[Federal Register Volume 78, Number 12 (Thursday, January 17, 2013)]
[Notices]
[Pages 3958-3960]
[FR Doc No: 2013-00876]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68635; File No. SR-NYSE-2012-54]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Granting Approval to Proposed Rule Change Amending the Listed Company
Manual Section 204.00 To Create a Uniform Method for a Company To
Provide Notice to the Exchange When Required Pursuant to Sections
204.06, 204.12, 204.17, 204.21, 204.22, 311.01, 401.02, and 601.00 of
the Listed Company Manual, and To Make Conforming Changes

January 11, 2013.

I. Introduction

    On November 8, 2012, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend Section 204.00 of the Listed Company
Manual, which sets forth the required procedures that listed companies
must follow to notify the Exchange upon the occurrence of certain
events, and to amend related provisions of the Manual to make clear
which provisions trigger the reporting procedures set forth in amended
Section 204.00. The proposed rule changes were published for comment in
the Federal Register on November 27, 2012.\3\ The Commission did not
receive any comments on the proposed rule change. This order approves
the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 68276 (November 20,
2012), 77 FR 70868 (November 27, 2012) (``Notice'').
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II. Description of the Proposals

    Companies that list their securities on the Exchange are subject to
a number of reporting requirements set forth in the Exchange's Listed
Company Manual (``Manual''). The Exchange proposes to amend the methods
by which listed companies give notice to the Exchange of matters or
events where timely notification is essential to the ability of
investors to arrange to be holders of a security by a certain date for
a distribution or shareholder meeting. These events are: Closing of
transfer books; notice of dividend action or action relating to a stock
distribution; meetings of shareholders, notice of the fixing of a date
for the taking of a record of shareholders or for the closing of
transfer books; redemption of listed securities; notice of corporate
action which will result in, or which looks toward, either the partial
or full call for redemption of a listed security; notice of dates set
in connection with the calling of any meeting of shareholders; and
notice by transfer agents of the number of shares outstanding at the
end of each calendar quarter.
    Currently, the Manual contains sections governing the notice that
listed companies are required to provide the Exchange in case of each
of these events; however, these sections set forth either different or
no precise method for providing such notice. The following chart
summarizes how these various notification provisions currently are
addressed in the Manual.

------------------------------------------------------------------------
                Section                           Current method
------------------------------------------------------------------------
204.00 Notice to and Filings with the    Notice methods include fax,
 Exchange (notice in connection with      telephone, telegram, and
 certain actions or events as specified   letter.
 in Sections 204.01 through 204.25).
204.06 Closing of Transfer Books.......  No method specified.
204.12 Dividends and Stock               Notice methods include fax,
 Distributions (notice of dividend        telephone, telegram, and
 action or action relating to a stock     letter.
 distribution).
204.17 Meetings of Shareholders........  No method specified.
204.21 Record Date (notice of the        Notice methods include fax,
 fixing of a date for the taking of a     telephone, telegram, and
 record of shareholders or for the        letter.
 closing of transfer books).
204.22 Redemption of Listed Securities.  No method specified.
311.01 Publicity and Notice to the       Notice methods include fax and
 Exchange of Redemption (notice of        telephone.
 corporate action which will result in,
 or which looks toward, either the
 partial or full call for redemption of
 a listed security).
401.02 Notice to the Exchange (notice    Notice methods include
 of dates set in connection with the      telephone and writing or fax.
 calling of any meeting of
 shareholders, including changes in
 record date).
601.00 Services to be Provided by        Notice methods include fax and
 Transfer Agents and Registrars (notice   email.
 by transfer agents of the number of
 shares outstanding at the end of each
 calendar quarter).
------------------------------------------------------------------------

