[Federal Register Volume 85, Number 44 (Thursday, March 5, 2020)]
[Notices]
[Pages 12930-12932]
[FR Doc No: 2020-04537]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2015-D-4750]

The ``Deemed To Be a License'' Provision of the Biologics Price
Competition and Innovation Act: Questions and Answers; Guidance for
Industry; Availability

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice of availability.

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SUMMARY: The Food and Drug Administration (FDA or Agency) is announcing
the availability of a final guidance for industry entitled ``The
`Deemed To Be a License' Provision of the BPCI Act: Questions and
Answers.'' This guidance is intended to provide answers to common
questions about FDA's implementation of the statutory provision under
which an application for a biological product approved under the
Federal Food, Drug, and Cosmetic Act (FD&C Act) as of March 23, 2020,
will be deemed to be a license for the biological product under the
Public Health Service Act (PHS Act) on March 23, 2020. This guidance
also describes FDA's compliance policy for the labeling of biological
products that will be the subject of deemed biologics license
applications (BLAs). This guidance is intended to facilitate planning
for the March 23, 2020, transition date and provide further clarity
regarding the Agency's implementation of this statutory provision. This
guidance finalizes the draft guidance of the same title issued on
December 12, 2018.

DATES: The announcement of the guidance is published in the Federal
Register on March 5, 2020.

ADDRESSES: You may submit either electronic or written comments on
Agency guidances at any time as follows:

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to https://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on https://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand Delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Dockets
Management Staff, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2015-D-4750 for ``The `Deemed To Be a License' Provision of the
BPCI Act: Questions and Answers.'' Received comments will be placed in
the docket and, except for those submitted as ``Confidential
Submissions,'' publicly viewable at https://www.regulations.gov or at
the Dockets Management Staff between 9 a.m. and 4 p.m., Monday through
Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on https://www.regulations.gov.
Submit both copies to the Dockets Management Staff. If you do not wish
your name and contact information to be made publicly available, you
can provide this information on the cover sheet and not in the body of
your comments and you must identify this information as

``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with 21 CFR 10.20 and other
applicable disclosure law. For more information about FDA's posting of
comments to public dockets, see 80 FR 56469, September 18, 2015, or
access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852.
    You may submit comments on any guidance at any time (see 21 CFR
10.115(g)(5)).
    Submit written requests for single copies of this guidance to the
Division of Drug Information, Center for Drug Evaluation and Research,
Food and Drug Administration, 10001 New Hampshire Ave., Hillandale
Building, 4th Floor, Silver Spring, MD 20993-0002. Send one self-
addressed adhesive label to assist that office in processing your
requests. See the SUPPLEMENTARY INFORMATION section for electronic
access to the guidance document.

FOR FURTHER INFORMATION CONTACT: Janice Weiner, Center for Drug
Evaluation and Research, Food and Drug Administration, 10903 New
Hampshire Ave., Bldg. 51, Rm. 6270, Silver Spring, MD 20993-0002, 301-
796-3475<EMAIL_ADDRESS>or Stephen Ripley, Center for
Biologics Evaluation and Research, Food and Drug Administration, 10903
New Hampshire Ave., Bldg. 71, Rm. 7268, Silver Spring, MD 20993-0002,
240-402-7911<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    FDA is announcing the availability of a guidance for industry
entitled ``The `Deemed to be a License' Provision of the BPCI Act:
Questions and Answers.'' This guidance is intended to provide answers
to common questions about FDA's implementation of the ``transition''
provision of the Biologics Price Competition and Innovation Act of 2009
(BPCI Act) under which an application for a biological product approved
under section 505 of the FD&C Act (21 U.S.C. 355) as of March 23, 2020,
will be deemed to be a license for the biological product under section
351 of the PHS Act (42 U.S.C. 262) on March 23, 2020 (``the transition
date''). This guidance also describes FDA's compliance policy for the
labeling of biological products that will be the subject of deemed
BLAs. This guidance is intended to facilitate planning for the
transition date and provide further clarity regarding the Agency's
implementation of this statutory provision.
    Although the majority of therapeutic biological products have been
licensed under section 351 of the PHS Act, some protein products
historically have been approved under section 505 of the FD&C Act. On
March 23, 2010, the BPCI Act was enacted as part of the Patient
Protection and Affordable Care Act (Pub. L. 111-148). The BPCI Act
clarified the statutory authority under which certain protein products
will be regulated by amending the definition of a ``biological
product'' in section 351(i) of the PHS Act to include a ``protein
(except any chemically synthesized polypeptide),'' and describing
procedures for submission of a marketing application for certain
``biological products.'' Section 605 of the Further Consolidated
Appropriations Act, 2020 (Pub. L. 116-94), further amended the
definition of a ``biological product'' in section 351(i) of the PHS Act
to remove the parenthetical ``(except any chemically synthesized
polypeptide)'' from the statutory category of ``protein.'' In the
Federal Register of February 21, 2020, FDA issued a final rule that
amends its regulation that defines ``biological product'' to
incorporate changes made by the BPCI Act and the Further Consolidated
Appropriations Act, 2020, and to provide its interpretation of the
statutory term ``protein'' (85 FR 10057). This rule is effective on
March 23, 2020. FDA also has previously stated its interpretation of
the statutory term ``protein'' in the amended definition of
``biological product'' (see FDA's draft guidance for industry entitled
``New and Revised Draft Q&As on Biosimilar Development and the BPCI Act
(Revision 2)'' (December 2018), available on FDA's website at https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs (``Biosimilar Q&A Draft Guidance'')).\1\
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    \1\ FDA also described its interpretation of the statutory term
``chemically synthesized polypeptide'' in the Biosimilar Q&A Draft
Guidance and the proposed rule entitled ``Definition of the Term
`Biological Product' '' (83 FR 63817, December 12, 2018); however,
this interpretation is no longer necessary to our interpretation of
the statutory term ``biological product'' in light of the amendment
made by section 605 of the Further Consolidated Appropriations Act,
2020.
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    The BPCI Act requires that a marketing application for a
``biological product'' (that previously could have been submitted under
section 505 of the FD&C Act) must be submitted under section 351 of the
PHS Act; this requirement is subject to certain exceptions during a 10-
year transition period ending on March 23, 2020 (see section 7002(e)(1)
to (3) and (e)(5) of the BPCI Act). On March 23, 2020, an approved
application for a biological product under section 505 of the FD&C Act
shall be deemed to be a license for the biological product under
section 351 of the PHS Act (see section 7002(e)(4) of the BPCI Act).\2\
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    \2\ Section 607 of the Further Consolidated Appropriations Act,
2020, amended section 7002(e)(4) of the BPCI Act to provide that FDA
will continue to review an application for a biological product
under section 505 of the FD&C Act after March 23, 2020, so long as
that application was submitted under section 505 of the FD&C Act, is
filed not later than March 23, 2019, and is not approved as of March
23, 2020. If such an application is approved under section 505 of
the FD&C Act before October 1, 2022, it will be deemed to be a
license for the biological product under section 351 of the PHS Act
upon approval (see section 7002(e)(4)(B)(iii) and (vi) of the BPCI
Act).
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    In the Federal Register of December 12, 2018 (83 FR 63894), FDA
invited comment on the preliminary list of approved applications for
biological products under the FD&C Act that will be affected by the
transition provision (``Preliminary List'') (available on FDA's website
at https://www.fda.gov/drugs/guidance-compliance-regulatory-information/deemed-be-license-provision-bpci-act). FDA explained that
if an application holder or other person believes that an approved new
drug application (NDA) should be added to the list or should not be
included on the list, the application holder or other person should
submit a comment to the public docket established for this Q&A guidance
and the list. FDA posted updates to the Preliminary List on September
23, 2019, and January 15, 2020.
    In the Federal Register of December 12, 2018, FDA also invited
comment on the factors that FDA should consider in determining whether
a combination product composed of a biological product constituent part
and a drug constituent part will be subject to the transition
provision. However, FDA did not receive any substantive comments on
this topic. The current Preliminary List includes a small number of
drug-biologic combination products and complex mixtures assigned to the
Center for Drug Evaluation and Research, which reflects the Agency's
current thinking that the approved NDAs for these products are
appropriately subject

