Document ID: SEC-2015-1936-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2015-11-17T05:00Z

[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)]
[Notices]
[Pages 71851-71853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29290]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76427; File No. SR-NYSEMKT-2015-76]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Constituting a Stated Interpretation With Respect 
to the Meaning, Administration, and Enforcement of Rule 28--Equities

November 12, 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 October 28, 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 and II 
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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.

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[[Page 71852]]

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

    The Exchange proposes to constitute a stated interpretation with 
respect to the meaning, administration, and enforcement of Rule 28--
Equities (``Rule 28''). 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.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes a rule change that constitutes a stated 
interpretation with respect to the meaning, administration, and 
enforcement of Rule 28. The Exchange is not proposing any changes to 
the text of the current version of Rule 28.
    Rule 28 describes and provides the basis for the Exchange's 
practice of conducting fingerprint-based criminal record checks. The 
Rule permits the Exchange to obtain fingerprints of prospective and 
current employees, temporary personnel, independent contractors and 
service providers of the Exchange and its principal subsidiaries; 
submit those fingerprints to the Attorney General of the United States 
or his or her designee (``Attorney General'') for identification and 
processing; and receive criminal history record information from the 
Attorney General for evaluation and use, in accordance with applicable 
law, in enhancing the security of the facilities, systems, data, and/or 
records of the Exchange and its principal subsidiaries.
    The Exchange utilizes a Live-Scan \4\ electronic system to capture 
and transmit fingerprints directly to the Federal Bureau of 
Investigation (``FBI''), which maintains on behalf of the Attorney 
General a database of fingerprint-based criminal history records. The 
capture and transmittal function, and corresponding receipt of criminal 
history information from the FBI, is handled directly by Exchange 
personnel. The Exchange intends to engage an FBI-approved ``Channel 
Partner'' \5\ to maintain and operate, on behalf of the Exchange, a 
Live-Scan and/or other electronic system(s) for the submission of 
fingerprints to the FBI; to receive and maintain criminal history 
record information from the FBI; and to disseminate such information, 
through secure systems, to a limited set of approved reviewing 
officials within the Exchange and its affiliates. The Exchange believes 
Rule 28 allows for the retention of a Channel Partner for these 
purposes.\6\
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    \4\ Live-Scan refers to the process of capturing fingerprints 
directly into a digitized format as opposed to traditional ink and 
paper methods. Live-Scan technology captures and transfers images to 
a central location and/or interface for identification processing.
    \5\ FBI-approved Channel Partners receive the fingerprint 
submission and relevant data, collect the associated fee(s), 
electronically forward the fingerprint submission with the necessary 
information to the FBI Criminal Justice Information Services 
Division (``CJIS'') for a national Criminal History Summary check, 
and receive the electronic summary check result for dissemination to 
the authorized employer entity. See Securities Exchange Act Release 
No. 71066 (December 12, 2013), 78 FR 76667 (December 18, 2013) (SR-
ISE-2013-66).
    \6\ Rule 28 allows the Exchange to obtain fingerprints from 
service providers, including employees of affiliates of the 
Exchange. See Chicago Board Options Exchange, Incorporated 
(``CBOE'') Rule 15.10; Securities Exchange Act Release No. 69496 
(May 2, 2013), 78 FR 26671, 26671 (May 7, 2013) (SR-CBOE-2013-044) 
(CBOE conducts fingerprint-based criminal record checks of 
directors, officers and employees as well as, without limitation, 
``temporary personnel, independent contractors, consultants, vendors 
and service providers . . . who have or are anticipated to have 
access to facilities and records.'').
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    The foregoing interpretation is consistent with the Exchange's 
authority under Section 17(f)(2) of the Act, as amended by the Dodd-
Frank Wall Street Reform and Consumer Protection Act of 2010 (``Dodd-
Frank Act''),\7\ which requires, inter alia, that employees of 
exchanges be fingerprinted and that exchanges ``shall submit such 
fingerprints, or cause the same to be submitted, to the Attorney 
General of the United States for identification and appropriate 
processing.'' The Exchange further notes that the proposed 
interpretation is consistent with the rules and procedures at other 
self-regulatory organizations (``SROs'').\8\
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    \7\ See 15 U.S.C. 17(f)(2) [sic]; Dodd-Frank Act Sect. 929S.
    \8\ See International Securities Exchange (``ISE'') Rule 1408; 
Chicago Board Options Exchange (``CBOE'') Rule 15.10. See generally 
Securities Exchange Act Release No. 71066 (December 12, 2013), 78 FR 
76667, 76668 n. 12 (December 18, 2013) (SR-ISE-2013-66) (noting that 
``[a]n FBI-approved Channel Partner simply helps expedite the 
delivery of Criminal History Summary information on behalf of the 
FBI'', and that the ``process for making a request through an FBI-
approved Channel Partner is consistent with FBI submission 
procedures'').
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    The Exchange accordingly believes that under Rule 28 and applicable 
statutes, the Exchange has the authority to engage an FBI-approved 
Channel Partner for some or all of the fingerprinting processes 
described in the Rule. The Exchange believes that this proposed 
interpretation would ensure the Exchange's continued compliance with 
its Rules and applicable state and federal law.\9\
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    \9\ Access to the FBI's fingerprint-based database of criminal 
records is permitted only when authorized by law. Section 17(f)(2) 
of the Act explicitly directs the Attorney General to provide SROs 
designated by the Commission (e.g., the Exchange) with access to 
such criminal history record information. Further, as amended by the 
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 
Section 17(f)(2) specifically requires, inter alia, that employees 
of national securities exchanges be fingerprinted. New York's 
General Business Law also requires SROs to fingerprint employees 
``as a condition of employment,'' as well as certain non-employee 
service providers. N.Y. Gen. Bus. Law Sec.  359-e (McKinney).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\11\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest. The 
Exchange believes that the proposed stated interpretation would enable 
the Exchange to continue to identify and exclude persons with felony or 
misdemeanor conviction records that may pose a threat to the safety of 
Exchange personnel or the security of facilities and records, thereby 
enhancing business continuity, workplace safety and the security of the 
Exchange's operations and helping to protect investors and the public 
interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    Continuing to run fingerprint-based background checks is imperative 
for the Exchange and its affiliates, as this process helps to identify 
persons with criminal history records who may pose a threat to the 
safety of Exchange personnel and/or the security of Exchange facilities 
and records. This identification and screening process thus enhances 
business continuity,

