Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a Billing Errors Policy and Enable the Exchange To Agree to Alternative Payment Instructions for the Exchange's Direct Debit Collection Process, 58972-58975 [2021-23139]
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Federal Register / Vol. 86, No. 203 / Monday, October 25, 2021 / Notices
information, but it will not yield data
that can be generalized to the overall
population. This type of generic
clearance for information will not be
used for quantitative information
collections that are designed to yield
reliably actionable results, such as
monitoring trends over time or
documenting program performance.
Below are the projected average
estimates for the next three years:
Expected Annual Number of:
Activities: [20].
Respondents: [6,200].
Responses: [6,200].
Frequency of Response: Once per
request.
Average Minutes per Response: [5].
Burden Hours: [517].
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Office, including whether the
information shall have practical utility;
(b) the accuracy of the estimates of the
burden of the proposed collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number.
Please direct your written comments
to: David L. Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
jspears on DSK121TN23PROD with NOTICES1
Dated: October 19, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–23158 Filed 10–22–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93381; File No. SR–MEMX–
2021–12]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Adopt a Billing Errors
Policy and Enable the Exchange To
Agree to Alternative Payment
Instructions for the Exchange’s Direct
Debit Collection Process
October 19, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
12, 2021, MEMX LLC (‘‘MEMX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
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
amend Exchange Rule 15.3 to: (a) Adopt
a policy relating to billing errors that is
substantially similar to the policy
adopted by another group of exchanges;
(b) enable the Exchange, upon request,
to permit a member of the Exchange
(‘‘Member’’) or applicant for registration
as such to provide alternative payment
instructions (i.e., other than a National
Securities Clearing Corporation
(‘‘NSCC’’) clearing account number, as
currently required by Exchange Rule
15.3(a)) for purposes of the Exchange’s
direct debit process for the collection of
fees and other monies due and owing to
the Exchange; and (c) add paragraph
headings and relocate certain existing
text within the Rule. 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
1 15
2 17
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CFR 240.19b–4.
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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
Billing Errors Policy
The Exchange is proposing to adopt a
policy relating to billing errors.
Specifically, the Exchange proposes to
adopt a new paragraph (c) in Rule 15.3
entitled, ‘‘Billing Errors,’’ which would
provide that all fees and rebates
assessed by the Exchange prior to the
three full calendar months before the
month in which the Exchange becomes
aware of a billing error shall be
considered final. Particularly, the
Exchange would resolve such an error
by crediting or debiting affected
Members and non-Member customers of
the Exchange (‘‘Non-Members’’) based
on the fees or rebates that should have
been applied in the three full calendar
months preceding the month in which
the Exchange became aware of the error,
including to all impacted transactions
that occurred during those months.3 The
Exchange would apply the three month
look back regardless of whether the
error was discovered by the Exchange or
by a Member or Non-Member that
submitted a pricing dispute.4
The purpose of the proposed change
is to provide both the Exchange and its
Members and Non-Members finality
with respect to fees and rebates
previously assessed by the Exchange
and the ability to close their books after
a specified time period. The Exchange
notes that Rule 15.3(b) already requires
that pricing disputes must be submitted
to the Exchange in writing and
accompanied by supporting
documentation no later than 60 days
after receipt of a billing invoice, which
3 The Exchange notes that the current policy in
Rule 15.3(b), which states that all pricing disputes
must be submitted no later than sixty (60) days after
receipt of a billing invoice, will remain in place.
4 For example, if the Exchange becomes aware of
a transaction fee billing error on June 4, 2021, the
Exchange will resolve the error by crediting or
debiting Members and Non-Members based on the
fees or rebates that should have been applied to any
impacted transactions during March, April and May
2021. The Exchange notes that because it bills in
arrears, the Exchange would be able to correct the
error in advance of issuing the June 2021 invoice,
and therefore, transactions impacted after the end
of the last full calendar month through the date of
discovery (in this example, after May 31, 2021
through June 4, 2021), and thereafter, would be
billed correctly.
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is designed to encourage prompt review
of Exchange invoices so that any pricing
disputes can be addressed in a timely
manner. The Exchange believes the
proposed change would further the goal
of addressing billing discrepancies in a
timely manner while the information
and data underlying those charges (e.g.,
applicable fees and order information) is
still easily and readily available,
without further limiting the timeframe
in which a pricing dispute may be
submitted. This practice would avoid
issues that may arise when billing errors
are discovered long after they occurred
and the parties have already prepared,
and in some cases published, their
books, and would conserve Exchange
resources that would have to be
expended to resolve untimely billing
disputes. As such, the proposed rule
change would alleviate administrative
burdens related to prior billing errors,
which could divert Exchange staff
resources away from the Exchange’s
regulatory and business purposes.
