22580 Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices 

93 15 U.S.C. 78f(b)(5). 

94See supra note 10. 

95 15 U.S.C. 78s(b)(2). 

96 17 CFR 200.30–3(a)(12) and (a)(57). 

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)(6). 

5 17 CFR 240.17d–2. 

6See Securities Exchange Act Release Nos. 70837 

(Nov. 8, 2013), 78 FR 68889 (Nov. 15, 2013) (SR– 

EDGA–2013–32) (Notice of Filing and Immediate 

Effectiveness of Proposed Rule Change to Amend 

EDGA Rule 3.5 (Advertising Practices) and to 

Repeal Rule 3.20 (Initial or Partial Payments) to 

Conform with the Rules of the Financial Industry 

Regulatory Authority); and 70836 (Nov. 8, 2013), 78 

FR 68897 (Nov. 15, 2013) (SR–EDGX–2013–40) 

(Notice of Filing and Immediate Effectiveness of 

Proposed Rule Change to Amend EDGX Rule 3.5 

(Advertising Practices) and to Repeal Rule 3.20 

(Initial or Partial Payments) to Conform with the 

Rules of the Financial Industry Regulatory 

Authority). 

7 17 CFR 240.17d–2. 

8See Securities and Exchange Release No. 61698 

(Mar. 12, 2010), 75 FR 13151 (Mar. 18, 2010) 

(approving File No. 10–196). 

9 ‘‘Member’’ is defined as ‘‘any registered broker 

or dealer, or any person associated with a registered 

broker or dealer, that has been admitted to 

membership in the Exchange. A Member will have 

the status of a ‘member’ of the Exchange as that 

that date, and June 28, 2015 is an 

additional 60 days from that date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule change 

so that it has sufficient time to consider 

the proposed rule change, the issues 

raised in the comment letter that has 

been submitted in connection with the 

proposal and the response from the 

Exchange and any comments that may 

be submitted on the proposed rule 

change, as modified by Amendment No. 

2. As the Commission noted in the 

Order Instituting Proceedings, the 

proposal raises questions as to whether 

the Exchange’s proposed rule change is 

consistent with the requirements of 

Sections 6(b)(5) 93 of the Act.94

Extending the time within which to 

approve or disapprove the proposed 

rule change, as modified by Amendment 

No. 2, will enable the Commission to 

more fully consider the issues raised by 

the proposed rule change, the comment 

letter received to date and the 

Exchange’s response and any comments 

that may be submitted on the proposed 

rule change, as modified by Amendment 

No. 2. 

Accordingly, the Commission, 

pursuant to Section 19(b)(2) of the 

Act,95 designates June 28, 2015, as the 

date by which the Commission should 

either approve or disapprove the 

proposed rule change, as modified by 

Amendment No. 2 (File No. SR–Phlx– 

2014–66). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.96

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–09265 Filed 4–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74743; File No. SR–BATS– 

2015–30] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Exchange 

Rule 3.5 (Advertising Practices) and 

Repeal Exchange Rule 3.20 (Initial or 

Partial Payments) 

April 16, 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 April 1, 

2015, BATS Exchange, Inc. (‘‘Exchange’’ 

or ‘‘BATS’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been 

substantially prepared by the Exchange. 

The Exchange has designated this 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(6) thereunder,4 which renders 

it effective upon filing with the 

Commission. 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 Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to: (i) 

Amend Exchange Rule 3.5 (Advertising 

Practices); and (ii) repeal Exchange Rule 

3.20 (Initial or Partial Payments) to 

conform with the rules of the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) for purposes of an agreement 

between the Exchange and FINRA 

pursuant to Rule 17d–2 under the Act.5

The proposed rule change is identical to 

proposed rule changes submitted by the 

EDGX Exchange, Inc. (‘‘EDGX’’) and the 

EDGA Exchange, Inc. (‘‘EDGA’’) that 

were published by the Commission.6

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 

Pursuant to Rule 17d–2 under the 

Act,7 the Exchange and FINRA entered 

into an agreement to allocate regulatory 

responsibility for common rules 

(‘‘17d–2 Agreement’’). The 17d–2 

Agreement covers common members of 

the Exchange and FINRA (‘‘Common 

Members’’) and allocates to FINRA 

regulatory responsibility, with respect to 

Common Members, for the following: (i) 