[[Page 71853]]

workplace safety, and the security of the Exchange's operations. The 
use of an FBI-approved Channel Partner in some or all phases of this 
process is consistent with Rule 28 and applicable state and federal 
law, and in furtherance of the important objectives described herein. 
Additionally, the use of a Channel Partner is consistent with the 
fingerprinting method currently employed by other SROs.\12\ For all 
these reasons, the proposal is also designed to protect investors as 
well as the public interest.
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    \12\ See note 8, supra.
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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 proposed rule change 
would enhance the security of the Exchange's facilities and records 
without adding any burden on market participants and allow the Exchange 
continued compliance with its fingerprinting rules and with Section 
17(f)(2) of the Act as amended by the Dodd-Frank Act.\13\
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    \13\ See Section 929S of the Dodd-Frank Act.
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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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) \14\ of the Act and Rule 19b-4(f)(1) \15\ thereunder. The 
proposed rule change effects a change that constitutes a stated policy, 
practice or interpretation with respect to the meaning, administration, 
or enforcement of an existing rule.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEMKT-2015-76 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-NYSEMKT-2015-76. 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 10 a.m. and 3 
p.m. Copies of the filing will also be available for inspection and 
copying at the NYSE's principal office and on its Internet Web site at 
www.nyse.com. 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-2015-76 and should be submitted on or before December 8, 2015.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29290 Filed 11-16-15; 8:45 am]
BILLING CODE 8011-01-P