to the transition provision. FDA's evaluation of each of these approved
NDAs for drug-biologic combination products or complex mixtures was
informed by a general consideration of the factors used to determine
the appropriate marketing application type for antibody-drug conjugates
(see FDA's guidance for industry entitled ``Questions and Answers on
Biosimilar Development and the BPCI Act'' (December 2018), available on
FDA's website at https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs).
    To ensure that the Agency considers any additional comments on the
list before the statutory transition date, the January 2020 update to
the Preliminary List recommended that application holders or other
interested persons submit either electronic or written comments no
later than February 19, 2020.
    This guidance finalizes the draft guidance entitled ``The `Deemed
to be a License' Provision of the BPCI Act: Questions and Answers''
issued on December 12, 2018 (83 FR 63894). FDA considered comments
received on the draft guidance as the guidance was finalized. Changes
from the draft to the final guidance include: (1) Providing information
on updating the listing information for the biological product in FDA's
electronic Drug Registration and Listing System between March 23, 2020,
and June 30, 2020; (2) clarifying that, in the absence of other changes
made by the application holder that would require a new National Drug
Code (NDC) number, biological products approved under the FD&C Act will
retain their current NDC number after the NDA is deemed to be a BLA;
(3) providing information on establishment standards for ``non-
specified biological products'' that are the subject of deemed BLAs;
(4) clarifying the process for submitting followup reports on or after
March 23, 2020, for any initial field alert report submitted before
March 23, 2020; and (5) clarifying certain aspects of FDA's compliance
policy for the labeling of biological products that are the subject of
deemed BLAs. In addition, technical changes were made for consistency
with the revisions to the PHS Act and the BPCI Act enacted in sections
605 and 607 of the Further Consolidated Appropriations Act, 2020, and
editorial changes were made to improve clarity.
    This guidance is being issued consistent with FDA's good guidance
practices regulation (21 CFR 10.115). The guidance represents the
current thinking of FDA on ``The `Deemed To Be a License' Provision of
the BPCI Act: Questions and Answers.'' It does not establish any rights
for any person and is not binding on FDA or the public. You can use an
alternative approach if it satisfies the requirements of the applicable
statutes and regulations.

II. Paperwork Reduction Act of 1995

    This guidance refers to previously approved collections of
information found in FDA regulations. These collections of information
are subject to review by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The
collections of information in 21 CFR part 314 have been approved under
0910-0001; the collections of information in 21 CFR parts 601 and 610
have been approved under 0910-0338; the collections of information in
21 CFR 600.80 through 600.90 have been approved under 0910-0308; and
the collections of information in 21 CFR 201.56, 201.57, and 201.80
have been approved under 0910-0572. In addition, the collections of
information for applications submitted under section 351(k) of the PHS
Act have been approved under 0910-0719.

III. Electronic Access

    Persons with access to the internet may obtain the guidance at
either https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs or https://www.regulations.gov.

    Dated: March 2, 2020.
Lowell J. Schiller,
Principal Associate Commissioner for Policy.
[FR Doc. 2020-04537 Filed 3-4-20; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 77, Number 167 (Tuesday, August 28, 2012)]
[Notices]
[Page 52082]
[FR Doc No: 2012-21106]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67706; File No. SR-OCC-2012-10]

Self-Regulatory Organizations; The Options Clearing Corporation;
Order Approving Proposed Rule Change To Amend OCC's By-Laws and Rules
To Terminate OCC's Pledge Program

August 22, 2012.

