[Federal Register Volume 77, Number 248 (Thursday, December 27, 2012)]
[Notices]
[Pages 76319-76320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31121]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68489; File No. 4-655]
Self-Regulatory Organizations; BOX Options Exchange LLC; Order
Approving Minor Rule Violation Plan for BOX Options Exchange LLC
December 20, 2012.
On October 15, 2012, BOX Options Exchange LLC (the ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
a proposed minor rule violation plan (``MRVP'') pursuant to Section
19(d)(1) of the Securities Exchange Act of 1934 (the ``Act'') \1\ and
Rule 19d-1(c)(2) thereunder.\2\ The proposed MRVP was published for
public comment on November 13, 2012.\3\ The Commission received no
comments on the proposal. This order approves the Exchange's proposed
MRVP.
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\1\ 15 U.S.C. 78s(d)(1).
\2\ 17 CFR 240.19d-1(c)(2).
\3\ See Securities Exchange Act Release No. 68170 (November 6,
2012), 77 FR 67722 (``Notice'').
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The Exchange's MRVP specifies those uncontested minor rule
violations with sanctions not exceeding $2,500 which would not be
subject to the provisions of Rule 19d-1(c)(1) of the Act \4\ requiring
that a self-regulatory organization (``SRO'') promptly file notice with
the Commission of any final disciplinary action taken with respect to
any person or organization.\5\ In accordance with Rule 19d-1(c)(2)
under the Act, the Exchange proposed to designate certain specified
rule violations as minor rule violations, and requested that it be
relieved of the prompt reporting requirements regarding such
violations, provided it gives notice of such violations to the
Commission on a quarterly basis. The Exchange proposed to include in
its MRVP the procedures and violations currently included in Exchange
Rule 12140 (``Imposition of Fines for Minor Rule Violations'').\6\
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\4\ 17 CFR 240.19d-1(c)(1).
\5\ The Commission adopted amendments to paragraph (c) of Rule
19d-1 to allow SROs to submit for Commission approval plans for the
abbreviated reporting of minor disciplinary infractions. See
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR
23828 (June 8, 1984). Any disciplinary action taken by an SRO
against any person for violation of a rule of the SRO which has been
designated as a minor rule violation pursuant to such a plan filed
with and declared effective by the Commission shall not be
considered ``final'' for purposes of Section 19(d)(1) of the Act if
the sanction imposed consists of a fine not exceeding $2,500 and the
sanctioned person has not sought an adjudication, including a
hearing, or otherwise exhausted his administrative remedies.
\6\ On April 27, 2012, the Exchange's application for
registration as a national securities exchange, including the rules
governing the Exchange, was approved. See Securities Exchange Act
Release No. 66871 (April 27, 2012), 77 FR 26323 (May 3, 2012) (File
No. 10-206).
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According to the Exchange's proposed MRVP, under Exchange Rule
12140, the Exchange may impose a fine (not to exceed $2,500) on a
member or an associated person with respect to any rule violation
listed in Exchange Rule 12140(d).\7\ The Exchange shall serve the
person against whom a fine is imposed with a written statement setting
forth the rule or rules violated, the act or omission constituting each
such violation, the fine imposed for each such violation, and the date
by which such fine shall be paid, such determination becomes final or
such determination must be contested. If the person against whom the
fine is imposed pays the fine, such payment shall be deemed to be a
waiver of such person's right to a disciplinary proceeding and any
review of the matter under the Exchange Rules. Any person against whom
a fine is imposed may contest the Exchange's determination by filing
with the Exchange a written answer, at which point the matter shall
become a disciplinary proceeding.
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\7\ See Notice, supra note 3. The Commission noted that the list
of violations set forth in the Notice corrected certain rule
reference errors that are presently in Exchange Rule 12140. The
Exchange has informed Commission staff that it will submit a rule
filing to correct such errors. Id.
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Upon approval of the plan, the Exchange will provide the Commission
a quarterly report of actions taken on minor rule violations under the
plan. The quarterly report will include, among other things: The
Exchange's internal file number for the case, the name of the
individual and/or organization, the nature of the violation, the
specific rule provision violated, the sanction imposed, the number of
times the rule violation has occurred, and the date of disposition.\8\
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\8\ The Exchange attached a sample form of the quarterly report
with its submission to the Commission.
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The Commission finds that the proposed MRVP is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange. In particular, the
Commission believes that the proposal is consistent with Section
[[Page 76320]]
6(b)(5) of the Act,\9\ which requires that the rules of an exchange be
designed to promote just and equitable principles of trade, 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 Commission also believes that the proposal is
consistent with Sections 6(b)(1) and 6(b)(6) of the Act,\10\ which
require that the exchange enforce compliance with, and provide
appropriate discipline for violations of, Commission and Exchange
rules. In addition, because the MRVP offers procedural rights to a
person sanctioned under Exchange Rule 12140, the Commission believes
that Exchange Rule 12140 provides a fair procedure for the disciplining
of members and persons associated with members, consistent with
Sections 6(b)(7) and 6(d)(1) of the Act.\11\
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\9\ 15 U.S.C. 78f(b)(5).
\10\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
\11\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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Finally, the Commission finds that the proposal is consistent with
the public interest, the protection of investors, or otherwise in
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2)
under the Act,\12\ because the MRVP strengthens the Exchange's ability
to carry out its oversight and enforcement responsibilities as an SRO
in cases where full disciplinary proceedings are unsuitable in view of
the minor nature of the particular violation.
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\12\ 17 CFR 240.19d-1(c)(2).
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In approving this proposal, the Commission in no way minimizes the
importance of compliance with Exchange rules and all other rules
subject to the imposition of sanctions under Exchange Rule 12140. The
Commission believes that the violation of an SRO's rules, as well as
Commission rules, is a serious matter. However, Exchange Rule 12140
provides a reasonable means of addressing violations that do not rise
to the level of requiring formal disciplinary proceedings, while
providing greater flexibility in handling certain violations. The
Commission expects that the Exchange will continue to conduct
surveillance with due diligence and make determinations based on its
findings, on a case-by-case basis, regarding whether a sanction under
the MRVP is appropriate, or whether a violation requires formal
disciplinary action.
It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the
Act,\13\ that the proposed MRVP for BOX Options Exchange LLC, File No.
4-655, be, and hereby is, approved and declared effective.
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\13\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(44).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-31121 Filed 12-26-12; 8:45 am]
BILLING CODE 8011-01-P