[Federal Register Volume 79, Number 212 (Monday, November 3, 2014)]
[Notices]
[Pages 65271-65273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26007]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73446; File No. SR-BX-2014-050]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Collection of Exchange Fees
October 28, 2014.
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 16, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III 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 proposes to amend Exchange Rule 7011, which is
currently reserved, and entitle it ``Collection of Exchange Fees and
Other Claims'' and require each BX member, and all applicants for
registration as such, to provide a clearing account number for an
account at the National Securities Clearing Corporation (``NSCC'') for
purposes of permitting the Exchange to debit certain fees, fines,
charges and/or other monetary sanctions or other monies due and owing
to the Exchange.
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxbx.cchwallstreet.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of
[[Page 65272]]
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 purpose of the proposed rule change is to amend Rule 7011 to
require BX members, and all applicants for registration as such, to
provide a clearing account number for an account at NSCC for purposes
of permitting the Exchange to debit any undisputed or final fees,
fines, charges and/or other monetary sanctions or other monies due and
owing to the Exchange or other charges related to certain 7000 series
rules \3\ and the 8000 \4\ series rules which are due and owing to BX.
The Exchange would entitle Rule 7011 ``Collection of Exchange Fees and
Other Claims.''
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\3\ The 7000 series rules in the BX Rulebook list charges for
membership, services and equipment. Only the Rules which require
payment to the Exchange would be subject to direct debit. By way of
example, Rule 7003, Registration and Processing Fees, fees are
collected by FINRA.
\4\ The 8000 series rules in the BX Rulebook list sanctions
associated with disciplinary actions. Any disciplinary fines or
sanctions collected pursuant to the 8000 series shall be subject to
direct debit to the extent described within this rule change. See
also note 6 for exceptions to debits.
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Currently, the Exchange requires all Options Participants to
provide such an NSCC account number.\5\ The Exchange believes that the
proposed debiting process for BX members that conduct an equities
business would create an efficient method of collecting undisputed or
final fees, fines, charges and/or other monetary sanctions or monies
due and owing to the Exchange.\6\ Further, this proposal would provide
a cost savings to the Exchange in that it would alleviate
administrative processes related to the collection of monies owed to
the Exchange by BX members conducting an equities business, as it does
today for BX Options Participants. Collection matters divert staff
resources away from the Exchange's regulatory and business purposes. In
addition, the debiting process would prevent BX member accounts from
becoming overdue.
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\5\ See Chapter XV, Section 1 in the BX Rules.
\6\ The Exchange will not debit accounts for fees that are
unusually large or for special circumstances, unless such debiting
is requested by the BX member.
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The Exchange proposes to require BX members and applicants to
provide a clearing account number for an account at NSCC in order to
permit the Exchange to debit any undisputed or final fees, fines,
charges and/or monetary sanctions or other monies due and owing to the
Exchange or other charges related to the 7000 series rules, as
specified below, and the 8000 series rules. Specifically, the following
7000 series rules will be subject to proposed Rule 7011: 7001
(Membership Fees), 7015 (Access Services), 7016 (BX Pre-Trade Risk
Management), 7018 (NASDAQ OMX BX Equities System Order Execution and
Routing), 7021 (BX Trading and Compliance Data Package Fee), 7027
(Aggregation of Activity of Affiliated Members), 7029 (Installation,
Removal or Relocation), 7030 (Other Services), 7034 (Co-Location
Services), 7051 (Direct Connectivity to BX), 7055 (Short Sale Monitor),
7058 (QView).
The Exchange would send a monthly invoice \7\ to each BX member on
approximately the 3th-10th business day of the following month.\8\ The
Exchange would also send a file to NSCC each month on approximately the
23rd of the following month to initiate the debit of the appropriate
amount stated on the BX member's invoice for the prior month. Because
the BX member would receive an invoice well before any monies are
debited (normally within two weeks), the BX member would have adequate
time to contact the staff with any questions concerning its invoice. If
a BX member disagrees with the invoice, the Exchange would not commence
the debit until the dispute is resolved. Specifically, the Exchange
will not include the disputed amount in the debit if the member has
disputed the amount in writing to the Exchange's designated staff by
the 15th of the month, or the following business day if the 15th is not
a business day, and the amount in dispute is at least $10,000 or
greater.
