[Federal Register Volume 83, Number 196 (Wednesday, October 10, 2018)]
[Notices]
[Pages 51015-51020]
[FR Doc No: 2018-21900]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84355; File No. SR-NASDAQ-2018-066]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Align Existing Investigatory and Disciplinary Processes and Related
Rules With the Investigatory and Disciplinary Processes and Related
Rules of Nasdaq PHLX LLC

October 3, 2018.
    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 September 24, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') 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 proposes to align its existing investigatory and
disciplinary processes and related rules with the investigatory and
disciplinary processes and related rules of Nasdaq PHLX LLC (``Phlx'')
[sic]
    The text of the proposed rule change is available on the Exchange's
website at http://nasdaq.cchwallstreet.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 aspects of such
statements.

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

1. Purpose
    Nasdaq proposes to amend certain of its rules to align its existing
investigatory and disciplinary processes and related rules with the
investigatory and disciplinary processes and related rules of Phlx.
Nasdaq notes that Phlx amended its rules recently to adopt an
investigatory and disciplinary process identical in all material
respects to the investigatory and disciplinary processes of Nasdaq BX,
Inc. (``BX'') and Nasdaq.\3\ The amendment also vested the Phlx
Regulation Department with the same authority proposed herein. The
Exchange therefore proposes the below changes to the 8000 and 9000
Series of the Nasdaq Rules in order to conform its rules to those of
Phlx 8000 and 9000 Series rules in all respects.\4\
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    \3\ See Securities Exchange Act Release No. 82143 (November 22,
2017), 82 FR 56672 (November 29, 2017) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Adopt
Investigatory and Disciplinary Processes Substantially Similar to
Nasdaq BX, Inc. and The Nasdaq Stock Market LLC for Phlx, which,
among other things, similarly enabled Phlx to retain discretion to
perform these functions).
    \4\ The Exchange notes that the Financial Industry Regulatory
Authority (``FINRA'') amended its rules recently to reflect an
internal reorganization of FINRA's Enforcement Operations. See
Securities Exchange Act Release No. 83781 (August 6, 2018), 83 FR
39802 (August 10, 2018). In July 2017, FINRA announced its plan to
consolidate its existing enforcement functions into a unified
Department of Enforcement. FINRA's recent rule change makes
technical and other non-substantive changes to FINRA Rules 9000
Series Code of Procedure (the ``Code'') to reflect the single
Department of Enforcement. The rule change removed references to the
Market Regulation department, its head and employees from the Code
where those references reflect the previously separate Market
Regulation enforcement function. In light of FINRA's reorganization,
the Exchange is likewise removing references to the Market
Regulation department, its head and employees from the Code, and re-
lettering the remainder of those sections where such re-lettering is
necessary (i.e. Rule 9120). Phlx will also submit a similar rule
filing to remove those references in due course.
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Definition of Nasdaq Regulation
    The Exchange proposes to revise the definition of Nasdaq Current
Rule 9120(w) (``Nasdaq Regulation'') to expressly include the
Exchange's Enforcement Department. The Exchange's Enforcement
Department is specifically charged with pursuing disciplinary action
against members, persons associated with a member, and persons subject
to the Exchange's jurisdiction, in addition to FINRA's Department of
Enforcement.
    Similarly, the Exchange proposes to add references to the ``Nasdaq
Regulation Department'' in Nasdaq Current Rule 9120(aa) (definition of
the term ``Party''). The Exchange also proposes to add a definition for
the term ``Party'' as used in the Nasdaq Rule 9400 series,\5\ and to
add references to ``FINRA'' in Nasdaq Current Rule 9120(aa)(3) to
clarify that FINRA falls under the definition of ``Party'' as used in
the Rule 9550 series. In addition, the Exchange is adding references to
the Nasdaq Regulation Department throughout the Nasdaq Rule 8000 and
9000 series.\6\ These amendments will conform the text of Nasdaq 8000
and 9000 rules with those of Phlx.\7\
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    \5\ The Exchange notes that, like Phlx, it is likewise including
the Department of Enforcement as a potential party to a matter under
the Rule 9400 Series. The Exchange believes that including this
department in Rule 9400 Series is appropriate because it may be
involved in the initiation of such a matter for Nasdaq currently.
The Exchange is also adding FINRA to other parts of Rule 9400 where
it is appropriate to show that FINRA may be the entity that
initiated an action under the rule.
    \6\ See Nasdaq Current Rules 8001, 8210, 8211, IM-8310-3, 9001,
9120, 9131, 9133, 9143, 9146, 9211, 9212, 9213, 9215, 9216, 9251,
9252, 9253, 9264, 9269, 9270, 9311, 9400, 9522, 9523, 9524, 9552,
9553, 9554, 9555, 9556, 9557, 9558, 9559, 9610, 9630, 9810, 9820,
9830, and 9840.
    \7\ The Exchange is also amending Current Nasdaq Rule
9120(aa)(2), to align that rule text with FINRA's recent rule
change. The term ``Party'' when used in the Rule 9520 Series, now
means FINRA's Department of Enforcement, rather than Member
Regulation. See Securities Exchange Act Release No. 83781 (August 6,
2018), 83 FR 39802 (August 10, 2018).
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Role of FINRA
    The Exchange proposes to add rule text to certain rules to clarify
that FINRA may act on behalf of the Exchange. Today, FINRA is empowered
to act on behalf of the Exchange.\8\ The revisions to these rules will
therefore clarify FINRA's authority as it currently exists today.\9\
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    \8\ See Nasdaq Current Rule 8001 (``Nasdaq and FINRA are parties
to the Regulatory Contract pursuant to which FINRA has agreed to
perform certain functions described in these rules on behalf of
Nasdaq. Nasdaq rules that refer to Nasdaq Regulation, Nasdaq
Regulation staff, Nasdaq staff, and Nasdaq departments should be
understood as also referring to FINRA staff and FINRA departments
acting on behalf of Nasdaq pursuant to the Regulatory Contract.'').
    \9\ See Nasdaq Current Rules 9400, 9522, 9552, 9553, 9554, 9555,
9556, 9557, and 9558. The Exchange notes that FINRA currently
performs the functions described in these rules. The proposed
changes further clarify that in the rule text.
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Jurisdiction
    The Exchange proposes to replace the current rule text related to
jurisdiction of Nasdaq to initiate disciplinary actions with text
substantially similar to the Phlx's jurisdiction rule text. Nasdaq
Current Rules 1012(h) \10\ and 1031(f) \11\ permit a disciplinary
action to be brought within two years after the effective date of
resignation, cancellation, or revocation of a member or associated
person. The current Nasdaq provisions are more limited than Phlx's
jurisdictional language. Phlx Rule 9110(d) does not contain a time
limit on when a matter may be brought against a member or associated
person following its termination or deregistration, so long as the
Exchange serves written notice within one year of receipt by the
Exchange of notice of such termination or deregistration that the
Exchange is making inquiry into a matter or matters which occurred
prior to the termination of such person's status as a member or
associated person.\12\ The substantive amendment