    The Exchange proposes to create a uniform method that listed
companies will use to notify the Exchange of the events identified in
the chart above. To do so, the Exchange proposes to set forth the new,
uniform method of notification in Section 204.00, and to amend the
remaining Sections in the chart above to include an explicit direction
to listed companies to follow the amended notification procedures of
Section 204.00.
    Specifically, the Exchange proposes to amend Section 204.00 \4\ to
provide that, when a provision of the Listed Company Manual requires a
company to give notice to the Exchange pursuant to Section 204.00, the
company shall provide such notice through a web-based communication
system--either a web portal or email address--specified by the Exchange
in a prominent position on its Web site.\5\ Should the Exchange ever
change the web-based communication system it uses to receive
notifications pursuant to Section 204.00, the proposed text of Section
204.00 would require the Exchange to promptly update and display the
applicable information on its Web site.\6\
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    \4\ In addition to the proposed substantive amendments to
Section 204.00 described in the text, the Exchange proposes to
delete the word ``written'' from the heading for Section 204.00 and
from the first sentence of the section. In its filing, the Exchange
stated that this technical change is meant to eliminate any
potential confusion as to whether notices provided through a web-
based communication system constitute ``written'' notices.
    \5\ The Exchange noted in its submission that if the filing is
approved, it plans to commence receiving the web-based notifications
pursuant to Section 204.00 through www.egovdirect, a web portal
operated by the Exchange, or through an email address designated by
the Exchange.
    \6\ Additionally, proposed Section 204.00 encourages listed
companies to contact their Exchange representatives if they have any
questions about the appropriate method of providing notification
under applicable Exchange rules.
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    The Exchange also proposes to amend Section 204.00 to address
several other scenarios that impact the notifications that companies
must provide to the Exchange. First, the amended Section 204.00 would
say that, in emergency situations--for instance, lack of computer or
Internet access, technical problems at the Exchange or company, or
incompatibility between Exchange and company systems--companies may
provide notifications required pursuant to the Section by telephone and
confirmed by facsimile, as specified by the Exchange on its Web
site.\7\ Second, amended Section 204.00 would require that, in cases
where a material event or a statement dealing with a rumor which calls
for immediate release is made shortly before the opening or during
market hours, companies must notify the Exchange using the telephone
alert procedures set forth in Section 202.06(B) of the Manual.\8\
Finally, amended Section 204.00 would clarify that for the remaining
notification provisions in the Manual that do not direct companies
specifically to follow the Section's revised notification methods,
companies may use the methods provided for in Section 204.00 or any
other reasonable method.
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    \7\ Again, the Exchange notes that companies are encouraged to
contact their Exchange representatives if they have any questions
about how to comply with applicable notification requirements.
    \8\ The telephone alert procedures in Section 202.06(B) require
that, when the announcement of news of a material event or a
statement dealing with a rumor which calls for immediate release is
made shortly before the opening or during market hours, a company
must give notice to their Exchange representatives by telephone at
least ten minutes prior to the release of the announcement. Section
202.06(B) further requires that when such announcement is in written
form, a company must also provide the text of such written
announcement to the Exchange at least ten minutes prior to its
release. The Exchange proposes to amend Section 202.06(B) to specify
that companies should now use the web-based communication system