The Exchange notes that the language
of proposed Rule 15.3(c) is substantially
similar to language included in the fee
schedules of the four Cboe U.S. equities
exchanges—Cboe BZX Exchange, Inc.
(‘‘Cboe BZX’’),5 Cboe BYX Exchange,
Inc. (‘‘Cboe BYX’’),6 Cboe EDGA
Exchange, Inc. (‘‘Cboe EDGA’’),7 and
Cboe EDGX Exchange, Inc. (‘‘Cboe
EDGX’’).8 The Exchange also notes that
a number of other exchanges have
explicitly stated that they consider all
fees to be final after a similar period of
time.9 The proposed billing errors
5 See Cboe BZX equities trading fee schedule on
its public website (available at https://
www.cboe.com/us/equities/membership/fee_
schedule/bzx/). See also Securities Exchange Act
Release No. 90897 (January 11, 2021), 86 FR 4161
(January 15, 2021) (SR-CboeBZX–2020–094).
6 See Cboe BYX equities trading fee schedule on
its public website (available at https://
www.cboe.com/us/equities/membership/fee_
schedule/byx/). See also Securities Exchange Act
Release No. 90899 (January 11, 2021), 86 FR 4156
(January 15, 2021) (SR–CboeBYX–2020–034).
7 See Cboe EDGA equities trading fee schedule on
its public website (available at https://
www.cboe.com/us/equities/membership/fee_
schedule/edga/). See also Securities Exchange Act
Release No. 90897 (January 11, 2021), 86 FR 4161
(January 15, 2021) (SR–CboeBZX–2020–094).
8 See Cboe EDGX equities trading fee schedule on
its public website (available at https://
www.cboe.com/us/equities/membership/fee_
schedule/edgx/). See also Securities Exchange Act
Release No. 90901 (January 11, 2021), 86 FR 4137
(January 15, 2021) (SR–CboeEDGX–2020–064).
9 See, e.g., Securities Exchange Act Release No.
34–91836 (May 11, 2021), 86 FR 26765 (May 17,
2021) (SR–BOX–2021–08); Securities Exchange Act
Release No. 87650 (December 3, 2019), 84 FR 67304
(December 9, 2019) (SR–NYSECHX–2019–024);
Securities Exchange Act Release No. 84430 (October
16, 2018), 83 FR 53347 (October 22, 2018)
(SRNYSENAT–2018–23); and Securities Exchange
Act Release No. 79060 (October 6, 2016), 81 FR
70716 (October 13, 2016) (SR–ISEGemini–2016–11).
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policy would apply to all fees and
rebates assessed by the Exchange.
Finally, the Exchange notes that the
proposed billing errors policy is not
intended to circumvent or supersede
any audit process with respect to the
Exchange’s market data offering, which
is intended to ensure that market data
recipients are in compliance with the
terms of the applicable market data
subscriber agreement. Thus, the
proposed billing errors policy would not
apply to, or otherwise affect the
Exchange’s or any market data
recipient’s ability to take a position with
respect to, any fees identified through
any such audit conducted by the
Exchange.10
Alternative Payment Instructions for
Direct Debit
The Exchange is also proposing to
amend Rule 15.3(a) to enable the
Exchange, upon request, to permit a
Member or applicant for registration as
such to provide alternative payment
instructions (i.e., other than an NSCC
clearing account number, as currently
required by Rule 15.3(a)) for purposes of
the Exchange’s direct debit process for
the collection of fees and other monies
due and owing to the Exchange.
Specifically, the proposed rule change
would provide that the Exchange will,
upon request, waive the current
requirement in Rule 15.3(a) for a
Member or applicant for registration as
such to provide an NSCC clearing
account number and instead require
such Member or applicant to provide
alternative payment instructions as
agreed to by the Exchange for purposes
of permitting the Exchange to debit any
of the fees, fines, charges and/or other
monetary sanctions or other monies due
and owing to the Exchange listed in
Rule 15.3(a). The proposed rule change
would further provide that the Exchange
reserves the right to require any such
Member or applicant to provide an
NSCC clearing account number for such
purposes if the Exchange encounters
repeated failed collection attempts using
the alternative payment instructions.