with respect to jurisdiction is with the timeframe for bringing a
disciplinary action against a member or associated person. The proposed
rule expands the timeframe.
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    \10\ A resigned Nasdaq member or a Nasdaq member that has had
its membership canceled or revoked shall continue to be subject to
the filing of a complaint under the Nasdaq Rules based upon conduct
that commenced prior to the effective date of the Nasdaq member's
resignation from Nasdaq or the cancellation or revocation of its
membership. Any such complaint, however, shall be filed within two
years after the effective date of resignation, cancellation, or
revocation.
    \11\ A person whose association with a Nasdaq member has been
terminated and who is no longer associated with any member of Nasdaq
or a person whose registration has been revoked or canceled shall
continue to be subject to the filing of a complaint under Nasdaq
Rules based upon conduct which commenced prior to the termination,
revocation, or cancellation or upon such person's failure, while
subject to Nasdaq's jurisdiction as provided herein, to provide
information requested by Nasdaq pursuant to the Nasdaq Rules, but
any such complaint shall be filed within: (A) Two years after the
effective date of termination of registration pursuant to subsection
(c); provided, however, that any amendment to a notice of
termination filed pursuant to paragraph (c)(2) that is filed within
two years of the original notice that discloses that such person may
have engaged in conduct actionable under any applicable statute,
rule, or regulation shall operate to recommence the running of the
two-year period under this subsection; (B) two years after the
effective date of revocation or cancellation of registration
pursuant to the Nasdaq Rules; or (C) in the case of an unregistered
person, within two years after the date upon which such person
ceased to be associated with the Nasdaq member.
    A person whose association with a member has been terminated and
is no longer associated with any Nasdaq member shall continue to be
subject to a proceeding to suspend, consistent with Article IX,
Section 2 of the Nasdaq By-Laws, his or her ability to associate
with a member based on such person's failure to comply with an
arbitration award or a written and executed settlement agreement
obtained in connection with an arbitration or mediation submitted
for disposition pursuant to Nasdaq Rules, provided that such
proceeding is instituted within two years after the date of entry of
such award or settlement.
    \12\ Any member or any partner, officer, director or person
employed by or associated with any member (the Respondent) who is
alleged to have violated or aided and abetted a violation of the
Securities Exchange Act of 1934 (Exchange Act), the rules and
regulations thereunder, the By-Laws and Rules of the Exchange or any
interpretation thereof, and the Rules, Regulations, resolutions and
stated policies of the Board of Directors or any Committee of the
Exchange, shall be subject to the disciplinary jurisdiction of the
Exchange, and after notice and opportunity for a hearing may be
appropriately disciplined by expulsion, suspension, fine, censure,
limitation or termination as to activities, functions, operations,
or association with a member organization, or any other fitting
sanction in accordance with the provisions of these disciplinary
Rules.
    An individual member, or a partner, officer, director or person
employed by or associated with a member may be charged with any
violation within the disciplinary jurisdiction of the Exchange
committed by employees under his supervision or by the member with
which he is associated, as though such violations were his own. A
member may be charged with any violation within the disciplinary
jurisdiction of the Exchange committed by its officers, directors,
or employees or by a member or other person who is associated with
such member, as though such violation were its own.
    Any member, or any partner, officer, director, or person
employed by or associated with a member organization, and any member
organization shall continue to be subject to the disciplinary
jurisdiction of the Exchange following the termination of such
person's permit or the termination of the employment by or the
association with a member organization of such member or partner,
officer, director or person, or following the deregistration of a
member organization from the Exchange; provided, that the Exchange
serves written notice to such former member, partner, officer,
director, employee, associated person or member organization within
one year of receipt by the Exchange of notice of such termination or
deregistration that the Exchange is making inquiry into a matter or
matters which occurred prior to the termination of such person's
status as a member, or as a partner, officer, director or person
employed by or associated with a member organization, or prior to
the deregistration of such member organization.
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    The amendment to expand jurisdiction will not apply retroactively
and any complaints not filed within the existing two year time-period
will be time-barred. The new jurisdiction rule will only apply to
members or associated persons who terminate with the Exchange on or
after October 15, 2018.
    The Exchange also proposes to eliminate the rule text contained
within Nasdaq Current Rules 1012(h) and 1031(f) and reserve those
sections.
Interested Staff Definition
    The definition of Interested Staff is being conformed to Phlx's
definition and includes references to Exchange and FINRA employees as
those terms are proposed to be defined.\13\ The proposed Nasdaq
definition better defines who falls within the category of Interested
Staff without substantively amending the definition. At this time,
Nasdaq's proposal mirrors the Phlx definition, except insofar as
Nasdaq's proposal omits references to FINRA's Department of Market
Regulation for the reasons set forth in footnote 5 above.\14\ The
Exchange also notes that it is removing the words ``a district director
or'' from Nasdaq Current Rules 9120(t)(1)(D), 9120(t)(2)(D), and
9120(t)(3)(D) because there is no such position at the Exchange. The
use of those words in the current definition refers to the individual
to whom a FINRA employee may report. Those words are therefore being
preserved as they relate to FINRA in Proposed New Rules 9120(r)(1)(H),
9120(r)(2)(E), 9120(r)(3)(E), and 9210(r)(4)(F).
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    \13\ As noted in n.5 above, the Exchange is, however, omitting
references to FINRA's Department of Market Regulation in light of
FINRA's recent rule filing that similarly omitted references to its
Department of Market Regulation.
    \14\ The Exchange notes that it is adopting a more comprehensive
definition of ``Interested Staff'' under Nasdaq Current Rule 9120(t)
to align it with the definition used by Phlx. Specifically, the
Exchange is adopting new text that accounts for the role of the
Nasdaq Regulation Department, including the involvement of employees
thereof. Thus, the proposed new definition will include all
individuals that should be considered as ``Interested Staff'' for
purposes of the Nasdaq Rule 9000 Series.
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Special Panelist
    The Exchange is removing the definition of Special Panelist and re-
lettering the remainder of the Section. Phlx and BX do not use or
otherwise define a Special Panelist. Nasdaq Current Rule 9120(u)
defines a Special Panelist.\15\ The Exchange notes that related rules,
Nasdaq Current Rules 9212(a)(2)(B) and 9231(b)(2), are not mandatory
today and permit, but do not require, a Chief Hearing Officer to
utilize a Special Panelist. Nasdaq has automated its system throughout
the years so that most disciplinary actions today involve issues which
pertain to quotations of securities, execution of transactions,
reporting of transactions and trading practices, including rules, for
example, that prohibit manipulation and insider trading, among other
Rules as described in Nasdaq Current Rules 9120(u)(1)-(4). Further,
FINRA has skilled panelists who, like the Special Panelists, are
trained to handle matters involving the subject matters described in
the Special Panelist definition. The Exchange believes that the notion
of a Special Panelist is not necessary because today FINRA panelists
are equipped to handle matters related to the subject matter of Nasdaq
Current Rules 9120(u)(1)-(4) with respect to any type of hearing. The
concept of a Special Panelist is not extraordinary, rather it is a
presumed skill set for today's FINRA panelists. The Exchange therefore
proposes to remove all references to the term ``Special Panelist'' from
its rules because the reality of current panelist selection and
disciplinary processes obviate the need for this rule.\16\
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    \15\ ``The term ``Special Panelist'' means an individual
approved by the Nasdaq Board of Directors at least annually who may
be selected by the Chief Hearing Officer to serve on a Hearing Panel
pursuant to Rules 9212, 9221, 9231, and 9232. A Special Panelist may
be drawn from FINRA's Market Regulation Committee, or any other
source the Nasdaq Board of Directors deems appropriate given the
responsibilities of Special Panelists. Special Panelists may
participate in disciplinary proceedings in which issues arise
regarding: (1) The quotations of securities; (2) the execution of
transactions; (3) the reporting of transactions; and (4) trading
practices, including rules prohibiting manipulation and insider
trading, and those Rules designated as Trading Rules (Rule 3300
Series), The Nasdaq Stock Market Rules (Rule 4000 Series), and Other
Systems and Programs Rules (Rule 6000 Series).'' See Nasdaq Current
Rule 9120(u).
    \16\ See Nasdaq Current Rules 9120(u), 9212(a)(2)(B),
9221(a)(3), 9231(b)(2), 9231(c)(2), and 9232(a)-(c).
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Hearing Panelists
    The Exchange is removing a category of individuals that may serve
on a Hearing Panel and re-lettering the remainder of the section.\17\
Phlx and BX rules do not include that category of individuals from
among those whom the Chief Hearing Officer may select as a Panelist.
The Exchange originally proposed Current Rule 9231(b)(1)(D) as a
transitional rule when the Exchange sought to become registered as a
national securities exchange. The Rule allowed ``persons who served on
the NASD National Adjudicatory Council, or a disciplinary subcommittee
thereof, prior to the date that Nasdaq commenced operating as a
national securities exchange to sit on Hearing Panels.'' \18\ This
enabled the Exchange to pull from a larger pool of candidates. The
Exchange has now been a national securities exchange for nearly 12
years, and believes that there is a sufficient pool of panelists from
which the Chief Hearing Officer may now pull. This is evidenced by the
Hearing Panels both Phlx and BX are able to assemble. Given the passage
of time, the need for Nasdaq Current Rule 9231(b)(1)(D) no longer
exists.
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    \17\ Specifically, the Exchange is removing Nasdaq Current Rule
9231(b)(1)(D) (``served on the FINRA National Adjudicatory Council
or on a disciplinary subcommittee of the FINRA National Adjudicatory
Council prior to the date that Nasdaq commenced operating as a
national securities exchange; or'').
    \18\ See Securities Exchange Act Release No. 34-53128 (January
13, 2006), 71 FR 3550 (January 23, 2006) (File No. 10-131) (Order
granting application of NASDAQ Stock Market LLC for registration as
a national securities exchange).
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    The Exchange is also clarifying Current Rule 9231(b)(1)(E)
(Proposed New Rule 9231(b)(1)(D)) to more clearly state who may serve
on a Hearing Panel.

