Document ID: SEC-2014-1839-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2014-11-03T05:00Z

[Federal Register Volume 79, Number 212 (Monday, November 3, 2014)]
[Notices]
[Pages 65271-65273]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26007]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73446; File No. SR-BX-2014-050]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Collection of Exchange Fees

October 28, 2014.
    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 October 16, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III 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 proposes to amend Exchange Rule 7011, which is 
currently reserved, and entitle it ``Collection of Exchange Fees and 
Other Claims'' and require each BX member, and all applicants for 
registration as such, to provide a clearing account number for an 
account at the National Securities Clearing Corporation (``NSCC'') for 
purposes of permitting the Exchange to debit certain fees, fines, 
charges and/or other monetary sanctions or other monies due and owing 
to the Exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxbx.cchwallstreet.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 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

[[Page 65272]]

the most significant aspects of such statements.

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

1. Purpose
    The purpose of the proposed rule change is to amend Rule 7011 to 
require BX members, and all applicants for registration as such, to 
provide a clearing account number for an account at NSCC for purposes 
of permitting the Exchange to debit any undisputed or final fees, 
fines, charges and/or other monetary sanctions or other monies due and 
owing to the Exchange or other charges related to certain 7000 series 
rules \3\ and the 8000 \4\ series rules which are due and owing to BX. 
The Exchange would entitle Rule 7011 ``Collection of Exchange Fees and 
Other Claims.''
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    \3\ The 7000 series rules in the BX Rulebook list charges for 
membership, services and equipment. Only the Rules which require 
payment to the Exchange would be subject to direct debit. By way of 
example, Rule 7003, Registration and Processing Fees, fees are 
collected by FINRA.
    \4\ The 8000 series rules in the BX Rulebook list sanctions 
associated with disciplinary actions. Any disciplinary fines or 
sanctions collected pursuant to the 8000 series shall be subject to 
direct debit to the extent described within this rule change. See 
also note 6 for exceptions to debits.
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    Currently, the Exchange requires all Options Participants to 
provide such an NSCC account number.\5\ The Exchange believes that the 
proposed debiting process for BX members that conduct an equities 
business would create an efficient method of collecting undisputed or 
final fees, fines, charges and/or other monetary sanctions or monies 
due and owing to the Exchange.\6\ Further, this proposal would provide 
a cost savings to the Exchange in that it would alleviate 
administrative processes related to the collection of monies owed to 
the Exchange by BX members conducting an equities business, as it does 
today for BX Options Participants. Collection matters divert staff 
resources away from the Exchange's regulatory and business purposes. In 
addition, the debiting process would prevent BX member accounts from 
becoming overdue.
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    \5\ See Chapter XV, Section 1 in the BX Rules.
    \6\ The Exchange will not debit accounts for fees that are 
unusually large or for special circumstances, unless such debiting 
is requested by the BX member.
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    The Exchange proposes to require BX members and applicants to 
provide a clearing account number for an account at NSCC in order to 
permit the Exchange to debit any undisputed or final fees, fines, 
charges and/or monetary sanctions or other monies due and owing to the 
Exchange or other charges related to the 7000 series rules, as 
specified below, and the 8000 series rules. Specifically, the following 
7000 series rules will be subject to proposed Rule 7011: 7001 
(Membership Fees), 7015 (Access Services), 7016 (BX Pre-Trade Risk 
Management), 7018 (NASDAQ OMX BX Equities System Order Execution and 
Routing), 7021 (BX Trading and Compliance Data Package Fee), 7027 
(Aggregation of Activity of Affiliated Members), 7029 (Installation, 
Removal or Relocation), 7030 (Other Services), 7034 (Co-Location 
Services), 7051 (Direct Connectivity to BX), 7055 (Short Sale Monitor), 
7058 (QView).
    The Exchange would send a monthly invoice \7\ to each BX member on 
approximately the 3th-10th business day of the following month.\8\ The 
Exchange would also send a file to NSCC each month on approximately the 
23rd of the following month to initiate the debit of the appropriate 
amount stated on the BX member's invoice for the prior month. Because 
the BX member would receive an invoice well before any monies are 
debited (normally within two weeks), the BX member would have adequate 
time to contact the staff with any questions concerning its invoice. If 
a BX member disagrees with the invoice, the Exchange would not commence 
the debit until the dispute is resolved. Specifically, the Exchange 
will not include the disputed amount in the debit if the member has 
disputed the amount in writing to the Exchange's designated staff by 