Examination of Common Members for 

compliance with federal securities laws, 

rules, and regulations, and rules of the 

Exchange that the Exchange has 

certified as identical or substantially 

similar to FINRA rules; (ii) investigation 

of Common Members for violations of 

federal securities laws, rules, and 

regulations, and Exchange rules that the 

Exchange has certified as identical or 

substantially identical to FINRA rules; 

and (iii) enforcement of compliance by 

Common Members with the federal 

securities laws, rules, and regulations, 

and the rules of the Exchange that the 

Exchange has certified as identical or 

substantially similar to FINRA rules.8

The 17d–2 Agreement included a 

certification by the Exchange that states 

that the requirements contained in 

certain Exchange rules are identical to, 

or substantially similar to, certain 

FINRA rules that have been identified as 

comparable. To conform with 

comparable FINRA rules for purposes of 

the 17d–2 Agreement, the Exchange 

proposes to: (i) Amend Exchange Rule 

3.5 (Advertising Practices); and (ii) 

repeal Exchange Rule 3.20 (Initial or 

Partial Payments). 

Rule 3.5 (Advertising Practices) 

The Exchange proposes to delete the 

current text of Rule 3.5 and adopt text 

that would require Exchange members 9


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term is defined in Section 3(a)(3) of the Act.’’ 

Exchange Rule 1.5(n). 

10The Exchange does not propose to require that 

Members comply with FINRA Rule 2210(c). FINRA 

Rule 2210(c) generally requires that FINRA 

members file certain communications with FINRA. 

The Exchange believes that it is inappropriate for 

its rules to require Members to file certain 

communications with FINRA as such filing 

requirements under FINRA rules are between 

FINRA and its members. 

11See Securities Exchange Act Release No. 53128 

(Jan. 13, 2006), 71 FR 3550 (Jan. 23, 2006) (order 

approving Nasdaq’s application for registration as a 

national securities exchange); see also Securities 

Exchange Act Release No. 58069 (June 30, 2008), 73 

FR 39360 (July 9, 2008) (SR–Nasdaq–2008–054) 

(Notice of Filing and Immediate Effectiveness). 

12See FINRA Regulatory Notice 12–29 (June 

2012) available at http://finra.complinet.com/net_

file_store/new_rulebooks/f/i/FINRANotice12_

29.pdf. 

13See FINRA Regulatory Notice 14–30 (July 2014) 

available at http://finra.complinet.com/net_file_

store/new_rulebooks/f/i/FINRANotice_14_30.pdf. 

(‘‘Members’’) to comply with FINRA 

Rule 2210 as if this Rule was part of the 

Exchange’s rules and to rename Rule 3.5 

‘‘Communications with the Public.’’ 10

The proposed rule text is substantially 

the same as Rule 2210(a) of the Nasdaq 

Stock Market LLC (‘‘Nasdaq’’), which 

has been approved by the 

Commission.11

Currently, Exchange Rule 3.5(d) and 

(f) are excluded from the 17d–2 

Agreement because they are not are 

identical to, or substantially similar to, 

certain FINRA rules. First, Exchange 

Rule 3.5(d) requires that advertising and 

sales literature be pre-approved and 

signed or initialed by a supervisor while 

FINRA Rule 2210(b) only requires 

supervisory pre-approval for retail 

communication, and different 

supervisory review standards for 

institutional communication, and 

correspondence. Second, Rule 3.5(f) and 

FINRA Rule 2210(d)(6) also contain 

different content requirements for 

testimonials. Exchange Rule 3.5(d) and 

(f) were, therefore, excluded from the 

17d–2 Agreement because their 

requirements were not identical or 

substantially similar to those required 

under FINRA Rule 2210(b) and (d)(6) 

respectively. To harmonize its rules 

with FINRA, the Exchange proposes to 

delete the current text of Rule 3.5 and 

adopt text that would require Members 

to comply with FINRA Rule 2210 as if 

such Rule were part of the Exchange’s 

rules so that Rule 3.5 may be 

incorporated into the 17d–2 Agreement 

in its entirety. 

