
[Federal Register Volume 80, Number 120 (Tuesday, June 23, 2015)]
[Notices]
[Pages 36006-36008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15364]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75193; File No. 4-668]


Joint Industry Plan; Notice of Filing of Amendment No. 2 to the 
National Market System Plan Governing the Process of Selecting a Plan 
Processor and Developing a Plan for the Consolidated Audit Trail by 
BATS Exchange, Inc., BATS-Y Exchange, Inc., BOX Options Exchange LLC, 
C2 Options Exchange, Incorporated, Chicago Board Options Exchange, 
Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX 
Exchange, Inc., Financial Industry Regulatory Authority, Inc., 
International Securities Exchange, LLC, ISE Gemini, LLC, Miami 
International Securities Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ OMX 
PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., 
New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.

June 17, 2015.

I. Introduction

    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 608 Thereunder,\2\ notice is hereby given that, 
on March 6, 2015, BATS Exchange, Inc., BATS-Y Exchange, Inc., BOX 
Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board 
Options Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA 
Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory 
Authority, Inc., International Securities Exchange, LLC, ISE Gemini, 
LLC, Miami International Securities Exchange LLC, NASDAQ OMX BX, Inc., 
NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock 
Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE 
Arca, Inc. (collectively, ``SROs'' or ``Participants''), filed with the 
Securities and Exchange Commission (the ``Commission'') a proposal to 
amend the Plan Governing the Process of Selecting a Plan Processor and 
Developing a Plan for the Consolidated Audit Trail (the ``Selection 
Plan'').
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
---------------------------------------------------------------------------

II. Background

    On September 3, 2013, the SROs filed for approval the Selection 
Plan \3\ to govern how the SROs would proceed

[[Page 36007]]

with formulating and submitting a national market system (``NMS'') plan 
to create, implement, and maintain a consolidated audit trail (``CAT 
NMS Plan'').\4\ The Selection Plan sets forth the process for the SROs 
to review, evaluate, and narrow down the Bids submitted in response to 
the SROs' request for proposals (``RFP'') for a Plan Processor to 
build, operate, administer, and maintain the consolidated audit trail, 
and ultimately for the SROs to select the Plan Processor.\5\ The 
Selection Plan was approved on February 21, 2014.\6\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 70892 (Nov. 15, 
2013), 78 FR 69910 (Nov. 21, 2013) (Notice of Selection Plan).
    \4\ See Securities Exchange Act Release No. 67457 (July 18, 
2012), 77 FR 45722 (Aug. 1, 2012) (Rule 613 Adopting Release).
    \5\ See Notice of Selection Plan, supra note 3.
    \6\ See Securities Exchange Act Release No. 71596 (Feb. 21, 
2014), 79 FR 11152 (Feb. 27, 2014) (Selection Plan Approval Order). 
On December 12, 2014, the SROs filed a proposed amendment to the 
Selection Plan, which was published for notice and comment in the 
Federal Register on February 11, 2015, to allow the SROs to accept 
revised Bids prior to Commission approval of the CAT NMS Plan, and 
to narrow the list of Shortlisted Bidders prior to Commission 
approval of the CAT NMS Plan (``Amendment No. 1''). See Securities 
Exchange Act Release No. 74223 (Feb. 6, 2015), 80 FR 7654 (Feb. 11, 
2015) (Notice of Amendment No. 1 to the Selection Plan). The 
Commission is separately issuing an approval order for Amendment No. 
1 concurrently with this Notice. See Securities Exchange Act Release 
No. 75192 (June 17, 2015).
---------------------------------------------------------------------------

    The SROs now propose to amend the Selection Plan to require an SRO 
that is a Bidding Participant \7\ to be recused from voting in any 
round by the Selection Committee to select the Plan Processor in which 
a Bid from or including such Bidding Participant or its Affiliate is 
being considered. A copy of the proposed amendment to the Selection 
Plan (``Amendment No. 2'') is attached as Exhibit A hereto. The 
Commission is publishing this notice to solicit comments from 
interested persons on proposed Amendment No. 2 to the Selection Plan.
---------------------------------------------------------------------------

    \7\ The Selection Plan defines ``Bidding Participant'' as a 
Participant that: (1) Submits a Bid; (2) is an Affiliate of an 
entity that submits a Bid; or (3) is included, or is an Affiliate of 
an entity that is included, as a Material Subcontractor as part of a 
Bid. See Notice of Selection Plan, supra note 3, Exhibit A at 2. The 
Selection Plan defines ``Participant'' as a party to the Selection 
Plan (i.e., an SRO). See id., Exhibit A at 3.
---------------------------------------------------------------------------

III. Description of the Plan

    Set forth in this Section III is the statement of the purpose of 
Amendment No. 2 to the Selection Plan, along with the information 
required by Rule 608(a)(4) and (5) under the Exchange Act,\8\ prepared 
and submitted by the SROs to the Commission.\9\
---------------------------------------------------------------------------

    \8\ See 17 CFR 242.608(a)(4) and (a)(5).
    \9\ See Letter from the Participants to Brent J. Fields, 
Secretary, Commission, dated March 4, 2015.
---------------------------------------------------------------------------

A. Background

    The Selection Plan, filed with the Commission on September 3, 
2013,\10\ and approved on February 21, 2014,\11\ governs the process 
for Participant review and vote for Bids for the role of Plan Processor 
for the CAT NMS Plan.\12\
---------------------------------------------------------------------------

