[Federal Register Volume 78, Number 164 (Friday, August 23, 2013)]
[Notices]
[Pages 52596-52598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20613]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70231; File No. SR-EDGA-2013-25]
Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate
EDGA Rule 13.4
August 19, 2013.
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 August 7, 2013, EDGA Exchange, Inc. (``Exchange'' or ``EDGA'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II and III below, which
items have been prepared by the self-regulatory organization. EDGA
filed the proposal pursuant to Section 19(b)(3)(A) \3\ of the Act and
Rule 19b-4(f)(6) \4\ thereunder so that the proposal was effective upon
filing with the Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to eliminate Rule 13.4, ``Assigning of
Registered Securities in the Name of a Member or Member Organization,''
which permits the Exchange to establish a signature guarantee program.
All of the changes described herein are applicable to Members.\5\ The
text of the proposed rule change is available on the Exchange's
Internet Web site at www.directedge.com, at the Exchange's principal
office, and at the Public Reference Room of the Commission.
---------------------------------------------------------------------------
\5\ A Member is any registered broker or dealer, or any person
associated with a registered broker or dealer that has been admitted
to membership in the Exchange.
---------------------------------------------------------------------------
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 self-regulatory organization
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 self-regulatory organization
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to eliminate Rule 13.4, ``Assigning of
Registered Securities in the Name of a Member or Member Organization,''
which permits the Exchange to establish a signature guarantee program.
In sum, a signature guarantee program allows an investor who seeks to
transfer or sell securities held in physical certificate form to have
their signature on the certificate ``guaranteed.'' Rule 13.4 permits
Members to guarantee their signatures by authorizing one or more of
their employees to assign registered securities in the Member's name
and to guarantee assignments of registered securities on behalf of the
Member where the security had been signed by one of the partners of the
Member or by one of the authorized officers of the Member by executing
and filing with the Exchange a separate Power of Attorney, also known
as a traditional signature card program. Transfer agents often insist
that a signature be guaranteed before they accept the transaction
because it limits their liability and losses if a signature turns out
to be forged.
Rule 17Ad-15 under the Act permits transfer agents to reject
signature guarantees from eligible guarantor institutions that are not
part of a signature guarantee program.\6\ The rule encouraged a
movement away from the traditional signature card programs administered
by the exchanges towards signature guarantee programs that use a
medallion imprint or stamp which evidences their participation in the
program and is an acceptable signature guarantee (``Medallion Signature
Guarantee Program'').\7\ The Commission has also noted that:
\6\ See 17 CFR 240.17Ad-15; Securities Exchange Act Release No.
30146 (January 10, 1992), 57 FR 1082 (February 24, 1992) (adopting
Rule 17Ad-15).
\7\ See, e.g., Securities Exchange Act Release No. 33669
(February 23, 1994), 59 FR 10189 (March 3, 1994) (SR-MSTC-93-13)
(``[t]his newly adopted Rule 17Ad-15 rule rendered [Midwest
Securities Trust Company's (``MSTC'')] Signature Distribution
Program and Signature Guarantee Program obsolete. Therefore, to
avoid costs that produce no benefits, MSTC eliminated its Signature
Distribution and Signature Guarantee Programs and deleted MSTC Rule
5, Sections 1 and 2 which govern these programs'').
[a]n investor can obtain a signature guarantee from a financial
institution--such as a commercial bank, savings bank, credit union,
or broker dealer--that participates in one of the Medallion
signature guarantee programs. . . . If a financial institution is
not a member of a recognized Medallion Signature Guarantee Program,
it would not be able to provide signature guarantees. Also, if [an
investor is] not a customer of a participating financial
institution, it is likely the financial institution will not
guarantee [the investor's] signature. Therefore, the best source of
a Medallion Guarantee would be a bank, savings and loan association,
brokerage firm, or credit union with which [the investor does]
business.\8\
---------------------------------------------------------------------------
\8\ See ``Signature Guarantees: Preventing the Unauthorized
Transfer of Securities,'' http://www.sec.gov/answers/sigguar.htm
(last modified May 20, 2009).
In response to Rule 17Ad-15, certain exchanges have decommissioned
or amended their rules to no longer provide for traditional signature
card program.\9\ While the Exchange adopted Rule 13.4 as part of its
Form 1 exchange application,\10\ it has never offered, and does not now
intend to offer, a signature
[[Page 52597]]
guarantee service. The move towards Medallion Signature Guarantee
Programs has also rendered traditional card programs as provided for
under Exchange Rule 13.4 obsolete. Therefore, the Exchange proposes to
eliminate Rule 13.4.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 34188 (June 9,
1994), 59 FR 30820 (June 15, 1994) (SR-MSTC-93-13) (order approving
the elimination of MSTC's signature guarantee program stating that
Rule 17Ad-15 rendered it obsolete); Securities Exchange Act Release
No. 32590 (July 7, 1993), 58 FR 37978 (July 14, 1993) (order
approving SR-PHLX-92-39 eliminating the PHLX's signature guarantee
program in light of Rule 17Ad-15) (noting that ``[b]y eliminating
its signature guarantee program, PHLX will streamline the signature
guarantee process. In place of the cumbersome signature card system,
PHLX will require participation in a Rule 17Ad-15 Signature
Guarantee Program''). In 2006, the Philadelphia Stock Exchange, Inc.
(currently Nasdaq OMX PHLX LLC) (``PHLX'') eliminated Rules 327--340
regarding signature guarantees in their entirety from its rulebook,
noting that they are ``being deleted as obsolete because they refer
to the delivery and settlement of securities, which is not done by
the Exchange, but by registered clearing agencies.'' Securities
Exchange Act Release No. 54329 (August 17, 2006), 71 FR 504538
(August 25, 2006) (SR-PHLX-2006-43); Securities Exchange Act Release
No. 54538 (September 28, 2006), 71 FR 59184 (October 6, 2006 (order
approving SR-PHLX-2006-43).