Currently, BX and Phlx Rules 9231(b)(1)(D) indicate that the Chief
Hearing Office may select as a Panelist a person who ``is a FINRA
Panelist approved by the Nasdaq Board at least annually, including a
person who previously served on the Market Regulation Committee \19\
not earlier than four years before the date the complaint was served
upon the Respondent who was the first served Respondent in the
disciplinary proceeding for which the Hearing Panel or the Extended
Hearing Panel is being appointed, or from other sources the Board deems
appropriate given the responsibilities of Panelists.'' The Exchange is
adding the same text after ``is a FINRA Panelist approved by the Nasdaq
Board at least annually'' in Proposed New Rule 9231(b)(1)(D) to make it
clear that a person who served on the Market Regulation Committee is
among those permitted to serve as a Panelist, provided that person
meets the requirements of the rule.
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    \19\ The Exchange notes that while FINRA recently
``consolidate[d] its existingenforcement [sic] functions into a
unified Department of Enforcement'', see Securities Exchange Act
Release No. 83781 (August 6, 2018), 83 FR 39802 (August 10, 2018),
it did not eliminate the Market Regulation Committee. See, e.g.,
FINRA Code of Procedure Rule 9120(u).
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Other Non-Substantive and Technical Amendments
    The Exchange proposes to add a sentence within Nasdaq Current Rule
9270(e)(2), similar to Phlx, to add more specificity to this rule and
make clear that the Office of Disciplinary Affairs may accept an offer
of settlement and order of acceptance or refer them to the Exchange
Review Council. The Exchange notes that today the Office of
Disciplinary Affairs may accept an offer of settlement and order of
acceptance or refer them to the Exchange Review Council, so this
language is intended to clarify current practice under the rule.
    The Exchange also proposes to make certain technical amendments
throughout these rules to: (i) Add ``FINRA'' before ``Regulatory
Contract''; \20\ (ii) amend ``NASD'' to the updated name ``FINRA'';
\21\ (iii) replace ``Association'' with ``FINRA''; \22\ (iv) update
certain incorrect cross-references to both FINRA and Nasdaq rule
citations \23\; (v) add, remove, or modify rule text or punctuation in
certain rules to conform the rule text of Nasdaq to Phlx ;\24\ (vi)
include the phrase ``or person'' in various places throughout the rule
to make it clear that inclusion of the person associated with a member
is applicable ;\25\ (vii) relocate and/or renumber certain rules for
ease of reference given other amendments described herein ;\26\ and
(vii) correct a typographical error.\27\
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    \20\ See Nasdaq Current Rules 8001, 9001, 9120(f), and Proposed
New Rules 9120(g), and 9120(u) and (v).
    \21\ See Nasdaq Current Rule 8110.
    \22\ See Nasdaq Current Rules 8210(a)(1), 9558(a)(2), and
9610(a).
    \23\ See Nasdaq Current Rules 9231(c), 9268(e)(2), 9269(d)(2),
9270(e), 9270(e)(2), 9270(f)(2), 9311(a), 9312(a)(3), 9331(a)(2),
9351(a), 9524(a)(1), 9524(b)(3), and 9559 (q)(1).
    \24\ See Nasdaq Current Rules IM-8310-3, 9211(a)(1)-(2),
9221(a)(1), 9231(b)(1), 9270(e)(2), 9270(f)(3), 9559(e), 9559(h)(2),
and 9630(b).
    \25\ See Nasdaq Current Rules 9552(b), 9553(b), 9554(b),
9555(b).
    \26\ See Proposed New Rule 9212(a)(2), which relocates language
from Current Rule 9212(a)(2)(A); and Proposed New Rule 9231(c),
which relocates language from Current Rule 9231(c)(1).
    \27\ See Nasdaq Current Rules 9215(f) and 9523(a)(4).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\28\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\29\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest. In addition, the Exchange believes that the proposed rule
changes further the objectives of Section 6(b)(7) of the Act,\30\ in
particular, in that these changes provide for fair procedures for the
disciplining of members and persons associated with members, the denial
of membership to any person seeking membership therein, the barring of
any person from becoming associated with a member thereof, 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.
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    \28\ 15 U.S.C. 78f(b).
    \29\ 15 U.S.C. 78f(b)(5).
    \30\ 15 U.S.C. 78f(b)(7).
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    In addition, the Exchange believes that the proposed rule changes
are consistent with Section 6(b)(6) of the Act,\31\ which requires the
rules of an exchange provide that its members be appropriately
disciplined for violations of the Act as well as the rules and
regulations thereunder, or the rules of the Exchange, by expulsion,
suspension, limitation of activities, functions, and operations, fine,
censure, being suspended or barred from being associated with a member,
or any other fitting sanction.
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    \31\ 15 U.S.C. 78f(b)(6).
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    The Exchange believes that the proposed changes are consistent with
these requirements because the changes further harmonize Nasdaq's
investigative and adjudicatory processes with similar processes used by
Phlx. The new processes are well-established as fair and designed to
protect investors and the public interest. Because the Exchange is
conforming the Nasdaq rule text to the Phlx rule text to eliminate any
differences (except for those noted herein), the Exchange believes that
the proposed changes should facilitate prompt, appropriate, and
effective discipline of members and their associated persons consistent
with the Act. The Exchange believes that adding references to the
Nasdaq Regulation Department within the 8000 and 9000 Nasdaq Series
rules as described in this proposal clarifies the involvement that
Nasdaq Regulation plays in the investigation and enforcement of
Nasdaq's disciplinary rules. In addition, the Exchange believes that
adding references to FINRA within the 8000 and 9000 Nasdaq Series rules
as described in this proposal brings greater transparency to its rules
and clarifies the process as it exists today. Today, FINRA is empowered
to act on behalf of the Exchange.\32\
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    \32\ See Nasdaq Current Rule 8001.
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    The Exchange believes that harmonizing the rule text of the
investigative and adjudicatory processes with those of Phlx will reduce
the burden on members and their associated persons as they only will
need to be familiar with a single rule set going forward. Because the
substance of the rules would remain unchanged, the Exchange believes
that the proposed change would continue to provide fair procedures for
the suspending and disciplining of members and associated persons, the
denial of membership to any person seeking membership therein, the
barring of any person from becoming associated with a member thereof,
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.
    The Exchange's proposal to replace the current rule text related to
jurisdiction of Nasdaq to initiate disciplinary actions with text
substantially similar to the Phlx's jurisdiction rule text will permit
the Exchange to initiate a disciplinary action beyond two years after
the effective date of the member's or associated person's termination
with the Exchange. This provision would not apply retroactively, but
would permit the Exchange to bring actions after the effective date of
termination, so long as the Exchange serves written notice within one
year of receipt by the

