Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Rule 14.10, Requirements for Securities Issued by the Exchange or Its Affiliates, 72716-72718 [2020-25058]
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72716
Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Notices
SECURITIES AND EXCHANGE
COMMISSION
the most significant aspects of such
statements.
[Release No. 34–90366; File No. SR–
CboeEDGA–2020–028]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Rule 14.10,
Requirements for Securities Issued by
the Exchange or Its Affiliates
November 6, 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 October
30, 2020, Cboe EDGA Exchange, Inc.
(the ‘‘Exchange’’ or ‘‘EDGA’’) 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Rule 14.10 (Requirements for Securities
Issued by the Exchange or its Affiliates)
regarding the requirements for the
listing of securities that are issued by
the Exchange or any of its affiliates. The
Exchange notes that the changes
proposed herein are substantively
identical to changes adopted on Cboe
BZX Exchange, Inc. (‘‘BZX’’).3
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/edga/),
at the Exchange’s Office of the
Secretary, and at the Commission’s
Public Reference Room.
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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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 86623
(August 9, 2019) 84 FR 41771 (August 15, 2019)
(SR–CboeBZX–2019–073) (the ‘‘BZX Filing’’).
2 17
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17:19 Nov 12, 2020
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1. Purpose
The Exchange proposes to amend
Rule 14.10 (Requirements for Securities
Issued by the Exchange or its Affiliates)
regarding the requirements for the
listing of securities that are issued by
the Exchange or any of its affiliates. The
Exchange notes that the changes
proposed herein are substantively
identical to changes adopted on Cboe
BZX Exchange, Inc. (‘‘BZX’’).4
Rule 14.10 sets forth certain
monitoring requirements that must be
met throughout the continued listing
and trading of securities issued by the
Exchange or its affiliates. More
specifically, Rule 14.10(b) and (c)
provide that:
• Throughout the continued listing
and trading of an Affiliate Security 5 on
the Exchange, the Exchange shall
prepare a quarterly report on the
Affiliate Security for the Regulatory
Oversight Committee (‘‘ROC’’) of the
Exchange’s Board of Directors that
describes the Exchange’s monitoring of
the Affiliate Security’s compliance with
the Exchange’s listing standards (the
‘‘Quarterly Listing Report’’);
• once a year, an independent
accounting firm shall review the listing
standards for the Affiliate Security to
ensure that the issuer is in compliance
with the listing requirements (‘‘Annual
Report’’), and a copy of the Annual
Report shall be forwarded promptly to
the ROC; and
• throughout the trading of an
Affiliate Security on the Exchange, the
Exchange shall prepare a quarterly
report on the Affiliate Security for the
Regulatory Oversight Committee of the
Exchange’s Board of Directors that
describes the Exchange’s monitoring of
the trading of the Affiliate Security,
including summaries of all related
surveillance alerts, complaints,
regulatory referrals, trades cancelled or
adjusted pursuant to Exchange Rules,
investigations, examinations, formal and
informal disciplinary actions, exception
reports and trading data used to ensure
the Affiliate Security’s compliance with
4 See Securities Exchange Act Release No. 86623
(August 9, 2019) 84 FR 41771 (August 15, 2019)
(SR–CboeBZX–2019–073) (the ‘‘BZX Filing’’).
5 As defined in Rule 14.10(a)(2), the term
‘‘Affiliate Security’’ means any security issued by
a EDGA Affiliate or any Exchange-listed option on
any such security, with the exception of Portfolio
Depository Receipts as defined in Rule 14.8(d) and
Investment Company Units as defined in Rule 14.2.
PO 00000
Frm 00097
Fmt 4703
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the Exchange’s listing and trading rules
(the ‘‘Quarterly Trading Report’’ and,
collectively with the Quarterly Listing
Report, the ‘‘Quarterly Reports’’).
Rule 14.10(d) requires that a copy of
all Quarterly Reports and Annual
Reports will be forwarded promptly to
the Commission.