\10\ See Securities Exchange Act Release No. 60651 (September
11, 2009), 74 FR 47827 (September 17, 2009) (File Nos. 10.193 and
10-194) (Notice of Filing of Exchange Applications for EDGA and EDGX
Exchange, Inc. (``EDGX'')); Securities Exchange Act Release No.
61698 (March 12, 2010), 75 FR 13151 (March 18, 2010) (File Nos. 10-
193 and 10-194) (Order Approving Exchange Applications for EDGA and
EDGX).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \11\ and furthers the objectives of
Section 6(b)(5) of the Act,\12\ in that it is designed promote just and
equitable principles of trade, 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 by eliminating
unnecessary confusion with respect to the Exchange's rules. Rule 17Ad-
15 encouraged a movement away from the traditional signature card
programs administered by the exchanges towards certain Medallion
Signature Guarantee Programs. In response, certain exchanges have
decommissioned or amended their rules to no longer provide for a
traditional signature card program.\13\ The Exchange has never offered,
and does not now intend to offer, a signature guarantee service. Also,
the move towards Medallion Signature Guarantee Programs has rendered
traditional card programs as provided for under Exchange Rule 13.4
obsolete. Therefore, the Exchange believes eliminating Rule 13.4 would
clarify the Exchange's rules by eliminating rules that account for
services the Exchange does not provide. The Exchange also believes the
elimination of unnecessary and obsolete rules removes impediments to
the perfection of the mechanisms for a free and open market system
consistent with the requirements of Section 6(b)(5) of the Act.\14\
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
\13\ See Securities Exchange Act Release No. 34188 (June 9,
1994), 59 FR 30820 (June 15, 1994) (SR-MSTC-93-13) (order approving
the elimination of MSTC's signature guarantee program stating that
Rule 17Ad-15 rendered it obsolete); Securities Exchange Act Release
No. 32590 (July 7, 1993), 58 FR 37978 (July 14, 1993) (SR-PHLX-92-
39) (order approving SR-PHLX-92-39 eliminating the PHLX's signature
guarantee program in light of Rule 17Ad-15).
\14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition.
Rule 17Ad-15 encouraged a movement away from the traditional signature
card programs administered by the exchanges towards certain Medallion
Signature Guarantee Programs. In response, certain exchanges have
decommissioned or amended their rules to no longer provide for a
traditional signature card program.\15\ An investor may still obtain a
signature guarantee from a financial institution that participates in
one of the Medallion Signature Guarantee Programs. The Exchange has
never offered, and does not intend to offer, a signature guarantee
service. Also, the move towards Medallion Signature Guarantee Programs
has rendered traditional card programs as provided for under Exchange
Rule 13.4 obsolete. Therefore, the Exchange believes eliminating Rule
13.4 would not impose any burden on competition.
---------------------------------------------------------------------------
\15\ See Securities Exchange Act Release No. 34188 (June 9,
1994), 59 FR 30820 (June 15, 1994) (SR-MSTC-93-13) (order approving
the elimination of MSTC's signature guarantee program stating that
Rule 17Ad-15 rendered it obsolete); Securities Exchange Act Release
No. 32590 (July 7, 1993), 58 FR 37978 (July 14, 1993) (SR-PHLX-92-
39) (order approving SR-PHLX-92-39 eliminating the PHLX's signature
guarantee program in light of Rule 17Ad-15).
---------------------------------------------------------------------------
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
The proposed rule change has become effective pursuant to Section
19(b)(3)(A) \16\ of the Act and Rule 19b-4(f)(6) \17\ thereunder. The
proposed rule change effects a change that (A) Does not significantly
affect the protection of investors or the public interest; (B) does not
impose any significant burden on competition; and (C) by its terms,
does not become operative for 30 days after the date of the filing, or
such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest; provided that the
self-regulatory organization has given 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.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
The Exchange provided the Commission with 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 (5) business days
prior to the date of filing.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change meets the
criteria of subparagraph (f)(6) of Rule 19b-4 \19\ because it would
clarify the Exchange's rules by eliminating rules that account for
services the Exchange does not provide. The Exchange has never offered,
and does not intend to offer, a signature guarantee service. Rule 17Ad-
15 encouraged a movement away from the traditional signature card
programs administered by the exchanges towards certain Medallion
Signature Guarantee Programs. This move towards Medallion Signature
Guarantee Programs has rendered traditional card programs as provided
for under Exchange Rule 13.4 obsolete. Today, an investor can obtain a
signature guarantee from a financial institution that participates in
one of the Medallion Signature Guarantee Programs. Therefore, the
Exchange believes eliminating Rule 13.4 is non-controversial because it
would clarify the Exchange's rules by eliminating rules that account
for services the Exchange does not provide. Accordingly, the Exchange
has designated this rule filing as non-controversial under Section
19(b)(3)(A) of the Act \20\ and paragraph (f)(6) of Rule 19b-4
thereunder.\21\
---------------------------------------------------------------------------
\19\ 17 CFR 240.19b-4(f)(6).
\20\ 15 U.S.C. 78s(b)(3)(A).
\21\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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
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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please
include File Number SR-EDGA-2013-25 on the subject line.
[[Page 52598]]
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-EDGA-2013-25. 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 Web site (http://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 Web site 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; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-EDGA-2013-25
and should be submitted on or before September 13, 2013.
---------------------------------------------------------------------------
\22\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20613 Filed 8-22-13; 8:45 am]
BILLING CODE 8011-01-P