Document ID: SEC-2017-1405-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Bats BZX Exchange, Inc.
Posted Date: 2017-08-18T04:00Z

[Federal Register Volume 82, Number 159 (Friday, August 18, 2017)]
[Notices]
[Pages 39473-39475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17432]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81387; File No. SR-BatsBZX-2017-50]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 

Filing of a Proposed Rule Change To Extend the Implementation Date For 

Certain Changes to Exchange Rules 14.11 and 14.12

August 14, 2017.

    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 July 31, 2017, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') 

filed with the Securities and Exchange Commission (``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\ 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

    The Exchange filed a proposal to extend the date on which certain 

changes to Exchange Rules 14.11 and 14.12 would be implemented.

    The text of the proposed rule change is available at the Exchange's 

Web site at www.bats.com, at the principal office of the Exchange, and 

at the Commission's Public Reference Room.

[[Page 39474]]

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

    On November 18, 2016 the Exchange filed a proposed rule change, as 

subsequently amended by Amendments No. 1 and 2 thereto (as amended, the 

``Proposed Rule Change''), to adopt certain changes to Exchange Rules 

14.11 and 14.12 to add additional continued listing standards for 

exchange-traded products (``ETP'') as well as clarify the procedures 

that the Exchange will undertake when an ETP is noncompliant with 

applicable rules. Given the scope of the amendments specified in the 

Proposed Rule Change, the Exchange proposed that such amendments not be 

implemented until October 1, 2017. On March 7, 2017, the Commission 

granted approval of the Proposed Rule Change, including the October 1, 

2017 implementation date. The Exchange now proposes to extend the 

implementation date of the amendments specified in the Proposed Rule 

Change to July 1, 2018.\3\

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    \3\ See Securities Exchange Act Release No. 80169 (March 7, 

2017), 82 FR 13536 (March 13, 2017) (SR-BatsBZX-2016-80).

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    Since the Proposed Rule Change was approved, the Exchange has 

engaged in extensive conversations with issuers of listed ETPs, 

industry advocacy groups and index providers to discuss the new rule 

requirements and offer guidance on rule interpretation and application. 

As a result of these conversations, ETP issuers have expressed concern 

about their ability to have in place systems and procedures to ensure 

compliance by the current October 1, 2017 implementation date. In 

particular, listed ETP issuers, and industry advocacy groups on their 

behalf, have explained that issuers will require time to design and 

test new compliance systems as well as engage in discussions with 

third-party providers to source and track new data elements required 

for rule compliance.\4\

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    \4\ See, for example, Letter, dated July 11, 2017, from Dorothy 

Donohue, Acting General Counsel, Investment Company Institute to 

Brent J. Fields, Secretary, Securities and Exchange Commission, 

available at https://www.sec.gov/comments/sr-nasdaq-2016-135/nasdaq2016135-1846208-155175.pdf.

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    The Exchange believes it is appropriate to extend the 

implementation date of the Proposed Rule Change to July 1, 2018 to 

provide listed ETP issuers with the time needed to develop and test 

their compliance procedures. In support of its proposal, the Exchange 

notes that the Proposed Rule Change imposes significant new compliance 

requirements on issuers that they have not been subject to previously. 

To meet these new compliance requirements, issuers must develop 

internal systems as well as coordinate with third-party service 

providers, such as index providers, to develop procedures by which they 

can obtain essential data. Listed issuers have informed the Exchange 

that they are unable to complete this extensive project by the pending 

October 1, 2017 implementation date. The Exchange believes that it is 

critical for listed ETP issuers to have the appropriate procedures and 

systems in place to monitor and evidence ETP compliance with the new 

continued listing rules before such rules are implemented. Therefore, 

the Exchange proposes to extend the implementation date for the 

Proposed Rule Change until July 1, 2018.

2. Statutory Basis

    The Exchange believes that the proposal is consistent with Section 

6(b) of the Act \5\ in general and Section 6(b)(5) of the Act \6\ in 

particular in that it is 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, 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.

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    \5\ 15 U.S.C. 78f [sic].

    \6\ 15 U.S.C. 78f(b)(5).

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    The Exchange believes that the proposed amendment is consistent 

with the protection of investors because it will enable listed issuers 

to have the systems and procedures needed to monitor and evidence 

compliance with the Proposed Rule Change prior to such rule being 

implemented. Providing listed issuers with additional time to ensure 

that they have adequate compliance systems in place furthers the 

protection of investors and the public interest because it will enhance 

investor confidence that listed issuers are complying with Exchange 

rules.

    For the above reasons, the Exchange believes that the proposed rule 

change is consistent with the requirements of Section 6(b)(5) of the 

Act.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 

impose any burden on competition that is not necessary or appropriate 

in furtherance of the purpose of the Act. The Exchange notes that the 

proposed rule change will facilitate listed ETP issuers' ability to 

monitor and evidence compliance with approved continued listing rules 

by providing issuers with additional time to develop and test their 

internal systems and procedures prior to the implementation date.

(C) Self-Regulatory Organization's Statement on Comments on the 

Proposed Rule Change Received From Members, Participants or Others

    The Exchange received a copy of a letter from the Investment 

Company Institute, on behalf of listed ETP issuers, to the Securities 

Exchange [sic] Commission.\7\ As described in Item 3 [sic], above, the 

Investment Company Institute detailed challenges that listed ETP 

issuers are facing in developing compliance systems to address the 

amendments contained in the Proposed Rule Change and have requested 

that the implementation date for such amendments be extended to July 1, 

2018.

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    \7\ See Footnote 4, infra. [sic]

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

Commission Action

    Within 45 days of the date of publication of this notice in the 

Federal Register or within such longer period up to 90 days (i) as the 

Commission may designate if it finds such longer period to be 

appropriate and publishes its reasons for so finding, or (ii) as to 

which the self-regulatory organization consents, the Commission will:

    (A) By order approve or disapprove the proposed rule change; or

    (B) institute proceedings to determine whether the proposed rule 

change should be disapproved.

[[Page 39475]]

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-BatsBZX-2017-50 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-BatsBZX-2017-50. 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 such 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-BatsBZX-2017-50 and should be 

submitted on or before September 8, 2017.

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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 

pursuant to delegated authority.\8\

Eduardo A. Aleman,

Assistant Secretary.

[FR Doc. 2017-17432 Filed 8-17-17; 8:45 am]

BILLING CODE 8011-01-P