The purpose of the proposed change
is to provide the Exchange with the
flexibility to agree to an alternative
payment arrangement with a Member or
applicant for registration as such, if
such Member or applicant so requests,
as the Exchange understands that
certain Members or applicants may have
an operational burden associated with
remitting payment to the Exchange
10 The Exchange notes that it does not currently
charge any fees for its market data, and therefore
does not currently conduct audits of market data
recipients, but may do so in the future.
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58973
through an NSCC clearing account.
Under the proposed rule change, any
such alternative payment instructions
must: (i) Be agreed to by the Exchange;
and (ii) permit the Exchange to initiate
the debit of any fees and other monies
due and owing to the Exchange in a
manner similar to the current
requirement with respect to an NSCC
clearing account (i.e., a direct debit
process).11 The requirement that such
alternative payment instructions must
be agreed to by the Exchange is
intended to be an objective standard,
and the Exchange’s ability to agree to
such alternative payment instructions
would be exercised uniformly with
respect to any Member or applicant that
so requests to the extent such alternative
payment instructions reasonably appear
to permit the Exchange to utilize a
direct debit process.
Addition of Paragraph Headings and
Relocation of Existing Rule Text
Lastly, the Exchange proposes to add
paragraph headings and relocate certain
existing text within Rule 15.3 for
organization purposes. Specifically, the
Exchange is proposing to add paragraph
headings to entitle paragraph (a) as
‘‘Collection Through Direct Debit’’;
paragraph (b) as ‘‘Pricing Disputes’’; and
proposed new paragraph (c) as ‘‘Billing
Errors’’. Additionally, the Exchange is
proposing to relocate existing Rule text
related to pricing dispute procedures
that is currently located in paragraph
(a), which otherwise addresses
procedures related to the Exchange’s
direct debit process for the collection of
fees and other monies due and owing to
the Exchange, to paragraph (b), which
contains procedures related to pricing
disputes, as the Exchange believes that
including such Rule text in paragraph
(b) is more appropriate. The Exchange is
not proposing to amend any of the Rule
text being relocated. These proposed
changes are non-substantive and are
intended to provide greater context and
organization within Rule 15.3 and make
such Rule easier to navigate and
understand.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,12 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,13 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
11 See Securities Exchange Act Release No. 89784
(September 8, 2020), 85 FR 56672 (September 14,
2020) (SR–MEMX–2020–06) for additional details
regarding the Exchange’s direct debit process.
12 15 U.S.C. 78f(b).
13 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 86, No. 203 / Monday, October 25, 2021 / Notices
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 also
believes the proposed rule change is
consistent with the Section 6(b)(5) 14
requirement that the rules of an
exchange not be designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(1) 15 requirement that it
be so organized and have the capacity
to be able to carry out the purposes of
the Act and to comply, and to enforce
compliance by its Members and persons
associated with its Members, with the
provisions of the Act, the rules and
regulations thereunder, and the
Exchange’s Rules.
With respect to the proposed policy
relating to billing errors, the Exchange
believes that providing that all fees and
rebates are final after three months (i.e.,
resolving billing errors only for the three
full calendar months preceding the
month in which the Exchange became
aware of the error) is reasonable and
consistent with the Act as both the
Exchange and its Members and NonMembers have an interest in knowing
when its fee assessments are final and
when reliance can be placed on those
assessments. Indeed, without some
deadline on billing errors, the Exchange
and its Members and Non-Members
would never be able to close their books
with any confidence. As noted above,
the Exchange believes this proposed
change would conserve Exchange
resources that would have to be
expended to resolve untimely billing
disputes, which could divert Exchange
staff resources away from the
Exchange’s regulatory and business
purposes. For these reasons, the
Exchange believes this proposed change
promotes just and equitable principles
of trade, fosters cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities,
removes impediments to and perfects
the mechanism of a free and open
market and a national market system,
and, in general, protects investors and
the public interest. Furthermore, as
noted above, the language of proposed
Rule 15.3(c) is substantially similar to
language included in the fee schedules
of the four Cboe U.S. equities
exchanges,16 and a number of other
exchanges similarly consider their fees
final after a similar period of time.17 As
such, this proposed change does not
raise any new or novel issues that have
not been previously considered by the
Commission. This proposed change is
also equitable and not unfairly
discriminatory because it would apply
equally to all Members (and NonMembers that pay Exchange fees) and
would apply in cases where either the
Member (or Non-Member) discovers the
error or the Exchange discovers the
error.
