18884 Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices 

1All entities that currently intend to rely on the 

requested order are named as applicants. Any other 

entity that relies on the order in the future will 

comply with the terms and condition of the 

application. 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

eligible to invest in securities (as 

defined in section 2(a)(36) of the Act) in 

reliance on rule 12d1–2 under the Act 

(the ‘‘Funds’’), to also invest, to the 

extent consistent with its investment 

objectives, policies, strategies and 

limitations, in financial instruments that 

may not be securities within the 

meaning of section 2(a)(36) of the Act 

(‘‘Other Investments’’).1 Applicants also 

request that the order exempt any entity, 

including any entity controlled by or 

under common control with an Adviser, 

that now or in the future acts as 

principal underwriter, or broker or 

dealer (if registered under the Securities 

Exchange Act of 1934, as amended (the 

‘‘Exchange Act’’)), with respect to the 

transactions described herein. 

3. Consistent with its fiduciary 

obligations under the Act, each Fund’s 

board of trustees will review the 

advisory fees charged by the Fund’s 

Adviser to ensure that the fees are based 

on services provided that are in addition 

to, rather than duplicative of, services 

provided pursuant to the advisory 

agreement of any investment company 

in which the Fund may invest. 

Applicants’ Legal Analysis 

1. Section 12(d)(1)(A) of the Act 

provides that no registered investment 

company (‘‘acquiring company’’) may 

acquire securities of another investment 

company (‘‘acquired company’’) if such 

securities represent more than 3% of the 

acquired company’s outstanding voting 

stock or more than 5% of the acquiring 

company’s total assets, or if such 

securities, together with the securities of 

other investment companies, represent 

more than 10% of the acquiring 

company’s total assets. Section 

12(d)(1)(B) of the Act provides that no 

registered open-end investment 

company may sell its securities to 

another investment company if the sale 

will cause the acquiring company to 

own more than 3% of the acquired 

company’s voting stock, or cause more 

than 10% of the acquired company’s 

voting stock to be owned by investment 

companies and companies controlled by 

them. 

2. Section 12(d)(1)(G) of the Act 

provides, in part, that section 12(d)(1) 

will not apply to securities of an 

acquired company purchased by an 

acquiring company if: (i) The acquired 

company and acquiring company are 

part of the same group of investment 

companies; (ii) the acquiring company 

holds only securities of acquired 

companies that are part of the same 

group of investment companies, 

government securities, and short-term 

paper; (iii) the aggregate sales loads and 

distribution-related fees of the acquiring 

company and the acquired company are 

not excessive under rules adopted 

pursuant to section 22(b) or section 

22(c) of the Act by a securities 

association registered under section 15A 

of the Exchange Act or by the 

Commission; and (iv) the acquired 

company has a policy that prohibits it 

from acquiring securities of registered 

open-end investment companies or 

registered unit investment trusts in 

reliance on section 12(d)(1)(F) or (G) of 

the Act. 

3. Rule 12d1–2 under the Act permits 

a registered open-end investment 

company or a registered unit investment 

trust that relies on section 12(d)(1)(G) of 

the Act to acquire, in addition to 

securities issued by another registered 

investment company in the same group 

of investment companies, government 

securities, and short-term paper: (i) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

12(d)(1)(A) or 12(d)(1)(F) of the Act; (ii) 

securities (other than securities issued 

by an investment company); and (iii) 

securities issued by a money market 

fund, when the investment is in reliance 

on rule 12d1–1 under the Act. For the 

purposes of rule 12d1–2, ‘‘securities’’ 

means any security as defined in section 

2(a)(36) of the Act. 

4. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security, or transaction from any 

provision of the Act, or from any rule 

under the Act, if such exemption is 

necessary or appropriate in the public 

interest and consistent with the 

protection of investors and the purposes 

fairly intended by the policies and 

provisions of the Act. Applicants submit 

that their request for relief meets this 

standard. 

5. Applicants request an order under 

section 6(c) of the Act for an exemption 

from rule 12d1–2(a) to allow the Funds 

to invest in Other Investments while 

investing in Underlying Funds. 

Applicants state that the Funds will 

comply with rule 12d1–2 under the Act, 

but for the fact that the Funds may 

invest a portion of their assets in Other 

Investments. Applicants assert that 

permitting the Funds to invest in Other 

Investments as described in the 

application would not raise any of the 

concerns that the requirements of 

section 12(d)(1) were designed to 

address. 