Exchange of notice of such termination that the Exchange is making
inquiry into a matter or matters which occurred prior to the
termination of status as a member or associated person. The Exchange
believes that this provision will provide the Exchange with the same
latitude as Phlx to bring actions against its members and associated
persons for violations of its rule. The Exchange believes that it is
consistent with the Act to provide the Exchange with the ability to
initiate violations for members and their associated persons for
violations which took place while these members and associated persons
were members of the Exchange. The rule change will better protect
investors and the public interest by allowing actions to proceed that
may otherwise have been time barred under the old rule.
    The Exchange's proposal to amend the definition of Interested Staff
will conform Nasdaq's definition to Phlx's definition, except insofar
as Nasdaq's proposal omits references to FINRA's Department of Market
Regulation for the reasons set forth in footnote 5 above. The Exchange
believes that it is consistent with the Act because the definition
better defines who falls within the category of Interested Staff
without substantively amending the definition.
    Removing the definition of Special Panelist is consistent with the
Act because today Nasdaq Current Rules 9212(a)(2)(B) and 9231(b)(2) do
not require a Chief Hearing Officer to utilize a Special Panelist.
Further, FINRA has skilled panelists who, like the Special Panelists,
are trained to handle matters involving the subject matters described
in the Special Panelist definition, thus the reality of the panel
selection and disciplinary processes today obviate the need for this
rule.
    Removing from the pool of panelists persons that served on the
FINRA National Adjudicatory Council or on a disciplinary subcommittee
of the FINRA National Adjudicatory Council prior to the date that
Nasdaq commenced operating as a national securities exchange is
consistent with the act because there currently exists a sufficient
number of persons from whom a Chief Hearing Officer may select as a
Panelist. This change, in addition to adding clarifying text to Current
Rule 9231(b)(1)(E) (Proposed New Rule 9231(b)(1)(D)) to more clearly
state who may serve on a Hearing Panel, thereby aligning the text with
the text of the parallel BX and Phlx Rules, is also consistent with the
Act because it creates a uniform pool from which Panelists may be
selected across the Nasdaq, BX, and Phlx, thus removing confusion that
may result from having different pools of Panelists depending on the
exchange.
    Finally, making technical amendments in Nasdaq Current Rules 8001,
8110, 8210, IM-8310-3, 9001, 9120, 9211, 9212, 9221, 9231, 9268, 9269,
9270, 9311, 9312, 9331, 9351, 9524, 9552, 9553, 9554, 9555, 9556, 9558,
9559, 9610, and 9630 removes impediments to and perfects the mechanism
of a free and open market by removing confusion that may result from
having incorrect or incomplete material in the Exchange's rulebook.
    The Exchange believes that its proposal furthers the objectives of
Section 6(b)(7) of the Act,\33\ in that it is designed to provide a
fair procedure for the disciplining of members and persons associated
with members, the denial of membership to any person seeking membership
therein, the barring of any person from becoming associated with a
member thereof, 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. Specifically, the Exchange believes that the
proposed investigatory and disciplinary process is consistent with
Section 6(b)(7) of the Act \34\ because it is based on the existing
processes used by Phlx.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f(b)(7).
    \34\ Id.
---------------------------------------------------------------------------