The Exchange proposes to amend
Rule 14.10(d) to remove the requirement
that copies of the Quarterly Reports and
Annual Reports be forwarded to the
Commission and instead providing that
the Exchange will forward a copy of the
Quarterly Reports and/or Annual
Reports to the Commission upon
request.
Finally, the Exchange is proposing to
make clear that the requirements under
Rule 14.10(b)(1),6 (2),7 (3),8 and (4) 9 do
not apply to Affiliate Securities that are
Exchange-listed options. The Exchange
is proposing this change because there
is no issuer for options as the term is
used in Rule 14.10(b) and each of the
requirements under Rule 14.10(b) is
implicitly related to equity securities
and not to options on such equity
securities. The Exchange is not
proposing to make any changes to the
6 Rule 14.10(b)(1) requires that prior to the initial
listing of an Affiliate Security on the Exchange,
Exchange personnel shall determine that such
security satisfies the Exchange’s rules for listing,
and such finding must be approved by the
Regulatory Oversight Committee of the Exchange’s
Board of Directors.
7 Rule 14.10(b)(2) requires that throughout the
continued listing of an Affiliate Security on the
Exchange, the Exchange shall prepare a quarterly
report on the Affiliate Security for the Regulatory
Oversight Committee of the Exchange’s Board of
Directors that describes the Exchange’s monitoring
of the Affiliate Security’s compliance with the
Exchange’s listing standards, including: The
Affiliate Security’s compliance with the Exchange’s
minimum share price requirement; and the Affiliate
Security’s compliance with each of the quantitative
continued listing requirements.
8 Rule 14.10(b)(3) requires that once a year, an
independent accounting firm shall review the
listing standards for the Affiliate Security to ensure
that the issuer is in compliance with the listing
requirements and a copy of the report shall be
forwarded promptly to the Regulatory Oversight
Committee of the Exchange’s Board of Directors.
9 Rule 14.10(b)(4) requires that in the event that
the Exchange determines that the EDGA Affiliate is
not in compliance with any of the Exchange’s
listing standards, the Exchange shall notify the
issuer of such non-compliance promptly and
request a plan of compliance. The Exchange shall
file a report with the Commission within five
business days of providing such notice to the issuer
of its non-compliance. The report shall identify the
date of the non-compliance, type of noncompliance, and any other material information
conveyed to the issuer in the notice of noncompliance. Within five business days of receipt of
a plan of compliance from the issuer, the Exchange
shall notify the Commission of such receipt,
whether the plan of compliance was accepted by
the Exchange or what other action was taken with
respect to the plan and the time period provided to
regain compliance with the Exchange’s listing
standards, if any.
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Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Notices
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requirement for all Affiliate Securities
(including options) under Rule 14.10(c)
that ‘‘[t]hroughout the trading of an
Affiliate Security on the Exchange, the
Exchange shall prepare a quarterly
report on the Affiliate Security for the
Regulatory Oversight Committee of the
Exchange’s Board of Directors that
describes the Exchange’s monitoring of
the trading of the Affiliate Security,
including summaries of all related
surveillance alerts, complaints,
regulatory referrals, trades cancelled or
adjusted pursuant to Exchange Rules,
investigations, examinations, formal and
informal disciplinary actions, exception
reports and trading data used to ensure
the Affiliate Security’s compliance with
the Exchange’s listing and trading
rules.’’ As such, the Exchange will
continue to prepare reports on all
Affiliate Securities (including those that
are Exchange-listed options) as required
under Rule 14.10(c).