The Exchange believes the proposed
change to enable the Exchange, upon
request, to permit a Member or
applicant for registration as such to
provide alternative payment
instructions (i.e., other than an NSCC
clearing account number, as currently
required by Rule 15.3) for purposes of
the Exchange’s direct debit collection
process is appropriate and consistent
with Section 6(b)(1) of the Act,18 as such
change would provide the Exchange
with the flexibility to agree to an
alternative payment arrangement with a
Member or applicant that has an
operational burden associated with
remitting payment to the Exchange
through an NSCC clearing account,
thereby enabling it to be so organized
and have the capacity to be able to carry
out the purposes of the Act and to
comply, and to enforce compliance by
its Members and persons associated
with its Members, with the Exchange’s
Rules relating to payment of fees and
other monies due and owing to the
Exchange. The Exchange also believes
that reserving the right to revert to the
general rule (i.e., to require an NSCC
clearing account number for direct debit
purposes) with respect to any such
Member or applicant if the Exchange
encounters repeated failed collection
attempts using such alternative payment
instructions is appropriately designed to
ensure that it is able to collect the fees
and other monies due and owing to the
Exchange through its standard
collection process if warranted, and is
thus consistent with the Act for similar
reasons.
Additionally, as this proposed change
is designed to give the Exchange and its
Members flexibility regarding their
payment arrangements while providing
a safeguard by which the Exchange may
16 See
supra notes 7–10.
supra note 11.
18 15 U.S.C. 78(b)(1).
14 Id.
15 15
revert to its standard collection process,
the Exchange believes it would promote
just and equitable principles of trade,
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, protect investors and the public
interest. This proposed change is also
equitable and not unfairly
discriminatory because it is based on
objective standards and would apply
equally to all Members and applicants
for registration as such, as described
above.
Finally, the Exchange believes the
proposed changes to add paragraph
headings and relocate certain existing
Rule text related to pricing disputes to
the appropriate paragraph within Rule
15.3 would remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, as such changes would provide
greater context and organization within
the Rule, which would assist Members
in locating the relevant text within the
Rule and therefore make the Rule easier
to navigate and understand. As noted
above, the Rule text being relocated is
not being amended by this proposal. For
the foregoing reasons, the Exchange
believes these proposed changes are
non-substantive and consistent with the
Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposal will impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act. With respect to the
proposed billing errors policy, the
proposal would establish a clearly
defined timeframe for fees and rebates
to be considered final that would apply
equally to all Members and NonMembers. Additionally, as noted above,
this proposed change is similar to rules
of other exchanges and therefore does
not raise any new or novel issues that
have not been previously considered by
the Commission.19 The proposed
change to enable the Exchange to agree
to alternative payment instructions for
the Exchange’s direct debit collection
process would also apply equally to all
Members and applicants for registration
as such, as the opportunity to request
that the Exchange agree to alternative
payment instructions is available to any
such Member or applicant and the
17 See
U.S.C. 78(b)(1).
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19 See
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Exchange’s ability to agree to such
alternative payment instructions would
be exercised uniformly on an objective
basis. Such change, as well as the nonsubstantive changes to add paragraph
headings and relocate existing Rule text
within Rule 15.3, do not address
competitive issues but are concerned
solely with the administration of the
Exchange. For these reasons, the
Exchange does not believe such
proposed changes would impair the
ability of Members or competing order
execution venues to maintain their
competitive standing in the financial
markets, and therefore, the Exchange
does not believe the proposal will
impose any burden on intermarket
competition. Moreover, because the
proposed changes would apply equally
to all Members and Non-Members, as
applicable, the Exchange does not
believe the proposal would impose any
burden on intramarket competition.
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. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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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)(iii) of the Act 20 and
subparagraph (f)(6) of Rule 19b–4
thereunder.21
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
20 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4. In addition, Rule 19b–4(f)(6)
requires a self-regulatory organization to give the
Commission written notice of its intent to file 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.
21 17
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change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
MEMX–2021–12 on the subject line.
58975
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–23139 Filed 10–22–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93386; File No. SR–CFE–
2021–008]
Self-Regulatory Organizations; Cboe
Futures Exchange, LLC; Notice of a
Filing of a Proposed Rule Change
Regarding Disruptive Trading
Practices
Paper Comments
October 19, 2021.