The Exchange believes that these 

changes would help to avoid confusion 

among Common Members by further 

aligning Exchange Rule 3.5 with FINRA 

Rule 2210. The proposed changes to 

Rule 3.5 are designed to enable the 

Exchange to incorporate Rule 3.5 into 

the 17d–2 Agreement, further reducing 

duplicative regulation of Common 

Members. 

Summary of FINRA Rule 2210 

FINRA Rule 2210 generally sets forth 

the content, filing, supervisory review, 

and record retention requirements for 

FINRA member’s communications with 

the public. A summary of FINRA Rule 

2210 is below. A more complete 

description of FINRA Rule 2210 is 

provided in FINRA’s Regulatory Notice 

12–29 12 and Regulatory Notice 14–30.13

FINRA Rule 2210 divides a Member’s 

communications with the public into 

the following three categories: 

• Institutional communication. 

FINRA Rule 2210(a)(3) defines 

‘‘institutional communication’’ as ‘‘any 

written (including electronic) 

communication that is distributed or 

made available only to institutional 

investors, but does not include a 

member’s internal communications.’’ 

• Retail communication. FINRA Rule 

2210(a)(5) defines ‘‘retail 

communication’’ as ‘‘any written 

(including electronic) communication 

that is distributed or made available to 

more than 25 retail investors within any 

30-day calendar period.’’ FINRA Rule 

2210(a)(6) defines ‘‘Retail investor’’ as 

‘‘any person other than an institutional 

investor, regardless of whether the 

person has an account with the 

member.’’ Communications that are 

considered advertisements and sales 

literature fall under the definition of 

‘‘retail communication.’’ 

• Correspondence. FINRA Rule 

2210(a)(2) defines ‘‘correspondence’’ as 

‘‘any written (including electronic) 

communication that is distributed or 

made available to fewer than 25 retail 

investors within any 30-day calendar 

period.’’ 

Supervisory Review. To comply with 

the supervisory requirements of FINRA 

Rule 2210(b), Common Members must 

obtain supervisory pre-approval of all 

retail communications, while 

institutional communications and 

correspondence would be subject to 

supervisory review, but not preapproval. 

Under FINRA Rule 2210(b)(1), all 

retail communications must be 

approved by a supervisor prior to their 

first use or filing with FINRA under 

FINRA Rule 2210(c). FINRA’s Rule 

2210(b)(1)’s supervisory requirements 

do not apply to a retail communication 

if, at the time that a member intends to 

publish or distribute it: (i) Another 

member has filed it with FINRA and has 

received a letter from FINRA stating that 

it appears to be consistent with 

applicable standards; and (ii) the 

member has not materially altered it and 

will not use it in a manner that is 

inconsistent with the conditions of 

FINRA’s letter. The rule’s supervisory 

review requirements also do not apply 

to the following retail communications, 

provided that the member supervises 

and reviews such communications in 

the same manner as required for 

supervising and reviewing 

correspondence pursuant to FINRA Rule 

3110(b) and Supplemental Material 

3110.06 through .09: (i) Any retail 

communication that is excepted from 

the definition of ‘‘research report’’ 

pursuant to NASD Rule 2711(a)(9)(A), 

unless the communication makes any 

financial or investment 

recommendation; (ii) any retail 

communication that is posted on an 

online interactive electronic forum; and 

(iii) any retail communication that does 

not make any financial or investment 

recommendation or otherwise promote a 

product or service of the member. 

For institutional communications, 

FINRA Rule 2210(b)(3) requires that 

members establish written procedures 

that are appropriate to its business, size, 

structure, and customers for the review 

by an appropriately qualified registered 

principal of institutional 

communications used by the member 

and its associated persons. These 

procedures must be reasonably designed 

to ensure that institutional 

communications comply with 

applicable standards. When these 

procedures do not require review of all 

institutional communications prior to 

first use or distribution, they must 

include provisions for: (i) The education 

and training of associated persons as to 

the firm’s procedures governing 

institutional communications; (ii) the 

documentation of their education and 

training; and (iii) surveillance and 

follow-up to ensure that these 

procedures are implemented and 

adhered to. Evidence that these 

supervisory procedures have been 

implemented and carried out must be 

maintained and made available to 

FINRA upon request. 

