA for minor rule
fines in connection with the CAT
Compliance Rules would also promote
regulatory consistency across selfregulatory organizations.
The Exchange further believes that the
proposed amendment to Rule 8.15.01 is
consistent with Section 6(b)(6) of the
Act,15 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 the ability to sanction minor
or technical violations of Rules 4.5
through 4.16 pursuant to the Exchange’s
rules.
Finally, the Exchange also believes
that the proposed change is designed to
provide a fair procedure for the
disciplining of members and persons
associated with members, consistent
with Sections 6(b)(7) and 6(d) of the
Act.16 Rule 8.15 does not preclude a
Member, associated person of a
Member, or registered or non-registered
employee of a Member from contesting
an alleged violation and receiving a
hearing on the matter with the same
procedural rights through a litigated
disciplinary proceeding.
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 rule change is not intended to
address competitive issues but rather is
concerned solely with making the CAT
Compliance Rules in Rules 4.5 through
4.16 eligible for a minor rule fine
disposition, thereby strengthening the
Exchange’s ability to carry out its
oversight and enforcement functions
and deter potential violative conduct.
Also, as stated above, the proposed rule
15 15
16 15
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U.S.C. 78f(b)(6).
U.S.C. 78f(b)(7) and 78f(d).
13AUN1
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Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Notices
change is consistent with similar
proposals recently filed by FINRA and
NYSE, and other Plan Participants
intend to submit the same.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
III. 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–
MEMX–2020–03 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–MEMX–2020–03. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
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
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17:16 Aug 12, 2020
Jkt 250001
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–MEMX–2020–03 and
should be submitted on or before
September 3, 2020.
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange.17 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,18 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
open market and a national market
system, and, in general, to protect
investors and the public interest. The
Commission also believes that the
proposal is consistent with Sections
6(b)(1) and 6(b)(6) of the Act 19 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 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,20 which governs
minor rule violation plans.
As stated above, the Exchange
proposes to add the CAT Compliance
Rules to the list of minor rule violations
in Rule 8.15 to be consistent with the
approach FINRA has taken for minor
violations of its corresponding CAT
Compliance Rules.21 The Commission
has already approved FINRA’s treatment
of CAT Compliance Rules violations
17 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).
18 15 U.S.C. 78f(b)(5).
19 15 U.S.C. 78f(b)(1) and 78f(b)(6).
20 17 CFR 240.19d–1(c)(2).
21 As discussed above, the Exchange has entered
into a Rule 17d–2 Plan and an RSA with FINRA
with respect to the CAT Compliance Rules. The
Commission notes that, unless relieved by the
Commission of its responsibility, as may be the case
under the Rule 17d–2 Plan, the Exchange continues
to bear the responsibility for self-regulatory conduct
and liability for self-regulatory failures, not the selfregulatory organization retained to perform
regulatory functions on the Exchange’s behalf
pursuant to an RSA. See Securities Exchange
Release No. 61419 (January 26, 2010), 75 FR 5157
(February 1, 2010) (SR–BATS–2009–031), note 93
and accompanying text.
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when it approved the addition of CAT
Compliance Rules to FINRA’s MRVP.22
As noted in that order, and similarly
herein, the Commission believes that
Exchange’s treatment of CAT
Compliance Rules violations as part of
its MRVP 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 that, as with
FINRA, 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. Accordingly, the Commission
believes the proposal raises no novel or
significant issues. In addition, the
Exchange proposes to amend Rule
8.15(a) to remove a reference to an
action brought under the Exchange’s
MRVP when the applicable violation is
a pattern or practice violation. The
Commission believes that removal of
such reference makes clear that a
pattern or practice of violative conduct
may require discipline beyond the scope
of the Exchange’s MRVP, and is
therefore consistent with the Act.
For the same reasons discussed above,
the Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,23 for approving the proposed rule
change 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 the
CAT Compliance Rules to the
Exchange’s MRVP, harmonizes its
application with FINRA’s application of
CAT Compliance Rules under its own
MRVP, and amends Rule 8.15(a) to
remove a pattern or practice of violative
conduct from the Exchange’s MRVP.
Accordingly, the Commission believes
that a full notice-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 24 and Rule
19d–1(c)(2) thereunder,25 that the
proposed rule change (SR–MEMX–
2020–03) be, and hereby is, approved on
an accelerated basis.