• 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–2021–12. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–MEMX–2021–12 and
should be submitted on or before
November 15, 2021.
Pursuant to Section 19(b)(7) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
October 5, 2021 Cboe Futures Exchange,
LLC (‘‘CFE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change described in Items
I, II, and III below, which Items have
been prepared by CFE. The Commission
is publishing this notice to solicit
comments on the proposed rule change
from interested persons. CFE also has
filed this proposed rule change with the
Commodity Futures Trading
Commission (‘‘CFTC’’). CFE filed a
written certification with the CFTC
under Section 5c(c) of the Commodity
Exchange Act (‘‘CEA’’) 2 on October 5,
2021.
I. Self-Regulatory Organization’s
Description of the Proposed Rule
Change
The Exchange proposes to provide
additional guidance in its rules
regarding prohibited disruptive
practices.
The rule amendments included as
part of this proposed rule change are to
apply to all products traded on CFE,
including both non-security futures and
any security futures that may be listed
for trading on CFE. The scope of this
filing is limited solely to the application
of the proposed rule change to security
futures that may be traded on CFE.
Although no security futures are
currently listed for trading on CFE, CFE
may list security futures for trading in
the future.
The text of the proposed rule change
is attached as Exhibit 4 to the filing but
is not attached to the publication of this
notice.
1
22 17
PO 00000
CFR 200.30–3(a)(12).
Frm 00117
Fmt 4703
Sfmt 4703
2
15 U.S.C. 78s(b)(7).
7 U.S.C. 7a–2(c).
E:\FR\FM\25OCN1.SGM
25OCN1
]]>Agencies
[Federal Register Volume 86, Number 203 (Monday, October 25, 2021)]
[Notices]
[Pages 58972-58975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-23139]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93381; File No. SR-MEMX-2021-12]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Adopt a Billing
Errors Policy and Enable the Exchange To Agree to Alternative Payment
Instructions for the Exchange's Direct Debit Collection Process
October 19, 2021.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on October 12, 2021, MEMX LLC (``MEMX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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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 amend Exchange Rule 15.3 to: (a) Adopt a policy relating to billing
errors that is substantially similar to the policy adopted by another
group of exchanges; (b) enable the Exchange, upon request, to permit a
member of the Exchange (``Member'') or applicant for registration as
such to provide alternative payment instructions (i.e., other than a
National Securities Clearing Corporation (``NSCC'') clearing account
number, as currently required by Exchange Rule 15.3(a)) for purposes of
the Exchange's direct debit process for the collection of fees and
other monies due and owing to the Exchange; and (c) add paragraph
headings and relocate certain existing text within the Rule. 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
Billing Errors Policy
The Exchange is proposing to adopt a policy relating to billing
errors. Specifically, the Exchange proposes to adopt a new paragraph
(c) in Rule 15.3 entitled, ``Billing Errors,'' which would provide that
all fees and rebates assessed by the Exchange prior to the three full
calendar months before the month in which the Exchange becomes aware of
a billing error shall be considered final. Particularly, the Exchange
would resolve such an error by crediting or debiting affected Members
and non-Member customers of the Exchange (``Non-Members'') based on the
fees or rebates that should have been applied in the three full
calendar months preceding the month in which the Exchange became aware
of the error, including to all impacted transactions that occurred
during those months.\3\ The Exchange would apply the three month look
back regardless of whether the error was discovered by the Exchange or
by a Member or Non-Member that submitted a pricing dispute.\4\
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\3\ The Exchange notes that the current policy in Rule 15.3(b),
which states that all pricing disputes must be submitted no later
than sixty (60) days after receipt of a billing invoice, will remain
in place.
\4\ For example, if the Exchange becomes aware of a transaction
fee billing error on June 4, 2021, the Exchange will resolve the
error by crediting or debiting Members and Non-Members based on the
fees or rebates that should have been applied to any impacted
transactions during March, April and May 2021. The Exchange notes
that because it bills in arrears, the Exchange would be able to
correct the error in advance of issuing the June 2021 invoice, and
therefore, transactions impacted after the end of the last full
calendar month through the date of discovery (in this example, after
May 31, 2021 through June 4, 2021), and thereafter, would be billed
correctly.