Applicants’ Condition 

Applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

except for paragraph (a)(2) to the extent 

that it restricts any Fund from investing 

in Other Investments as described in the 

application. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–07970 Filed 4–7–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74636; File No. SR– 

NYSEMKT–2015–17] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Notice of Filing of Proposed 

Rule Change Amending Rule 923NY To 

Refine the Appointment Process 

Utilized by the Exchange 

April 2, 2015. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on March 

20, 2015, NYSE MKT LLC (the 

‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend 

Rule 923NY (Appointment of Market 

Makers) to refine the appointment 

process utilized by the Exchange. The 

text of the proposed rule change is 

available on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 


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4See, e.g., BATS Exchange, Inc. (‘‘BATS’’) Rules 

22.3(a),(b) (Market Maker Registration); NASDAQ 

OMX PHLX (‘‘PHLX) Rule 3212(b) (Registration as 

a Market Maker); NASDAQ Options Market 

(‘‘NOM’’), Chapter VII (Market Participants), 

Section 3(a),(b) (Continuing Market Maker 

Registration). 

5See Rule 921NY(Registration of Market Makers). 

See also Rule 920NY(a) (Market Maker Defined) (‘‘A 

Market Maker is an ATP Holder that is registered 

with the Exchange for the purpose of submitting 

quotes electronically and making transactions as a 

dealer-specialist verbally on the Trading Floor or 

through the System from on the Trading Floor or 

remotely from off the Trading Floor, in accordance 

with the Rules of the Exchange. A Market Maker 

submitting quotes remotely is not eligible to 

participate in trades affected in open outcry except 

to the extent that such Market Maker’s quotation 

represents the BBO. Market Makers are designated 

as specialists on the Exchange for all purposes 

under the Securities Exchange Act of 1934 and the 

Rules and Regulations thereunder. A Market Maker 

on the Exchange will be either a Remote Market 

Maker, a Floor Market Maker, a Specialist or an eSpecialist. Unless specified, or unless the context 

requires otherwise, the term Market Maker refers to 

Remote Market Makers, Floor Market Makers, 

Specialists and e-Specialists.’’). 

6See Rule 923NY(a). 

7A Specialist is ‘‘an individual or entity that has 

been deemed qualified by the Exchange for the 

purpose of making transactions on the Exchange in 

accordance with the provisions of Rule 920NY 

[Market Makers], and who meets the qualification 

requirements of Rule 927NY(b) [Specialists]. Each 

Specialist must be registered with the Exchange as 

a Market Maker. Any ATP Holder registered as a 

Market Maker with the Exchange is eligible to be 

qualified as a Specialist. See Rule 900.2(76). Rule 

923NY(b) also provides that ‘‘[t]he Exchange may 

designate e-Specialists in an option class in 

accordance with Rule 927.4NY[e-Specialists].’’ Id. 

The Exchange is not proposing to change Rule 

923NY(b) regarding Specialists and e-Specialists. 

8See Rule 923NY(b). 

9See Rule 923NY(c). 

10See Rule 923NY(d)(1). See also NYSE Amex 

Options Fee Schedule (Section III.A., Monthly ATP 

Fees) (describing ‘‘Number Of Issues Permitted In 

A Market Makers Quoting Assignment’’ based on 

the number of permits held and the associated 

costs), available here, https://www.nyse.com/

publicdocs/nyse/markets/amex-options/NYSE_

Amex_Options_Fee_Schedule.pdf. 

11A Floor Market Maker is ‘‘a registered Market 

Maker who makes transactions as a dealer-specialist 

while on the Floor of the Exchange and provides 

quotations: (A) Manually, by public outcry, and (B) 

electronically through an auto-quoting device.’’ See 

Rule 900.2NY(29). 

12A Trading Zone refers to the areas on the Floor 

designated by the Exchange in which issues are 

assigned for the purposes of open outcry trading. 

See Rule 900.2NY(29). 

13See Rule 923NY(d)(1) (also providing that 

Specialists shall be appointed to the Trading Zone 

designated for their issues). 

14See Rule 923NY(e). In considering the change 

request, the Exchange will consider the factors set 

forth in Rule 923NY(c). 

15See Rule 923NY(f). 

16 Id. Section 9A of the Office Rules sets forth the 

procedures for Exchange disciplinary proceedings, 

including the due process for the formal hearing 

process and the requirement that any decision by 

the Exchange must include a statement of findings 

and conclusions, with the reasons therefore upon 

all material issues presented in the record. Further, 

where a penalty is imposed, the Exchange’s 

decision must include a statement specifying the 

acts or practices in which the Respondent has been 

found to have engaged, or which the Respondent 

has been found to have omitted. 

