[Federal Register Volume 81, Number 130 (Thursday, July 7, 2016)]
[Notices]
[Pages 44363-44365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16025]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78198; File No. SR-NYSEMKT-2016-52]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Amending Rules 340, 341, and 359 To Extend the 
Time Within Which a Member or Member Organization or an ATP Holder Must 
File a Uniform Termination Notice for Securities Industry Registration

June 30, 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 June 16, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by NYSE MKT. 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\ 15 U.S.C. 78a.
    \3\ 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 Rules 340, 341 and 359 to harmonize 
the requirement of when a member or member organization or an ATP 
Holder must file an Uniform Termination Notice for Securities Industry 
Registration (``Form U-5'') with the rules of other exchanges and 
FINRA. The proposed rule change is available on the Exchange's Web site 
at www.nyse.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

[[Page 44364]]

and discussed any comments it received on the proposed rule change. The 
text of those 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 parts 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 amend Rules 340, 341 and 359 to harmonize 
the requirement of when a member or member organization or an ATP 
Holder must file a Form U-5 with the requirements on other exchanges 
and the Financial Industry Regulatory Authority (``FINRA''). This 
filing is not intended to address any other registration requirements 
in Exchange rules.
    Specifically, under current Commentary .01 to Rule 340, members and 
member organizations (collectively, ``Members'') are required to 
electronically file a Form U-5 and any amendment thereto to the Central 
Registration Depository (``CRD'') within ten (10) days of the date of 
termination of an employee that has been approved for admission to the 
trading floor. Under current Commentary .09 to Rule 341, Members must 
submit information concerning the termination of employment of a 
member, registered employee or an officer on Form U-5 within ten (10) 
days of the date of termination.\4\ Under current Rule 359(a), an ATP 
Holder that terminates an ATP Holder or approved person shall 
electronically file a Form U-5 within ten (10) days of such 
termination. While each of these rules govern [sic] the same topic, 
they do not use the same rule language.
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    \4\ Commentary .09 to Rule 341 does not currently specify 
electronic transmission, an absence that the proposed amendment 
would also remedy.
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    The Exchange proposes to amend these three rules by replacing the 
current requirements of when to electronically file a Form U-5 with the 
same requirement in each rule that a member, member organization, or 
ATP Holder (as applicable) promptly file a Form U-5 electronically with 
CRD, but not later than 30 calendar days after the date of termination 
of a member, ATP Holder, registered employee or approved person (as 
applicable). The proposed rule would further require that any amendment 
to a Form U-5 must also be promptly filed electronically with CRD, but 
not later than 30 calendar days after learning of the facts or 
circumstances giving rise to the amendment. Finally, the proposed rule 
would provide that all Forms U-5 must also be provided to the 
terminated person concurrently with filing.
    The proposed rule text is based on the requirements of other 
exchanges and FINRA and therefore would harmonize the requirement of 
when a member or member organization or an ATP Holder must file a Form 
U-5 with the rules of other exchanges and FINRA.\5\ The Exchange 
believes that the proposed rule changes will promote the protection of 
investors by adding that a Form U-5 be filed promptly, rather than the 
current requirement that a Form U-5 be filed within 10 days. The 
Exchange believes that this proposed requirement may lead to Form U-5s 
being filed sooner than the current 10-day requirement. Consistent with 
the rules of other exchanges and FINRA, the rule would further provide 
that a Form U-5 should be filed not later than 30 days after the date 
of termination. While this date is longer than the current 10 day 
requirement, the Exchange believes that this timing, combined with the 
requirement to file promptly, may still lead to firms submitting Form 
U-5s on a more prompt basis. In addition, the proposed rule would 
harmonize the standard, thus reducing the burden on competition for 
member organizations and ATP Holders that are members of multiple 
exchanges and FINRA to meet similar requirements. Such conformance to 
the prevalent standard would both harmonize the time period for filing 
the requisite Form U-5 across multiple self-regulatory organizations 
and establish a known consistent standard to further ensure adherence.
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    \5\ See New York Stock Exchange LLC (``NYSE'') Rule 345(a).17(a) 
and (b) (requiring that a Form U-5 shall be reported promptly, but 
in any event not later than 30 days following termination, that any 
amendment to the Form U-5 shall be filed not later than 30 days 
after learning of the facts or circumstances giving rise to the 
amendment, and that any termination notice must be provided 
concurrently to the person whose association has been terminated); 
BATS BZX Exchange, Inc. (``BZX'') Rule 2.5 Interpretations and 
Policies .04(a) and (b) (requiring that a Form U-5 be reported 
immediately following the date of termination, but in no event later 
than 30 days following termination, that any amendment to the Form 
U-5 shall be filed no later than 30 days after learning of the facts 
or circumstances giving rise to the amendment, and that any 
termination notice or amendment should [sic] be provided 
concurrently to the person whose association has been terminated); 
FINRA By-Laws Article 5 Sec. 3(a) and (b) (requiring that notice of 
termination be filed not later than 30 days after termination, that 
an amendment to a Form U-5 be filed not later than 30 days after 
learning of the facts or circumstances giving rise to the amendment, 
and that notice be provided concurrently to the person whose 
association has been terminated within the time periods prescribed).
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2. Statutory Basis
    The Exchange believes that the proposed changes are consistent with 
Section 6(b) of the Act,\6\ in general, and furthers [sic] the 
objectives of Section 6(b)(5),\7\ in particular, in that they are 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanism of a free and open market and, in general, to 
protect investors and the public interest. Additionally, the Exchange 
believes the proposed rule changes are consistent with the Section 
6(b)(5) \8\ requirement that the rules of an exchange not be designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ Id.
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    Specifically, the Exchange believes that the proposed rule changes 
would remove impediments to and perfect the mechanisms of a free and 
open market by conforming the time period within which Members and ATP 
Holders must file a Form U-5 to the requirement that such forms be 
filed promptly, but not later than 30 days after the termination event. 
The Exchange believes that the proposed rule changes would protect 
investors and the public interest by adding that Form U-5s should be 
filed promptly, rather than requiring only that they be filed within 10 
days. In addition, the Exchange believes that adding the requirement 
that a Form U-5 be filed not later than 30 days after the event would 
eliminate the disparity among the exchanges, other SROs and the 
affected persons stemming from the cessation of their employment. In 
this regard, the proposed changes would foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities as they would both harmonize the time period for filing 
the requisite Form U-5 across multiple self-regulatory organizations 
and establish a known consistent standard to further ensure adherence. 
Such action would not affect nor diminish the abilities of the 
Exchange, its Members or an ATP Holder to fulfill their regulatory 
responsibilities under the Act or the rules promulgated thereunder,