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. The proposed rule change is
intended to more clearly align the text of Phlx's and the Exchange's
rules. Specifically and as described in detail above, the Exchange
believes that this change will bring efficiency and consistency to the
investigative and adjudicatory processes, thereby reducing the burden
on members and their associated persons who are also members of Phlx.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \35\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\36\
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \36\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6)\37\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\38\ 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 the Exchange may
immediately amend its disciplinary rules to conform to Phlx's
disciplinary process. The Exchange states that the proposed amendment
to expand its current jurisdiction will not apply retroactively and any
complaints not filed within the existing two-year time period will be
time-barred. The Exchange further states that its new jurisdiction rule
will only apply to applicable members or associated persons who
terminate their membership or association on October 15, 2018 or
thereafter. 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 Nasdaq to conform its disciplinary rules to
those of Phlx. In addition, the proposal does not present any novel
issues. Therefore, the Commission hereby waives the operative delay and
designates the proposal as operative upon filing.\39\
---------------------------------------------------------------------------

    \37\ 17 CFR 240.19b-4(f)(6).
    \38\ 17 CFR 240.19b-4(f)(6)(iii).
    \39\ For purposes only of waving the 30-day operative delay, the
Commission has considered the purposed 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. 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 protected]. Please include
File Number SR-NASDAQ-2018-066 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-NASDAQ-2018-066. 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 website (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 website 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 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2018-066 and should be submitted
on or before October 31, 2018.
---------------------------------------------------------------------------

    \40\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21900 Filed 10-9-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 47 (Thursday, March 10, 2016)]
[Notices]
[Pages 12739-12741]
[FR Doc No: 2016-05390]

-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2012-N-0976]

Agency Information Collection Activities; Submission for Office
of Management and Budget Review; Comment Request; Guidance: Emergency
Use Authorization of Medical Products

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA) is announcing that a
proposed collection of information has been submitted to the Office of
Management and Budget (OMB) for review and clearance under the
Paperwork Reduction Act of 1995.

DATES: Fax written comments on the collection of information by April
11, 2016.

ADDRESSES: To ensure that comments on the information collection are
received, OMB recommends that written comments be faxed to the Office
of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer,
FAX:<PHONE_NUMBER>, or emailed to<EMAIL_ADDRESS>All
comments should be identified with the OMB control number 0910-0595.
Also include the FDA docket number found in brackets in the heading of
this document.

FOR FURTHER INFORMATION CONTACT: FDA PRA Staff, Office of Operations,
Food and Drug Administration, 8455 Colesville Rd., COLE-14526, Silver
Spring, MD 20993-0002<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: In compliance with 44 U.S.C. 3507, FDA has
submitted the following proposed collection of information to OMB for
review and clearance.

Emergency Use Authorization of Medical Products and Related
Authorities; Guidance for Industry and Public Health Stakeholders OMB
Control Number 0910-0595-Extension

    The guidance describes the Agency's general recommendations and
procedures for issuance of emergency use authorizations (EUA) under
section 564 of the Federal Food, Drug, and Cosmetic Act (the FD&C Act)
(21 U.S.C. 360bbb-3), which was amended by the Project BioShield Act of
2004 (Pub. L. 108-276). The FD&C Act permits the Commissioner to
authorize the use of unapproved medical products or unapproved uses of
approved medical products during an emergency declared under section
564 of the FD&C Act. The data to support issuance of an EUA must
demonstrate that, based on the totality of the scientific evidence
available to the Commissioner, including data from adequate and well-
controlled clinical trials (if available), it is reasonable to believe
that the product may be effective in diagnosing, treating, or
preventing a serious or life-threatening disease or condition (21
U.S.C. 360bbb-3(c)). Although the exact type and amount of data needed
to support an EUA may vary depending on the nature of the declared
emergency and the nature of the candidate product, FDA recommends that
a request for consideration for an EUA include scientific evidence
evaluating the product's safety and effectiveness, including the
adverse event profile for diagnosis, treatment, or prevention of the
serious or life-threatening disease or condition, as well as data and
other information on safety, effectiveness, risks and benefits, and (to
the extent available) alternatives.
    Under section 564 of the FD&C Act, the FDA Commissioner may
establish conditions on the authorization. Section 564(e) requires the
FDA Commissioner (to the extent practicable given the circumstances of
the emergency) to establish certain conditions on an authorization that
the Commissioner finds necessary or appropriate to protect the public
health and permits the FDA Commissioner to establish other conditions
that she finds necessary or appropriate to protect the public health.
Conditions authorized by section 564(e) of the FD&C Act include, for
example: Requirements for information dissemination to health care
providers or authorized dispensers and product recipients; adverse
event monitoring and reporting; data collection and analysis;
recordkeeping and records access; restrictions on product advertising,
distribution, and

administration; and limitations on good manufacturing practices
requirements. Some conditions, the statute specifies, are mandatory to
the extent practicable for authorizations of unapproved products and
discretionary for authorizations of unapproved uses of approved
products. Moreover, some conditions may apply to manufacturers of an
EUA product, while other conditions may apply to any person who carries
out any activity for which the authorization is issued. Section 564 of
the FD&C Act also gives the FDA Commissioner authority to establish
other conditions on an authorization that she finds to be necessary or
appropriate to protect the public health.
    For purposes of estimating the annual burden of reporting (table
1), FDA has established four categories of respondents: (1) Those who
file a request for FDA to issue an EUA or a substantive amendment to an
EUA that has previously been issued, assuming that a requisite
declaration under section 564 of the FD&C Act has been made and
criteria for issuance have been met; (2) those who submit a request for
FDA to review information/data (i.e., a pre-EUA package) for a
candidate EUA product or a substantive amendment to an existing pre-EUA
package for preparedness purposes; (3) manufacturers who carry out an
activity related to an unapproved EUA product (e.g., administering
product, disseminating information) who must report to FDA regarding
such activity; and (4) public health authorities (e.g., State, local)
who carry out an activity (e.g., administering product, disseminating
information) related to an unapproved EUA product who must report to
FDA regarding such activity.
    In some cases, manufacturers directly submit EUA requests. Often a
Federal Government entity (e.g., the Centers for Disease Control and
Prevention, Department of Defense) requests that FDA issue an EUA and
submits pre-EUA packages for FDA to review. In many of these cases,
manufacturer respondents inform these requests and submissions, which
are the activities that form the basis of the estimated reporting
burdens. However, in some cases the Federal Government is the sole
respondent; manufacturers do not inform these requests or submissions.
FDA estimates minimal burden when the Federal Government performs the
relevant activities. In addition to variability based on whether there
is an active manufacturer respondent, other factors also inject
significant variability in estimates for annual reporting burdens. A
second factor is the type of product. For example, FDA estimates
greater burden for novel therapeutics than for certain unapproved uses
of approved products. A third significant factor that injects
variability is the type of submission. For example, FDA estimates
greater burden for ``original'' EUA and pre-EUA submissions than for
amendments to them, and FDA estimates minimal burden to issue an EUA
when there is a previously reviewed pre-EUA package or investigational
application. For purposes of estimating the reporting burden, FDA has
calculated the anticipated burden on manufacturers based on the
anticipated types of responses (i.e., estimated manufacturer input),
types of product, and types of submission that comprise the described
reporting activities.
    For purposes of estimating the annual burden of recordkeeping, FDA
has also calculated the anticipated burden on manufacturers and public
health officials associated with administration of unapproved products
authorized for emergency use, recognizing that the Federal Government
will perform much of the recordkeeping related to administration of
such products (table 2).
    No burden was attributed to reporting or recordkeeping for
unapproved uses of approved products, since those products are already
subject to approved collections of information (i.e., adverse
experience reporting for biological products is approved under OMB
control number 0910-0308 through February 28, 2018; adverse drug
experience reporting is approved under OMB control number 0910-0230
through December 31, 2018; adverse device experience reporting is
approved under OMB control number 0910-0471 through May 31, 2017;
investigational new drug application regulations are approved under OMB
control number 0910-0014 through February 28, 2019; and investigational
device exemption reporting is approved under OMB control number 0910-
0078 through March 31, 2016). Any additional burden imposed by this
proposed collection would be minimal.
    In the Federal Register of December 23, 2015 (80 FR 79905), FDA
published a 60-day notice requesting public comment on the proposed
collection of information. No comments were received.
    FDA estimates the burden of this collection of information as
follows:

                                 Table 1--Estimated Annual Reporting Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                     Number of                        Average
       Type of respondent            Number of     responses per   Total annual     burden per      Total hours
                                    respondents     respondent       responses       response
----------------------------------------------------------------------------------------------------------------
Manufacturer, Request to Issue                 6               3              18              45             810
 an EUA or a Substantive
 Amendment to an Existing EUA...
Manufacturer, Request for FDA                 13               6              78              34           2,652
 Review of a Pre-EUA Package or
 an Amendment Thereto...........
Manufacturer of an Unapproved                  5               2              10               2              20
 EUA Product; Conditions of
 Authorization..................
Public Health Authority;                      30               3              90               2             180
 Unapproved EUA Product;
 Conditions of Authorization....
                                 -------------------------------------------------------------------------------
    Total.......................  ..............  ..............  ..............  ..............           3,662
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

                               Table 2--Estimated Annual Recordkeeping Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                     Number of                        Average
       Type of respondent            Number of      records per    Total annual     burden per      Total hours
                                   recordkeepers   recordkeeper       records      recordkeeping
----------------------------------------------------------------------------------------------------------------
Manufacturers of an Unapproved                 5               2              10              25             250
 EUA Product....................

Public Health Authorities;                    30               3              90               3             270
 Unapproved EUA Product.........
                                 -------------------------------------------------------------------------------
    Total.......................  ..............  ..............  ..............  ..............             520
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

    Dated: March 7, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-05390 Filed 3-9-16; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 81, Number 74 (Monday, April 18, 2016)]
[Notices]
[Pages 22691-22696]
[FR Doc No: 2016-08820]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77589; File No. SR-BatsEDGX-2016-04]

Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Adopt Rule 8.17 To Provide a Process for an Expedited Suspension
Proceeding and Rule 12.15 To Prohibit Layering and Spoofing

April 12, 2016.
    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 March 30, 2016, Bats EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') 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 the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange filed a proposal to adopt a new rule to clearly
prohibit disruptive quoting and trading activity on the Exchange, as
further described below. Further, the Exchange proposes to amend
Exchange Rules to permit the Exchange to take prompt action to suspend
Members or their clients that violate such rule.
    The text of the proposed rule change is available at the Exchange's
Web site at 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
Statutory Basis for, the Proposed Rule Change

1. Purpose
Introduction
    The Exchange is filing this proposal to adopt a new rule to clearly
prohibit disruptive quoting and trading activity on the Exchange and to
amend Exchange Rules to permit the Exchange to take prompt action to
suspend Members or their clients that violate such rule. The proposal
is identical to the proposal of Bats BZX Exchange, Inc., formerly known
as BATS Exchange, Inc. (``BZX''),\3\ which was recently approved by the
Commission.\4\
---------------------------------------------------------------------------

    \3\ The Exchange notes that the membership of the Exchange and
the membership of BZX is nearly identical. BZX members and the
public had the opportunity to comment--and did comment--on an
identical BZX proposal to the current proposal before the Staff
approved the BZX proposal. See https://www.sec.gov/comments/sr-bats-2015-101/bats2015101.shtml.
    \4\ See Securities Exchange Act Release No. 77171 (February 18,
2016) (SR-BATS-2015-101).
---------------------------------------------------------------------------

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 members and persons associated with its
members, with the Act, the rules and regulations thereunder, and the
Exchange's Rules.\5\ 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.'' \6\ In fulfilling these
requirements, the Exchange has developed a comprehensive regulatory
program that includes automated surveillance of trading activity that
is both operated directly by Exchange staff and by staff of the
Financial Industry Regulatory Authority (``FINRA'') pursuant to a
Regulatory Services Agreement (``RSA''). When disruptive and
potentially manipulative or improper quoting and trading activity is
identified, the Exchange or FINRA (acting as an agent of the Exchange)
conducts an investigation into the activity, requesting additional
information from the Member or Members involved. To the extent
violations of the Act, the rules and regulations thereunder, or
Exchange Rules have been identified and confirmed, the Exchange or
FINRA as its agent will commence the enforcement process, which might
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 even a temporary or permanent ban from
the securities industry.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b)(1).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 is generally necessary and
appropriate to afford the subject Member 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 an
affiliate of the Exchange and other SROs that involved 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 \7\ or spoofing.\8\ An affiliate of the Exchange
and other SROs were able to identify the disruptive quoting and trading
activity in real-time or near real-time; nonetheless, in accordance
with Exchange Rules and the Act, the Members responsible for such
conduct or responsible for their customers' conduct were allowed to
continue the disruptive quoting and trading activity during the
entirety of the subsequent lengthy investigation and enforcement
process. The Exchange believes that it should have the authority to
initiate an expedited suspension proceeding in order to stop the
behavior from continuing on the Exchange if a Member is engaging in or
facilitating disruptive quoting and trading activity and the Member has
received sufficient notice with an opportunity to respond, but such
activity has not ceased.
---------------------------------------------------------------------------

    \7\ ``Layering'' is 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.
    \8\ ``Spoofing'' is 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.
---------------------------------------------------------------------------

