Document ID: SEC-2020-1491-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2020-09-17T04:00Z

[Federal Register Volume 85, Number 181 (Thursday, September 17, 2020)]
[Notices]
[Pages 58081-58082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20475]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89836; File No. 4-764]

Self-Regulatory Organizations; MEMX, LLC; Order Declaring 
Effective a Minor Rule Violation Plan

September 11, 2020.
    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'' or ``Plan'') pursuant to Section 
19(d)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19d-1(c)(2) thereunder.\2\ The proposed MRVP was published for public 
comment on August 11, 2020.\3\ This order declares the Exchange's 
proposed MRVP effective.\4\
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    \1\ 15 U.S.C. 78s(d)(1).
    \2\ 17 CFR 240.19d-1(c)(2).
    \3\ See Securities Exchange Act Release No. 89485 (August 5, 
2020), 85 FR 48577 (``Notice''). The Commission received one comment 
letter that was not germane to the proposal. See letter dated August 
24, 2020, from Angela N B.
    \4\ Terms not otherwise defined herein are defined in the 
Exchange Rules.
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    The Exchange's MRVP specifies the rule violations which will be 
included in the Plan and will have sanctions not exceeding $2,500. Any 
violations which are resolved under the MRVP would not be subject to 
the provisions of Rule 19d-1(c)(1) of the Act,\5\ which requires 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.\6\ In accordance with Rule 19d-1(c)(2) under 
the Act,\7\ the Exchange proposed to designate certain specified rule 
violations as minor rule violations, and requested 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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    \5\ 17 CFR 240.19d-1(c)(1).
    \6\ The Commission adopted amendments to paragraph (c) of Rule 
19d-1 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.
    \7\ 17 CFR 240.19d-1(c)(2).
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    The Exchange proposed 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'').\8\ 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

[[Page 58082]]

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.\9\
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    \8\ The Exchange received its grant of registration on May 4, 
2020, which included the rules that govern the Exchange. 
Contemporaneous with this submission, the Exchange filed with the 
Commission a rule filing that proposed 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 proposed the Exchange's MRVP, including those proposed 
changes to Rules 8.15 and 8.15.01. See Securities Exchange Act 
Release No. 89509 (August 7, 2020), 85 FR 49407 (August 13, 2020) 
(SR-MEMX-2020-03).
    \9\ See, Notice, supra note 3.
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    Once MEMX's MRVP is effective, 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 sanction imposed, the number of 
times the rule violation occurred, and the date of the disposition.
    The Commission finds that the proposal is consistent with the 
public interest, the protection of investors, and otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act,\10\ because the MRVP will permit the Exchange to carry 
out its oversight and enforcement responsibilities as an SRO more 
efficiently in cases where full disciplinary proceedings are not 
necessary due to the minor nature of the particular violation.
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    \10\ 17 CFR 240.19d-1(c)(2).
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    In declaring the Exchange's MRVP effective, the Commission in no 
way minimizes the importance of compliance with Exchange rules and all 
other rules subject to the imposition of sanctions under Exchange Rule 
8.15. The Commission believes that the violation of an SRO's rules, as 
well as Commission rules, is a serious matter. However, Exchange Rule 
8.15 provides a reasonable means of addressing violations that do not 
rise to the level of requiring formal disciplinary proceedings, while 
providing greater flexibility in handling certain violations. The 
Commission expects that the Exchange will continue to conduct 
surveillance and make determinations based on its findings, on a case-
by-case basis, regarding whether a sanction under the MRVP is 
appropriate, or whether a violation requires formal disciplinary 
action.
    It is therefore ordered, pursuant to Rule 19d-1(c)(2) under the 
Act,\11\ that the proposed MRVP for MEMX LLC, File No. 4-764, be, and 
hereby is, declared effective.
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    \11\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(44).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20475 Filed 9-16-20; 8:45 am]
BILLING CODE 8011-01-P