specified in Section 204.00--i.e., the web portal or designated
email address--to transmit the written form of the announcement.
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    The Exchange explained in its filing the reason why the remaining
notification provisions contained in the Manual--the ones not specified
in the chart above and subject to the proposed amendments--would not
require companies to follow the notification methods set forth in
204.00. According to the Exchange, these remaining provisions found in
Sections 204.01 through 204.25 relate to matters about which the
Exchange needs to be informed promptly, such as a change in transfer
agent or trustee (Section 204.02) or change in auditors (Section
204.03), but a company's failure to notify the Exchange immediately in
the case of these events would not significantly disadvantage
investors. As a result, the Exchange does not propose to amend these
remaining provisions to require notification pursuant to 204.00;
instead, the Exchange believes it is reasonable to afford listed
companies more flexibility with respect to how they comply with the
remaining notification provisions that do not specifically direct a
company to Section 204.00.
    In connection with the proposed amendments to the notification
methods prescribed in Section 204.00, the Exchange also proposes to
revise the ``Guide to Requirements for Submitting Data to the
Exchange'' (``Guide'') which appears in the Introduction to the Listed
Company Manual.\9\ The Exchange proposes to amend the portion of the
Guide summarizing the submission requirements relating to press
releases disclosing material corporate events. This part of the Guide
is meant to summarize the requirements of the telephone alert policy
found in Section 202.06(B), but as it stands now, it states incorrectly
that the text of certain written announcements should be conveyed to
the Exchange after an announcement is released. The Exchange's proposed
amendment to this portion of the Guide would conform the summary
language used in the Guide to the language of the actual requirement
found in Section 202.06(B), which states that the text of certain
written announcements must be conveyed to the Exchange at least ten
minutes prior to release.
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    \9\ In addition to the substantive changes to the Guide
described in the text, the Exchange proposes to revise cross-
references contained in the Guide so that they refer to a
``Section'' of the Manual rather than a ``Paragraph,'' as the Manual
is organized in ``Sections,'' not ``Paragraphs.''
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    The Exchange also proposes several administrative changes to the
Guide. First, it proposes to amend from six to three the number of
copies of a proxy statement that a listed company must submit to the
Exchange. The reason for the change is that the Exchange has determined
that three copies of the proxy statement is sufficient for the
Exchange's review purposes, and that the proposed amendment would
lessen an administrative burden on listed companies. Second, the
Exchange proposes to make changes to the portion of the Guide
summarizing the notification requirements for shareholder meetings. The
Exchange proposes to change the name of this Item in the Guide from
``Shareholders' Meeting/Notice'' to ``Shareholders' Meeting/Notice of
Record Date or Change of Record Date.'' The Exchange also proposes to
revise the description of the ``Due Date'' for this Item in the Guide,
by rewording the description to require notice ``[a]t least ten days in
advance of record date,'' instead of ``[n]ot later than the tenth day
prior to the record date.''
    Finally, the Exchange proposes to amend Section 311.01 to clarify
what method of notification is required when a company's corporate
action (or any action of which the company has knowledge) will result
in, or looks toward, either the partial or full call for redemption of
a listed security. Currently, Section 311.01 contains language in two
different places setting forth methods of notification in cases of
redemptions, and the language in these two places is potentially in
conflict. In the first instance where Section 311.01