FINRA Rule 2210(b)(2) states that 

correspondence is subject to the 

supervision and review requirements of 

FINRA Rule 3110(b) and Supplemental 

Material 3110.06 through .09. Under 

FINRA Rule 3110(b)(4), each member 

shall develop written procedures that 

are appropriate to its business, size, 

structure, and customers for reviewing 

incoming and outgoing written 

(including electronic) correspondence 


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with the public relating to its 

investment banking or securities 

business, including procedures for 

reviewing incoming written 

correspondence directed to registered 

representatives, and related to the 

member’s investment banking or 

securities business, to properly identify 

and handle customer complaints and to 

ensure that customer funds and 

securities are handled in accordance 

with firm procedures. Where these 

procedures for the review of 

correspondence do not require review of 

all correspondence prior to use or 

distribution, they must include 

provisions for: (i) The education and 

training of associated persons as to the 

firm’s procedures governing 

correspondence; (ii) the documentation 

of their education and training; and (iii) 

surveillance and follow-up to ensure 

that these procedures are implemented 

and adhered to. 

Record Retention. Under FINRA Rule 

2210(b)(4)(A), members must maintain 

all retail communications and 

institutional communications for the 

retention period required by Rule 17a– 

4(b) under the Act and in a format and 

media that comply with Rule 17a–4 

under the Act. The records must 

include: 

• A copy of the communication and 

the dates of first and (if applicable) last 

use of such communication; 

• the name of any registered principal 

who approved the communication and 

the date that approval was given; 

• in the case of a retail 

communication or an institutional 

communication that is not approved 

prior to first use by a registered 

principal, the name of the person who 

prepared or distributed the 

communication; 

• information concerning the source 

of any statistical table, chart, graph, or 

other illustration used in the 

communication; and 

• for any retail communication for 

which principal approval is not 

required pursuant to FINRA Rule 

2210(b)(1)(C), the name of the member 

that filed the retail communication with 

the FINRA Advertising Regulation 

Department, and a copy of the 

corresponding review letter from the 

Department. 

Filing Requirements. Like Nasdaq 

Rule 2210(a), Exchange Rule 3.5 would 

expressly state that Members would not 

be required to comply with FINRA Rule 

2210(c). FINRA Rule 2210(c) generally 

requires FINRA members to file certain 

retail communications with FINRA 

prior to first use. Exchange members 

who are also FINRA members would 

continue to be subject to FINRA Rule 

2210(c). 

Content Standards. FINRA Rule 

2210(d) sets forth general content 

standards for all communications. All 

member communications must be based 

on principles of fair dealing and good 

faith, must be fair and balanced, and 

must provide a sound basis for 

evaluating the facts in regard to any 

particular security or type of security, 

industry, or service. No member may 

omit any material fact or qualification if 

the omission, in light of the context of 

the material presented, would cause the 

communications to be misleading. No 

member may make any false, 

exaggerated, unwarranted, promissory, 

or misleading statement or claim in any 

communication. No member may 

publish, circulate, or distribute any 

communication that the member knows 

or has reason to know contains any 

untrue statement of a material fact or is 

otherwise false or misleading. 

Information may be placed in a legend 

or footnote only in the event that such 

placement would not inhibit an 

investor’s understanding of the 

communication. Members must ensure 

that statements are clear and not 

misleading within the context in which 

they are made, and that they provide 

balanced treatment of risks and 

potential benefits. Communications 

must be consistent with the risks of 

fluctuating prices and the uncertainty of 

dividends, rates of return, and yield 

inherent to investments. Members must 

consider the nature of the audience to 

which the communication will be 

directed and must provide details and 

explanations appropriate to the 

audience. 

Communications may also not predict 

or project performance, imply that past 

performance will recur, or make any 

exaggerated or unwarranted claim, 

opinion, or forecast; provided, however, 

communications may include: (i) A 

hypothetical illustration of 

mathematical principles, provided that 

it does not predict or project the 

performance of an investment or 

investment strategy; (ii) an investment 

analysis tool, or a written report 

produced by an investment analysis 

tool, that meets the requirements of 

FINRA Rule 2214; and (iii) a price target 

contained in a research report on debt 

or equity securities, provided that the 

price target has a reasonable basis, the 

report discloses the valuation methods 

used to determine the price target, and 

the price target is accompanied by 

disclosure concerning the risks that may 

impede achievement of the price target. 