2. Statutory Basis
The Exchange believes that the
proposal is consistent with Section 6(b)
of the Act 10 in general and Section
6(b)(5) of the Act 11 in particular in that
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
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.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, 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,
because the proposed changes would
reduce the paperwork received by the
Commission and ease the burden of
submitting the Quarterly Reports and
Annual Reports, without changing the
information available to the
Commission. In discussions with the
Commission Staff regarding Rule 14.10,
it was determined that the Exchange no
longer needed to provide copies of the
10 15
11 15
17:19 Nov 12, 2020
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
Exchange believes that the proposed
changes to eliminate the requirement
that the Exchange submit copies of the
Quarterly Reports and Annual Reports
to the Commission and excluding
options on Affiliate Securities from the
requirements of Rule 14.10(b) will have
no impact on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Sep<11>2014
Quarterly Reports and Annual Reports
to the Commission. The Quarterly
Reports and Annual Reports would
continue to be available to the
Commission, as they are subject to
Section 17 of the Act 12 and Rule 17a–
1 thereunder,13 pursuant to which the
Exchange is required to keep and
preserve copies of the Quarterly Reports
and Annual Reports, and to promptly
furnish to the Commission copies of
such Reports upon request of any
representative of the Commission.
Finally, the Exchange believes that
the clarifying change to exclude options
on Affiliate Securities from the
requirements of Rule 14.10(b) would
promote just and equitable principles of
trade and remove impediments to a free
and open market by making clear that
certain obligations that implicitly did
not apply to options on Affiliate
Securities do not, in fact, apply. As
noted above, the Exchange will continue
to prepare reports on all Affiliate
Securities that include summaries of all
related surveillance alerts, complaints,
regulatory referrals, trades cancelled or
adjusted pursuant to Exchange Rules,
investigations, examinations, formal and
informal disciplinary actions, exception
reports and trading data used to ensure
the Affiliate Security’s compliance with
the Exchange’s listing and trading rules
(including those that are Exchangelisted options) as required under Rule
14.10(c).
13 17
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PO 00000
U.S.C. 78q.
CFR 240.17a–1.
Frm 00098
Fmt 4703
Sfmt 4703
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 14 and Rule 19b–
4(f)(6) thereunder.15
A proposed rule change filed under
Rule 19b–4(f)(6) 16 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b–4(f)(6)(iii),17 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay to
allow the Exchange to make the
proposed changes to its rules without
unnecessary delay in order to be
consistent with those already in place
on BZX, its affiliate. The Commission
notes that the proposed rule change is
based on and substantively identical to
the rules of BZX.18 For this reason, the
Commission believes that waiver of the
30-day operative delay is consistent
with the protection of investors and the
public interest. Accordingly, the
Commission waives the 30-day
operative delay and designates the
proposal operative upon filing.19
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.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
14 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
18 See supra note 3.
19 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
15 17
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Federal Register / Vol. 85, No. 220 / Friday, November 13, 2020 / Notices
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:
[FR Doc. 2020–25058 Filed 11–12–20; 8:45 am]
Electronic Comments
BILLING CODE 8011–01–P
• 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–
CboeEDGA–2020–028 on the subject
line.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34088; 812–15177]
Upstart Holdings, Inc.
Paper Comments
November 9, 2020.
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE,
Washington, DC 20549–1090.
AGENCY:
All submissions should refer to File
Number SR–CboeEDGA–2020–028. 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–CboeEDGA–2020–028 and
should be submitted on or before
December 4, 2020.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
Notice of an application under
Section 6(c) of the Investment Company
Act of 1940 (the ‘‘Act’’).
SUMMARY OF APPLICATION: Applicant
requests an order to permit it directly,
and through wholly-owned subsidiaries,
to operate an artificial intelligence
(‘‘AI’’)-based lending platform
(‘‘Platform’’) that facilitates the issuance
of small consumer general purpose
loans, and conduct related activities,
without being subject to the provisions
of the Act.
APPLICANT: Upstart Holdings, Inc.
FILING DATES: The application was filed
on November 5, 2020.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov and serving Applicant
with a copy of the request by email.
Hearing requests should be received by
the Commission by 5:30 p.m. on
November 30, 2020, and should be
accompanied by proof of service on the
Applicant, in the form of an affidavit or,
for lawyers, a certificate of service.
Pursuant to rule 0–5 under the Act,
hearing requests should state the nature
of the writer’s interest, any facts bearing
upon the desirability of a hearing on the
matter, the reason for the request, and
the issues contested. Persons who wish
to be notified of a hearing may request
by emailing the Commission’s Secretary.