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\7\ The monthly invoice will indicate that the amount on the
invoice will be debited from the designated NSCC account. Each
month, the Exchange will send a file to the BX member's clearing
firm which will indicate the amounts to be debited from each member.
If a BX member is ``self-clearing'', no such file would be sent as
the member would receive the invoice, as noted above, which would
indicate the amount to be debited.
\8\ BX members may receive invoices either electronically, by
mail or by both methods.
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Once NSCC receives the file from the Exchange, NSCC would proceed
to debit the amounts indicated from the clearing members account. In
the instance where the BX member clears through an Exchange clearing
member, the estimated transaction fees owed to the Exchange are
typically debited by the clearing member on a daily basis in order to
ensure adequate funds have been escrowed. The Exchange would debit any
monies owed including undisputed or final fees, fines, charges and/or
monetary sanctions or monies due and owed to the Exchange.\9\ The
Exchange believes that the debit process would eliminate the risk of
unpaid invoices because of the large amounts of capital held at NSCC by
BX members.
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\9\ This includes, among other things, fines and sanctions which
result from disciplinary proceedings or actions taken pursuant to
the 8000 series of BX Rules. With respect to disciplinary
proceedings, the Exchange would not debit any monies until such
action is final. The Exchange would not consider an action final
until all appeal periods have run and/or all appeal timeframes are
exhausted. With respect to non-disciplinary actions, the Exchange
would similarly not take action to debit a member account until all
appeal periods have run and/or all appeal timeframes are exhausted.
Any uncontested disciplinary or non-disciplinary actions will be
debited, and the amount due will appear on the BX member's invoice
prior to the actual NSCC debit.
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The Exchange proposes this rule change become operative with
respect to December 2014 billing. The Exchange will debit December 2014
billing in January 2015 pursuant to the process described in this rule
change.\10\ The Exchange will notify BX members of this rule change in
an Equity Trader Alert to provide its members ample time to provide the
Exchange with the information necessary for the direct debit and
prepare for the change to the collection process. BX members will be
required to provide an NSCC number prior to January 1, 2015.
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\10\ The initial debit will include all outstanding fees through
December 2014.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \11\ in general, and furthers the objectives of Section
6(b)(5) of the Act \12\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in 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 by providing BX members with
an efficient process to pay undisputed or final fees, fines, charges
and/or monetary sanctions or monies dues and owing to the Exchange.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that its proposal to debit NSCC accounts is
reasonable because it would ease the BX member's administrative burden
in paying monthly invoices, avoid overdue balances and provide same day
collection from all BX members who owe monies to the Exchange.
[[Page 65273]]
The Exchange believes that its proposal to debit NSCC accounts is
equitable and not unfairly discriminatory because it will apply to all
BX members in a uniform manner. Today, the debit process is applied to
all Options Participants.
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. With this proposal, the
proposed debit process would apply uniformly to all BX members as it
does today with all Options Participants.
Further, this proposal would provide a cost savings to the Exchange
in that it would alleviate administrative processes related to the
collection of monies owed to the Exchange for BX members conducting an
equities business, as it does today for BX Options Participants.
Collection matters divert staff resources away from the Exchange's
regulatory and business purposes. In addition, the debiting process
would prevent BX member accounts from becoming overdue.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest; does not
impose any significant burden on competition; and by its terms does not
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) \13\ of the Act and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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. If the
Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule 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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BX-2014-050 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-BX-2014-050. 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 offices 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-BX-2014-050,
and should be submitted on or before November 24, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-26007 Filed 10-31-14; 8:45 am]
BILLING CODE 8011-01-P