I. Introduction

    On June 28, 2012, The Options Clearing Corporation (``OCC'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change SR-OCC-2012-10 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder.\2\ The proposed rule change was published for comment in
the Federal Register on July 16, 2012.\3\ The Commission received no
comment letters. For the reasons discussed below, the Commission is
granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 34-67392 (July 10,
2012), 77 FR 41835 (July 16, 2012).
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II. Description

    The proposed rule change would terminate OCC's pledge program (the
``Program''). Since implementation of the Program, only a limited
number of clearing members participated and those that did participate
did so on a sporadic basis. OCC is eliminating the Program in its
entirety.
    The Program was adopted by OCC in the early 1980s to facilitate the
ability of an OCC clearing member to finance positions by permitting
the clearing member to pledge unsegregated long positions in cleared
securities (other than securities futures) for a loan of cash. The
Program was initially designed for, and used by, firms clearing market
maker business; however, use of the Program diminished as market making
operations were acquired by larger wire houses. While OCC occasionally
receives an inquiry regarding the Program, it has been essentially
dormant for some time. OCC recently reviewed the Program and determined
that any potential benefits that OCC may gain through updating the
Program are greatly offset by the resources required for such
modernization. Accordingly, OCC is terminating the Program in its
entirety.
    OCC is eliminating Rule 614 in its entirety as well as references
to the Program and Rule 614 in its Rules and in its By-Laws.

 III. Discussion

    Section 19(b)(2)(C) of the Act \4\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if it
finds that such proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such organization. Section 17A(b)(3)(F) of the Act \5\
requires, among other things, that the rules of a clearing agency are
designed to remove impediments to and perfect the mechanism of a
national system for the prompt and accurate clearance and settlement of
securities transactions.
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    \4\ 15 U.S.C. 78s(b)(2)(C).
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
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    The changes to OCC's Rules and By-Laws are designed to allow OCC to
remove a rarely used operational function and focus its resources on
core clearing operations. Moreover, the elimination of the Program will
not materially affect clearing members given its limited and infrequent
use. The rule change is not inconsistent with any rules of OCC,
including any proposed to be amended. As a result, the rule change is
consistent with the requirements of Section 17A(b)(3)(F) of the Act.

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of Section 17A of the Act \6\ and the
rules and regulations thereunder.
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    \6\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\7\, that the proposed rule change (File No. SR-OCC-2012-10) be, and
hereby is, approved.\8\
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ In approving the proposed rule change, the Commission
considered the proposal's impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21106 Filed 8-27-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 106 (Monday, June 5, 2017)]
[Notices]
[Pages 25856-25862]
[FR Doc No: 2017-11502]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80807; File No. SR-NYSE-2017-21]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt Rules 5220 and 9560 and Amend Rule 8313

May 30, 2017.
    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 May 17, 2017, New York Stock Exchange LLC (``NYSE'' 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 (1) a new Rule 5220 that defines and
prohibits two types of disruptive quoting and trading activity on the
Exchange; (2) a new Rule 9560 governing supplemental expedited
suspension proceedings; and (3) amendments to Rule 8313 to permit
release to the public of suspension notices and orders issued pursuant
to proposed Rule 9560. 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 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
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes (1) a new Rule 5220 that defines and
prohibits two types of disruptive quoting and trading activity on the
Exchange; (2) a new Rule 9560 governing supplemental expedited
suspension proceedings; and (3) amendments to Rule 8313 (Release of
Disciplinary Complaints, Decisions and Other Information) to permit
release to the public of suspension notices and orders issued pursuant
to proposed Rule 9560.
    The proposed rule change is based on rules recently adopted by Bats
BZX Exchange, Inc., formerly known as BATS Exchange, Inc. (``BATS''),
and The Nasdaq Stock Market LLC (``NASDAQ'').\3\ The proposed rules are
the same as those adopted by BATS and NASDAQ, with the following
exceptions discussed below: (1) Conforming references to reflect the
Exchange's membership; and (2) the call for review process in proposed
Rule 9560(f). The Exchange believes that having consistent rules for
issuing a cease and desist order on an expedited basis as other self-
regulatory organizations (``SROs'') to halt certain disruptive and
manipulative quoting and trading activity would enhance the Exchange's
ability to protect investors and market integrity.
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    \3\ On February 18, 2016, the SEC approved a proposed rule
change filed by BATS to adopt new BATS Rule 12.15, which prohibits
certain types of disruptive quoting and trading activities, and BATS
Rule 8.17, which permits BATS to conduct a new expedited suspension
proceeding when it believes BATS Rule 12.15 has been violated. See
Securities Exchange Act Release No. 77171 (February 18, 2016), 81 FR
9017 (February 23, 2016) (SR-BATS-2015-101) (``BATS Approval
Order''); see also Securities Exchange Act Release No. 77606 (April
13, 2016), 81 FR 23026 (April 19, 2016) (SR-BatsEDGA-2016-03)
(adopting identical rules for Bats EDGA Exchange, Inc.); Securities
Exchange Act Release No. 77602 (April 13, 2016), 81 FR 23046 (April
19, 2016) (SR-BatsBYX-2016-03) (adopting identical rules for Bats
BYX Exchange, Inc.); Securities Exchange Act Release No. 77589
(April 12, 2016), 81 FR 22691 (April 18, 2016) (SR-BatsEDGX-2016-04)
(adopting identical rules for Bats EDGX Exchange, Inc.). On May 19,
2016, NASDAQ filed a substantially similar proposed rule change with
the SEC for immediate effectiveness. See Securities Exchange Act
Release No. 77913 (May 25, 2016), 81 FR 35081 (June 1, 2016) (SR-
NASDAQ-2016-074). NASDAQ has also extended the rule to other
exchanges. See, e.g., Securities Exchange Act Release No. 78208
(June 30, 2016), 81 FR 44366 (July 7, 2016) (SR-NASDAQ-2016-092).
Similarly, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') also recently prohibited disruptive quoting and trading
and amended its procedural rules. See Securities Exchange Act
Release No. 76361 (November 21, 2016), 81 FR 85650 (November 28,
2016) (SR-FINRA-2016-043).
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Background
    As a national securities exchange registered pursuant to Section 6
of the Act, the Exchange is required to be organized and to have the
capacity to enforce compliance by its member organizations and persons
associated with its member organizations, with the Act, the rules and
regulations thereunder, and the Exchange's Rules.\4\ Further, the
Exchange's Rules are required to be ``designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade . . . and, in general, to protect investors and the
public interest.'' \5\
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    \4\ 15 U.S.C. 78f(b)(1).
    \5\ 15 U.S.C. 78f(b)(1).
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    In fulfilling these requirements, the Exchange has developed a
comprehensive regulatory program that includes automated surveillance
of trading activity operated directly by Exchange staff. When
disruptive and potentially manipulative or improper quoting and trading
activity is identified, the Exchange conducts an investigation into the
activity and requests documents and information. To the extent
violations of the Act, the rules and regulations thereunder, or
Exchange Rules are identified, the Exchange will commence disciplinary
proceedings, which could result in, among other things, a censure, a
requirement to take certain remedial actions, one or more restrictions
on future business activities, a monetary fine, or a temporary or
permanent ban from the securities industry.
    The process described above, from the identification of disruptive
and

