[Federal Register Volume 78, Number 207 (Friday, October 25, 2013)]
[Notices]
[Pages 64039-64041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24913]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70714; File No. SR-EDGX-2013-39]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
EDGX Rule 4.3, Record of Written Complaints, To Conform to Financial 
Industry Regulatory Authority, Inc. Rule 4513

October 18, 2013.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on October 15, 2013, EDGX Exchange, Inc. (the 
``Exchange'' or ``EDGX'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which items have been substantially 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 EDGX Rule 4.3, Record of Written 
Complaints, to conform to the rules of the Financial Industry 
Regulatory Authority, Inc. (``FINRA'') for purposes of an agreement 
between the Exchange and FINRA pursuant to Rule 17d-2 under the 
Exchange Act.\3\ 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.
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    \3\ 17 CFR 240.17d-2. Pursuant to Rule 17d-2 under the Exchange 
Act, the Exchange and FINRA entered into an agreement to allocate 
regulatory responsibility for common rules (the ``17d-2 
Agreement''). Id.

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[[Page 64040]]

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 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 17d-2 Agreement between the Exchange and FINRA covers common 
members of both self-regulatory organizations and allocates to FINRA 
regulatory responsibility, with respect to common members, for the 
following: (1) Examination of common members of the Exchange and FINRA 
for compliance with federal securities laws, rules, and regulations, 
and rules of the Exchange that the Exchange has certified as identical 
or substantially similar to FINRA rules; (2) investigation of common 
members of EDGX and FINRA for violations of federal securities laws, 
rules, or regulations, or Exchange rules that the Exchange has 
certified as identical or substantially identical to a FINRA rule; and 
(3) enforcement of compliance by common members with the federal 
securities laws, rules, and regulations, and the rules of the Exchange 
that the Exchange has certified as identical or substantially similar 
to FINRA rules.\4\
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    \4\ See Securities and Exchange Release No. 61698 (Mar. 12, 
2010), 75 FR 13151 (Mar. 18, 2010) (Order Approving File No. 10-196) 
(Findings, Opinion, and Order of the Commission).
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    The 17d-2 Agreement included a certification by the Exchange that 
states that the requirements contained in certain Exchange rules are 
identical to, or substantially similar to, certain FINRA rules that 
have been identified as comparable. To conform to the comparable FINRA 
rule for purposes of the 17d-2 Agreement, the Exchange proposes to 
amend EDGX Rule 4.3, Record of Written Complaints, to align with FINRA 
Rule 4513.\5\
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    \5\ See also Securities Exchange Act Release No. 63784 (Jan. 27, 
2011), 76 FR 5850 (Feb. 2, 2011) (Order Approving Proposed Rule 
Change; File No. SR-FINRA-2010-052) (Approval Order).
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    EDGX Rule 4.3 currently requires that members keep and preserve 
written customer complaints \6\ for a period of not less than five 
years, the first two of which must be in a readily accessible place. To 
take into account FINRA's four-year routine examination cycle for 
certain members, FINRA Rule 4513 requires that members preserve the 
customer complaint records for a period of at least four years. Under 
the 17d-2 Agreement, FINRA examines common members of the Exchange and 
FINRA for compliance with EDGX Rule 4.3. However, because of the 
differing retention periods of EDGX Rule 4.3 and FINRA Rule 4513, the 
17d-2 Agreement specifically states that FINRA has the regulatory 
responsibilities for the first four years of EDGX Rule 4.3's five-year 
record keeping requirement.
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    \6\ EDGX Rule 4.3(b) defines a ``complaint'' as ``any written 
statement of a customer or any person acting on behalf of a customer 
alleging a grievance involving the activities of a Member or persons 
under the control of the Member in connection with (1) the 
solicitation or execution of any transaction conducted or 
contemplated to be conducted through the facilities of the Exchange 
or (2) the disposition of securities or funds of that customer which 
activities are related to such a transaction.''
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    The Exchange, therefore, proposes to decrease the record retention 
requirements under EDGX Rule 4.3 from five to four years.\7\ The 
Exchange believes that amending the record retention requirements for 
customer complaints to align with FINRA Rule 4513 would help to avoid 
confusion among members of the Exchange that are also members of FINRA. 
The Exchange further believes that aligning the Exchange's rules with 
FINRA Rule 4513 would account for FINRA's four-year routine examination 
cycle for certain members, which FINRA conducts on the Exchange's 
behalf under the 17d-2 Agreement, ensuring consistent regulation of 
members that are also members of FINRA.
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    \7\ Under Exchange Act Rules 17a-3(a)(18) and 17a-4(b)(4), 
members are required to preserve customer complaint records for a 
period of at least three years. See 17 CFR 240.17a-3(a)(18); 17 CFR 
240.17a-4(b)(4).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b)(5) of the Exchange Act,\8\ which requires, among 
other things, that the Exchange's rules be 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, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The proposed rule change would 
provide greater harmonization between similar Exchange and FINRA rules, 
resulting in greater uniformity and less burdensome and more efficient 
regulatory compliance. As such, the proposed rule change would foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities and would remove impediments to and perfect 
the mechanism of a free and open market and a national market system.
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    \8\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The proposed rule 
change is not designed to address any competitive issues but rather is 
designed to provide greater harmonization among similar Exchange and 
FINRA rules, resulting in less burdensome and more efficient regulatory 
compliance for common members and facilitating FINRA's performance of 
its regulatory functions under the 17d-2 Agreement.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange 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 Exchange filed the proposed rule change pursuant to section 
19(b)(3)(A)(iii) of the Exchange Act \9\ and Rule 19b-4(f)(6) 
thereunder.\10\ The Exchange believes that the proposed rule change 
meets the criteria of subparagraph (f)(6) of Rule 19b-4 \11\ because 
the proposed rule change will not adversely affect investors or the 
public interest; rather, the proposed rule change will promote greater 
harmonization between the Exchange and FINRA rules of similar purpose, 
resulting in greater uniformity and less burdensome and more efficient