Testimonials. To comply with FINRA 

Rule 2210(d)(6): (i) If a testimonial 

includes a technical aspect of investing, 

the person making the testimonial must 

have the knowledge and expertise to 

form a valid opinion; and (ii) retail 

communications or correspondence 

providing any testimonial concerning 

the investment advice or investment 

performance of a member or its products 

must prominently disclose that the 

testimonial: (a) May not be 

representative of the experience of other 

customers; (b) is no guarantee of future 

performance or success; and (c) is a paid 

testimonial, if more than $100 in value 

has been paid. 

Recommendations. FINRA Rule 

2210(d)(7)(A) requires that retail 

communications that include a 

recommendation of securities must have 

a reasonable basis for the 

recommendation and must disclose, if 

applicable, the following: (i) That at the 

time the communication was published 

or distributed, the member was making 

a market in the security being 

recommended, or in the underlying 

security if the recommended security is 

an option or security future, or that the 

member or associated persons will sell 

to or buy from customers on a principal 

basis; (ii) that the member or any 

associated person that is directly and 

materially involved in the preparation 

of the content of the communication has 

a financial interest in any of the 

securities of the issuer whose securities 

are recommended, and the nature of the 

financial interest (including, without 

limitation, whether it consists of any 

option, right, warrant, future, long or 

short position), unless the extent of the 

financial interest is nominal; and (iii) 

that the member was manager or comanager of a public offering of any 

securities of the issuer whose securities 

are recommended within the past 12 

months. Members must provide, or offer 

to furnish upon request, available 

investment information supporting the 

recommendation. When a member 

recommends a corporate equity security, 

the member must provide the price at 

the time the recommendation is made. 

Retail communication or 

correspondence may not refer, directly 

or indirectly, to past specific 

recommendations of the member that 

were or would have been profitable to 

any person; provided, however, that a 

retail communication or correspondence 

may set out or offer to furnish a list of 

all recommendations as to the same 

type, kind, grade, or classification of 

securities made by the member within 

the immediately preceding period of not 

less than one year, if the communication 

or list: (i) States the name of each 

security recommended, the date and 

nature of each recommendation (e.g., 


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14See Securities Exchange Act Release No. 61542 

(Feb. 18, 2010), 75 FR 8768 (Feb. 25, 2010) (SR– 

FINRA–2009–093) (order approving proposal to 

repeal NASD Rule 2450). 

15Federal Reserve Board, Regulation T (Credit by 

Brokers and Dealers), 12 CFR 220 et seq. 

16See Section 220.8(a)(1) of Regulation T. 

17According to Section 220.2 of Regulation T, 

‘‘payment period’’ means the number of business 

days in the standard securities settlement cycle in 

the United States, as defined in Rule 15c6–1(a) 

under the Act (17 CFR 240.15c6–1(a)), plus two 

business days. 

18 15 U.S.C. 78f(b)(5). 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4. 

21Rule 19b–4(f)(6) also requires that the Exchange 

give the Commission written notice of its 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 

satisfied this requirement. 

whether to buy, sell, or hold), the 

market price at that time, the price at 

which the recommendation was to be 

acted upon, and the market price of 

each security as of the most recent 

practicable date; and (ii) contains the 

following cautionary legend, which 

must appear prominently within the 

communication or list: ‘‘it should not be 

assumed that recommendations made in 

the future will be profitable or will 

equal the performance of the securities 

in this list.’’ 

Rule 3.20 (Initial or Partial Payments) 