17See Rule 923NY(g). The Exchange, however, 

proposes to correct the possessive form of 

‘‘Exchange’’ (from ‘‘Exchanges’ judgment’’ to 

‘‘Exchange’s judgment’’) in this paragraph to correct 

a typo in the existing rule text, which adds clarity 

to Exchange rules. See proposed Rule 923NY(g) 

(‘‘The Exchange may suspend or terminate any 

appointment of a Market Maker in one or more 

option issues under this Rule whenever, in the 

Exchange’s judgment, the interests of a fair and 

orderly market are best served by such action.’’). 

18See Rule 923NY(h). Per Rule 923NY(i), Market 

Makers are also subject to a trading requirement, 

such that ‘‘[a]t least 75% of the trading activity of 

a Market Maker (measured in terms of contract 

volume per quarter) must be in classes within the 

Market Maker’s appointment and, in the case of 

Floor Market Makers, within their designated 

Trading Zone’’ and a failure to comply with the 

75% contract volume requirement may result in the 

imposition of a fine per Rule 476A or initiation of 

formal disciplinary action, pursuant to Section 9A 

(Disciplinary Rules). The Exchange is not proposing 

any changes to Rule 923NY(i). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 923NY to refine the appointment 

process utilized by the Exchange. The 

Exchange believes this proposal, which 

is consistent with the rules of other 

option exchanges,4 would simplify and 

enhance the efficiency of the 

appointment process for both Market 

Makers and the Exchange and add 

clarity to Exchange rules. 

Current Appointment Process 

To register as a Market Maker, an 

applicant must file an application with 

the Exchange on a form or forms 

prescribed by the Exchange.5 Once 

registered, a Market Maker may seek an 

appointment in one or more option 

classes pursuant to Rule 923NY. 

Specifically, this Rule provides that 

‘‘[o]n a form or forms prescribed by the 

Exchange, a Market Maker must apply 

for an appointment in one or more 

classes of option contracts.’’ 6

In addition to having the authority to 

appoint one Specialist per option class 

and to designate e-Specialists to fulfill 

certain obligations required of 

Specialists,7 ‘‘[t]he Exchange may 

appoint an unlimited number of Market 

Makers in each class unless the number 

of Market Makers appointed to a 

particular option class should be 

limited’’ based on the Exchange’s 

judgment.8 Further, the Rule provides 

that ‘‘Market Makers may select from 

among any option issues traded on the 

Exchange for inclusion in their 

appointment, subject to the approval of 

the Exchange. In considering the 

approval of the appointment of a Market 

Maker in each security,’’ the Exchange 

will consider the Market Maker’s 

preference; the financial resources 

available to the Market Maker; the 

Market Maker’s experience, expertise 

and past performance in making 

markets, including the Market Maker’s 

performance in other securities; the 

Market Maker’s operational capability; 

and the maintenance and enhancement 

of competition among Market Makers in 

each security in which they are 

appointed.9 The Rule also states that, in 

order to have a trading appointment on 

the Exchange, Market Makers must have 

the number of Amex Trading Permits 

(‘‘ATPs’’) required under the Amex 

Options Fee Schedule.10 In addition, 

Floor Market Makers 11 must also apply 

for appointment to a Trading Zone 12 on 

the floor, subject to approval by the 

Exchange.13

Under the current Rule, ‘‘Market 

Makers may change the option issues in 

their appointment, subject to the 

approval of the Exchange’’ provided 

requests for changes are ‘‘made in a 

form and manner prescribed by the 

Exchange.’’ 14 In addition, ‘‘Market 

Makers may withdraw from trading an 

option issue that is within their 

appointment by providing the Exchange 

with three business days’ written notice 

of such withdrawal.’’ 15 If Market 

Makers fail to provide this notice, they 

‘‘may be subject to formal disciplinary 

action pursuant to Section 9A of the 

Office Rules.’’ 16 Moreover, the 

Exchange ‘‘may suspend or terminate 

any appointment of a Market Maker in 

one or more option issues under this 

Rule whenever, in the Exchanges’ 

judgment, the interests of a fair and 

orderly market are best served by such 

action’’ 17 A Market Maker may seek 

review of any action taken by the 

Exchange.18

Finally, under the current Rule, the 

Exchange periodically conducts 

evaluations of Market Makers to 

determine whether they have fulfilled 


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19See Rule 923NY(j). 

20See Rule 923NY(j)(1). See also Rule 923NY(j)(2) 

(‘‘If a Market Maker’s appointment in an option 

issue or issues has been terminated pursuant to this 

subsection (j), the Market Maker may not be reappointed as a Market Maker in that option issue 

or issues for a period not to exceed 6 months.’’). 