[[Page 64041]]

regulatory compliance. Additionally, the Exchange believes the proposed 
rule change does not raise any new policy issues not previously 
considered by the Commission nor impose any significant burden on 
competition because it will: (1) Result in less burdensome and more 
efficient regulatory compliance for common members; and (2) facilitate 
FINRA's performance of its regulatory functions under the 17d-2 
Agreement.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of the 
Exchange's 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. The 
Exchange has satisfied this requirement.
    \11\ 17 CFR 240.19b-4(f)(6).
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    Accordingly, the Exchange has designated this rule filing as non-
controversial under section 19(b)(3)(A) of the Exchange Act \12\ and 
paragraph (f)(6) of Rule 19b-4 thereunder.\13\ Because the proposed 
rule change does not: (1) Significantly affect the protection of 
investors or the public interest; (2) impose any significant burden on 
competition; and (3) become operative prior to 30 days from the date on 
which it was filed, or such shorter time as the Commission may 
designate, if consistent with the protection of investors and the 
public interest, the proposed rule change has become effective pursuant 
to section 19(b)(3)(A) of the Exchange Act and Rule 19b-4(f)(6)(iii) 
thereunder.
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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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    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Exchange stated its 
belief that this proposal is non-controversial and will not 
significantly affect the protection of investors because the Exchange 
is not proposing any substantive changes and is merely amending its 
rule text to mirror FINRA's rules. Based on the Exchange's statements 
and the non-controversial nature of the proposed rule change, the 
Commission believes that waiving the operative delay is consistent with 
the protection of investors and the public interest. Accordingly, the 
Commission hereby grants the Exchange's request and waives the 30-day 
operative delay.\16\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ For purposes only of waiving the operative delay, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
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    At any time within 60 days of the filing of such 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 Exchange 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 Exchange 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 No. SR-EDGX-2013-39 on the subject line.

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 No. SR-EDGX-2013-39. 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 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 No. SR-EDGX-2013-39 and should 
be submitted on or before November 15, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24913 Filed 10-24-13; 8:45 am]
BILLING CODE 8011-01-P