The Exchange also proposes to delete 

Exchange Rule 3.20 (Initial or Partial 

Payments). In January 2010, FINRA 

repealed NASD Rule 2450 (Initial or 

Partial Payments) and does not 

currently include a comparable rule in 

its rulebook.14 Like NASD Rule 2450, 

Exchange Rule 3.20 prohibits any 

arrangement whereby the customer of a 

Member submits partial or installment 

payments for the purchase of a security 

with the following exceptions: (i) If a 

Member is acting as agent or broker in 

the transaction, then the Member must 

immediately make an actual purchase of 

the security for the account of the 

customer, and immediately take 

possession or control of the security and 

maintain possession or control of the 

security as long as the Member is under 

the obligation to deliver the security to 

the customer; (ii) if a Member is acting 

as principal in the transaction, the 

Member must, at the time of the 

transaction, own the security and 

maintain possession or control of the 

security as long as the Member is under 

the obligation to deliver the security to 

the customer; and (iii) if applicable to a 

Member, the provisions of Regulation T 

of the Federal Reserve Board 15 are 

satisfied. The rule also prohibits a 

Member, whether acting as principal or 

agent, in connection with any 

installment or partial sales transaction, 

from making any agreement with the 

customer whereby the Member would 

be allowed to pledge or hypothecate any 

security involved in such transaction for 

any amount in excess of the 

indebtedness of the customer to the 

Member. 

Section 220.8 of Regulation T permits 

the purchase of a security in a cash 

account predicated on either: (i) There 

being sufficient funds in the account; or 

(ii) the Member accepts in good faith the 

customer’s agreement that full cash 

payment will be made.16 The rule 

further stipulates that payment must be 

made within a specified payment 

period.17 Regulation T also allows the 

purchase of a security in a margin 

account, whereby a customer must 

deposit an initial requirement, based 

upon the amount of the transaction, 

within the specified payment period. 

The Exchange proposes to repeal 

Exchange Rule 3.20 in light of the 

explicit provisions in Regulation T 

requiring the deposit of sufficient funds 

within the specified payment period. 

The Exchange also believes that the 

hypothecation prohibition in Exchange 

Rule 3.20 would no longer be relevant 

because it is predicated on a partial or 

installment payment under the rule. The 

Exchange notes that, notwithstanding 

the repeal of Exchange Rule 3.20, 

Members are required to comply with 

all applicable federal securities laws, 

including Regulation T. 

2. Statutory Basis 

The Exchange believes that proposed 

rule change is consistent with Section 

6(b)(5) of the Act,18 which requires, 

among other things, that the Exchange’s 

rules be designed to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

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 would further 

these requirements by eliminating 

duplicative and unnecessary rules and 

advancing the development of a more 

efficient and effective Exchange 

Rulebook. The Exchange believes that 

the proposed rule change would provide 

greater harmonization between 

Exchange and FINRA rules of similar 

purpose, resulting in greater uniformity 

and less burdensome and more efficient 

regulatory compliance. Accordingly, the 

Exchange believes that the proposed 

rule change would foster cooperation 

and coordination with persons engaged 

in facilitating transactions in securities 

and would remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. 

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. The 

Exchange believes that the proposed 

rule change is not designed to address 

any competitive issues but rather is 

designed to provide greater 

harmonization among Exchange and 

FINRA rules of similar purpose, 

resulting in less burdensome and more 

efficient regulatory compliance for 

Common Members and facilitating 

FINRA’s performance of its regulatory 

functions under the 17d–2 Agreement. 

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 

proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has designated the 

proposed rule change as noncontroversial under Section 19(b)(3)(A) 

of the Act 19 and Rule 19b–4(f)(6) 20

thereunder. 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 after the date of 

the filing, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest, the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act and Rule 

19b–4(f)(6) thereunder.21

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily 

temporarily suspend the proposed rule 

change if it appears to the Commission 

that this action is: (i) Necessary or 

appropriate in the public interest; (ii) for 

the protection of investors; or (iii) 

otherwise in furtherance of the purposes 

of the Act. If the Commission takes this 

action, it shall institute proceedings 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
22584 Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices 

22 15 U.S.C. 78s(b)(2)(B). 

23 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 74378 

(February 25, 2015), 80 FR 11509 (‘‘Notice’’). 

5 In Amendment No. 1, the Exchange clarified 

that the quotation and last-sale information will be 

available via the Options Price Reporting Authority 

only for U.S. exchange-listed options that the Fund 

holds. Amendment No. 1 is not subject to notice 

and comment because it is a technical amendment 

that does not materially alter the substance of the 

proposed rule change or raise any novel regulatory 

issues. 

6 In Amendment No. 2, the Exchange removed 

exchange-listed options on U.S. Treasury securities 

from the types of derivative instruments in which 

the Fund may invest. Amendment No. 2 is not 

subject to notice and comment because it does not 

materially alter the substance of the proposed rule 

change or raise any novel regulatory issues. 