21See proposed Rule 923NY(a) (‘‘On a form or 

forms prescribed by the Exchange, a Market Maker 

may register for an appointment in one or more 

classes of option contracts, subject to paragraph (d) 

of this Rule.’’). As discussed, paragraph (d) of the 

Rule provides that Market Makers must have the 

designated number of ATPs set forth in the Amex 

Options Fee Schedule in order to have a trading 

appointment on the Exchange. 

22See proposed Rule 923NY(b) (‘‘The Exchange 

may appoint one Specialist per option class. The 

Exchange may designate e-Specialists in an option 

class in accordance with Rule 927.4NY. An 

unlimited number of Market Makers may register in 

each class unless the number of Market Makers 

appointed to a particular option class should be 

limited whenever, in the Exchange’s judgment, 

quotation system capacity in an option class or 

classes is not sufficient to support additional 

Market Makers in such class or classes.’’). 

23See proposed Rule 923NY(c). 24 Id. 25 Id. Proposed changes to Rule 923NY(d) are 

discussed below. 26The Exchange is also required to confirm 

receipt of requests to withdraw option issues from 

a Market Maker’s appointment. See proposed Rule 

923NY(c). 27The Exchange will announce by Trader Update 

the email address that Market Makers should utilize 

to make selections in, or changes to, their 

appointment pursuant to this Rule. 

28The Exchange proposes to designate 

subparagraphs (e) and (f) as Reserved. 

29See Rule 923NY(g). The Exchange, however, 

proposes to correct the possessive form of 

‘‘Exchange’’ (from ‘‘Exchanges’ judgment’’ to 

‘‘Exchange’s judgment’’) in this paragraph to correct 

a typo in the existing rule text, which adds clarity 

to Exchange rules. See proposed Rule 923NY(g) 

(‘‘The Exchange may suspend or terminate any 

appointment of a Market Maker in one or more 

option issues under this Rule whenever, in the 

Exchange’s judgment, the interests of a fair and 

orderly market are best served by such action.’’). 

30See e.g., BATS Rules 22.3(a) (‘‘An Options 

Member that has qualified as an Options Market 

Maker may register to make markets in individual 

series of options’’); NOM, Chapter VII, Section 3(a) 

(‘‘An Options Participant that has qualified as an 

Options Market Maker may register to make markets 

in individual options.’’). 

31See e.g., PHLX Rule 3212(b) (‘‘A PSX Market 

Maker may become registered in an issue by 

entering a registration request via an Exchange 

approved electronic interface with PSX’s systems or 

by contacting PSX Market Operations. Registration 

shall become effective on the day the registration 

request is entered’’); PHLX Rule 3220(a) (‘‘A market 

maker may voluntarily terminate its registration in 

a security by withdrawing its two-sided quotation 

from PSX. A PSX Market Maker that voluntarily 

terminates its registration in a security may not reregister as a market maker for one (1) business 

day.’’). See also BATS Rules 22.3(b) (‘‘An Options 

Market Maker may become registered in a series by 

entering a registration request via an Exchange 

approved electronic interface with the Exchange’s 

systems by 9:00 a.m. Eastern time. Registration shall 

become effective on the day the registration request 

is entered’’); NOM, Chapter VII, Section 3(b) (‘‘An 

Options Market Maker may become registered in an 

option by entering a registration request via a 

Nasdaq approved electronic interface with Nasdaq’s 

systems. Registration shall become effective on the 

day the registration request is entered.’’). 

performance standards.19 If the 

Exchange finds that a Market Maker has 

not met the performance standards, the 

Exchange may take action, including 

suspending, terminating or restricting a 

Market Maker’s appointment or 

registration, after providing the Market 

Maker an opportunity to be heard.20

Proposed Appointment Process 

The Exchange proposes to modify 

Rule 923NY to refine the current 

appointment process. Presently, Market 

Makers must apply for an appointment 

in an options class, which, as discussed 

further below, is done by submitting an 

email to the Exchange. The Exchange 

proposes to modify Rule 923NY(a) to 

provide that, rather than apply for an 

appointment, ‘‘a Market Maker may 

register for an appointment in one or 

more classes of option contracts,’’ in a 

form and manner prescribed the 

Exchange.21 The Exchange would 

continue to have authority to appoint 

one Specialist per option class and to 

designate e-Specialists in options 

classes to fulfill certain obligations 

required of Specialists. Similarly, there 

would continue to be an unlimited 

number of Market Makers appointed to 

an options class, unless the Exchange 

restricted such appointments following 

Commission review and approval. The 

Exchange is proposing a change to the 

text in Rule 923NY(b) to reflect the 

proposed changes in Rule 923NY(a) to 

provide that ‘‘[a]n unlimited number of 

Market Makers may register in each 

class,’’ subject to any limits imposed by 

the Exchange.22

In addition, to simplify a Market 

Maker’s ability to select and make 

changes to its appointment, the 

Exchange proposes to modify Rule 

923NY(c) to replace the existing rule 

text with text that provides that ‘‘[a] 