22 See
SR–FINRA–2020–013.
U.S.C. 78s(b)(2).
24 15 U.S.C. 78s(b)(2).
25 17 CFR 240.19d–1(c)(2).
23 15
E:\FR\FM\13AUN1.SGM
13AUN1
Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–17670 Filed 8–12–20; 8:45 am]
BILLING CODE 8011–01–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #16571 and #16572;
Pennsylvania Disaster Number PA–00106]
Administrative Declaration of a
Disaster for the Commonwealth of
Pennsylvania
Small Business Administration.
ACTION: Notice.
AGENCY:
This is a notice of an
Administrative declaration of a disaster
for the Commonwealth of Pennsylvania
dated 08/07/2020. Incident: Civil
Unrest. Incident Period: 05/30/2020
through 06/08/2020.
DATES: Issued on 08/07/2020.
Physical Loan Application Deadline
Date: 10/06/2020.
Economic Injury (EIDL) Loan
Application Deadline Date: 05/07/2021.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
SUPPLEMENTARY INFORMATION: Notice is
hereby given that as a result of the
Administrator’s disaster declaration,
applications for disaster loans may be
filed at the address listed above or other
locally announced locations.
The following areas have been
determined to be adversely affected by
the disaster:
Primary Counties: Philadelphia
Contiguous Counties:
Pennsylvania: Bucks, Delaware,
Montgomery.
New Jersey: Burlington, Camden,
Gloucester.
The Interest Rates are:
SUMMARY:
For Physical Damage:
Homeowners With Credit Available Elsewhere ......................
Homeowners Without Credit
Available Elsewhere ..............
Businesses With Credit Available Elsewhere ......................
26 17
CFR 200.30–3(a)(12).
VerDate Sep<11>2014
17:16 Aug 12, 2020
Percent
Businesses
Without
Credit
Available Elsewhere ..............
Non-Profit Organizations With
Credit Available Elsewhere ...
Non-Profit Organizations Without Credit Available Elsewhere .....................................
For Economic Injury:
Businesses & Small Agricultural
Cooperatives Without Credit
Available Elsewhere ..............
Non-Profit Organizations Without Credit Available Elsewhere .....................................
3.000
2.750
2.750
2.750
(Catalog of Federal Domestic Assistance
Number 59008)
Jovita Carranza,
Administrator.
[FR Doc. 2020–17706 Filed 8–12–20; 8:45 am]
BILLING CODE 8026–03–P
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #16573 and #16574;
Tennessee Disaster Number TN–00124]
Administrative Declaration of a
Disaster for the State of Tennessee
Small Business Administration.
ACTION: Notice.
AGENCY:
PO 00000
Frm 00053
Fmt 4703
Sfmt 4703
Primary Counties: McNairy.
Contiguous Counties:
Tennessee: Chester, Hardeman, Hardin.
Mississippi: Alcorn.
Percent
3.000
This is a notice of an
Administrative declaration of a disaster
for the State of Tennessee dated 08/07/
2020. Incident: Flooding. Incident
Period: 07/01/2020.
DATES: Issued on 08/07/2020.
Physical Loan Application Deadline
Date: 10/06/2020.
Economic Injury (EIDL) Loan
Application Deadline Date: 05/07/2021.
ADDRESSES: Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A.
Escobar, Office of Disaster Assistance,
Percent
U.S. Small Business Administration,
409 3rd Street, SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
2.500
SUPPLEMENTARY INFORMATION: Notice is
1.250 hereby given that as a result of the
Administrator’s disaster declaration,
6.000 applications for disaster loans may be
filed at the address listed above or other
locally announced locations.
Jkt 250001
The following areas have been
determined to be adversely affected by
the disaster:
The Interest Rates are:
The number assigned to this disaster
for physical damage is 16571 F and for
economic injury is 16572 0.
The States which received an EIDL
Declaration # are Pennsylvania, New
Jersey.
SUMMARY:
49411
For Physical Damage:
Homeowners With Credit Available Elsewhere .........................
Homeowners
Without
Credit
Available Elsewhere ..................
Businesses With Credit Available
Elsewhere .................................
Businesses Without Credit Available Elsewhere .........................
Non-Profit Organizations With
Credit Available Elsewhere .......