potentially manipulative or improper quoting and trading activity to a
final resolution of the matter, can often take several years. The
Exchange believes that this time period sometimes is necessary and
appropriate to afford adequate due process, particularly in complex
cases. However, as described below, the Exchange believes that there
are certain obvious and uncomplicated cases of disruptive and
manipulative behavior or cases where the potential harm to investors is
so large that the Exchange should have the authority to initiate an
expedited suspension proceeding in order to stop the behavior from
continuing on the Exchange. In recent years, several cases have been
brought and resolved by the Exchange and other SROs involving
allegations of wide-spread market manipulation, much of which was
ultimately being conducted by foreign persons and entities using
relatively rudimentary technology to access the markets and over which
the Exchange and other SROs had no direct jurisdiction. In each case,
the conduct involved a pattern of disruptive quoting and trading
activity indicative of manipulative layering \6\ or spoofing.\7\
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    \6\ ``Layering'' can include a form of market manipulation in
which multiple, non-bona fide limit orders are entered on one side
of the market at various price levels in order to create the
appearance of a change in the levels of supply and demand, thereby
artificially moving the price of the security. An order is then
executed on the opposite side of the market at the artificially
created price, and the non-bona fide orders are cancelled.
    \7\ ``Spoofing'' can include a form of market manipulation that
involves the market manipulator placing non-bona fide orders that
are intended to trigger some type of market movement and/or response
from other market participants, from which the market manipulator
might benefit by trading bona fide orders.
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    The Exchange and other SROs were able to identify the disruptive
quoting and trading activity in real-time or near real-time;
nonetheless, the parties responsible for such conduct or responsible
for their customers' conduct continued the disruptive quoting and
trading activity on the Exchange and other exchanges during the
entirety of the subsequent lengthy investigation and enforcement
process. To supplement other Exchange Rules on which it may already
rely to stop such activity from continuing, the Exchange believes that
it should have additional authority to initiate expedited suspension
proceedings in order to stop behavior from continuing on the Exchange
if a member organization or a person associated with its member
organization is engaging in or facilitating disruptive quoting and
trading activity and the member organization or associated person has
received sufficient notice with an opportunity to respond, but such
activity has not ceased. The following examples involving the Exchange
and its affiliate NYSE Arca, Inc. (``NYSE Arca''), are instructive
regarding the rationale for the proposed rule change.
    In July 2012, Biremis Corp. (formerly Swift Trade Securities USA,
Inc.) (``Biremis'') and its CEO were barred from the securities
industry for, among other things, supervisory violations related to a
failure by Biremis to detect and prevent disruptive and allegedly
manipulative trading activities, including layering, short sale
violations, and anti-money laundering violations.\8\ Biremis' sole
business was providing trade execution services via a proprietary day
trading platform and order management system to day traders located in
foreign jurisdictions. Thus, the disruptive and allegedly manipulative
trading activity introduced by Biremis to U.S. markets originated
directly or indirectly from its foreign clients. The pattern of
disruptive and allegedly manipulative quoting and trading activity was
widespread across multiple exchanges, and the Exchange, FINRA, and
other SROs identified clear patterns of the behavior in 2007 and 2008.
Although Biremis and its principals were on notice of the disruptive
and allegedly manipulative quoting and trading activity that was
occurring, Biremis took little to no action to attempt to supervise or
prevent such quoting and trading activity until at least 2009. Even
when it put some controls in place, they were deficient and the pattern
of disruptive and allegedly manipulative trading activity continued to
occur. As noted above, the final resolution of the enforcement action
to bar the firm and its CEO from the industry was not concluded until
2012, four years after the disruptive and allegedly manipulative
trading activity was first identified.
---------------------------------------------------------------------------

    \8\ See Biremis Corp. and Peter Beck, FINRA Letter of
Acceptance, Waiver and Consent No.<PHONE_NUMBER>202, July 30, 2012.
---------------------------------------------------------------------------

    In September of 2012, Hold Brothers On-Line Investment Services,
Inc. (``Hold Brothers'') settled a regulatory action in connection with
its provision of a trading platform, trade software and trade
execution, support and clearing services for day traders.\9\ Many
traders using the firm's services were located in foreign
jurisdictions. Hold Brothers ultimately settled the action with FINRA
and several exchanges, including NYSE Arca, for a total monetary fine
of $3.4 million. In a separate action, the Firm settled with the
Commission for a monetary fine of $2.5 million.\10\ Among the alleged
violations in the case were disruptive and allegedly manipulative
quoting and trading activity, including spoofing, layering, wash
trading, and pre-arranged trading. Through its conduct and insufficient
procedures and controls, Hold Brothers also allegedly committed anti-
money laundering violations by failing to detect and report
manipulative and suspicious trading activity. Hold Brothers was alleged
to have not only provided foreign traders with access to the U.S.
markets to engage in such activities, but that its principals also
owned and funded foreign subsidiaries that engaged in the disruptive
and allegedly manipulative quoting and trading activity. Although the
pattern of disruptive and allegedly manipulative quoting and trading
activity was identified in 2009, as noted above, the enforcement action
was not concluded until 2012. Thus, although disruptive and allegedly
manipulative quoting and trading was promptly detected, it continued
for several years. The Exchange also notes that criminal proceedings
were initiated against Navinder Singh Sarao for manipulative trading
activity, including forms of layering and spoofing in the futures
markets, that were identified as a contributing factor to the ``Flash
Crash'' of 2010, and yet continued through 2015. In November 2016, Mr.
Sarao pled guilty to one count each of wire fraud and spoofing.\11\
---------------------------------------------------------------------------