Market Maker may select or withdraw 

option issues included in their 

appointment by submitting a request via 

an Exchange-approved electronic 

interface with the Exchange on a day 

when the Exchange is open for 

business.’’ 23 The modified rule would 

also provide that an appointment would 

become effective by no later than the 

following business day, whereas a 

Market Maker’s request to withdraw 

option issues from its appointment 

would not become effective until the 

following business day. 24 Thus, as 

proposed, a Market Maker could be 

appointed to an options issue on the 

same day it submits a request to the 

Exchange, depending on availability of 

Exchange resources to process the 

request that day, but such addition to its 

appointment would be effective no later 

than the following business day. A 

Market Maker, however, would not be 

able to withdraw an options issue from 

its appointment on the same day that it 

submits the request; instead, the 

Exchange will only process such 

requests on an overnight basis for 

effectiveness on the following business 

day. Before any additions to a Market 

Maker’s appointment would become 

effective, the Exchange would be 

required to confirm ‘‘that the Market 

Maker’s appointment will not exceed 

that permitted under paragraph (d) of 

this Rule’’ 25 and confirm receipt of the 

Market Maker’s request.26 Confirmation 

of receipt is designed to ensure that the 

request was successfully transmitted to 

the Exchange (i.e., there was no system 

failure or human error on either side of 

the electronic transaction that prevented 

transmission and receipt of the Market 

Maker’s request). Presently, Market 

Makers can select issues in their 

appointment or make changes thereto, 

pursuant to proposed Rule 923NY(c), by 

submitting an email [sic] the Exchange 

which is ‘‘the Exchange-approved 

electronic interface’’ at this time.27

Consistent with this proposed change, 

the Exchange proposes to delete 

paragraphs (e) and (f) of Rule 923NY, 

which describe how Market Makers can 

change their appointment or withdraw 

from issues in their appointment 

because these provisions are rendered 

superfluous by the proposed changes to 

Rule 923NY(c).28

The Exchange believes that the 

proposed changes to how Market 

Makers select and modify their appoints 

would enable Market Makers to manage 

their appointments with more flexibility 

and in a timelier manner which, in turn, 

would reduce the time and resources 

expended by Market Makers and the 

Exchange on the appointment process. 

The Exchange believes this proposal 

would provide Market Makers with 

more efficient access to the securities in 

which they want to make markets and 

disseminate competitive quotations, 

which would provide additional 

liquidity and enhance competition in 

those securities. The Exchange would 

retain the ability to suspend or 

terminate any appointment of a Market 

Maker if necessary to maintain a fair 

and orderly market.29 The Exchange 

also notes that the proposed changes to 

Rule 923NY(a), (b) 30 and (c) 31 are 

consistent with the rules of other 

exchanges and therefore raise no new or 

novel issues. 

The Exchange also proposes to amend 

Rule 923NY(d)(1) to state that ‘‘Market 

Makers must have the number of ATPs 

required under the Fee Schedule for its 


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32See proposed Rule 923NY(d)(1). 

33The Exchange also proposes to capitalize 

‘‘Floor’’ in the first sentence of Rule 923NY(d)(1) to 

add clarity and consistency to Exchange rules. 

34This proposed change also conforms to the 

latter portion of Rule 923NY(d)(2) which provides 

that ‘‘Specialists shall be appointed to the Trading 

Zone designated for their issues.’’ 

35See Rule 923NY(h) (‘‘A Market Maker may seek 

review of any action taken by the Exchange 

pursuant to this Rule in accordance with Section 

9A of the Office Rules, as applicable.’’). 

36 Id. 

37See proposed Rule 923NY(j) (‘‘The Exchange 

will periodically conduct an evaluation of Market 

Makers to determine whether they have fulfilled 

performance standards relating to, among other 

things, quality of markets, competition among 

Market Makers, observance of ethical standards, 

and administrative factors. The Exchange may 

consider any relevant information including, but 

not limited to, the results of a Market Maker 

evaluation, trading data, a Market Maker’s 

regulatory history, the financial resources available 

to the Market Maker, the Market Maker’s 

operational capability, and such other factors and 

data as may be pertinent in the circumstances.’’). 