prescribes a method of notification, it says that companies must follow
the timely disclosure/telephone alert procedures found in Sections
202.05 and 202.06(B).\10\ Later in Section 311.01, there is a second
notification directive that requires companies to notify the Exchange
of redemptions in writing, delivered by hand if possible, and if
immediate hand delivery is not possible, than the company must notify
the Exchange of a redemption action by telephone, no later than
simultaneously with the release of the information to the newspapers
and news wire services, confirmed promptly by fax. The Exchange
proposes to delete the paragraph containing the second directive. As a
result of the proposed change, the only notification directive in
Section 311.01 would be the first one that requires companies to follow
the timely disclosure and telephone alert procedures.
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    \10\ The Exchange proposed several additional technical and non-
substantive changes to Section 311.01. See Notice, supra note 3.
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III. Discussion and Commission Findings

    The Commission has carefully reviewed the proposed rule change and
finds that it consistent with the requirements of the Act.\11\
Specifically, the Commission believes it is consistent with Section
6(b)(5) of the Act,\12\ which requires, among other things, that the
rules of a national securities exchange 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 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 a national market system, and, in general, to
protect investors and the public interest.
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    \11\ 15 U.S.C. 78f. In approving this proposed rule change, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
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    The proposed changes are intended to simplify and clarify the
provisions of the Manual relating to the methods by which listed
companies must notify the Exchange when certain events occur. By
creating a uniform method of notification by web portal or email for
the Sections that specifically refer to Section 204.00, identified in
the chart above, the Exchange may reduce the likelihood that companies
make a mistake when trying to notify the Exchange of important events.
As explained by the Exchange, the Sections that will require notice by
web portal or email pursuant to Section 204.00 all relate to matters
where timely notification is critical to allow investors time to make
arrangements to be holders of a security by a certain date for a
distribution or shareholder meeting. In such cases, it makes sense to
require listed companies to give notice to the Exchange using current,
efficient electronic methods that more easily lend themselves to
accurate recordkeeping than manual or written methods.\13\ The
Commission therefore believes that the proposed rule change is
consistent with the Act, as more clear, easy to follow, and easily
recorded notification methods should facilitate the transmission of
information and promote transparency for the benefit of investors
consistent with Section 6(b)(5) of the Act.\14\
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    \13\ The Commission also notes that the Exchange provides for
alternative methods of notification should electronic communications
systems be unavailable. See supra note 7 and accompanying text.
    \14\ The Commission notes that the Exchange has committed in its
rule text to displaying prominently on its Web site the specific
electronic web-based communication system that listed companies must
use to give notice in accordance with Section 204.00. Accordingly,
the Commission believes that the proposed rule change should
facilitate listed companies' means of providing notice of certain
events while ensuring that all listed companies should be able to
determine how they must comply with such notification requirements.
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    Likewise, with respect to the remaining notification provisions in
the Manual where timely notification is less critical, it is reasonable
to allow companies more flexibility to determine what method of
notification best suits a particular situation. The Commission notes
that, even in such cases, the Exchange is offering to allow companies
to use the electronic web-based notification methods of 204.00 if they
would like to use such methods.
    The Commission also finds that the remaining clarifying,
conforming, administrative, and technical changes are consistent with
the Act. The changes to the Guide make it consistent with language used
elsewhere in the Guide and Manual. For instance, the revision of the
Item in the Guide dealing with press releases conforms the language
used in that Guide entry with the corresponding language in Section
202.06(B). The same is true of the change to the Due Date description
associated with Shareholders' Meeting/Notice of Record Date or Change
of Record Date, which is meant to mirror language used in the Due Date
description of the Guide entry associated with Dividend Notification.
Because these changes conform the Guide's language to what is used
elsewhere in the Manual, they promote consistency and transparency and
reduce the potential for confusion. Similarly, in Section 311.01, the
Exchange's deletion of a second, potentially conflicting method of
notification of redemption actions should reduce listed companies'
confusion as to how to comply with the provision, and ultimately, this
should promote transparency and protect investors by ensuring better
and more accurate notification. Lastly, the change to Section 402.01
that reduces the number of copies of proxy material that listed
companies must provide to the Exchange lessens the administrative
burden imposed on issuers without, as the Exchange represents,
threatening the Exchange's review of such material for the benefit and
protection of investors.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\15\ that the proposed rules change (SR-NYSE-2012-54) be, and
hereby is, approved.
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    \15\ 15 U.S.C. 78s(b)(2).
    \16\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(83).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00876 Filed 1-16-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 16 (Wednesday, January 25, 2012)]
[Notices]
[Pages 3834-3836]
[FR Doc No: 2012-1486]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66190; File No. SR-BATS-2012-001]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Extend
Pilot Program Related to Trading Pauses Due to Extraordinary Market
Volatility

January 19, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 6, 2012, BATS Exchange, Inc. (the ``Exchange'' or
``BATS'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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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 is filing with the Commission a proposal to extend a
pilot program previously approved by the Commission related to Rule
11.18, entitled ``Trading Halts Due to Extraordinary Market
Volatility.''
    The text of the proposed rule change is available at the Exchange's
Web site at http://www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of 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 purpose of this filing is to extend the effectiveness of the
Exchange's rule related to individual stock circuit breakers, which is
contained in Rule 11.18(d) and Interpretation and Policy .05 to Rule
11.18. The rule, explained in further detail below, is currently
operating as a pilot program set to expire on January 31, 2012. The
Exchange proposes to extend the pilot program to July 31, 2012.
    On June 10, 2010, the Commission approved on a pilot basis changes
to BATS Rule 11.18 to provide for uniform market-wide trading pause
standards for individual securities in the S&P 500[supreg] Index that
experience rapid price movement.\3\ Later, the Exchange and