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The purpose of the proposed change is to provide both the Exchange
and its Members and Non-Members finality with respect to fees and
rebates previously assessed by the Exchange and the ability to close
their books after a specified time period. The Exchange notes that Rule
15.3(b) already requires that pricing disputes must be submitted to the
Exchange in writing and accompanied by supporting documentation no
later than 60 days after receipt of a billing invoice, which
[[Page 58973]]
is designed to encourage prompt review of Exchange invoices so that any
pricing disputes can be addressed in a timely manner. The Exchange
believes the proposed change would further the goal of addressing
billing discrepancies in a timely manner while the information and data
underlying those charges (e.g., applicable fees and order information)
is still easily and readily available, without further limiting the
timeframe in which a pricing dispute may be submitted. This practice
would avoid issues that may arise when billing errors are discovered
long after they occurred and the parties have already prepared, and in
some cases published, their books, and would conserve Exchange
resources that would have to be expended to resolve untimely billing
disputes. As such, the proposed rule change would alleviate
administrative burdens related to prior billing errors, which could
divert Exchange staff resources away from the Exchange's regulatory and
business purposes.
The Exchange notes that the language of proposed Rule 15.3(c) is
substantially similar to language included in the fee schedules of the
four Cboe U.S. equities exchanges--Cboe BZX Exchange, Inc. (``Cboe
BZX''),\5\ Cboe BYX Exchange, Inc. (``Cboe BYX''),\6\ Cboe EDGA
Exchange, Inc. (``Cboe EDGA''),\7\ and Cboe EDGX Exchange, Inc. (``Cboe
EDGX'').\8\ The Exchange also notes that a number of other exchanges
have explicitly stated that they consider all fees to be final after a
similar period of time.\9\ The proposed billing errors policy would
apply to all fees and rebates assessed by the Exchange. Finally, the
Exchange notes that the proposed billing errors policy is not intended
to circumvent or supersede any audit process with respect to the
Exchange's market data offering, which is intended to ensure that
market data recipients are in compliance with the terms of the
applicable market data subscriber agreement. Thus, the proposed billing
errors policy would not apply to, or otherwise affect the Exchange's or
any market data recipient's ability to take a position with respect to,
any fees identified through any such audit conducted by the
Exchange.\10\
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\5\ See Cboe BZX equities trading fee schedule on its public
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/). See also Securities Exchange Act Release No.
90897 (January 11, 2021), 86 FR 4161 (January 15, 2021) (SR-CboeBZX-
2020-094).
\6\ See Cboe BYX equities trading fee schedule on its public
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/byx/). See also Securities Exchange Act Release No.
90899 (January 11, 2021), 86 FR 4156 (January 15, 2021) (SR-CboeBYX-
2020-034).
\7\ See Cboe EDGA equities trading fee schedule on its public
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edga/). See also Securities Exchange Act Release No.
90897 (January 11, 2021), 86 FR 4161 (January 15, 2021) (SR-CboeBZX-
2020-094).
\8\ See Cboe EDGX equities trading fee schedule on its public
website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/). See also Securities Exchange Act Release No.
90901 (January 11, 2021), 86 FR 4137 (January 15, 2021) (SR-
CboeEDGX-2020-064).
\9\ See, e.g., Securities Exchange Act Release No. 34-91836 (May
11, 2021), 86 FR 26765 (May 17, 2021) (SR-BOX-2021-08); Securities
Exchange Act Release No. 87650 (December 3, 2019), 84 FR 67304
(December 9, 2019) (SR-NYSECHX-2019-024); Securities Exchange Act
Release No. 84430 (October 16, 2018), 83 FR 53347 (October 22, 2018)
(SRNYSENAT-2018-23); and Securities Exchange Act Release No. 79060
(October 6, 2016), 81 FR 70716 (October 13, 2016) (SR-ISEGemini-
2016-11).
\10\ The Exchange notes that it does not currently charge any
fees for its market data, and therefore does not currently conduct
audits of market data recipients, but may do so in the future.
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Alternative Payment Instructions for Direct Debit
The Exchange is also proposing to amend Rule 15.3(a) to enable the
Exchange, upon request, to permit a Member or applicant for
registration as such to provide alternative payment instructions (i.e.,
other than an NSCC clearing account number, as currently required by
Rule 15.3(a)) for purposes of the Exchange's direct debit process for
the collection of fees and other monies due and owing to the Exchange.