38See Rule 923NY(c)(2) and (4). 39The Exchange is not proposing any changes to 

Rule 923NY(j)(1), which sets forth the actions that 

the Exchange may take, after affording a Market 

Maker written notice and an opportunity for 

hearing pursuant to Section 9A should the 

Exchange find a Market Maker is failing to meet 

minimum performance standards. See Rule 

923NY(j)(1). The Exchange however proposes to 

delete the word ‘‘primary’’ from Rule 

923NY(j)(1)(A) so that the clause refers simply to 

the ‘‘Market Maker’s appointment,’’ which change 

would add clarity and consistency to Exchange 

rules. See proposed Rule 923NY(j)(1)(A). 

40See proposed Rule 923NY(j)(2) (‘‘If a Market 

Maker’s appointment in an option issue or issues 

has been terminated pursuant to this subsection (j), 

the Market Maker may not register as a Market 

Maker in that option issue or issues for a period not 

to exceed 6 months.’’). 

41 15 U.S.C. 78f(b). 42 15 U.S.C. 78f(b)(5). 

appointment as a Market Maker in 

option issues,’’ which the Exchange 

believes adds clarity to the Rule.32 In 

addition, the Exchange proposes to 

modify Rule 923NY(d)(2) to provide that 

‘‘Floor Market Makers shall be 

appointed to a Trading Zone on the 

Floor,’’ 33 to conform this provision to 

other changes proposed herein, which 

are designed to streamline the 

Exchange’s appointment process.34

The Exchange also proposes to modify 

the text in paragraph (h) of the Rule. As 

proposed, a Market Maker would 

continue to be permitted to ‘‘seek 

review of any action taken by the 

Exchange, in accordance with Section 

9A of the Office Rules, as applicable.’’ 

However, to clarify the rule text, the 

Exchange proposes to delete the 

unnecessary clause ‘‘including the 

denial of the appointment for, or the 

termination or suspension of, a Market 

Maker’s appointment in an option issue 

or issues.’’ 35 The Exchange’s denial, 

termination, or suspension of a Market 

Maker’s appointment would continue to 

be reviewable under Section 9A of the 

Office Rules, as would other applicable 

actions taken by the Exchange under 

Rule 923NY.36

Rule 923NY(j) states that the 

Exchange will conduct periodic 

evaluations of Market Makers to 

determine whether they have fulfilled 

the requisite performance standards. 

The Exchange proposes to add ‘‘the 

financial resources available to the 

Market Maker’’ and ‘‘the Market Maker’s 

operational capability’’ as factors the 

Exchange will consider in its 

evaluations conducted pursuant to Rule 

923NY(j).37 The additional 

considerations the Exchange proposes to 

include in its periodic evaluations 

under Rule 923NY (j) are currently 

among the considerations of the 

Exchange in approving a Market 

Maker’s appointment.38 In connection 

with the Exchange’s proposed changes 

to the process for Market Makers’ 

appointments to options classes, the 

Exchange proposes to eliminate these 

approval provisions. Because financial 

resources and operational capability are 

important considerations in a Market 

Maker’s performance, the Exchange 

proposes to retain these factors for 

consideration in the Exchange’s 

periodic evaluation of Market Maker 

performance.39

Finally, the Exchange proposes to 

modify Rule 923NY(j)(2) to reflect the 

proposed changes to the Market Maker 

appointment process. Specifically, the 

Exchange proposes to change the 

reference to a Market Maker being ‘‘reappointed’’ by the Exchange if an option 

issue or issues has been terminated 

pursuant to this subsection (j), and to 

instead provide that ‘‘the Exchange may 

restrict a Market Maker’s registration as 

a Market Maker in that option issue or 

issues for a period not to exceed 6 

months.’’ 40 This proposal continues to 

give the Exchange discretion to suspend 

that Market Maker’s appointment in the 

affected option issue(s) for a full six 

months, or to allow that Market Maker 

to resume that appointment earlier than 

the prescribed six-month period, based 

on the Exchange’s evaluation of the facts 

and circumstances. The Exchange 

believes the proposed change is 

necessary so that Rule 923NY(j)(2) is 

consistent with the proposed changes in 

paragraphs (a), (b), and (c) of Rule 

923NY to the process for Market Makers 

to register and change their 

appointments to options classes. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 41 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’), in general, and furthers the 

