Document ID: SEC-2020-1281-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2020-08-11T04:00Z

[Federal Register Volume 85, Number 155 (Tuesday, August 11, 2020)]
[Notices]
[Pages 48577-48579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17453]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89485; File No. 4-764]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing of 
Proposed Minor Rule Violation Plan

August 5, 2020.
    Pursuant to Section 19(d)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19d-l(c)(2) thereunder,\2\ notice is hereby 
given that on August 5, 2020, MEMX LLC (``MEMX'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
proposed minor rule violation plan (``MRVP'') with sanctions not 
exceeding $2,500 which would not be subject to the provisions of Rule 
19d-1(c)(1) of the Act \3\ requiring that a self-regulatory 
organization (``SRO'') promptly file notice with the Commission of any 
final disciplinary action taken with respect to any person or 
organization.\4\ In

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accordance with Rule 19d-l(c)(2) under the Act, the Exchange proposes 
to designate certain specified rule violations as minor rule violations 
and requests that it be relieved of the prompt reporting requirements 
regarding such violations, provided it gives notice of such violations 
to the Commission on a quarterly basis.
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    \1\ 15 U.S.C. 78s(d)(1).
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ 17 CFR 240.19d-1(c)(1).
    \4\ The Commission adopted amendments to paragraph (c) of Rule 
19d-l to allow SROs to submit for Commission approval plans for the 
abbreviated reporting of minor disciplinary infractions. See 
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR 
23828 (June 8, 1984). Any disciplinary action taken by an SRO 
against any person for violation of a rule of the SRO which has been 
designated as a minor rule violation pursuant to such a plan filed 
with and declared effective by the Commission is not considered 
``final'' for purposes of Section 19(d)(1) of the Act if the 
sanction imposed consists of a fine not exceeding $2,500 and the 
sanctioned person has not sought an adjudication, including a 
hearing, or otherwise exhausted his administrative remedies.
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    The Exchange proposes to include in its MRVP the procedures 
included in Exchange Rule 8.15 (``Imposition of Fines for Minor 
Violation(s) of Rules'') and the violations included in Rule 8.15.01 
(``List of Exchange Rule Violations and Recommended Fine Schedule 
Pursuant to Rule 8.15'').\5\ According to the Exchange's MRVP, under 
Rule 8.15(a), the Exchange may impose a fine (not to exceed $2,500) on 
any Member, associated person of a Member, or registered or non-
registered employee of a Member, for any violation of a Rule of the 
Exchange which violation the Exchange shall have determined is minor in 
nature, as set forth in Rule 8.15.01. The Exchange may aggregate 
similar violations generally if the conduct was unintentional, there 
was no injury to public investors, or the violations resulted from a 
single systemic problem or cause that has been corrected. In any action 
taken by the Exchange pursuant to Rule 8.15, the person against whom a 
fine is imposed shall be served with a written statement, signed by an 
authorized officer of the Exchange, setting forth (i) the Rule or Rules 
alleged to have been violated; (ii) the act or omission constituting 
each such violation; (iii) the fine imposed for each such violation; 
and (iv) the date by which such determination becomes final and such 
fine becomes due and payable to the Exchange. Pursuant to paragraph (c) 
of Rule 8.15, if the person against whom a fine is imposed pursuant to 
Rule 8.15 pays such fine, that payment shall be deemed to be a waiver 
by of such person's right to a disciplinary proceeding under Rules 8.1 
through 8.13 and any review of the matter by the Appeals Committee or 
by the Board. Any person against whom a fine is imposed pursuant to 
Rule 8.15 may contest such a finding pursuant to paragraph (d) of Rule 
8.15 by filing with the Exchange not later than the date by which such 
determination must be contested (such date to be not less than 15 
business days after the date of service of the written statement by the 
Exchange) a written response meeting the requirements provided in Rule 
8.5 at which point the matter shall become a disciplinary proceeding 
subject to the provisions of Rules 8.1 through 8.13.
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    \5\ The Exchange received its grant of registration on May 4, 
2020, which included approving the rules that govern the Exchange. 
Exhibit A includes the entirety of Rules 8.15 and 8.15.01. Terms not 
otherwise defined herein are defined in the Exchange Rules. 
Contemporaneous with this filing, the Exchange filed with the 
Commission a rule filing that proposes a minor amendment to Rule 
8.15(a) and a proposed change to Rule 8.15.01 to add Rules 4.5 
through 4.16 (Consolidated Audit Trail Compliance Rules). This 
submission proposes the Exchange's MRVP, including those proposed 
changes to Rules 8.15 and 8.15.01. See SR-MEMX-2020-03, filed July 
31, 2020, available at: https://info.memxtrading.com/category/rule-filings/.
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    The Exchange proposes that, as set forth in Exchange Rule 8.15.01, 
violations of the following rules would be appropriate for disposition 
under the MRVP: Rule 4.2 and Interpretations thereunder (requiring the 
submission of responses to Exchange requests for trading data within 
specified time period); Rule 11.10(a)(5) (requirement to identify short 
sale orders as such); Rule 11.10(f) (requirement to comply with locked 
and crossed market rules); Rule 3.5 (Advertising Practices); Rule 12.11 
Interpretations and Policy .01 and Exchange Act Rule 604 (failure to 
properly display limit orders); Rule 4.2 and Interpretations thereunder 
(related to the requirement to furnish Exchange-related order, market 
and transaction data, as well as financial or regulatory records and 
information); Rule 11.20(a)(1) (requirement for Market Makers to 
maintain continuous two-sided quotations); and Rules 4.5 through 4.16 
(Consolidated Audit Trail Compliance Rules).
    Upon the Commission's declaration of effectiveness of the MRVP, the 
Exchange will provide to the Commission a quarterly report for any 
actions taken on minor rule violations under the MRVP. The quarterly 
report will include: The Exchange's internal file number for the case, 
the name of the individual and/or organization, the nature of the 
violation, the specific rule provision violated, the fine imposed, the 
number of times the rule violation occurred, and the date of the 
disposition.
    Based on compliance with the above, the Exchange requests that the 
rule violations designated in Exchange Rule 8.15.01 be designated as 
minor rule violations subject to a minor rule violation reporting plan 
and that the Exchange be relieved of the current reporting requirements 
regarding such violations. In addition, going forward, to the extent 
that there are any changes to the rules applicable to the Exchange's 
MRVP, the Exchange requests that the Commission deem such changes to be 
modifications to the Exchange's MRVP.

I. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the Exchange's proposed MRVP, including whether 
the proposed MRVP 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 4-764 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 4-764. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed MRVP that are filed with the 
Commission, and all written communications relating to the proposed 
MRVP between the Commission and any person, other than those that may 
be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for website viewing and printing in the 
Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the proposed MRVP also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number 4-764, and should be submitted 
on or before August 26, 2020.

II. Date of Effectiveness of the Proposed Minor Rule Violation Plan and 
Timing for Commission Action

    Pursuant to Section 19(d)(l) of the Act and Rule 19d-l(c)(2) 
thereunder,\6\ after

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August 26, 2020, the Commission may, by order, declare the Exchange 
proposed MRVP effective if the plan is consistent with the public 
interest, the protection of investors, or otherwise in furtherance of 
the purposes of the Act. The Commission in its order may restrict the 
categories of violations to be designated as minor rule violations and 
may impose any other terms or conditions to the proposed MRVP, File No. 
4-764, and to the period of its effectiveness, which the Commission 
deems necessary or appropriate in the public interest, for the 
protection of investors or otherwise in furtherance of the purposes of 
the Act.
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    \6\ 15 U.S.C. 78s(d)(1); 17 CFR 240.19d-1(c)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(44).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-17453 Filed 8-10-20; 8:45 am]
BILLING CODE 8011-01-P