Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 72743 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 3 17 CFR 240.19b–4(f)(6). 

4The current FINRA rulebook consists of: (1) 

FINRA Rules; (2) NASD Rules; and (3) rules 

incorporated from New York Stock Exchange LLC 

(‘‘NYSE’’) (‘‘Incorporated NYSE Rules’’) (together, 

the NASD Rules and Incorporated NYSE Rules are 

referred to as the ‘‘Transitional Rulebook’’). While 

the NASD Rules generally apply to all FINRA 

members, the Incorporated NYSE Rules apply only 

to those members of FINRA that are also members 

of the NYSE (‘‘Dual Members’’). The FINRA Rules 

apply to all FINRA members, unless such rules 

have a more limited application by their terms. For 

more information about the rulebook consolidation 

process, see Information Notice, March 12, 2008 

(Rulebook Consolidation Process). 

5FINRA previously solicited comment on a 

proposal to move NASD Rule 2430 to the 

Consolidated FINRA Rulebook with substantive 

changes. See Regulatory Notice 11–08 (February 

2011); see also Regulatory Notice 13–07 (January 

2013). Given that FINRA would like to proceed 

Continued 

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 

offices 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–Phlx– 

2014–76, and should be submitted on or 

before December 29, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28646 Filed 12–5–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73714; File No. SR–FINRA– 

2014–049] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Adopt FINRA Rule 

2122 (Charges for Services Performed) 

in the Consolidated FINRA Rulebook 

December 2, 2014. 

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 November 

21, 2014, Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 

II below, which Items have been 

prepared by FINRA. FINRA has 

designated the proposed rule change as 

constituting a ‘‘non-controversial’’ rule 

change under paragraph (f)(6) of Rule 

19b–4 under the Act,3 which renders 

the proposal effective upon receipt of 

this filing by the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to adopt NASD 

Rule 2430 (Charges for Services 

Performed) as FINRA Rule 2122 

(Charges for Services Performed) 

without any substantive changes. 

FINRA also proposes to update a crossreference within FINRA Rule 0150 

accordingly. 

Below is the text of the proposed rule 

change. Proposed new language is in 

italics; proposed deletions are in 

brackets. 

* * * * * 

FINRA Rules 

* * * * * 

0150. Application of Rules to Exempted 

Securities Except Municipal Securities 

(a) through (b) No Change. 

(c) Unless otherwise indicated within 

a particular Rule, the following FINRA 

and NASD rules are applicable to 

transactions in, and business activities 

relating to, exempted securities, except 

municipal securities, conducted by 

members and associated persons: 

FINRA Rules 2010, 2020, 2060, 2111, 

2122, 2150, 2210, 2212, 2261, 2268, 

2269, 2320(g), 3110, 3220, 3270, 4120, 

4130, 4210, 4311, 4330, 4360, 4510 

Series, 4530, 5160, 5210, 5220, 5230, 

5310, 5340, 8110, 8120, 8210, 8310, 

8311, 8312, 8320, 8330 and 9552; NASD 

Rules IM–2210–2, 2340, [2430,] 2510, 

3040, 3050 and 3140. 

* * * * * 

[2430] 2122. Charges for Services 

Performed 

Charges, if any, for services 

performed, including, but not limited to, 

miscellaneous services such as 

collection of monie[y]s due for 

principal, dividends, or interest; 

exchange or transfer of securities; 

appraisals, safe-keeping or custody of 

securities, and other services[,] shall be 

reasonable and not unfairly 

discriminatory [between] among 

customers. 

* * * * * 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

As part of the process of developing 

a new consolidated rulebook 

(‘‘Consolidated FINRA Rulebook’’),4

FINRA is proposing to transfer NASD 

Rule 2430 (Charges for Services 

Performed) into the Consolidated 

FINRA Rulebook as FINRA Rule 2122 

(Charges for Services Performed) 

without any substantive changes. 

Proposed FINRA Rule 2122 states that 

charges, if any, for services performed, 

including, but not limited to, 

miscellaneous services such as 

collection of monies due for principal, 

dividends, or interest; exchange or 

transfer of securities; appraisals, safekeeping or custody of securities, and 

other services shall be reasonable and 

not unfairly discriminatory among 

customers. Proposed FINRA Rule 2122 

closely tracks the language of NASD 

Rule 2430 but makes non-substantive 

changes to the text of the NASD rule.5

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72744 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 

with the rulebook consolidation process 

expeditiously to provide greater clarity and 

regulatory efficiency to FINRA members, FINRA is 

proposing in this rule change to move NASD Rule 

2430 to the FINRA rules without substantive 

changes, and will defer proposing any substantive 

changes to the rule for a future rule proposal. 