objectives of Section 6(b)(5),42 in 

particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

The Exchange believes that the 

proposed rule change removes 

impediments to a free and open market 

because it would enable Market Makers 

to manage their appointments with 

more flexibility and in a timelier 

manner. The Exchange believes the 

proposed change would reduce the 

burden on both Market Makers and 

Exchange staff, which would result in a 

fair and reasonable use of resources to 

the benefit of all market participants. In 

particular, the proposal to allow Market 

Makers to select their appointments, 

and make changes thereto, via an 

Exchange-approved electronic interface 

is consistent with [sic] Act because it 

would provide Market Makers with 

more efficient access to the securities in 

which they want to make markets and 

thus more quickly begin disseminating 

competitive quotations in those 

securities, which would provide 

additional liquidity and enhance 

competition in those securities. The 

Exchange also believes that preventing 

Market Makers from being able to 

withdraw an option issue from its 

appointment on the same day that it 

submits the request (as such requests are 

processed on an overnight basis for 

effectiveness on the following business 

day) would serve to promote just and 

equitable principles of trade and benefit 

investors and the public interest. 

In addition, the Exchange believes 

that the proposal to allow Market 

Makers to make selections or changes to 

their appointment without first 

obtaining explicit Exchange approval is 

likewise consistent with the Act. First, 

because financial resources and 

operational capability are important 

considerations in a Market Maker’s 

performance, the Exchange proposes to 

retain these factors for consideration in 

the Exchange’s periodic evaluation of 

Market Maker performance. The 

Exchange believes that adding these 

factors to the Exchange’s consideration 

would remove impediments to and 

perfect the mechanism of a free and 

open market and would benefit 

investors and the public interest. In 

addition, as noted above, the Exchange 

would continue to have authority to 


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18888 Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices 

43See Rule 923NY(g). See also Rule 921NY 

(regarding the Exchange’s ability to suspend or 

terminate a Market Maker’s registration based on ‘‘a 

determination of any substantial or continued 

failure by such Market Maker to engage in dealings 

in accordance with Rules 925NY or 923NY’’, which 

outline the obligations of Market Makers). 

44 15 U.S.C. 78f(d). 

45See Rule 925.1NY. 

46See supra nn. 4, 30, 31. 47 Id. 

suspend or terminate any Market Maker 

appointment in the interest of a fair and 

orderly market, including if necessary to 

prevent fraudulent and manipulative 

acts and practices and protect investors, 

or if a Market Maker does not satisfy its 

obligations with respect to an 

appointment.43 The Exchange would 

also retain the ability to restrict a Market 

Maker’s registration in option issues for 

up to six months if a Market Maker’s 

appointment in that option issue or 

issues had been previously terminated 

under the rule, and continues to give the 

Exchange discretion to allow the Market 

Maker to resume that appointment 

earlier than the prescribed six-month 

period or to maintain the suspension for 

the entire period. Finally, the Exchange 

is not proposing changes to the 

disciplinary and appeals process for 

Market Makers that do not meet the 

minimum performance standards. 

Accordingly, the Exchange believes this 

proposal is consistent with Section 6(d) 

of the Exchange Act.44

The proposed rule change would not 

result in unfair discrimination, as it 

applies to all Market Makers. Further, 

the proposed rule change would reduce 

the burden on Market Makers to manage 

their appointments and thus provide 

liquidity to the Exchange. Nevertheless, 

Market Makers would still be required 

to comply with certain obligations to 

maintain their status as a Market Maker, 

including that they provide continuous, 

two-sided quotations in their appointed 

securities.45

Finally, as noted above, the proposed 

modifications to the appointment 

process would align the rules of the 

Exchange with the rules of other options 

exchanges, where Market Makers 

presently have the ability to select and 

make changes to their appointment via 

an Exchange-approved electronic 

interface.46 The Exchange believes this 

consistency across exchanges would 

remove impediments to and perfect the 

mechanism of a free and open market by 

ensuring that members, regulators and 

the public can more easily navigate the 

Exchange’s rulebook and better 

understand the appointment process. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change would impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act because it 

provides the same relief to a group of 

similarly situated market participants— 

Market Makers. The proposed rule 

change would reduce the burden on 

Market Makers to manage their 

appointments and thus provide 

liquidity to the Exchange. 

