Document ID: SEC-2016-1399-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange LLC
Posted Date: 2016-08-11T04:00Z

[Federal Register Volume 81, Number 155 (Thursday, August 11, 2016)]
[Notices]
[Pages 53174-53176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19052]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78482; File No. SR-IEX-2016-06]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Rule 11.270(c) Concerning Clearly Erroneous Executions

August 5, 2016.
    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 July 28, 2016, the Investors Exchange LLC (``IEX'' or 
the ``Exchange'') 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 Exchange. 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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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) under the Securities 
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ 
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change to correct the chart in Rule 11.270(c), which sets forth the 
numerical guidelines for determining if a transaction that is the 
subject of a complaint shall be found to be clearly erroneous, to 
specify such guidelines for leveraged exchange traded funds (``ETF'') 
and exchange traded notes (``ETN''). The Exchange has designated this 
rule change as ``non-controversial'' under Section 19(b)(3)(A) of the 
Act \6\ and provided the Commission with the notice required by Rule 
19b-4(f)(6) thereunder.\7\
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CRF 240.19b-4.
    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4.
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    The text of the proposed rule change is available at the Exchange's 
Web site at www.iextrading.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 these statement [sic] may be examined 
at the places specified in Item IV below. The self-regulatory 
organization has prepared summaries, set forth in Sections A, B, and C 
below, of the most significant aspects of such statements.

[[Page 53175]]

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule filing is to correct the chart in 
Rule 11.270(c), which sets forth the numerical guidelines for 
determining if a transaction that is the subject of a complaint shall 
be found to be clearly erroneous, to specify such guidelines for 
leveraged ETFs and ETNs. Due to an oversight, the last line of the 
chart, entitled ``Leveraged ETF/ETN'' does not contain all necessary 
language with respect to the applicable numerical guidelines. 
Accordingly, IEX proposes to amend the chart so that the last line 
provides that the numerical guidelines during regular market hours, as 
well as the Pre-Market Session and Post-Market Session, shall be the 
``Regular Market Hours Numerical Guidelines multiplied by the leverage 
multiplier (i.e., 2x).''
    The Exchange notes that Rule 11.270 is substantially identical to 
Bats BZX Exchange, Inc. f/k/a BATS Exchange, Inc. (``BZX'') Rule 11.17, 
which in turn is substantially identical to corresponding rules of the 
other U.S. securities exchanges that trade equities securities and of 
the Financial Industry Regulatory Authority, Inc. (``FINRA'').\8\ 
Accordingly, the Exchange believes that it is appropriate to amend Rule 
11.270(c) to correct the chart contained therein.
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    \8\ See, e.g., BZX Rule 11.17.
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \9\ of the Act in general, and furthers the 
objectives of Section 6(b)(5) of the Act \10\ in particular, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest. The Exchange believes it is appropriate to make the 
correction to the chart in Rule 11.270(c) so that the correct guideline 
is used in its rules. Additionally, the correction will create 
consistency with the rules of other equities exchanges and eliminate 
confusion in its rules. In this regard, FINRA and the equities 
exchanges have adopted substantially identical rules relating to 
clearly erroneous transactions to provide consistency in the handling 
of such transactions. As noted above, the proposed correction will 
assure that Rule 11.270 is substantially identical to, and consistent 
with, the rules relating to clearly erroneous transactions of FINRA and 
the other equities exchanges.\11\ The Exchange believes that it is 
appropriate to make the specified correction to alleviate any confusion 
among market participants.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
    \11\ See supra note 8 and accompanying text.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    IEX does not believe that the proposed rule change will result in 
any burden on competition because IEX is merely correcting its rule to 
correct an inadvertent omission of necessary text.

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.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has designated this rule filing as non-controversial 
under Section 19(b)(3)(A) \12\ of the Act and Rule 19b-4(f)(6) \13\ 
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 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 and Rule 19b-
4(f)(6) thereunder.\14\ The Exchange notes that its proposal corrects 
an inadvertent omission and has asked the Commission to waive the 30-
day operative delay, making this proposal operative upon filing. As 
noted above, IEX's proposal adds rule text to IEX Rule 11.270(c) that 
IEX inadvertently omitted, which conforms IEX's rule to the 
substantially identical BZX rule. As this proposal will correct the 
error in IEX's rule, it should alleviate any potential confusion among 
market participants. For this reason, the Commission believes that 
waiver of the operative delay is consistent with the protection of 
investors and the public interest and waiver will allow IEX to update 
its rule without undue delay. Therefore, the Commission hereby waives 
the operative delay and designates the proposal operative upon 
filing.\15\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 15 U.S.C. 78s(b)(3)(A) and 17 CFR 240.19b-4(f)(6), 
respectively. In addition, Rule 19b-4(f)(6) requires a self-
regulatory organization to give the Commission written notice of its 
intent to file 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 has 
satisfied this requirement.
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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.

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-IEX-2016-06 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-IEX-2016-06. 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

[[Page 53176]]

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 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-IEX-2016-06, and should be submitted on or before 
September 1, 2016.
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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\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2016-19052 Filed 8-10-16; 8:45 am]
 BILLING CODE 8011-01-P