7The Commission has issued an order, upon 

which the Trust may rely, granting certain 

exemptive relief under the Investment Company 

Act of 1940 (‘‘1940 Act’’). See Investment Company 

Act Release No. 30029 (April 10, 2012) (File No. 

812–13795) (the ‘‘Exemptive Relief ’’). In addition, 

the Commission has issued no-action relief that the 

Fund believes affects its ability to invest in 

derivatives notwithstanding certain representations 

in the application for the Exemptive Relief. See 

Commission No-Action Letter (December 6, 2012). 

8See Post-Effective Amendment No. 104 to 

Registration Statement on Form N–1A for the Trust, 

dated January 29, 2015 (File Nos. 333–174332 and 

811–22559). 

9See Notice, supra note 4, 80 FR at 11510. 

10See id. 

under Section 19(b)(2)(B) of the Act 22 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 proposal 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 No. SR– 

BATS–2015–30 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 No. 

SR–BATS–2015–30. This file number 

should be included on the subject line 

if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing will also be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File No. SR–BATS– 

2015–30 and should be submitted on or 

before May 13, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–09272 Filed 4–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74742; File No. SR– 

NASDAQ–2015–011] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving a Proposed Rule Change, 

as Modified by Amendments No. 1 and 

No. 2, To List and Trade the Shares of 

the First Trust Strategic Floating Rate 

ETF of First Trust Exchange-Traded 

Fund IV 

April 16, 2015. 

I. Introduction 

On February 12, 2015, The NASDAQ 

Stock Market LLC (the ‘‘Exchange’’ or 

‘‘Nasdaq’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 2 and Rule 19b–4 

thereunder,3 a proposed rule change to 

list and trade shares (‘‘Shares’’) of the 

First Trust Strategic Floating Rate ETF 

(the ‘‘Fund’’) of First Trust ExchangeTraded Fund IV (the ‘‘Trust’’) under 

NASDAQ Rule 5735. The proposed rule 

change was published for comment in 

the Federal Register on March 3, 2015.4

On April 6, 2015, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.5 On April 15, 2015, the 

Exchange filed Amendment No. 2 to the 

proposed rule change.6 The Commission 

received no comments on the proposed 

rule change. This order approves the 

proposed rule change, as modified by 

Amendments No. 1 and No. 2. 

II. Description of the Proposal 

The Exchange proposes to list and 

trade the Shares under Nasdaq Rule 

5735, which governs the listing and 

trading of Managed Fund Shares on the 

Exchange. The Fund will be an activelymanaged exchange-traded fund (‘‘ETF’’). 

The Shares will be offered by the Trust.7

The Trust is registered with the 

Commission as an investment company 

and has filed a registration statement on 

Form N–1A (‘‘Registration Statement’’) 

with the Commission.8 The Fund will 

be a series of the Trust. 

First Trust Advisors L.P. will be the 

investment adviser (‘‘Adviser’’) to the 

Fund. First Trust Portfolios L.P. (the 

‘‘Distributor’’) will be the principal 

underwriter and distributor of the 

Fund’s Shares. The Bank of New York 

Mellon Corporation will act as the 

administrator, accounting agent, 

custodian and transfer agent to the 

Fund. The Exchange states that the 

Adviser is not a broker-dealer, although 

it is affiliated with the Distributor, a 

broker-dealer.9 In addition, the 

Exchange states that the Adviser has 

implemented a fire wall with respect to 

its broker-dealer affiliate regarding 

access to information concerning the 

composition and/or changes to the 

portfolio, and that personnel who make 

decisions on the Fund’s portfolio 

composition will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding the Fund’s 

portfolio.10 In the event (a) the Adviser 

becomes, or becomes newly affiliated 

with, a broker-dealer, or (b) any new 

adviser or sub-adviser is a registered 

broker-dealer or becomes affiliated with 

another broker-dealer, it will implement 

a fire wall with respect to its relevant 

personnel and/or such broker-dealer 

affiliate, as applicable, regarding access 

to information concerning the 

composition and/or changes to the 

portfolio and will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 


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