ADDRESSES: The Commission,
Secretarys-Office@sec.gov; Applicant,
2950 S. Delaware Street, Suite 300, San
Mateo, California 94403.
FOR FURTHER INFORMATION CONTACT:
Rochelle Plesset, Senior Counsel, or
David Marcinkus, Branch Chief, at (202)
20 17
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17:19 Nov 12, 2020
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PO 00000
CFR 200.30–3(a)(12).
Frm 00099
Fmt 4703
Sfmt 4703
551–6821 (Division of Investment
Management, Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
APPLICANT’S REPRESENTATIONS:
1. Upstart Network Inc. (‘‘UNI’’), a
Delaware corporation established in
2012, originally began as an internetbased platform that connected graduates
with investors who provided funding in
return for a portion of the graduate’s
earnings. As part of its operations, UNI
used AI and modelling to assess a
graduate’s future income. In 2014, UNI
adapted its AI model to support the
origination of consumer loans and
changed its business model to that of
operating the Platform and conducting
related activities.
2. Applicant states that, pursuant to a
restructuring, Applicant was
incorporated in December 2013 to
become the holding company of UNI,
which in turn became its wholly-owned
subsidiary. Applicant states that it
operates its business, directly and
indirectly, through UNI. Accordingly,
Applicant’s assets consist entirely of its
interest in UNI. Applicant has publicly
filed a Form S–1 registration statement
and intends to effect an initial public
offering (‘‘IPO’’) of its equity securities.
3. Applicant states that UNI develops
AI models that are generally used by
partner U.S. banks to quantify the credit
risk of potential borrowers and to
determine whether to originate a loan if
the AI model shows the loan meets
applicable underwriting standards. UNI
also operates the Platform, which among
other things, aggregates consumer
demand for the loans, and connects that
demand to the banks for purposes of
originating the loans. Through the
Platform, UNI provides banks a broad
range of services, including an
application flow interface used to
facilitate origination of loans, risk
underwriting, verification of borrower
information, and support for borrowers
during the origination. Banks can use
these services either by originating loans
on the Platform or by ‘‘white-labelling’’
the technology on their own websites.1
1 Applicant notes that UNI recently began
operating a pilot program in which it originates
through its Platform a new auto loan product.
Applicant states that while it generally prefers to
collaborate with a bank partner, in this instance it
could test this new product more quickly by
originating the auto loans itself. Applicant states
that UNI in 2020 (through September 30) has
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]]>Agencies
[Federal Register Volume 85, Number 220 (Friday, November 13, 2020)]
[Notices]
[Pages 72716-72718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25058]
[[Page 72716]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90366; File No. SR-CboeEDGA-2020-028]
Self-Regulatory Organizations; Cboe EDGA Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change Rule
14.10, Requirements for Securities Issued by the Exchange or Its
Affiliates
November 6, 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 October 30, 2020, Cboe EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') 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.
---------------------------------------------------------------------------
\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 proposes to amend Rule 14.10 (Requirements for
Securities Issued by the Exchange or its Affiliates) regarding the
requirements for the listing of securities that are issued by the
Exchange or any of its affiliates. The Exchange notes that the changes
proposed herein are substantively identical to changes adopted on Cboe
BZX Exchange, Inc. (``BZX'').\3\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 86623 (August 9,
2019) 84 FR 41771 (August 15, 2019) (SR-CboeBZX-2019-073) (the ``BZX
Filing'').
---------------------------------------------------------------------------
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/edga/), at the Exchange's Office of the Secretary, 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 Exchange proposes to amend Rule 14.10 (Requirements for
Securities Issued by the Exchange or its Affiliates) regarding the
requirements for the listing of securities that are issued by the
Exchange or any of its affiliates. The Exchange notes that the changes
proposed herein are substantively identical to changes adopted on Cboe
BZX Exchange, Inc. (``BZX'').\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 86623 (August 9,
2019) 84 FR 41771 (August 15, 2019) (SR-CboeBZX-2019-073) (the ``BZX
Filing'').