the 15th of the month, or the following business day if the 15th is not 
a business day, and the amount in dispute is at least $10,000 or 
greater.
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    \7\ The monthly invoice will indicate that the amount on the 
invoice will be debited from the designated NSCC account. Each 
month, the Exchange will send a file to the BX member's clearing 
firm which will indicate the amounts to be debited from each member. 
If a BX member is ``self-clearing'', no such file would be sent as 
the member would receive the invoice, as noted above, which would 
indicate the amount to be debited.
    \8\ BX members may receive invoices either electronically, by 
mail or by both methods.
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    Once NSCC receives the file from the Exchange, NSCC would proceed 
to debit the amounts indicated from the clearing members account. In 
the instance where the BX member clears through an Exchange clearing 
member, the estimated transaction fees owed to the Exchange are 
typically debited by the clearing member on a daily basis in order to 
ensure adequate funds have been escrowed. The Exchange would debit any 
monies owed including undisputed or final fees, fines, charges and/or 
monetary sanctions or monies due and owed to the Exchange.\9\ The 
Exchange believes that the debit process would eliminate the risk of 
unpaid invoices because of the large amounts of capital held at NSCC by 
BX members.
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    \9\ This includes, among other things, fines and sanctions which 
result from disciplinary proceedings or actions taken pursuant to 
the 8000 series of BX Rules. With respect to disciplinary 
proceedings, the Exchange would not debit any monies until such 
action is final. The Exchange would not consider an action final 
until all appeal periods have run and/or all appeal timeframes are 
exhausted. With respect to non-disciplinary actions, the Exchange 
would similarly not take action to debit a member account until all 
appeal periods have run and/or all appeal timeframes are exhausted. 
Any uncontested disciplinary or non-disciplinary actions will be 
debited, and the amount due will appear on the BX member's invoice 
prior to the actual NSCC debit.
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    The Exchange proposes this rule change become operative with 
respect to December 2014 billing. The Exchange will debit December 2014 
billing in January 2015 pursuant to the process described in this rule 
change.\10\ The Exchange will notify BX members of this rule change in 
an Equity Trader Alert to provide its members ample time to provide the 
Exchange with the information necessary for the direct debit and 
prepare for the change to the collection process. BX members will be 
required to provide an NSCC number prior to January 1, 2015.
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    \10\ The initial debit will include all outstanding fees through 
December 2014.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \11\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \12\ 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 by providing BX members with 
an efficient process to pay undisputed or final fees, fines, charges 
and/or monetary sanctions or monies dues and owing to the Exchange.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal to debit NSCC accounts is 
reasonable because it would ease the BX member's administrative burden 
in paying monthly invoices, avoid overdue balances and provide same day 
collection from all BX members who owe monies to the Exchange.

[[Page 65273]]

    The Exchange believes that its proposal to debit NSCC accounts is 
equitable and not unfairly discriminatory because it will apply to all 
BX members in a uniform manner. Today, the debit process is applied to 
all Options Participants.

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 purposes of the Act. With this proposal, the 
proposed debit process would apply uniformly to all BX members as it 
does today with all Options Participants.
    Further, this proposal would provide a cost savings to the Exchange 
in that it would alleviate administrative processes related to the 
collection of monies owed to the Exchange for BX members conducting an 
equities business, as it does today for BX Options Participants. 
Collection matters divert staff resources away from the Exchange's 
regulatory and business purposes. In addition, the debiting process 
would prevent BX member accounts from becoming overdue.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not significantly 
affect the protection of investors or the public interest; does not 
impose any significant burden on competition; and by its terms does not 
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) \13\ of the Act and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 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 shall institute 
proceedings to determine whether the proposed rule 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-BX-2014-050 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-BX-2014-050. 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 also will be available 
for inspection and copying at the principal offices 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-BX-2014-050, 
and should be submitted on or before November 24, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-26007 Filed 10-31-14; 8:45 am]
BILLING CODE 8011-01-P