Non-Profit Organizations Without
Credit Available Elsewhere .......
For Economic Injury:
Businesses & Small Agricultural
Cooperatives Without Credit
Available Elsewhere ..................
Non-Profit Organizations Without
Credit Available Elsewhere .......
2.500
1.250
6.000
3.000
2.750
2.750
3.000
2.750
The number assigned to this disaster
for physical damage is 16573 6 and for
economic injury is 16574 0.
The States which received an EIDL
Declaration # are Tennessee,
Mississippi.
(Catalog of Federal Domestic Assistance
Number 59008)
Jovita Carranza,
Administrator.
[FR Doc. 2020–17705 Filed 8–12–20; 8:45 am]
BILLING CODE 8026–03–P
SURFACE TRANSPORTATION BOARD
[Docket No. FD 36424]
Union Pacific Railroad Company—
Temporary Trackage Rights
Exemption—BNSF Railway Company
Union Pacific Railroad Company
(UP), a Class I railroad, has filed a
verified notice of exemption under 49
CFR 1180.2(d)(8) for the acquisition of
temporary trackage rights, for overhead
operations, over approximately 566.6
miles of rail line owned by BNSF
Railway Company (BNSF) between
milepost 737.3 on BNSF’s Needles
Subdivision near Daggett, Cal., and
milepost 191.6 on BNSF’s Phoenix
Subdivision near Phoenix, Ariz.,
pursuant to the terms of a written
E:\FR\FM\13AUN1.SGM
13AUN1
]]>Agencies
[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Notices]
[Pages 49407-49411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17670]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89509; File No. SR-MEMX-2020-03]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Order Granting Accelerated Approval of a Proposed Rule Change To Amend
Rule 8.15 and To Add the Consolidated Audit Trail Industry Member
Compliance Rules to the List of Minor Rule Violations in Rule 8.15.01
August 7, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 31, 2020, MEMX LLC (``MEMX'' or the ``Exchange'') filed
with the Securities and Exchange Commission (the ``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons and approving the proposal on an accelerated basis.
---------------------------------------------------------------------------
\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
The Exchange is filing with the Commission a proposed rule change
to add the Consolidated Audit Trail (``CAT'') industry member
compliance
[[Page 49408]]
rules (``CAT Compliance Rules'') to the list of minor rule violations
in Rule 8.15 and to make an additional change to paragraph (a) of Rule
8.15. The text of the proposed rule change is provided in Exhibit 5.
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
In order to implement the National Market System Plan Governing the
Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan''), the
Exchange codified the CAT Compliance Rules in Rules 4.5 through 4.16 as
part of its initial Rules.\3\ The CAT NMS Plan was filed by the Plan
Participants to comply with Rule 613 of Regulation NMS under the
Act,\4\ and each Plan Participant accordingly has adopted the same
compliance rules as in Exchange Rules 4.5 through 4.16. The common
compliance rules adopted by each Plan Participant are designed to
require industry members to comply with the provisions of the CAT NMS
Plan, which broadly calls for industry members to record and report
timely and accurate customer, order, and trade information relating to
activity in NMS Securities and OTC Equity Securities.
---------------------------------------------------------------------------
\3\ On May 4, 2020, the Commission approved the MEMX Form 1
application for registration as a national securities exchange. See
Securities Exchange Release No. 88806 (May 4, 2020), 85 FR 27451
(May 8, 2020).
\4\ 17 CFR 242.613.
---------------------------------------------------------------------------
Rule 8.15 provides for disposition of certain violations through
assessment of fines in lieu of conducting a formal disciplinary
proceeding. Rule 8.15.01, specifically, sets forth the list of specific
Exchange Rules under which any member of the Exchange (``Member''),
associated person of a Member, or registered or non-registered employee
of a Member may be subject to a fine for violations of such Rules. The
Exchange proposes to amend Rule 8.15.01 to add the CAT Compliance Rules
in Rules 4.5 through 4.16 to the list of rules in Rule 8.15.01 eligible
for disposition pursuant to a minor fine; specifically, under proposed
Rule 8.15.01(h).\5\ Proposed Rule 8.15.01(h) provides that for failures
to comply with the Consolidated Audit Trail Compliance Rule
requirements of Rules 4.5 through 4.16, the Exchange may impose a minor
rule violation fine of up to $2,500. The Exchange may seek other
disciplinary action for more serious violations.