6 15 U.S.C. 78s(b)(3). 

7 17 CFR 240.19b–4(f)(6). 

8 15 U.S.C. 78o–3(b)(6). 

9 15 U.S.C. 78o–3(b)(9). 

10But see note 5 supra. 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). 

13 Id. 

14 17 CFR 240.19b–4(f)(6)(iii). 

15For 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). 

FINRA also proposes to update a 

cross-reference within FINRA Rule 0150 

to reflect the transfer of NASD Rule 

2430 to FINRA Rule 2122. 

FINRA has filed the proposed rule 

change for immediate effectiveness 

pursuant to Section 19(b)(3) of the Act 6

and paragraph (f)(6) of Rule 19b–4 

thereunder,7 in that the proposed rule 

change does not significantly affect the 

protection of investors or the public 

interest; does not impose any significant 

burden on competition; and does not 

become operative for 30 days after filing 

or such shorter time as the Commission 

may designate. FINRA has requested 

that the SEC waive the requirement that 

the proposed rule change not become 

operative for 30 days after the date of 

the filing so that FINRA can implement 

the proposed rule change immediately. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,8 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest, and Section 15A(b)(9) of 

the Act,9 which requires that FINRA 

rules not impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the Act. 

FINRA believes that this proposed rule 

change, which does not substantively 

change the rule, is consistent with the 

Act because it is being undertaken 

pursuant to the rulebook consolidation 

process, which is designed to provide 

additional clarity and regulatory 

efficiency to FINRA members by 

consolidating the applicable NASD, 

Incorporated NYSE, and FINRA rules 

into one rule set. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. As noted 

above, this proposal will not 

substantively change either the text or 

application of the rule. FINRA would 

like to proceed with the rulebook 

consolidation process expeditiously, 

which it believes will provide 

additional clarity and regulatory 

efficiency to members. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received with respect to 

this proposal to transfer NASD Rule 

2430 into the Consolidated FINRA 

Rulebook without any substantive 

changes.10

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) of the Act 11 and Rule 19b– 

4(f)(6) thereunder.12

A proposed rule change filed under 

Rule 19(b)(3)(A) of the Act 13 normally 

does not become operative prior to 30 

days after the date of the filing. 

However, pursuant to Rule 19b– 

4(f)(6)(iii),14 the Commission may 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. FINRA 

has asked the Commission to waive the 

30-day operative delay so that the 

proposal may become operative upon 

filing. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Because FINRA is proposing to transfer 

NASD Rule 2430 (Charges for Services 

Performed) into the Consolidated 

FINRA Rulebook as FINRA Rule 2122 

(Charges for Services Performed) 

without any substantive changes, and 

because the rulebook consolidation 

process is designed to provide 

additional clarity and regulatory 

efficiency to members, the Commission 

believes that a waiver of the 

requirement is appropriate so that the 

rule change may become operative 

immediately. Therefore, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposal operative upon filing.15

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 rule-comments@

sec.gov. Please include File Number SR– 

FINRA–2014–049 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–FINRA–2014–049. 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 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices 72745 

16 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(7). 

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 FINRA. All comments received 

will be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

All submissions should refer to File 

Number SR–FINRA–2014–049 and 

should be submitted on or before 

December 29, 2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28641 Filed 12–5–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73715; File No. SR–OC– 

2014–06] 

Self-Regulatory Organizations; 

OneChicago, LLC; Notice of Filing of 

Proposed Rule Change Relating to 

Bilateral Block and Bilateral EFP 

Reporting Guidance 

December 2, 2014. 

Pursuant to Section 19(b)(7) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 notice is hereby given that on 

November 20, 2014, OneChicago, LLC 

(‘‘OneChicago,’’ ‘‘OCX,’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change described in Items I, II, and III 

below, which Items have been prepared 

by the self-regulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

OneChicago has also filed this rule 

change with the Commodity Futures 

Trading Commission (‘‘CFTC’’). 

OneChicago filed a written certification 

with the CFTC under Section 5c(c) of 

the Commodity Exchange Act (‘‘CEA’’) 

on November 20, 2014. 

I. Self-Regulatory Organization’s 

Description of the Proposed Rule 

Change 

OCX is proposing to issue Notice to 

Members (‘‘NTM’’) 2014–33, which 

provides guidance to market 

participants regarding bilateral block 

and bilateral Exchange of Future for 

Physical (‘‘EFP’’) reporting. NTM 2014– 

33 provides guidance relating to four 

aspects of bilateral block and bilateral 

EFP reporting. 

