[Federal Register Volume 81, Number 155 (Thursday, August 11, 2016)]
[Notices]
[Pages 53174-53176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19052]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78482; File No. SR-IEX-2016-06]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend
Rule 11.270(c) Concerning Clearly Erroneous Executions
August 5, 2016.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on July 28, 2016, the Investors Exchange LLC (``IEX'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to the provisions of Section 19(b)(1) under the Securities
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the
Securities and Exchange Commission (``Commission'') a proposed rule
change to correct the chart in Rule 11.270(c), which sets forth the
numerical guidelines for determining if a transaction that is the
subject of a complaint shall be found to be clearly erroneous, to
specify such guidelines for leveraged exchange traded funds (``ETF'')
and exchange traded notes (``ETN''). The Exchange has designated this
rule change as ``non-controversial'' under Section 19(b)(3)(A) of the
Act \6\ and provided the Commission with the notice required by Rule
19b-4(f)(6) thereunder.\7\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(1).
\5\ 17 CRF 240.19b-4.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
The text of the proposed rule change is available at the Exchange's
Web site at www.iextrading.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 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 statement [sic] 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.
[[Page 53175]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of this proposed rule filing is to correct the chart in
Rule 11.270(c), which sets forth the numerical guidelines for
determining if a transaction that is the subject of a complaint shall
be found to be clearly erroneous, to specify such guidelines for
leveraged ETFs and ETNs. Due to an oversight, the last line of the
chart, entitled ``Leveraged ETF/ETN'' does not contain all necessary
language with respect to the applicable numerical guidelines.
Accordingly, IEX proposes to amend the chart so that the last line
provides that the numerical guidelines during regular market hours, as
well as the Pre-Market Session and Post-Market Session, shall be the
``Regular Market Hours Numerical Guidelines multiplied by the leverage
multiplier (i.e., 2x).''
The Exchange notes that Rule 11.270 is substantially identical to
Bats BZX Exchange, Inc. f/k/a BATS Exchange, Inc. (``BZX'') Rule 11.17,
which in turn is substantially identical to corresponding rules of the
other U.S. securities exchanges that trade equities securities and of
the Financial Industry Regulatory Authority, Inc. (``FINRA'').\8\
Accordingly, the Exchange believes that it is appropriate to amend Rule
11.270(c) to correct the chart contained therein.
---------------------------------------------------------------------------
\8\ See, e.g., BZX Rule 11.17.
---------------------------------------------------------------------------
2. Statutory Basis
IEX believes that the proposed rule change is consistent with the
provisions of Section 6(b) \9\ of the Act in general, and furthers the
objectives of Section 6(b)(5) of the Act \10\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
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 Exchange believes it is appropriate to make the
correction to the chart in Rule 11.270(c) so that the correct guideline
is used in its rules. Additionally, the correction will create
consistency with the rules of other equities exchanges and eliminate
confusion in its rules. In this regard, FINRA and the equities
exchanges have adopted substantially identical rules relating to
clearly erroneous transactions to provide consistency in the handling
of such transactions. As noted above, the proposed correction will
assure that Rule 11.270 is substantially identical to, and consistent
with, the rules relating to clearly erroneous transactions of FINRA and
the other equities exchanges.\11\ The Exchange believes that it is
appropriate to make the specified correction to alleviate any confusion
among market participants.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(5).
\11\ See supra note 8 and accompanying text.
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
IEX does not believe that the proposed rule change will result in
any burden on competition because IEX is merely correcting its rule to
correct an inadvertent omission of necessary text.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated this rule filing as non-controversial
under Section 19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(6) \13\
thereunder. Because the 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) of the Act and Rule 19b-
4(f)(6) thereunder.\14\ The Exchange notes that its proposal corrects
an inadvertent omission and has asked the Commission to waive the 30-
day operative delay, making this proposal operative upon filing. As
noted above, IEX's proposal adds rule text to IEX Rule 11.270(c) that
IEX inadvertently omitted, which conforms IEX's rule to the
substantially identical BZX rule. As this proposal will correct the
error in IEX's rule, it should alleviate any potential confusion among
market participants. For this reason, the Commission believes that
waiver of the operative delay is consistent with the protection of
investors and the public interest and waiver will allow IEX to update
its rule without undue delay. Therefore, the Commission hereby waives
the operative delay and designates the proposal operative upon
filing.\15\
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
\14\ 15 U.S.C. 78s(b)(3)(A) and 17 CFR 240.19b-4(f)(6),
respectively. 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.
\15\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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-IEX-2016-06 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-IEX-2016-06. 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
[[Page 53176]]
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-IEX-2016-06, and should be submitted on or before
September 1, 2016.
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2016-19052 Filed 8-10-16; 8:45 am]
BILLING CODE 8011-01-P