---------------------------------------------------------------------------
\5\ FINRA's maximum fine for minor rule violations under FINRA
Rule 9216(b) is $2,500. The Exchange will apply an identical maximum
fine amount for eligible violations of Rules 4.5 through 4.16 to
achieve consistency with FINRA and also amend its minor rule
violation plan (``MRVP'') to include such fines. Like FINRA, the
Exchange would be able to pursue a fine greater than $2,500 for
violations of Rules 4.5 through 4.16 in a regular disciplinary
proceeding or a letter of consent under Chapter 8 as appropriate.
Any fine imposed in excess of $2,500 or not otherwise covered by
Rule 19d-1(c)(2) of the Act would be subject to prompt notice to the
Commission pursuant to Rule 19d-1 under the Act. As noted below, in
assessing the appropriateness of a minor rule fine with respect to
CAT Compliance Rules, the Exchange will be guided by the same
factors that FINRA utilizes. See text accompanying notes 9-10,
infra.
---------------------------------------------------------------------------
The Exchange is coordinating with the Financial Industry Regulatory
Authority, Inc. (``FINRA'') and other Plan Participants to promote
harmonized and consistent enforcement of all the Plan Participants' CAT
Compliance Rules. The Commission recently approved a Rule 17d-2 Plan
under which the regulation of CAT Compliance Rules will be allocated
among Plan Participants to reduce regulatory duplication for industry
members that are members of more than one Participant (``common
members'').\6\ Under the Rule 17d-2 Plan, the regulation of CAT
Compliance Rules with respect to common members that are members of
FINRA is allocated to FINRA. Similarly, under the Rule 17d-2 Plan,
responsibility for common members of multiple other Plan Participants
and not a member of FINRA will be allocated among those other Plan
Participants, including to the Exchange. For those non-common members
who are allocated to MEMX pursuant to the Rule 17d-2 Plan, the Exchange
and FINRA have entered into a Regulatory Services Agreement (``RSA'')
pursuant to which FINRA will assist the Exchange with conducting
surveillance, investigation, examination, and enforcement activity in
connection with the CAT Compliance Rules on the Exchange's behalf. The
Exchange expects that the other exchanges will be entering into similar
RSAs.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 88366 (March 12,
2020), 85 FR 15238 (March 17, 2020).
---------------------------------------------------------------------------
The Exchange notes that this proposal is based upon the FINRA
filing to amend FINRA Rule 9217 in order to add FINRA's corresponding
CAT Compliance Rules to FINRA's list of rules that are eligible for
minor rule violation plan treatment.\7\ The Exchange also notes that
the New York Stock Exchange LLC (``NYSE'') submitted a filing to amend
its Minor Rule Violation Plan (``MRVP'') to add its CAT Compliance
Rules in a manner consistent with FINRA's proposal,\8\ and other Plan
Participants intend to submit the same. Thus, in order to achieve
consistency with FINRA and the other Plan Participants, the Exchange
proposes to adopt fines up to $2,500 in connection with minor rule
fines for violations of the CAT Compliance Rules (Rules 4.5 through
4.16) in proposed Rule 8.15.01(h) under the Exchange's MRVP. In
connection with FINRA's proposed amendment to FINRA Rule 9217 to make
FINRA's CAT Compliance Rules MRVP eligible, FINRA has stated that it
will apply the minor fines for CAT Compliance Rules in the same manner
that FINRA has for its similar existing audit trail-related rules.\9\
Accordingly, in order to promote regulatory consistency, the Exchange
plans to do the same. Specifically, application of a minor fine with
respect to CAT Compliance Rule violations will be guided by the same
factors that FINRA references in its filing. However, more formal
disciplinary proceedings may be warranted instead of minor rule
dispositions in certain circumstances such as where violations prevent
regulatory users of the CAT from performing their regulatory functions.
Where minor rule dispositions are appropriate, the following factors
help guide the determination of fine amounts:
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 88870 (May 14,
2020), 85 FR 30768 (May 20, 2020) (SR-FINRA-2020-013).
\8\ See Securities Exchange Act Release No. 89123 (June 23,
2020), 85 FR 39016 (June 29, 2020) (SR-NYSE-2020-51).