Specifically, the proposed rule change would provide that the Exchange
will, upon request, waive the current requirement in Rule 15.3(a) for a
Member or applicant for registration as such to provide an NSCC
clearing account number and instead require such Member or applicant to
provide alternative payment instructions as agreed to by the Exchange
for purposes of permitting the Exchange to debit any of the fees,
fines, charges and/or other monetary sanctions or other monies due and
owing to the Exchange listed in Rule 15.3(a). The proposed rule change
would further provide that the Exchange reserves the right to require
any such Member or applicant to provide an NSCC clearing account number
for such purposes if the Exchange encounters repeated failed collection
attempts using the alternative payment instructions.
The purpose of the proposed change is to provide the Exchange with
the flexibility to agree to an alternative payment arrangement with a
Member or applicant for registration as such, if such Member or
applicant so requests, as the Exchange understands that certain Members
or applicants may have an operational burden associated with remitting
payment to the Exchange through an NSCC clearing account. Under the
proposed rule change, any such alternative payment instructions must:
(i) Be agreed to by the Exchange; and (ii) permit the Exchange to
initiate the debit of any fees and other monies due and owing to the
Exchange in a manner similar to the current requirement with respect to
an NSCC clearing account (i.e., a direct debit process).\11\ The
requirement that such alternative payment instructions must be agreed
to by the Exchange is intended to be an objective standard, and the
Exchange's ability to agree to such alternative payment instructions
would be exercised uniformly with respect to any Member or applicant
that so requests to the extent such alternative payment instructions
reasonably appear to permit the Exchange to utilize a direct debit
process.
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\11\ See Securities Exchange Act Release No. 89784 (September 8,
2020), 85 FR 56672 (September 14, 2020) (SR-MEMX-2020-06) for
additional details regarding the Exchange's direct debit process.
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Addition of Paragraph Headings and Relocation of Existing Rule Text
Lastly, the Exchange proposes to add paragraph headings and
relocate certain existing text within Rule 15.3 for organization
purposes. Specifically, the Exchange is proposing to add paragraph
headings to entitle paragraph (a) as ``Collection Through Direct
Debit''; paragraph (b) as ``Pricing Disputes''; and proposed new
paragraph (c) as ``Billing Errors''. Additionally, the Exchange is
proposing to relocate existing Rule text related to pricing dispute
procedures that is currently located in paragraph (a), which otherwise
addresses procedures related to the Exchange's direct debit process for
the collection of fees and other monies due and owing to the Exchange,
to paragraph (b), which contains procedures related to pricing
disputes, as the Exchange believes that including such Rule text in
paragraph (b) is more appropriate. The Exchange is not proposing to
amend any of the Rule text being relocated. These proposed changes are
non-substantive and are intended to provide greater context and
organization within Rule 15.3 and make such Rule easier to navigate and
understand.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\12\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\13\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
to
[[Page 58974]]
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
also believes the proposed rule change is consistent with the Section
6(b)(5) \14\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers. Additionally, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(1) \15\ requirement that it be so
organized and have the capacity to be able to carry out the purposes of
the Act and to comply, and to enforce compliance by its Members and
persons associated with its Members, with the provisions of the Act,
the rules and regulations thereunder, and the Exchange's Rules.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(5).
\14\ Id.
\15\ 15 U.S.C. 78(b)(1).
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With respect to the proposed policy relating to billing errors, the
Exchange believes that providing that all fees and rebates are final
after three months (i.e., resolving billing errors only for the three
full calendar months preceding the month in which the Exchange became
aware of the error) is reasonable and consistent with the Act as both
the Exchange and its Members and Non-Members have an interest in
knowing when its fee assessments are final and when reliance can be
placed on those assessments. Indeed, without some deadline on billing
errors, the Exchange and its Members and Non-Members would never be
able to close their books with any confidence. As noted above, the
Exchange believes this proposed change would conserve Exchange
resources that would have to be expended to resolve untimely billing
disputes, which could divert Exchange staff resources away from the
Exchange's regulatory and business purposes. For these reasons, the
Exchange believes this proposed change promotes just and equitable
principles of trade, fosters cooperation and coordination with persons
engaged in regulating, clearing, settling, processing information with
respect to, and facilitating transactions in securities, removes
impediments to and perfects the mechanism of a free and open market and
a national market system, and, in general, protects investors and the
public interest. Furthermore, as noted above, the language of proposed
Rule 15.3(c) is substantially similar to language included in the fee
schedules of the four Cboe U.S. equities exchanges,\16\ and a number of
other exchanges similarly consider their fees final after a similar
period of time.\17\ As such, this proposed change does not raise any
new or novel issues that have not been previously considered by the
Commission. This proposed change is also equitable and not unfairly
discriminatory because it would apply equally to all Members (and Non-
Members that pay Exchange fees) and would apply in cases where either
the Member (or Non-Member) discovers the error or the Exchange
discovers the error.