[[Page 44365]]

including but not limited to the responsibilities to monitor the 
activities of such persons, nor would such proposed amendment affect 
the rights of such terminated persons.
    The Exchange believes this additional transparency and clarity 
removes a potential impediment to, and would contribute to perfecting, 
the mechanism for a free and open market and a national market system, 
and, in general, would protect investors and the public interest by 
harmonizing the time period for filing the requisite Form U-5 across 
multiple SROs, and by imposing the requirement that such forms be filed 
promptly.\9\
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    \9\ This filing is intended to address only the filing 
requirements of Forms U-5; it is not intended to address or affect 
any other mandatory filing requirements or procedures.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that these proposed rule changes 
would impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed changes are not 
designed to address any competitive issue but rather to harmonize 
Exchange time-filing requirements to a standard prevalent among other 
exchanges and FINRA, thereby reducing any potential confusion and 
making the Exchange's rules easier to understand and navigate. The 
Exchange believes that the proposed rule changes would serve to promote 
regulatory clarity and consistency, thereby reducing burdens on the 
marketplace and facilitating investor protection.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-NYSEMKT-2016-52 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-NYSEMKT-2016-52. 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-NYSEMKT-2016-52 and 
should be submitted on or before July 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16025 Filed 7-6-16; 8:45 am]
 BILLING CODE 8011-01-P