other markets proposed extension of the trading pause standards on a
pilot basis to individual securities in the Russell 1000[supreg] Index
and specified Exchange Traded Products, which changes the Commission
approved on September 10, 2010.\4\ More recently, the Exchange proposed
expansion of the pilot program to apply to all NMS stocks.\5\ This
expansion was approved on June 23, 2011.\6\ The pilot program relating
to trading pause standards has been extended three times since its
inception.\7\
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    \3\ Securities Exchange Act Release No. 62252 (June 10, 2010),
75 FR 34186 (June 16, 2010) (SR-BATS-2010-014).
    \4\ Securities Exchange Act Release No. 62884 (September 10,
2010), 75 FR 56618 (September 16, 2010) (SR-BATS-2010-018).
    \5\ Securities Exchange Act Release No. 64435 (May 6, 2011), 76
FR 27684 (May 12, 2011) (SR-BATS-2011-016).
    \6\ Securities Exchange Act Release No. 64735 (June 23, 2011),
76 FR 38243 (June 29, 2011) (File Nos. SR-BATS-2011-016; SR-BYX-
2011-011; SR-BX-2011-025; SR-CBOE-2011-049; SR-CHX-2011-09; SR-EDGA-
2011-15; SR-EDGX-2011-14; SR-FINRA-2011-023; SR-ISE-2011-028; SR-
NASDAQ-2011-067; SR-NYSE-2011-21; SR-NYSEAmex-2011-32; SR-NYSEArca-
2011-26; SR-NSX-2011-06; SR-Phlx2011-64).
    \7\ Securities Exchange Act Release No. 63497 (December 9,
2010), 75 FR 78315 (December 15, 2010) (SR-BATS-2010-037);
Securities Exchange Act Release No. 64207 (April 6, 2011), 76 FR
20424 (April 12, 2011) (SR-BATS-2011-011); Securities Exchange Act
Release No. 65081 (August 9, 2011), 76 FR 50798 (August 16, 2011)
(SR-BATS-2011-027).
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    The Exchange believes the benefits to market participants from the
individual stock trading pause rule should be continued on a pilot
basis.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\8\ In particular, the
proposal is consistent with Section 6(b)(5) of the Act,\9\ because it
would promote just and equitable principles of trade, remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system. The proposed rule change is also
consistent with Section 11A(a)(1) of the Act \10\ in that it seeks to
assure fair competition among brokers and dealers and among exchange
markets. The Exchange believes that the pilot program promotes just and
equitable principles of trade in that it promotes transparency and
uniformity across markets concerning decisions to pause trading in a
security when there are significant price movements. The Exchange
believes that the pilot program is working well, that it has been
infrequently invoked during the previous months, and that the extension
of the pilot program will allow the Exchange to further assess the
effect of the pilot program on the market or whether other initiatives
should be adopted in lieu of the current pilot program.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ 15 U.S.C. 78k-1(a)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change imposes
any burden on competition.

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

    The Exchange has 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 has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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 \13\ and Rule 19b-
4(f)(6)(iii) thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
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.
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii) \16\ 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.
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest, as
it will allow the pilot program to continue uninterrupted, thereby
avoiding the investor confusion that could result from a temporary
interruption in the pilot program. For this reason, the Commission
designates the proposed rule change to be operative upon filing.\17\
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    \17\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File No. SR-BATS-2012-001 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-BATS-2012-001. 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
a.m. and 3 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-BATS-2012-001 and should be
submitted on or before February 15, 2012.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-1486 Filed 1-24-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 164 (Friday, August 25, 2017)]
[Notices]
[Pages 40610-40612]
[FR Doc No: 2017-18000]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81448; File No. SR-FINRA-2017-026]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Clarify Application of FINRA Rule 11140
(Transactions in Securities ``Ex-Dividend,'' ``Ex-rights'' or ``Ex-
Warrants'') in Connection With the Implementation of the Shortened
Settlement Cycle (T+2) on September 5, 2017