---------------------------------------------------------------------------
Rule 14.10 sets forth certain monitoring requirements that must be
met throughout the continued listing and trading of securities issued
by the Exchange or its affiliates. More specifically, Rule 14.10(b) and
(c) provide that:
Throughout the continued listing and trading of an
Affiliate Security \5\ on the Exchange, the Exchange shall prepare a
quarterly report on the Affiliate Security for the Regulatory Oversight
Committee (``ROC'') of the Exchange's Board of Directors that describes
the Exchange's monitoring of the Affiliate Security's compliance with
the Exchange's listing standards (the ``Quarterly Listing Report'');
---------------------------------------------------------------------------
\5\ As defined in Rule 14.10(a)(2), the term ``Affiliate
Security'' means any security issued by a EDGA Affiliate or any
Exchange-listed option on any such security, with the exception of
Portfolio Depository Receipts as defined in Rule 14.8(d) and
Investment Company Units as defined in Rule 14.2.
---------------------------------------------------------------------------
once a year, an independent accounting firm shall review
the listing standards for the Affiliate Security to ensure that the
issuer is in compliance with the listing requirements (``Annual
Report''), and a copy of the Annual Report shall be forwarded promptly
to the ROC; and
throughout the trading of an Affiliate Security on the
Exchange, the Exchange shall prepare a quarterly report on the
Affiliate Security for the Regulatory Oversight Committee of the
Exchange's Board of Directors that describes the Exchange's monitoring
of the trading of the Affiliate Security, including summaries of all
related surveillance alerts, complaints, regulatory referrals, trades
cancelled or adjusted pursuant to Exchange Rules, investigations,
examinations, formal and informal disciplinary actions, exception
reports and trading data used to ensure the Affiliate Security's
compliance with the Exchange's listing and trading rules (the
``Quarterly Trading Report'' and, collectively with the Quarterly
Listing Report, the ``Quarterly Reports'').
Rule 14.10(d) requires that a copy of all Quarterly Reports and
Annual Reports will be forwarded promptly to the Commission.
The Exchange proposes to amend Rule 14.10(d) to remove the
requirement that copies of the Quarterly Reports and Annual Reports be
forwarded to the Commission and instead providing that the Exchange
will forward a copy of the Quarterly Reports and/or Annual Reports to
the Commission upon request.
Finally, the Exchange is proposing to make clear that the
requirements under Rule 14.10(b)(1),\6\ (2),\7\ (3),\8\ and (4) \9\ do
not apply to Affiliate Securities that are Exchange-listed options. The
Exchange is proposing this change because there is no issuer for
options as the term is used in Rule 14.10(b) and each of the
requirements under Rule 14.10(b) is implicitly related to equity
securities and not to options on such equity securities. The Exchange
is not proposing to make any changes to the
[[Page 72717]]
requirement for all Affiliate Securities (including options) under Rule
14.10(c) that ``[t]hroughout the trading of an Affiliate Security on
the Exchange, the Exchange shall prepare a quarterly report on the
Affiliate Security for the Regulatory Oversight Committee of the
Exchange's Board of Directors that describes the Exchange's monitoring
of the trading of the Affiliate Security, including summaries of all
related surveillance alerts, complaints, regulatory referrals, trades
cancelled or adjusted pursuant to Exchange Rules, investigations,
examinations, formal and informal disciplinary actions, exception
reports and trading data used to ensure the Affiliate Security's
compliance with the Exchange's listing and trading rules.'' As such,
the Exchange will continue to prepare reports on all Affiliate
Securities (including those that are Exchange-listed options) as
required under Rule 14.10(c).
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\6\ Rule 14.10(b)(1) requires that prior to the initial listing
of an Affiliate Security on the Exchange, Exchange personnel shall
determine that such security satisfies the Exchange's rules for
listing, and such finding must be approved by the Regulatory
Oversight Committee of the Exchange's Board of Directors.