    \9\ See Hold Brothers On-Line Investment Services, LLC, FINRA
Letter of Acceptance, Waiver and Consent No.<PHONE_NUMBER>0001,
September 25, 2012.
    \10\ In the Matter of Hold Brothers On-Line Investment Services,
LLC, Exchange Act Release No. 67924, September 25, 2012.
    \11\ The plea agreement in United States v. Navinder Singh
Sarao, Docket Number: 1:15-CR-00075-1 (N.D. Ill.), is available at
https://www.justice.gov/criminal-fraud/file/910196/download.
---------------------------------------------------------------------------

    The Exchange believes that the activities described in the cases
above provide justification for the proposed rule change, which is
described below.
Proposed Rule Change
Proposed Rule 5220
    The Exchange proposes to adopt new Rule 5220 of the Exchange's
Conduct Rules to define and prohibit disruptive quoting and trading
activity on the Exchange. Proposed Rule 5220(a) would prohibit member
organizations and covered persons \12\ from engaging in or

facilitating disruptive quoting and trading activity on the Exchange,
as described in proposed Rule 5220(b)(1) and (2), including acting in
concert with other persons to effect such activity. The Exchange
believes that it is necessary to extend the prohibition to situations
when persons are acting in concert to avoid a potential loophole where
disruptive quoting and trading activity is simply split between several
brokers or customers. The Exchange also believes, that with respect to
persons acting in concert perpetrating an abusive scheme, it is
important that the Exchange have authority to act against the parties
perpetrating the abusive scheme, whether it is one person or multiple
persons. The Exchange proposes to adopt Rule 5220(b)(1) and (2)
providing additional details regarding disruptive quoting and trading
activity. Proposed Rule 5220(b)(1) would describe disruptive quoting
and trading activity containing many of the elements indicative of
layering. For purposes of the proposed Rule, disruptive quoting and
trading activity would include a frequent pattern in which the
following facts are present:
---------------------------------------------------------------------------

    \12\ Rule 9120(g) defines ``covered person'' to include a
member, principal executive, approved person, registered or
nonregistered employee of a member organization, or other person
(excluding a member organization) subject to the jurisdiction of the
Exchange. Rule 2(b) defines ``member organization'' as a registered
broker or dealer (unless exempt pursuant to the Act) that is a
member of FINRA or another registered securities exchange.
---------------------------------------------------------------------------

     A party enters multiple limit orders on one side of the
market at various price levels (the ``Displayed Orders'') (proposed
Rule 5220(b)(1)(A)); and
     following the entry of the Displayed Orders, the level of
supply and demand for the security changes (proposed Rule
5220(b)(1)(B)); and
     the party enters one or more orders on the opposite side
of the market of the Displayed Orders (the ``Contra-Side Orders'') that
are subsequently executed (proposed Rule 5220(b)(1)(C)); and
     following the execution of the Contra-Side Orders, the
party cancels the Displayed Orders (proposed Rule 5220(b)(1)(D)).
    Proposed Rule 5220(b)(2) would describe disruptive quoting and
trading activity containing many of the elements indicative of spoofing
and would describe disruptive quoting and trading activity as a
frequent pattern in which the following facts are present:
     A party narrows the spread for a security by placing an
order inside the national best bid or offer (proposed Rule
5220(b)(2)(A)); and
     the party then submits an order on the opposite side of
the market that executes against another market participant that joined
the new inside market established by the order described in proposed
(b)(2)(A) that narrowed the spread (proposed Rule 5220(b)(2)(B)).
    The Exchange believes that the proposed descriptions of disruptive
quoting and trading activity articulated in the rule are consistent
with the activities that have been identified and described in the
client access cases described above and with the rules of other
SROs.\13\
---------------------------------------------------------------------------

    \13\ See, e.g., BATS Rule 12.15; NASDAQ Rule 2170. See generally
note 4, supra.
---------------------------------------------------------------------------