The Exchange does not believe the 

proposed rule change would help 

Market Makers to the detriment of 

market participants on other exchanges, 

particularly because the proposed 

functionality is similar to functionality 

already available on other exchanges.47

Market Makers would still be subject to 

the same obligations with respect to its 

appointments; the proposed rule change 

would make the appointment process 

more efficient for Market Makers. The 

Exchange believes that the proposed 

rule change would relieve any burden 

on, or otherwise promote, competition, 

as it would enable Market Makers to 

manage their appointments with more 

flexibility and in a timelier manner. The 

Exchange believes this would provide 

Market Makers with more efficient 

access to the securities in which they 

want to make markets and thus more 

quickly begin disseminating competitive 

quotations in those securities, which 

would provide additional liquidity and 

enhance competition in those securities. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEMKT–2015–17 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEMKT–2015–17. 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– 

NYSEMKT–2015–17, and should be 

submitted on or before April 29, 2015. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 67 / Wednesday, April 8, 2015 / Notices 18889 

48 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(2). 

5Securities Exchange Act Release No. 57813 (May 

12, 2008), 73 FR 28539 (May 16, 2008) (SR–NSCC– 

2007–12). 

6See, [sic] NSCC Rule 53 (Alternative Investment 

Product Services and Members), Section 6 

(Transmission of AIP Data) [emphasis added]. 

7 15 U.S.C. 78q–1(b)(3)(D). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.48

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–07964 Filed 4–7–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74639; File No. SR–NSCC– 

2015–001] 

Self-Regulatory Organizations; 

National Securities Clearing 

Corporation; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change to Amend Addendum A 

(Fee Structure) With Respect to the 

Alternative Investment Product 

Services 

April 2, 2015. 

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 23, 

2015, National Securities Clearing 

Corporation (‘‘NSCC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by NSCC. NSCC filed the proposed rule 

change pursuant to Section 19(b)(3)(A) 3

of the Act and Rule 19b–4(f)(2) 4

thereunder. The proposed rule change 

was effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change consists of 

an amendment to Addendum A (Fee 

Structure) of NSCC’s Rules & Procedures 

(‘‘Rules’’) to establish certain fees 

applicable to the Alternative Investment 

Product services (‘‘AIP’’ or the 

‘‘Service’’), as more fully described 

below. The text of the proposed rule 

change is available on NSCC’s Web site 

at http://www.dtcc.com/legal/sec-rulefilings.aspx, at the principal office of 

NSCC, and at the Commission’s Public 

Reference Room. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, 

NSCC 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. NSCC 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) Statement of Purpose 

AIP was initially approved by the 

Commission on May 12, 2008 5 as a new 

processing platform for alternative 

investment products such as hedge 

funds, funds of hedge funds, 

commodities pools, managed futures, 

and real estate investment trusts 

(collectively, ‘‘Eligible AIP Products’’). 

AIP links global market participants, 

including broker/dealers, fund 

managers, fund administrators and 

custodians (collectively, ‘‘AIP 

Members’’), to provide one standard 

end-to-end process for Eligible AIP 

Products. 

As set forth in NSCC’s Rules, ‘‘AIP 

Data transmitted through the AIP 

Service may include data relating to 

subscriptions and purchases; 

redemptions, withdrawals and tender 

offers; exchange transactions; transfers; 

. . . and such other data as may be 

established by [NSCC] from time to 

time.’’ 6

NSCC recently enhanced the AIP 

platform to better process transfer 

instructions submitted by AIP Members. 

In connection with these enhancements, 

NSCC proposes to amend Addendum A 

to establish the fees applicable to the 

processing of transfers, such as for 

example, internal transfers. Internal 

transfers occur within an AIP Member 

that is a broker/dealer when such AIP 

Member re-registers a customer account 

in the name of a different customer due 

to, for example, the death of the 

previously registered customer. NSCC 

proposes to establish the following fees 

for AIP transfers: 

• $1.50 per transfer for higher volume 

Eligible AIP Products. 

• $5.00 per transfer for lower volume 

Eligible AIP Products. 

NSCC will implement the new 

transfer fees beginning March 26, 2015, 

or such later date as NSCC may 

announce through Important Notice. 

(2) Statutory Basis 

NSCC believes that the proposed rule 

change is consistent with the 

requirements of the Act, and the rules 

and regulations thereunder applicable to 

NSCC. In particular, the proposed rule 

change is consistent with Section 

17A(b)(3)(D) 7 of the Act because it 

establishes NSCC’s fees for the 

processing of transfer instructions 

submitted by AIP Members, which 

helps to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among members in 

connection with use of the Service. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NSCC does not believe that the 

proposed rule change will have any 

impact or impose any burden on 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments relating to the 

proposed rule change have not yet been 

solicited or received. NSCC will notify 

the Commission of any written 

comments received by NSCC. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 8 and paragraph (f) of Rule 

19b–4 9 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 


asabaliauskas on DSK5VPTVN1PROD with NOTICES