August 21, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``SEA'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby
given that on August 17, 2017, Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by FINRA. FINRA
has designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to address the application of FINRA Rule 11140
(Transactions in Securities ``Ex-Dividend,'' ``Ex-Rights'' or ``Ex-
Warrants'') as it relates to establishing ex-dividend dates in
connection with the implementation of the T+2 settlement cycle on
September 5, 2017.
    No change to the text of FINRA Rule 11140(b)(1) is required by this
proposal.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA 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. FINRA 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
Background
    On March 22, 2017, the SEC adopted amendments to SEA Rule 15c6-1(a)
to shorten the standard settlement cycle for U.S. secondary market
transactions in equities, corporate and municipal bonds, unit
investment trusts and financial instruments composed of these products,
from three business days after the trade date (``T+3'') to two business
days after the trade date (``T+2'').\4\ The industry-wide initiative is
designed to reduce a number of risks, including credit risk, market
risk, and liquidity risk and, as a result, reduce systemic risk for
U.S. market participants.\5\ The compliance date for the rule
amendments is September 5, 2017.
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    \4\ See Securities Exchange Act Release No. 80295 (March 22,
2017), 82 FR 15564 (March 29, 2017) (Securities Transaction
Settlement Cycle) (File No. S7-22-16) (stating that, as amended, SEA
Rule 15c6-1(a) will prohibit broker-dealers from effecting or
entering into a contract for the purchase or sale of a security
(other than an exempted security, government security, municipal
security, commercial paper, bankers' acceptances or commercial
bills) that provides for payment of funds and delivery of securities
later than the second business day after the date of the contract,
unless otherwise expressly agreed to by the parties at the time of
the transaction).
    \5\ See supra note 4.
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    In support of this initiative, FINRA proposed changes to its rules
pertaining to securities settlement by, among other things, amending
the definition of ``regular way'' settlement as occurring on T+2.\6\ On
February 9, 2017, the SEC approved FINRA's amendments to the applicable
rules, including Rule 11140(b), that establish or reference T+3 to
conform to T+2, and these amendments will become effective on September
5, 2017.\7\
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    \6\ See Securities Exchange Act Release No. 79648 (December 21,
2016), 81 FR 95705 (December 28, 2016) (Notice of Filing of File No.
SR-FINRA-2016-047).
    \7\ See Securities Exchange Act Release No. 80004 (February 9,
2017), 82 FR 10835 (February 15, 2017) (Order Approving File No. SR-
FINRA-2016-047) and Securities Exchange Act Release No. 80004A
(March 6, 2017), 82 FR 13517 (March 13, 2017) (Correction to Order
Approving File No. SR-FINRA-2016-047).
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    During the transition period the industry and self-regulatory
organizations (``SROs''), including The Depository Trust Company
(``DTC'') which processes corporate action events, have raised concern
that the