    Proposed Rule 5220(c) would provide that, unless otherwise
indicated, the descriptions of disruptive quoting and trading activity
do not require the facts to occur in a specific order in order for the
Rule to apply. For instance, with respect to the pattern defined in
proposed Rule 5220(b)(1)(A)-(D), it is of no consequence whether a
party first enters Displayed Orders and then Contra-side Orders or
vice-versa. However, as proposed, it is required for supply and demand
to change following the entry of the Displayed Orders.
    The Exchange also proposes to make clear that disruptive quoting
and trading activity includes a pattern or practice in which some
portion of the disruptive quoting and trading activity is conducted on
the Exchange and the other portions of the disruptive quoting and
trading activity are conducted on one or more other exchanges. The
Exchange believes that this authority is necessary to address market
participants who would otherwise seek to avoid the prohibitions of the
proposed Rule by spreading their activity amongst various execution
venues.
Proposed Rule 9560
    Proposed Rule 9560 would set forth procedures for issuing
suspension orders, immediately prohibiting a member organization or
covered person from conducting continued disruptive quoting and trading
activity on the Exchange. Importantly, these procedures would also
provide the Exchange the authority to order a member organization or
covered person to cease and desist from providing access to the
Exchange to a client that is conducting disruptive quoting and trading
activity.
    Under proposed paragraph (a)(1) of Rule 9560, with the prior
written authorization of the Chief Regulatory Officer (``CRO'') or such
other senior officers as the CRO may designate, the Exchange's
Enforcement department may initiate an expedited suspension proceeding
with respect to alleged violations of proposed Rule 5220. Proposed
paragraph (a) would also set forth the requirements for notice ((a)(2))
and service of such notice ((a)(3)) pursuant to the Rule, including the
required method of service and the content of notice.
    Proposed paragraph (b) of Rule 9560 would govern the appointment of
a Hearing Panel as well as potential disqualification or recusal of
Hearing Officers. The proposed provision is consistent with current
Rule 9231(b), which governs the appointment of a hearing panel or
extended hearing panel to conduct disciplinary proceedings. The
Exchange's Rules provide for a Hearing Officer to be recused in the
event he or she has a conflict of interest or bias or other
circumstances exist where his or her fairness might reasonably be
questioned in accordance with Rules [sic] 9233(a). In addition to
recusal initiated by such a Hearing Officer, a party to the proceeding
will be permitted to file a motion to disqualify a Hearing Officer.
However, due to the compressed schedule pursuant to which the process
would operate under Rule 9560, the proposed rule would require such
motion to be filed no later than 5 days after the announcement of the
Hearing Panel and the Exchange's brief in opposition to such motion
would be required to be filed no later than 5 days after service
thereof. Pursuant to existing Rule 9233(c), a motion for
disqualification of a Hearing Officer shall be decided by the Chief
Hearing Officer based on a prompt investigation. The applicable Hearing
Officer shall remove himself or herself and request the Chief Executive
Officer to reassign the hearing to another Hearing Officer such that
the Hearing Panel still meets the compositional requirements described
in Rule 9231(b). If the Chief Hearing Officer determines that the
Respondent's grounds for disqualification are insufficient, it shall
deny the Respondent's motion for disqualification by setting forth the
reasons for the denial in writing and the Hearing Panel will proceed
with the hearing.
    Under paragraph (c)(1) of the proposed Rule, the hearing would be
held not later than 15 days after service of the notice initiating the
suspension proceeding, unless otherwise extended by the Chairman of the
Hearing Panel with the consent of the Parties for good cause shown. In
the event of a recusal or disqualification of a Hearing Officer, the
hearing shall be held not later than five days after a replacement
Hearing Officer is appointed.
    Under paragraph (c)(2) of the proposed Rule, a notice of date,
time, and place of the hearing shall be served on the Parties not later
than seven days before the hearing, unless otherwise ordered by the
Chairman of the Hearing Panel. Under the proposed Rule, service

shall be made by personal service or overnight commercial courier and
shall be effective upon service.
    Proposed paragraph (c) would also govern how the hearing is
conducted, including the authority of Hearing Officers ((c)(3),
witnesses ((c)(4)), additional information that may be required by the
Hearing Panel ((c)(5)), the requirement that a transcript of the
proceeding be created and details related to such transcript ((c)(6)),
and details regarding the creation and maintenance of the record of the
proceeding ((c)(7)). Proposed paragraph (c)(8) would also provide that
if a Respondent fails to appear at a hearing for which it has notice,
the allegations in the notice and accompanying declaration may be
deemed admitted, and the Hearing Panel may issue a suspension order
without further proceedings. Finally, as proposed, if the Exchange
fails to appear at a hearing for which it has notice, the Hearing Panel
may order that the suspension proceeding be dismissed.
    Under paragraph (d)(1) of the proposed Rule, the Hearing Panel
would be required to issue a written decision stating whether a
suspension order would be imposed. The Hearing Panel would be required
to issue the decision not later than 10 days after receipt of the
hearing transcript, unless otherwise extended by the Chairman of the
Hearing Panel with the consent of the Parties for good cause shown. The
proposed Rule would state that a suspension order shall be imposed if
the Hearing Panel finds by a preponderance of the evidence that the
alleged violation specified in the notice has occurred and that the
violative conduct or continuation thereof is likely to result in
significant market disruption or other significant harm to investors.
    Proposed paragraph (d)(2) would also describe the content, scope
and form of a suspension order. As proposed, a suspension order shall
be limited to ordering a Respondent to cease and desist from violating
proposed Rule 5220, and/or to ordering a Respondent to cease and desist
from providing access to the Exchange to a client of Respondent that is
causing violations of proposed Rule 5220 ((d)(2)(A)). Under the
proposed rule, a suspension order shall also set forth the alleged
violation and the significant market disruption or other significant
harm to investors that is likely to result without the issuance of an
order ((d)(2)(B)). The order shall describe in reasonable detail the
act or acts the Respondent is to take or refrain from taking, and
suspend such Respondent unless and until such action is taken or
refrained from ((d)(2)(C)). Finally, the order shall include the date
and hour of its issuance ((d)(2)(D)).
    As proposed, under proposed paragraph (d)(3), a suspension order
would remain effective and enforceable unless modified, set aside,
limited, or revoked pursuant to proposed paragraph (e), as described
below.
    Finally, paragraph (d)(4) would require service of the Hearing
Panel's decision and any suspension order consistent with other
portions of the proposed rule related to service.
    Proposed paragraph (e) of Rule 9560 would provide that at any time
after the Hearing Officers served the Respondent with a suspension
order, a Party could apply to the Hearing Panel to have the order
modified, set aside, limited, or revoked. If any part of a suspension
order is modified, set aside, limited, or revoked, proposed paragraph
(e) of Rule 9560 provides the Hearing Panel discretion to leave the
cease and desist part of the order in place. For example, if a
suspension order suspends Respondent unless and until Respondent ceases
and desists providing access to the Exchange to a client of Respondent,
and after the order is entered the Respondent complies, the Hearing
Panel is permitted to modify the order to lift the suspension portion
of the order while keeping in place the cease and desist portion of the
order. With its broad modification powers, the Hearing Panel also
maintains the discretion to impose conditions upon the removal of a
suspension--for example, the Hearing Panel could modify an order to
lift the suspension portion of the order in the event a Respondent
complies with the cease and desist portion of the order but
additionally order that the suspension will be re-imposed if Respondent
violates the cease and desist provisions modified order in the future.
The Hearing Panel generally would be required to respond to the request
in writing within 10 days after receipt of the request. An application
to modify, set aside, limit or revoke a suspension order would not stay
the effectiveness of the suspension order.
    Proposed paragraph (f) would describe the call for review process
by the Exchange Board of Directors. Specifically, the proposed Rule
would provide that if there is no pending application to the Hearing
Panel to have a suspension order modified, set aside, limited, or
revoked, the Exchange Board of Directors, in accordance with Rule 9310
(Review by Exchange Board of Directors), may call for review the
Hearing Panel decision on whether to issue a suspension order. Further,
the proposed Rule would provide that a call for review by the Exchange
Board of Directors shall not stay the effectiveness of a suspension
order.
    Finally, proposed paragraph (g) would provide that sanctions issued
under the proposed Rule 9560 would constitute final and immediately
effective disciplinary sanctions imposed by the Exchange, and that the
right to have any action under the Rule reviewed by the Commission
would be governed by Section 19 of the Act. The filing of an
application for review would not stay the effectiveness of a suspension
order unless the Commission otherwise ordered.
Proposed Amendments to Rule 8313
    Finally, the Exchange proposes amendments to Rule 8313 to permit
release to the public of suspension notices and orders issued pursuant
to proposed Rule 9560. Specifically, the Exchange proposes to amend
Rule 8313(a)(3), which provides that the Exchange shall release to the
public information with respect to any suspension, cancellation,
expulsion, or bar that constitutes final Exchange action imposed
pursuant various Exchange Rules, to include a reference to proposed
Rule 9560. The Exchange also proposes to include a notice of the
initiation of a suspension proceeding served pursuant to proposed Rule
9560 in the definition of ``disciplinary complaint'' under Rule
8313(e)(1). Similarly, the Exchange would include suspension orders
issued pursuant to proposed Rule 9560 in the definition of
``disciplinary decision'' under Rule 8313(e)(2). The proposed
amendments to Rule 8313 are consistent with the FINRA Rule 8313 and the
rules of the other SROs modeled on FINRA Rule 8313.\14\
---------------------------------------------------------------------------