\7\ Rule 14.10(b)(2) requires that throughout the continued
listing of an Affiliate Security on the Exchange, the Exchange shall
prepare a quarterly report on the Affiliate Security for the
Regulatory Oversight Committee of the Exchange's Board of Directors
that describes the Exchange's monitoring of the Affiliate Security's
compliance with the Exchange's listing standards, including: The
Affiliate Security's compliance with the Exchange's minimum share
price requirement; and the Affiliate Security's compliance with each
of the quantitative continued listing requirements.
\8\ Rule 14.10(b)(3) requires that once a year, an independent
accounting firm shall review the listing standards for the Affiliate
Security to ensure that the issuer is in compliance with the listing
requirements and a copy of the report shall be forwarded promptly to
the Regulatory Oversight Committee of the Exchange's Board of
Directors.
\9\ Rule 14.10(b)(4) requires that in the event that the
Exchange determines that the EDGA Affiliate is not in compliance
with any of the Exchange's listing standards, the Exchange shall
notify the issuer of such non-compliance promptly and request a plan
of compliance. The Exchange shall file a report with the Commission
within five business days of providing such notice to the issuer of
its non-compliance. The report shall identify the date of the non-
compliance, type of non-compliance, and any other material
information conveyed to the issuer in the notice of non-compliance.
Within five business days of receipt of a plan of compliance from
the issuer, the Exchange shall notify the Commission of such
receipt, whether the plan of compliance was accepted by the Exchange
or what other action was taken with respect to the plan and the time
period provided to regain compliance with the Exchange's listing
standards, if any.
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2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act \10\ in general and Section 6(b)(5) of the Act \11\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in 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.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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,
because the proposed changes would reduce the paperwork received by the
Commission and ease the burden of submitting the Quarterly Reports and
Annual Reports, without changing the information available to the
Commission. In discussions with the Commission Staff regarding Rule
14.10, it was determined that the Exchange no longer needed to provide
copies of the Quarterly Reports and Annual Reports to the Commission.
The Quarterly Reports and Annual Reports would continue to be available
to the Commission, as they are subject to Section 17 of the Act \12\
and Rule 17a-1 thereunder,\13\ pursuant to which the Exchange is
required to keep and preserve copies of the Quarterly Reports and
Annual Reports, and to promptly furnish to the Commission copies of
such Reports upon request of any representative of the Commission.
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\12\ 15 U.S.C. 78q.
\13\ 17 CFR 240.17a-1.
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Finally, the Exchange believes that the clarifying change to
exclude options on Affiliate Securities from the requirements of Rule
14.10(b) would promote just and equitable principles of trade and
remove impediments to a free and open market by making clear that
certain obligations that implicitly did not apply to options on
Affiliate Securities do not, in fact, apply. As noted above, the
Exchange will continue to prepare reports on all Affiliate Securities
that include summaries of all related surveillance alerts, complaints,
regulatory referrals, trades cancelled or adjusted pursuant to Exchange
Rules, investigations, examinations, formal and informal disciplinary
actions, exception reports and trading data used to ensure the
Affiliate Security's compliance with the Exchange's listing and trading
rules (including those that are Exchange-listed options) as required
under Rule 14.10(c).
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 Exchange believes that
the proposed changes to eliminate the requirement that the Exchange
submit copies of the Quarterly Reports and Annual Reports to the
Commission and excluding options on Affiliate Securities from the
requirements of Rule 14.10(b) will have no impact on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay to allow the
Exchange to make the proposed changes to its rules without unnecessary
delay in order to be consistent with those already in place on BZX, its
affiliate. The Commission notes that the proposed rule change is based
on and substantively identical to the rules of BZX.\18\ For this
reason, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission waives the 30-day operative delay
and designates the proposal operative upon filing.\19\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ See supra note 3.
\19\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
[[Page 72718]]
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-CboeEDGA-2020-028 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-CboeEDGA-2020-028. 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-CboeEDGA-2020-028 and should be
submitted on or before December 4, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25058 Filed 11-12-20; 8:45 am]
BILLING CODE 8011-01-P