September 5, 2017 industry-wide transition date from T+3 to T+2 will
result in September 7, 2017 being a ``double'' settlement date for
trades that occur on September 1, 2017 (under T+3 and reflecting the
Labor Day holiday on September 4, 2017) and trades that occur on
September 5, 2017 (under T+2), which generally will result in investors
who trade on either date being deemed a record holder of September 7,
2017.\8\ In order to avoid confusion about the proper settlement date
and to coordinate with other SROs, FINRA is proposing not to establish
September 5, 2017 as an ex-dividend date for applicable securities.
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    \8\ See, e.g., Nasdaq Issuer Alert 2017-001, Changes to Ex-
dividend Procedures Effective September 5, 2017 to Accommodate T+2
Settlement, http://nasdaq.cchwallstreet.com/nasdaq/pdf/nasdaq-issalerts/2017/2017-001.pdf; NYSE, NYSE MKT, NYSE ARCA: Changes
Related to the Shortened Settlement Cycle (T+2) (July 11, 2017),
https://www.nyse.com/trader-update/history#110000069618.
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Proposal
    FINRA is proposing to address the application of Rule 11140(b) as
it relates to the ex-dividend date in connection with the
implementation of the T+2 settlement cycle on September 5, 2017. As
amended to address T+2, the timeframes in Rule 11140 to establish an
ex-dividend date were generally reduced by one business day.
    The ex-dividend date (or ex-date) is the date on or after which a
security is traded without a specific dividend or distribution.\9\ Rule
11140(b) provides for the determination of normal ex-dividend and ex-
warrant dates for certain types of dividends and distributions. As
amended to address T+2, Rule 11140(b)(1) provides that with respect to
cash dividends or distributions, or stock dividends, and the issuance
or distribution of warrants, which are less than 25% of the value of
the subject security (i.e., ``regular'' distributions), if the
definitive information is received sufficiently in advance of the
record date, the date designated as the ``ex-dividend date'' is the
first business day preceding the record date if the record date falls
on a business day, or the second business day preceding the record date
if the record date falls on a day designated by FINRA's Uniform
Practice Code (``UPC'') Committee as a non-delivery date.\10\ Rule
11140(b)(2), which did not require amendment in connection with T+2,
establishes the ex-dividend date as the first business day following
the payable date with respect to cash dividends or distributions, stock
dividends and/or splits, and the distribution of warrants, which are
25% or greater of the value of the subject security (i.e., ``large''
distributions).\11\
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    \9\ See generally Notice to Members 00-54 (August 2000).
    \10\ The record date is the date fixed by an issuer for the
purpose of determining the holder of the security who is eligible to
receive the dividend, interest or principal payment, or any other
distribution relating to the security. See generally Notice to
Members 00-54 (August 2000).
    \11\ The payable date is the date that the dividend is sent to
the record owner of the security. See generally Notice to Members
00-54 (August 2000).
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    Consistent with the compliance date of the amendments to SEA Rule
15c6-1(a), the industry and FINRA have adopted Tuesday, September 5,
2017 as the transition date to the T+2 settlement cycle.\12\ To
mitigate the potential confusion that may result concerning proper
settlement during the transition period, FINRA, in coordination with
other SROs, supports the proposal that Tuesday, September 5, 2017
should not be designated as an ex-dividend date.\13\
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    \12\ See Regulatory Notice 17-19 (SEC Approves Amendments to
FINRA Rules to Conform to the Shortened Standard Settlement Cycle
for Most Broker-Dealer Transactions From Three Business Days (T+3)
to Two Business Days After the Trade Date (T+2)) (May 2017).
    \13\ See, e.g., Nasdaq Issuer Alert 2017-001, Changes to Ex-
dividend Procedures Effective September 5, 2017 to Accommodate T+2
Settlement, http://nasdaq.cchwallstreet.com/nasdaq/pdf/nasdaq-issalerts/2017/2017-001.pdf; NYSE, NYSE MKT, NYSE ARCA: Changes
Related to the Shortened Settlement Cycle (T+2) (July 11, 2017),
http://www.ust2.com/pdfs/NYSE-T2-Announcements.pdf.
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    Accordingly, FINRA proposes to interpret Rule 11140(b)(1) so that
the first record date to which the new ex-dividend date determination
will be applied will be Thursday, September 7, 2017. The ex-dividend
dates for ``regular'' distributions during the transition to T+2 will
be as follows:

------------------------------------------------------------------------
                Record date                            Ex-date
------------------------------------------------------------------------
Friday, September 1, 2017 \14\............  Wednesday, August 30, 2017.
Tuesday, September 5, 2017 \15\...........  Thursday, August 31, 2017.
                                             \16\
Wednesday, September 6, 2017..............  Friday, September 1, 2017.
                                             \17\
Thursday, September 7, 2017 \18\..........  Wednesday, September 6,
                                             2017.
------------------------------------------------------------------------

    As described above, the ex-date  for ``large'' distributions under
Rule 11140(b)(2) is the first business day following the payable date.
This provision was not amended in connection with T+2. In order to
ensure that September 5, 2017 will not be designated as an ex-dividend
date for ``large'' distributions, FINRA will advise issuers to not set
September 1, 2017 as the payable date for any ``large'' distribution
under Rule 11140(b)(2) and proposes to interpret Rule 11140(b)(2) so
that, if an issuer sets September 1, 2017 as the payable date for a
``large'' distribution, the ex-dividend date will be September 6, 2017,
not September 5, 2017.
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    \14\ The last day of the T+3 settlement cycle.
    \15\ The first day of the T+2 settlement cycle.
    \16\ Monday, September 4, 2017 is Labor Day, a Federal holiday.
    \17\ See supra note 16.
    \18\ The date on which previous trades settling on a T+3
settlement cycle and current trades on the T+2 settlement cycle will
be processed.
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    FINRA has filed the proposed rule change for immediate
effectiveness and has requested that the SEC waive the requirement that
the proposed rule change not become operative for 30 days after the
date of the filing, so FINRA can implement the proposed rule change
immediately.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\19\ which requires, among
other things, that FINRA rules must 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 regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, and, in general, to protect investors and the public
interest. FINRA believes that the proposal to address the application
of Rule 11140(b) to exclude September 5, 2017 as an ex-dividend date
for ``regular'' or ``large'' distributions supports the collective
effort among the industry and SROs to mitigate the potential confusion
concerning proper settlement during the transition from the T+3
settlement cycle to the T+2 settlement cycle.
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    \19\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. As noted above, the SROs
support that no securities will be subject to an ex-date ruling on
September 5, 2017. The primary benefit of this proposed rule change is
to minimize potential confusion about proper settlement that may arise
during the transition to the T+2 settlement cycle.\20\ FINRA believes

that the proposed rule change would not impose any additional costs on
the industry. As noted above, the proposed rule change does not change
the text to Rule 11140(b). Instead, the proposed rule change interprets
the application of the rule solely to refrain from designating
September 5, 2017 as an ex-dividend date for ``regular'' or ``large''
distributions.
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    \20\ As a result of the September 5, 2017 transition date for
regular-way settlement from T+3 to T+2, September 7, 2017 will be a
``double'' settlement date for trades that occur on September 1,
2017 (under T+3 and reflecting the Labor Day holiday on September 4,
2017) and trades that occur on September 5, 2017 (under T+2).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \21\ and Rule 19b-4(f)(6)
thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires FINRA to give the Commission written notice of FINRA'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. FINRA
has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\24\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. FINRA has asked the
Commission to waive the 30-day operative delay so that the proposal may
become operative upon filing. FINRA has stated that the purpose of the
proposed rule change is to minimize confusion about proper settlement
that may arise during the transition to the T+2 settlement cycle on
September 5, 2017. The Commission believes that waiving the 30-day
operative delay is consistent with the protection of investors and the
public interest to avoid the confusion that could arise in connection
with the transition to the T+2 settlement cycle on September 5, 2017,
if normal or large distributions were to be ex-dividend on that date.
Accordingly, the Commission hereby waives the 30-day operative delay
requirement and designates the proposed rule change as operative upon
filing.\25\
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    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
    \25\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-FINRA-2017-026 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-FINRA-2017-026. 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 FINRA. 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-FINRA-2017-026, and should
be submitted on or before September 15, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-18000 Filed 8-24-17; 8:45 am]
BILLING CODE 8011-01-P