    \14\ See FINRA Rule 8313; BATS Rule 8.18.
---------------------------------------------------------------------------

* * * * *
    In summary, proposed Rule 5220, coupled with proposed Rule 9560,
would provide the Exchange with another form and means of authority to
promptly act to prevent disruptive quoting and trading activity from
continuing on the Exchange. The following example illustrates how the
proposed rule would operate.
    Assume that through its surveillance program, Exchange staff
identifies a pattern of potentially disruptive quoting and trading
activity. After an initial investigation, the Exchange would contact
the member organization or covered person responsible for the orders
that caused the activity to request an explanation of the activity as
well as any additional relevant information,

including the source of the activity. If the Exchange were to continue
to see the same pattern from the same member organization or covered
person and the source of the activity is the same or has been
previously identified as a frequent source of disruptive quoting and
trading activity then the Exchange could initiate an expedited
suspension proceeding by serving notice on the member organization or
covered person that would include details regarding the alleged
violations as well as the proposed sanction.
    In such a case the proposed sanction would likely be to order the
member organization or covered person to cease and desist providing
access to the Exchange to the client that is responsible for the
disruptive quoting and trading activity and to suspend such member
organization or covered person unless and until such action is taken.
The member organization or covered person would have the opportunity to
be heard in front of a Hearing Panel at a hearing to be conducted
within 15 days of the notice. If the Hearing Panel determined that the
violation alleged in the notice did not occur or that the conduct or
its continuation would not have the potential to result in significant
market disruption or other significant harm to investors, then the
Hearing Panel would dismiss the suspension order proceeding. If the
Hearing Panel determined that the violation alleged in the notice did
occur and that the conduct or its continuation is likely to result in
significant market disruption or other significant harm to investors,
then the Hearing Panel would issue the order including the proposed
sanction, ordering the member organization or covered person to cease
providing access to the client at issue and suspending such Member
unless and until such action is taken.
    If such member organization or covered person wished for the
suspension to be lifted because the client ultimately responsible for
the activity no longer would be provided access to the Exchange, then
such member organization or covered person could apply to the Hearing
Panel to have the order modified, set aside, limited or revoked. The
Exchange notes that the issuance of a suspension order would not alter
the Exchange's ability to further investigate the matter and/or later
sanction the member or member organization pursuant to the Exchange's
standard disciplinary process for supervisory violations or other
violations of Exchange rules or the Act.
    The Exchange reiterates that it already has broad authority to take
action against a member organization or covered person in the event
that such member organization or covered person is engaging in or
facilitating disruptive or manipulative trading activity on the
Exchange. For the reasons described above, and in light of recent
matters such as the client access cases described above, as well as
other cases currently under investigation, the Exchange believes that
it is equally important for the Exchange to have this supplemental
authority to promptly initiate expedited suspension proceedings against
any member organization or covered person who has demonstrated a clear
pattern or practice of disruptive quoting and trading activity, as
described above, and to take action including ordering such member
organization or covered person to terminate access to the Exchange to
one or more clients that are [sic] responsible for the violative
activity.
    The Exchange recognizes that its proposed authority to issue a
suspension order is a powerful measure that should be used very
cautiously. Consequently, the proposed rules have been designed to
ensure that the proceedings are used to address only the most clear and
serious types of disruptive quoting and trading activity and that the
interests of respondents are protected. For example, to ensure that
proceedings are used appropriately and that the decision to initiate a
proceeding is made only at the highest staff levels, the proposed rules
require the CRO or another senior officer of the Exchange to issue
written authorization before the Exchange can institute an expedited
suspension proceeding. In addition, the rule by its terms is limited to
violations of proposed Rules [sic] 5220, when necessary to protect
investors, other member organizations or covered persons, and the
Exchange.
    Further, the Exchange believes that the proposed expedited
suspension provisions described above that provide the opportunity to
respond as well as a Hearing Panel determination prior to taking action
will ensure that the Exchange would not utilize its authority in the
absence of a clear pattern or practice of disruptive quoting and
trading activity. Notwithstanding the adoption of the proposed rules
along with existing disciplinary rules in the 9000 series, the Exchange
also notes that that pursuant to Rule 9555(a)(2) (Failure to Meet the
Eligibility or Qualification Standards or Prerequisites for Access to
Services), if a member organization or covered person cannot continue
to have access to services offered by the Exchange or a member thereof
with safety to investors, creditors, members, or the Exchange, the
Exchange may provide written notice to such member or person limiting
or prohibiting access to services offered by the Exchange or a member
thereof. This ability to impose a temporary restriction upon Members
assists the Exchange in maintaining the integrity of the market and
protecting investors and the public interest.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\15\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\16\ 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, and 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. Pursuant
to the proposal, the Exchange will have a mechanism to promptly
initiate expedited suspension proceedings in the event the Exchange
believes that it has sufficient proof that a violation of proposed Rule
5220 has occurred and is ongoing.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Further, the Exchange believes that the proposal is consistent with
Sections 6(b)(1) and 6(b)(6) of the Act,\17\ which require that the
rules of an exchange enforce compliance with, and provide appropriate
discipline for, violations of the Commission and Exchange rules. The
Exchange believes that the proposal is consistent with the public
interest, the protection of investors, or otherwise in furtherance of
the purposes of the Act because the proposal helps to strengthen the
Exchange's ability to carry out its oversight and enforcement
responsibilities as a self-regulatory organization in cases where
awaiting the conclusion of a full disciplinary proceeding is unsuitable
in view of the potential harm to other member organization and their
customers. The Exchange notes that if this type of conduct is allowed
to continue on the Exchange, the Exchange's reputation could be harmed
because it may appear to the public that the Exchange is not acting to
address the behavior. The proposed expedited process would enable the
Exchange to address the behavior with greater speed.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As noted throughout this filing, the Exchange believes that these
rule proposals are necessary for the