\9\ See supra note 7; see also FINRA Notice to Members 04-19
(March 2004) available at https://www.finra.org/rules-guidance/notices/04-19 (providing specific factors used to inform
dispositions for violations of OATS reporting rules).
---------------------------------------------------------------------------
Total number of reports that are not submitted or
submitted late;
The timeframe over which the violations occur;
Whether violations are batched;
Whether the violations are the result of the actions of
one individual or the result of faulty systems or procedures;
[[Page 49409]]
Whether the firm has taken remedial measures to correct
the violations;
Prior minor rule violations within the past 24 months;
Collateral effects that the failure has on customers; and
Collateral effects that the failure has on the Exchange's
ability to perform its regulatory function.\10\
---------------------------------------------------------------------------
\10\ See id.
---------------------------------------------------------------------------
Upon effectiveness of this rule change, the Exchange will publish a
regulatory notice notifying its Members of the rule change and the
specific factors that will be considered in connection with assessing
minor rule fines described above.
For the foregoing reasons, the Exchange believes that the proposed
rule change will result in a coordinated, harmonized approach to CAT
Compliance Rule enforcement across Plan Participants that will be
consistent with the approach FINRA has taken with the CAT rules.
In addition to the changes set forth above, the Exchange proposes
to remove a sentence from its current Rule 8.15(a) given the
possibility that it may cause confusion. Specifically, as set forth
above, the provisions of Rule 8.15 are intended to provide for a way to
resolve violations of Exchange Rules that are minor in nature. However,
current paragraph (a) of Rule 8.15 states that the Exchange may, if no
exceptional circumstances are present, impose a fine based upon a
determination that there exists a pattern or practice of violative
conduct. Given the fact that most violations involving a ``pattern or
practice'' of violative conduct are not considered to be minor in
nature, the Exchange believes this language might cause confusion and
proposes to delete this sentence.
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.\11\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \12\ requirements that the rules
of an exchange be 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 regulating,
clearing, settling, processing information with respect to, and
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.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \13\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ Id.
---------------------------------------------------------------------------
Minor rule fines provide a meaningful sanction for minor or
technical violations of rules when the conduct at issue does not
warrant stronger, immediately reportable disciplinary sanctions. The
inclusion of a rule in the Exchange's MRVP does not minimize the
importance of compliance with the rule, nor does it preclude the
Exchange from choosing to pursue violations of eligible rules through a
letter of consent if the nature of the violations or prior disciplinary
history warrants more significant sanctions. Rather, 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. The Exchange believes the
option to impose a minor rule sanction gives the Exchange additional
flexibility to administer its enforcement program in the most effective
and efficient manner while still fully meeting the Exchange's remedial
objectives in addressing violative conduct.\14\ 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 the CAT Compliance Rules in
Rules 4.5 through 4.16 where a more formal disciplinary action may not
be warranted or appropriate consistent with the approach of other Plan
Participants for the same conduct. For the same reason, the Exchange
believes its proposal to amend Rule 8.15(a) is consistent with the Act
as it is designed to prevent fraudulent and manipulative acts and
practices because it would remove a reference to an action brought
under the Exchange's MRVP when the applicable violation is a pattern or
practice violation.
---------------------------------------------------------------------------
\14\ Pursuant to Rule 8.15(a) and (e), the Exchange has the
discretion to impose a fine in lieu of commencing a disciplinary
proceeding for a violation that is minor in nature. Rule 8.15(e)
states specifically that nothing in Rule 8.15 requires the Exchange
to impose a fine pursuant to Rule 8.15 with respect to the violation
of any Rule included in any such listing.
---------------------------------------------------------------------------
In connection with the fine level specified in the proposed rule
change, adding proposed Rule 8.15.01(h) to specifically provide that
for violations of the CAT Compliance Rules in Rules 4.5 through 4.16
the Exchange may impose a fine not to exceed $2,500 would further the
goal of transparency within the Exchange's rules. Adopting the same cap
as FINRA for minor rule fines in connection with the CAT Compliance
Rules would also promote regulatory consistency across self-regulatory
organizations.
The Exchange further believes that the proposed amendment to Rule
8.15.01 is consistent with Section 6(b)(6) of the Act,\15\ 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 the ability
to sanction minor or technical violations of Rules 4.5 through 4.16
pursuant to the Exchange's rules.
