[Federal Register Volume 79, Number 60 (Friday, March 28, 2014)]
[Notices]
[Pages 17613-17615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06965]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71777; File No. SR-EDGX-2014-06]
Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Add a
Reference to Rule 10C-1 Under the Exchange Act in EDGX Rule 14.1
Concerning Unlisted Trading Privileges
March 24, 2014.
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 March 12, 2014, EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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. 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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[[Page 17614]]
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange is filing with the Commission a proposal to amend
Exchange Rule 14.1 to make clear that the Exchange will not list equity
securities without first ensuring that its rules comply with Rule 10C-1
under the Act (``Rule 10C-1''). 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.
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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Exchange Rule 14.1 to make clear
that the Exchange will not list equity securities without first
ensuring that its rules comply with Rule 10C-1.
On March 30, 2011, to implement Section 10C of the Act, as added by
Section 952 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010,\3\ the Commission proposed Rule 10C-1 under the
Act,\4\ which directs each national securities exchange to prohibit the
listing of any equity security of any issuer, with certain exceptions,
that does not comply with the rule's requirements regarding
compensation committees of listed issuers and related requirements
regarding compensation advisers. On June 20, 2012, the Commission
adopted Rule 10C-1.\5\
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\3\ Public Law 111-203, 124 Stat. 1900 (2010).
\4\ See Securities Act Release No. 9199, Securities Exchange Act
Release No. 64149 (March 30, 2011), 76 FR 18966 (April 6, 2011)
(``Rule 10C-1 Proposing Release'').
\5\ See 17 CFR 240.10C-1 and Securities Exchange Act Release No.
67220 (June 20, 2012), 77 FR 38422 (June 27, 2012) (``Rule 10C-1
Adopting Release'').
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Exchange Rule 14.1 states that the Exchange extends unlisted
trading privileges (``UTP'') to equity securities listed on another
national securities exchange.\6\ Rule 14.1 further states that, should
the Exchange wish to permit the listing of equity securities, pursuant
to Rules 14.2 through 14.9, it must first file a proposed rule change
with the Commission amending its rules to comply with Rule 10A-3 under
the Act, among other requirements.\7\ Accordingly, the Exchange
proposes to add a reference to Rule 10C-1 under the Act, which requires
securities exchanges that list equity securities to adopt rules
relating to the independence of compensation committees and their
advisers.\8\ In particular, the following change will be made to the
text of Rule 14.1(a) (proposed text to be added is underlined):
\6\ See Exchange Rule 14.1.
\7\ Id.
\8\ 17 CFR 240.10C-1.
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Therefore, the provisions of Rules 14.2 through 14.9 that permit
the listing of Equity Securities other than common stock, secondary
classes of common stock, preferred stock and similar issues, shares
or certificates of beneficial interest of trusts, notes, limited
partnership interests, warrants, certificates of deposit for common
stock, convertible debt securities, American Depositary Receipts
(``ADRs''), and contingent value rights (``CVRs'') will not be
effective until the Exchange files a proposed rule change under
Section 19(b)(2) under the Exchange Act to amend its rules to comply
with Rules 10A-3 and 10C-1 under the Exchange Act and to incorporate
qualitative listing criteria, and such proposed rule change is
approved by the Commission.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\10\ in particular, in that it is 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, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The rule change will promote
these goals by clarifying further the intent of Rule 14.1, which exists
to permit the Exchange to extend UTP to stocks that are listed on
another national securities exchange pursuant to Section 12(f) of the
Act.\11\ The proposed amendments to Rule 14.1 emphasize that the
Exchange will not list securities pursuant to Rules 14.2 through 14.9
until it proposes certain rule changes and those changes are approved
by the Commission. The Exchange believes the proposed rule change is
consistent with the protection of investors because it clarifies the
fact that the Exchange will not list equity securities without first
ensuring that its rules comply with Rule 10C-1, which implements
Section 10C of the Act. These clarifications will also serve to protect
investors and the public interest by preventing confusion about the
intent of Rule 14.1.
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\9\15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78l(f).
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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, as amended. The proposed
rule change simply requires the codification of standards to which
compensation committees of listed companies will be held should such
companies choose to list their securities on the Exchange if the
Exchange were to become a relevant listing exchange.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)\12\ of the Act and Rule 19b-4(f)(6)\13\ 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
[[Page 17615]]
proposed rule change, or such shorter time as designated by the
Commission.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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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.\14\ The Exchange has satisfied this
requirement [sic].
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\14\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange believes that the proposed rule change meets the
requirements of Rule 19b-4(f)(6).\15\ Specifically, the proposal does
not significantly affect the protection of investors or the public
interest because it simply requires the codification of standards to
which compensation committees of listed companies will be held if the
Exchange were to become a listing market. Further, it does not involve
any novel or complex issue and is substantially similar to the UTP
listing rules of the BATS-Y Exchange, Inc. (``BYX'').\16\ Furthermore,
the proposed rule change benefits investors in that it increases
transparency for investors and promotes responsible corporate
governance by requiring the codification of standards for compensation
committees of listed companies should the Exchange become a primary
listing exchange. Accordingly, the Exchange has designated this rule
filing as non-controversial under Section 19(b)(3)(A) of the Act\17\
and paragraph (f)(6) of Rule 19b-4 thereunder.\18\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ See BYX Rule 14.1. Securities Exchange Act Release No.
70623 (October 8, 2013), 78 FR 6277 (October 22, 2013).
\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6).
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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
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-EDGX-2014-06 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-EDGX-2014-06. 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 such 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-EDGX-2014-06, and should be
submitted on or before April 18, 2014.
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\19\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-06965 Filed 3-27-14; 8:45 am]
BILLING CODE 8011-01-P