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\16\ See supra notes 7-10.
\17\ See supra note 11.
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The Exchange believes the proposed change to enable the Exchange,
upon request, to permit a Member or applicant for registration as such
to provide alternative payment instructions (i.e., other than an NSCC
clearing account number, as currently required by Rule 15.3) for
purposes of the Exchange's direct debit collection process is
appropriate and consistent with Section 6(b)(1) of the Act,\18\ as such
change would provide the Exchange with the flexibility to agree to an
alternative payment arrangement with a Member or applicant that has an
operational burden associated with remitting payment to the Exchange
through an NSCC clearing account, thereby enabling it to be so
organized and have the capacity to be able to carry out the purposes of
the Act and to comply, and to enforce compliance by its Members and
persons associated with its Members, with the Exchange's Rules relating
to payment of fees and other monies due and owing to the Exchange. The
Exchange also believes that reserving the right to revert to the
general rule (i.e., to require an NSCC clearing account number for
direct debit purposes) with respect to any such Member or applicant if
the Exchange encounters repeated failed collection attempts using such
alternative payment instructions is appropriately designed to ensure
that it is able to collect the fees and other monies due and owing to
the Exchange through its standard collection process if warranted, and
is thus consistent with the Act for similar reasons.
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\18\ 15 U.S.C. 78(b)(1).
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Additionally, as this proposed change is designed to give the
Exchange and its Members flexibility regarding their payment
arrangements while providing a safeguard by which the Exchange may
revert to its standard collection process, the Exchange believes it
would promote just and equitable principles of trade, 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, protect investors and the public interest.
This proposed change is also equitable and not unfairly discriminatory
because it is based on objective standards and would apply equally to
all Members and applicants for registration as such, as described
above.
Finally, the Exchange believes the proposed changes to add
paragraph headings and relocate certain existing Rule text related to
pricing disputes to the appropriate paragraph within Rule 15.3 would
remove impediments to and perfect the mechanism of a free and open
market and a national market system, as such changes would provide
greater context and organization within the Rule, which would assist
Members in locating the relevant text within the Rule and therefore
make the Rule easier to navigate and understand. As noted above, the
Rule text being relocated is not being amended by this proposal. For
the foregoing reasons, the Exchange believes these proposed changes are
non-substantive and consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. With respect to the proposed
billing errors policy, the proposal would establish a clearly defined
timeframe for fees and rebates to be considered final that would apply
equally to all Members and Non-Members. Additionally, as noted above,
this proposed change is similar to rules of other exchanges and
therefore does not raise any new or novel issues that have not been
previously considered by the Commission.\19\ The proposed change to
enable the Exchange to agree to alternative payment instructions for
the Exchange's direct debit collection process would also apply equally
to all Members and applicants for registration as such, as the
opportunity to request that the Exchange agree to alternative payment
instructions is available to any such Member or applicant and the
[[Page 58975]]
Exchange's ability to agree to such alternative payment instructions
would be exercised uniformly on an objective basis. Such change, as
well as the non-substantive changes to add paragraph headings and
relocate existing Rule text within Rule 15.3, do not address
competitive issues but are concerned solely with the administration of
the Exchange. For these reasons, the Exchange does not believe such
proposed changes would impair the ability of Members or competing order
execution venues to maintain their competitive standing in the
financial markets, and therefore, the Exchange does not believe the
proposal will impose any burden on intermarket competition. Moreover,
because the proposed changes would apply equally to all Members and
Non-Members, as applicable, the Exchange does not believe the proposal
would impose any burden on intramarket competition.
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\19\ See supra notes 7-11.
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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. 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)(iii) of the Act \20\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\21\
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\20\ 15 U.S.C. 78s(b)(3)(A)(iii).
\21\ 17 CFR 240.19b-4. In addition, Rule 19b-4(f)(6) requires a
self-regulatory organization to give the Commission written notice
of its intent to file 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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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MEMX-2021-12 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-MEMX-2021-12. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MEMX-2021-12 and should be submitted on
or before November 15, 2021.
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\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-23139 Filed 10-22-21; 8:45 am]
BILLING CODE 8011-01-P