    The following two examples are instructive on the Exchange's
rationale for the proposed rule change.
    In July 2012, Biremis Corp. (formerly Swift Trade Securities USA,
Inc.) (the ``Firm'') and its CEO were barred from the industry for,
among other things, supervisory violations related to a failure by the
Firm to detect and prevent disruptive and allegedly manipulative
trading activities, including layering, short sale violations, and
anti-money laundering violations.\9\ The Firm's sole business was to
provide 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 the Firm to U.S. markets originated directly or
indirectly from foreign clients of the Firm. The pattern of disruptive
and allegedly manipulative quoting and trading activity was widespread
across multiple exchanges, and FINRA and other SROs identified clear
patterns of the behavior in 2007 and 2008. Although the Firm and its
principals were on notice of the disruptive and allegedly manipulative
quoting and trading activity that was occurring, the Firm 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.
---------------------------------------------------------------------------

    \9\ 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. (the ``Firm'') settled a regulatory action in connection with the
Firm's provision of a trading platform, trade software and trade
execution, support and clearing services for day traders.\10\ Many
traders using the Firm's services were located in foreign
jurisdictions. The Firm ultimately settled the action with FINRA and
several exchanges 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.\11\ 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, the Firm
also allegedly committed anti-money laundering violations by failing to
detect and report manipulative and suspicious trading activity. The
Firm 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.
---------------------------------------------------------------------------

    \10\ See Hold Brothers On-Line Investment Services, LLC, FINRA
Letter of Acceptance, Waiver and Consent No.<PHONE_NUMBER>0001,
September 25, 2012.
    \11\ In the Matter of Hold Brothers On-Line Investment Services,
LLC, Exchange Act Release No. 67924, September 25, 2012.
---------------------------------------------------------------------------

    The Exchange also notes the current criminal proceedings that have
commenced against Navinder Singh Sarao. Mr. Sarao's allegedly
manipulative trading activity, which included forms of layering and
spoofing in the futures markets, has been linked as a contributing
factor to the ``Flash Crash'' of 2010, and yet continued through 2015.
    The Exchange believes that the activities described in the cases
above provide justification for the proposed rule change, which is
described below.
Rule 8.17--Expedited Client Suspension Proceeding
    The Exchange proposes to adopt new Rule 8.17 to set forth
procedures for issuing suspension orders, immediately prohibiting a
Member 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 to cease and
desist from providing access to the Exchange to a client of the Member
that is conducting disruptive quoting and trading activity in violation
of proposed Rule 12.15.
    Under proposed paragraph (a) of Rule 8.17, with the prior written
authorization of the Chief Regulatory Officer (``CRO'') or such other
senior officers as the CRO may designate, the Office of General Counsel
or Regulatory Department of the Exchange (such departments generally
referred to as the ``Exchange'' for purposes of proposed Rule 8.17) may
initiate an expedited suspension proceeding with respect to alleged
violations of Rule 12.15, which is proposed as part of this filing and
described in detail below. Proposed paragraph (a) would also set forth
the requirements for notice and service of such notice pursuant to the
Rule, including the required method of service and the content of
notice.
    Proposed paragraph (b) of Rule 8.17 would govern the appointment of
a Hearing Panel as well as potential disqualification or recusal of
Hearing Officers. The proposed provision is consistent with existing
Exchange Rule 8.6 and includes the requirement 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 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 8.17, 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
8.6(b), if the Hearing Panel believes the Respondent has provided
satisfactory evidence in support of the motion to disqualify, 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 8.6(a). If the Hearing Panel 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) 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. Proposed paragraph (c) would also govern
how the hearing is conducted, including the authority of Hearing
Officers, witnesses, additional information that may be required by the
Hearing Panel, the requirement that a transcript of the proceeding be
created and details related to such transcript, and details regarding
the creation and maintenance of the record of the proceeding. Proposed
paragraph (c) would also state 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) of the proposed Rule, the Hearing Panel would
be authorized 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 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) 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 12.15, 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 Rule 12.15. 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. 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. Finally, the order shall
include the date and hour of its issuance. As proposed, 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) 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 8.17 would state that at any time
after the Office of 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 8.17 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.
    Finally, proposed paragraph (f) would provide that sanctions issued
under the proposed Rule 8.17 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.
Rule 12.15--Disruptive Quoting and Trading Activity Prohibited
    The Exchange currently has authority to prohibit and take action
against manipulative trading activity, including disruptive quoting and
trading activity, pursuant to its general market manipulation rules,
including Rule 3.1. The Exchange proposes to adopt new Rule 12.15,
which would more specifically define and prohibit disruptive quoting
and trading activity on the Exchange. As noted above, the Exchange also
proposes to apply the proposed suspension rules to proposed Rule 12.15.
    Proposed Rule 12.15 would prohibit Members from engaging in or
facilitating disruptive quoting and trading activity on the Exchange,
as described in proposed Interpretation and Policies .01 and .02 of the
Rule, 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.
    To provide proper context for the situations in which the Exchange
proposes to utilize its proposed authority, the Exchange believes it is
necessary to describe the types of disruptive quoting and trading
activity that would cause the Exchange to use its authority.
Accordingly, the Exchange proposes to adopt Interpretation and Policy
.01 and .02, providing additional details regarding disruptive quoting
and trading activity. Proposed Interpretation and Policy .01(a), which
describes disruptive quoting and trading activity containing many of
the elements indicative of layering, would describe disruptive quoting
and trading activity as a frequent pattern in which the following facts
are present: (a) A party enters multiple limit orders on one side of
the market at various price levels (the ``Displayed Orders''); and (b)
following the entry of the Displayed Orders, the level of supply and
demand for the security changes; and (c) 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; and (d)
following the execution of the Contra-Side Orders, the party cancels
the Displayed Orders. Proposed Interpretation and Policy .01(b), which
describes disruptive quoting and trading activity containing many of
the elements indicative of spoofing, would describe disruptive quoting
and trading activity as a frequent pattern in which the following facts
are present: (a) A party narrows the spread for a security by placing
an order inside the national best bid or offer; and (b) 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 (a) that narrowed the spread. 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. The Exchange further believes that the proposed
descriptions will provide Members with clear descriptions of disruptive
quoting and trading activity that will help them to avoid engaging in
such activities or allowing their clients to engage in such activities.
    The Exchange proposes to make clear in Interpretation and Policy
.02 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 Interpretation and Policy
.01(a) 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.
    In sum, proposed Rule 12.15 coupled with proposed Rule 8.17 would
provide the Exchange with authority to promptly act to prevent
disruptive quoting and trading activity from continuing on the
Exchange. Below is an example of 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 then
contact the Member 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
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 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
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 unless and until such action is taken. The Member
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 to cease providing access to the
client at issue and suspending such Member unless and until such action
is taken. If such Member 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 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 pursuant to the Exchange's
standard disciplinary process for supervisory violations or other
violations of Exchange rules or the Act.\12\
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    \12\ The proposal will not supplant the Exchange's current
investigative and enforcement process. Currently, when Exchange
surveillance staff identifies a pattern of potentially disruptive
quoting and trading activity, the staff conducts an initial analysis
and investigation of that activity. After the initial investigation,
the Exchange then contacts the Member 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. The Exchange will continue this practice after this
proposal becomes operative. The Exchange will only seek an expedited
suspension when--after multiple requests to a Member for an
explanation of activity--it continues to see the same pattern of
manipulation from the same Member and the source of the activity is
the same or has been previously identified as a frequent source of
disruptive quoting and trading activity.
---------------------------------------------------------------------------