First, NTM 2014–33 defines the 

completion time of certain types of 

block trades. Specifically, the NTM 

relates to block trades in which a 

liquidity provider pre-hedges the 

customer’s futures block order by 

executing in a related product, such as 

the underlying equity. OCX is clarifying 

that those types of block trades must be 

reported upon completion of the 

customer’s full futures order quantity, 

and are not required to be reported in 

partial portions throughout the day. 

The second topic on which NTM 

2014–33 provides guidance is the order 

in which market participants may report 

a block trade. Specifically, for block 

trades that involve an order originator or 

customer on one side and a liquidity 

provider on the other, OCX is clarifying 

that it is acceptable for the liquidity 

provider to inform the order originator 

that the trade is complete, and for the 

order originator to then post the trade to 

the Exchange (after which time the 

liquidity provider would then accept 

the trade details in the OneChicago 

System). Previous OCX guidance was 

silent on this issue. 

Furthermore, OneChicago is 

proposing to update its reporting time 

requirements to account for the dualparty posting guidance described above. 

Generally, OCX requires the posting 

party of a block trade to post the trade 

within five minutes of execution, and 

the accepting party to accept the 

reported trade details within five 

minutes from the time it was posted. 

OCX is proposing to modify this 

requirement for pre-hedged blocks for 

two reasons. First, OCX has become 

aware that market participants may be 

unable to comply with a strict five 

minute deadline when executing a block 

that involves a hedge in a related 

market. Second, OCX is tailoring the 

reporting requirements imposed on each 

side of a block trade to allow the side 

with greater reporting requirements 

more time to meet those obligations. 

Finally, NTM 2014–33 states that 

block and EFP trades may be reported 

outside the time parameters described 

in the NTM only in extenuating 

circumstances. The NTM then provides 

a non-exhaustive list of scenarios that 

OCX may consider to constitute an 

extenuating circumstance. 

Block Trade Completion 

Generally, block trades in OCX’s 

products occur with one party (the order 

originator or customer) seeking 

directional exposure to a single stock 

future. The counterparty (the liquidity 

provider) hedges in a related product, 

such as the underlying equity, and then 

buys/sells the equivalent number of 

single stock futures from/to the order 

originator/customer. OCX considers this 

type of ‘‘pre-hedged’’ block trade to be 

complete when the liquidity provider 

hedges in the related market and then 

calculates the futures price by adding or 

subtracting the agreed upon basis from 

the hedge price. 

Under this interpretation, a block 

trade may be considered complete 

before the customer’s entire order 

quantity is filled. This interpretation has 

led to concerns among market 

participants regarding how to 

appropriately report amounts that meet 

the block trade minimum quantity 

threshold, but that do not satisfy the 

customer’s full order quantity. These 

situations generally arise when a 

liquidity provider has completed a 

blockable amount, but can no longer 

execute the remaining customer order 

due to the customer’s limit price being 

crossed, or because of a lack of liquidity 

in the hedge product. 

OCX is now clarifying in NTM 2014– 

33 that market participants are not 

required to report these ‘‘partial fill’’ 

amounts throughout the day. Rather, a 

block trade of this type is considered 

complete when the liquidity provider 

has completed the hedge for the 

customer’s full futures block order 

quantity. The NTM then lists certain 

requirements relating to the reporting of 

block trades pursuant to the NTM. First, 

if the liquidity provider is unable to 

complete the customer’s entire futures 

order quantity equivalent by the end of 

the day, the reporting firm should report 

the amount that the liquidity provider 

was able to complete, so long as that 

amount meets the minimum block trade 

quantity threshold. Second, if the 

liquidity provider was not able to hedge 

an amount at least equal to the 

minimum block trade quantity 

threshold, a futures block was not 

created, and thus no block trade may be 

reported. In such a situation, the 

liquidity provider may offset or 

maintain its long or short position in the 

hedge product. For example, a liquidity 

provider that bought stock to hedge its 

sale of futures may sell the stock if it 

was unable to hedge enough shares of 

stock to reach the minimum block trade 

quantity threshold. 

The NTM then describes a customer’s 

obligation to accept a pre-hedged 

amount greater than or equal to the 

minimum block trade quantity 

threshold. A customer is required to 

accept a futures block that the liquidity 

provider has completed by pre-hedging. 

In other words, once a liquidity 

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