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------
Finally, the Exchange also believes that the proposed change is
designed to provide a fair procedure for the disciplining of members
and persons associated with members, consistent with Sections 6(b)(7)
and 6(d) of the Act.\16\ Rule 8.15 does not preclude a Member,
associated person of a Member, or registered or non-registered employee
of a Member from contesting an alleged violation and receiving a
hearing on the matter with the same procedural rights through a
litigated disciplinary proceeding.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f(b)(7) and 78f(d).
---------------------------------------------------------------------------
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 rule change is
not intended to address competitive issues but rather is concerned
solely with making the CAT Compliance Rules in Rules 4.5 through 4.16
eligible for a minor rule fine disposition, thereby strengthening the
Exchange's ability to carry out its oversight and enforcement functions
and deter potential violative conduct. Also, as stated above, the
proposed rule
[[Page 49410]]
change is consistent with similar proposals recently filed by FINRA and
NYSE, and other Plan Participants intend to submit the same.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. 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-MEMX-2020-03 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-MEMX-2020-03. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public 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-MEMX-2020-03 and should be submitted on
or before September 3, 2020.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\17\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\18\ 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 open market and a national market system, and, in
general, to protect investors and the public interest. The Commission
also believes that the proposal is consistent with Sections 6(b)(1) and
6(b)(6) of the Act \19\ 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 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,\20\ which
governs minor rule violation plans.
---------------------------------------------------------------------------
\17\ 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).
\18\ 15 U.S.C. 78f(b)(5).
\19\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\20\ 17 CFR 240.19d-1(c)(2).
---------------------------------------------------------------------------
As stated above, the Exchange proposes to add the CAT Compliance
Rules to the list of minor rule violations in Rule 8.15 to be
consistent with the approach FINRA has taken for minor violations of
its corresponding CAT Compliance Rules.\21\ The Commission has already
approved FINRA's treatment of CAT Compliance Rules violations when it
approved the addition of CAT Compliance Rules to FINRA's MRVP.\22\ As
noted in that order, and similarly herein, the Commission believes that
Exchange's treatment of CAT Compliance Rules violations as part of its
MRVP 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 that, as with FINRA, 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. Accordingly, the Commission believes the
proposal raises no novel or significant issues. In addition, the
Exchange proposes to amend Rule 8.15(a) to remove a reference to an
action brought under the Exchange's MRVP when the applicable violation
is a pattern or practice violation. The Commission believes that
removal of such reference makes clear that a pattern or practice of
violative conduct may require discipline beyond the scope of the
Exchange's MRVP, and is therefore consistent with the Act.
---------------------------------------------------------------------------
\21\ As discussed above, the Exchange has entered into a Rule
17d-2 Plan and an RSA with FINRA with respect to the CAT Compliance
Rules. The Commission notes that, unless relieved by the Commission
of its responsibility, as may be the case under the Rule 17d-2 Plan,
the Exchange continues to bear the responsibility for self-
regulatory conduct and liability for self-regulatory failures, not
the self-regulatory organization retained to perform regulatory
functions on the Exchange's behalf pursuant to an RSA. See
Securities Exchange Release No. 61419 (January 26, 2010), 75 FR 5157
(February 1, 2010) (SR-BATS-2009-031), note 93 and accompanying
text.
\22\ See SR-FINRA-2020-013.
---------------------------------------------------------------------------
For the same reasons discussed above, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Act,\23\ for approving the
proposed rule change 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 the CAT Compliance Rules to the
Exchange's MRVP, harmonizes its application with FINRA's application of
CAT Compliance Rules under its own MRVP, and amends Rule 8.15(a) to
remove a pattern or practice of violative conduct from the Exchange's
MRVP. Accordingly, the Commission believes that a full notice-and-
comment period is not necessary before approving the proposal.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\24\ and Rule 19d-1(c)(2) thereunder,\25\ that the proposed rule change
(SR-MEMX-2020-03) be, and hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------
\24\ 15 U.S.C. 78s(b)(2).
\25\ 17 CFR 240.19d-1(c)(2).
[[Page 49411]]
---------------------------------------------------------------------------
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------
\26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-17670 Filed 8-12-20; 8:45 am]
BILLING CODE 8011-01-P