protection of investors rather than allowing disruptive quoting and
trading activity to occur for several years. The Exchange believes that
the pattern of disruptive and allegedly manipulative quoting and
trading activity was widespread across multiple exchanges, and the
Exchange, FINRA, and other SROs identified clear patterns of the
behavior in 2007 and 2008 in the equities markets.\18\ The Exchange
believes that this proposal will provide the Exchange with additional
means to enforce against such behavior in an expedited manner while
providing member organizations or covered person with the necessary due
process. The Exchange believes that its proposal is consistent with the
Act because it provides the Exchange with the ability 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 from such ongoing behavior.
---------------------------------------------------------------------------

    \18\ See Section 3 herein, the Purpose section, for examples of
conduct referred to herein.
---------------------------------------------------------------------------

    The Exchange believes that the proposal is also consistent with
Section 6(b)(7) of the Act,\19\ which requires that the rules of an
exchange ``provide a fair procedure for the disciplining of members and
persons associated with members . . . and the prohibition or limitation
by the exchange of any person with respect to access to services
offered by the exchange or a member thereof.'' Finally, the Exchange
also believes the proposal is consistent with Sections 6(d)(1) and
6(d)(2) of the Act,\20\ which require that the rules of an exchange
with respect to a disciplinary proceeding or proceeding that would
limit or prohibit access to or membership in the exchange require the
exchange to: Provide adequate and specific notice of the charges
brought against a member or person associated with a member, provide an
opportunity to defend against such charges, keep a record, and provide
details regarding the findings and applicable sanctions in the event a
determination to impose a disciplinary sanction is made. The Exchange
believes that each of these requirements is addressed by the notice and
due process provisions included within proposed Rule 9560. Importantly,
as noted above, the Exchange will use the authority proposed in this
filing only in clear and egregious cases when necessary to protect
investors, other member organizations or covered persons and the
Exchange, and even in such cases, respondents will be afforded due
process in connection with the suspension proceedings.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78f(b)(7).
    \20\ 15 U.S.C. 78f(d)(1).
---------------------------------------------------------------------------

    Finally, the Exchange believes that amending Rule 8313 to permit
release to the public of suspension notices and orders issued pursuant
to proposed Rule 9560 furthers the objectives of Section 6(b)(5) of the
Act \21\ by providing greater clarity, consistency, and transparency
regarding the release of disciplinary complaints, decisions and other
information to the public. The Exchange also believes that the proposed
rule change promotes greater transparency to the Exchange's
disciplinary process by providing greater access to information
regarding its disciplinary actions and valuable guidance and
information to persons subject to the Exchange's jurisdiction,
regulators, and the investing public.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
believes that each self-regulatory organization should be empowered to
regulate trading occurring on their [sic] market consistent with the
Act and without regard to competitive issues. The Exchange is
requesting authority to take appropriate action if necessary for the
protection of investors, other member organizations or covered persons,
and the Exchange. The Exchange also believes that it is important for
all exchanges to be able to take similar action to enforce its [sic]
rules against manipulative conduct thereby leaving no exchange prey to
such conduct. The Exchange does not believe that the proposed rule
change imposes an undue burden on competition, rather this process will
provide the Exchange with necessary means to enforce against violations
of manipulative quoting and trading activity in an expedited manner,
while providing member organizations or covered persons with the
necessary due process. Finally, the proposed rule change is designed to
enhance the Exchange's rules governing the release of disciplinary
complaints, decisions and other information to the public, thereby
providing greater clarity and consistency and resulting in less
burdensome and more efficient regulatory compliance and facilitating
performance of regulatory functions.

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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \22\ and Rule 19b-4(f)(6) thereunder.\23\
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 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 Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \23\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \24\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\25\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
---------------------------------------------------------------------------

    \24\ 17 CFR 240.19b-4(f)(6).
    \25\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    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 Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \26\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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_ADDRESS>Please include
File Number SR-NYSE-2017-21 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-NYSE-2017-21. 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-NYSE-2017-21 and should be
submitted on or before June 26, 2017.
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    \27\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11502 Filed 6-2-17; 8:45 am]
 BILLING CODE 8011-01-P