    The Exchange reiterates that it already has broad authority to take
action against a Member in the event that such Member is engaging in or
facilitating disruptive or manipulative trading activity on the
Exchange. For the reasons described above, and in light of recent cases
like 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 the authority to promptly initiate
expedited suspension proceedings against any Member 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 to terminate access to the Exchange to one or more
of such Member's clients if such clients are responsible for the
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 Exchange believes that it would
use this authority in limited circumstances, when necessary to protect
investors, other Members 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.
2. Statutory Basis
    The Exchange believes that the proposed rule changes are consistent
with Section 6(b) of the Act \13\ and further the objectives of Section
6(b)(5) of the Act \14\ because they are 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 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. 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 Rule 12.15 has occurred and is ongoing.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 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,\15\ 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 also 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 Members and their customers as
well as the Exchange if conduct is allowed to continue on the Exchange.
As explained above, the Exchange notes that it has defined the
prohibited disruptive quoting and trading activity by modifying the
traditional definitions of layering and spoofing \16\ to eliminate an
express intent element that would not be proven on an expedited basis
and would instead require a thorough investigation into the activity.
As noted throughout this filing, the Exchange believes it is necessary
for the protection of investors to make such modifications in order to
adopt an expedited process rather than allowing disruptive quoting and
trading activity to occur for several years. Through this proposal, the
Exchange does not intend to modify the definitions of spoofing and
layering that have generally been used by the Exchange and other
regulators in connection with actions like those cited above.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \16\ See supra, notes 7 and 8.
---------------------------------------------------------------------------

    The Exchange further believes that the proposal is consistent with
Section 6(b)(7) of the Act,\17\ which requires that the rules of an
exchange ``provide a fair procedure for the disciplining of members and
persons associated with persons . . . 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,\18\ 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 8.17. Importantly,
as noted above, the Exchange anticipates using the authority proposed
in this filing only in clear and egregious cases when necessary to
protect

investors, other Members and the Exchange, and even in such cases, the
Respondent will be afforded due process in connection with the
suspension proceedings.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b)(7).
    \18\ 15 U.S.C. 78f(d)(1).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will
result in any burden on competition that is 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 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 Members and the Exchange.

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 \19\ and Rule 19b-4(f)(6) thereunder.\20\
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, 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 \21\ and Rule 19b-
4(f)(6) thereunder.\22\
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
    \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 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally
does not become operative prior to 30 days after the date of the
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. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately. The Exchange asserts that
the waiver of the 30-day operative delay will allow the Exchange to
immediately enforce the proposed rules to protect its members and
market participants from the behavior proscribed by the proposed rules.
The Exchange further states that waiver of the operative delay is
consistent with the protection of investors and the public interest
because it is designed to protect investors and the public from
disruptive quoting and trading activity. Furthermore, the Commission
notes that it recently approved an identical expedited disciplinary
procedure for an affiliate of the Exchange, BatsBZX,\25\ and the
Exchange represents above that the membership of the Exchange and the
membership of BatsBZX is nearly identical.\26\ Based on the foregoing,
the Commission believes that waiver of the operative delay is
consistent with the protection of investors and the public interest.
Accordingly, Commission hereby waives the 30-day operative delay and
designates the proposal operative upon filing.\27\
---------------------------------------------------------------------------

    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
    \25\ See supra note 4.
    \26\ See supra note 3.
    \27\ For purposes only of waiving the 30-day operative delay,
the Commission has 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change 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-BatsEDGX-2016-04 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-BatsEDGX-2016-04. 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 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 Number SR-BatsEDGX-2016-04, and should
be submitted on or before May 9, 2016.
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12), (59).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08820 Filed 4-15-16; 8:45 am]
 BILLING CODE 8011-01-P


316B RULE

 TELEPHONE LOG

Name of Caller: 	John Sunda, SAIC

Date: 	February 26, 2010

Company Name: 	SPX Cooling Technologies, Inc.

Street Address:	7401 W 129 Street

City/State/ZIP:	Overland Park, KS 66213

Person Contacted:	Kent A. Martens, P. E.

Title:	Chief Technical Advisor - Evaporative Cooling

Contact Info:	Tel:      913/664-7501

	Fax:     913/693-9522

	Cell:     913/302-7234

<EMAIL_ADDRESS>
Questions: Called to inquire about treated flu gas disposal through
natural draft cooling towers, their project to do this at the Cardinal
Power Plant, and about natural draft tower cost and prevalence

The AEP Cardinal power plant $47 million project includes demolishing
the fill ring and replacing nearly the entire unit 3 cooling tower
internal components. The plant would have had to do this anyway to
extend the life of the tower so it wasn’t necessary to accommodate the
flue gas disposal system. They do need to provide engineering solutions
to deal with the hole through which the flue gas passes. A detailed
engineering analysis is performed and the solution will be dependent on
tower design its condition and various loads – he mentioned that the
towers are subject to substantial wind loads. One solution is to install
a steel ring around the tower near when the breach is.  I confirmed that
the system was only for unit 3 (the press release is vague about this.
The company that recently put in new stacks for unit 1&2 as part of
those units FGD retrofit at the plant was well into engineering design
for unit 3 as well when AEP decided to go with the SPX solution using
the natural draft towers instead.  AEP had already last year during a
shut down lined the inside and outside near the top of cooling tower
with a corrosion resistant coating in anticipation of the project and so
this component was not part of the $47 million. Distance to the existing
(or new) tower is an important consideration. He also noted that Germany
requires that treated flue gas be discharged through the natural draft
cooling tower.

I asked about a comparison of long term costs for natural draft towers
versus mechanical draft towers and he said natural draft towers need an
expected life of about 40 years and be a base load operation like a
large coal plant. I asked if he had a feel about expectations of the
future use of natural draft towers and he mentioned that few of the 17
coal plants being proposed were considering natural draft towers but
that a recent coal plant project now cancelled or on hold was not
considering natural draft towers until the option and savings such as
stack costs for flue gas was introduced .

We discussed the issues regarding aesthetics and the nuclear stigma for
natural draft towers and I noted the trend in US businesses for short
economic horizons, he agreed that the public acceptance issues are a
problem but that new large coal plants do use long time horizons of 40+
years when evaluating plant economics.