    \10\ See Notice of Selection Plan, supra note 3.
    \11\ See Selection Plan Approval Order, supra note 6.
    \12\ The Participants also have filed a proposed amendment to 
the Selection Plan (Amendment No. 1) that would allow the 
Participants to accept revised Bids prior to the Commission's 
approval of the CAT NMS Plan, and to narrow the list of Shortlisted 
Bidders prior to the Commission's approval of the CAT NMS Plan. See 
Notice of Amendment No. 1 to the Selection Plan, supra note 6. 
Amendment No. 1 also requires recusal of a Bidding Participant from 
voting in the narrowing process if a Bid submitted by or including 
the Participant or an Affiliate of the Participant is a Shortlisted 
Bid.
---------------------------------------------------------------------------

    After gaining experience with the development process for the CAT 
NMS Plan, the Participants believe it is advisable to amend the 
Selection Plan to ensure that the Participants will be able to choose a 
Plan Processor without any potential conflict of interest raised by 
having a Participant vote in any round in the selection process where 
that Participant has submitted a Bid, a Bid has been submitted by an 
Affiliate of that Participant, or a Bid has been submitted that 
includes that Participant or its Affiliate, and any such Bid is under 
consideration in that round. The Participants propose amending the 
Selection Plan to require recusal of that Bidding Participant in any of 
those situations.
1. The Selection Plan Currently Requires Recusal on a Vote Only in the 
Second Round of the Selection Process
    Under the Selection Plan, a Bidding Participant is recused from a 
vote only in the second round of voting by the Selection Committee to 
select the Plan Processor (as set forth in Section VI(E)(4) of the 
Selection Plan) where that Participant has submitted a Bid, a Bid has 
been submitted by an Affiliate of that Participant, or a Bid has been 
submitted that includes that Participant or its Affiliate, and any such 
Bid is under consideration in that round.
2. Requiring Recusal on a Vote in all Rounds of the Selection Will 
Ensure That All Participants Voting on the Plan Processor Do Not Have 
Any Conflict of Interest
    As noted in the Selection Plan Approval Order, the Selection Plan 
as currently drafted balances the competing goals of ensuring all 
Participants participate meaningfully in the process of developing the 
CAT NMS Plan and mitigating potential conflicts of interest related to 
the involvement of Bidding Participants through information barriers 
and the voting limitations.\13\ Based on their experience with these 
measures as currently set forth in the Plan, the Participants believe 
that the Plan has adequately addressed the potential conflicts of 
interest related to Bidding Participants. Nonetheless, the Participants 
believe that requiring recusal in all rounds of the selection process 
will further the Participants' goal of ensuring the fair and impartial 
consideration and selection of the Plan Processor.
---------------------------------------------------------------------------

    \13\ See Selection Plan Approval Order, supra note 6 at 11157.
---------------------------------------------------------------------------

B. Requirements Pursuant to Rule 608(a)

1. Description of the Amendments to the Selection Plan
    The Participants propose amending the Selection Plan to prohibit a 
Bidding Participant from voting in any round to select the Plan 
Processor from among the Shortlisted Bidders where that Bidding 
Participant has submitted a Bid, a Bid has been submitted by an 
Affiliate of that Bidding Participant, or a Bid has been submitted that 
includes that Participant or its Affiliate, and any such Bid is under 
consideration in that round.
2. Governing or Constituent Documents
    Not applicable.
3. Implementation of Amendment
    The terms of the proposed amendment will be operative immediately 
upon approval of the amendment by the Commission.
4. Development and Implementation Phases
    Not applicable.
5. Analysis of Impact on Competition
    The proposed amendment does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Exchange Act. The SROs believe that the amendment further helps 
assure the fair and impartial consideration and selection of the Plan 
Processor for the CAT NMS Plan.
6. Written Understanding or Agreements Relating to Interpretation of, 
or Participation in, Plan
    Not applicable.
7. Statement that the Amendments Have Been Approved by the Plan 
Sponsors
    The Selection Plan provides that amendments to the Selection Plan 
shall

[[Page 36008]]

be effected by means of a written amendment that: (1) Sets forth the 
change, addition, or deletion; (2) is executed by over two-thirds of 
the Participants; and (3) is approved by the SEC pursuant to Rule 608, 
or otherwise becomes effective under Rule 608.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 242.608.
---------------------------------------------------------------------------

    The proposed amendment has been executed by all of the 
Participants, and has consequently been approved by the SROs.
8. Terms and Conditions of Access
    Not applicable.
9. Method of Determination and Imposition, and Amount of, Fees and 
Charges
    Not applicable.
10. Method and Frequency of Processor Evaluation
    Not applicable.
11. Dispute Resolution
    Not applicable.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the Amendment No. 
2 to the Selection Plan 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 4-668 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number 4-668. 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 Amendment to the Plan that are filed 
with the Commission, and all written communications relating to the 
Amendment to the Plan 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 10:00 a.m. and 
3:00 p.m. Copies of the submission will also be available for 
inspection and copying at the Participants' principal offices. 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 4-668 and should be submitted 
on or before July 23, 2015.

    By the Commission.
Brent J. Fields,
Secretary.

Exhibit A

    Proposed new language is italicized; proposed deletions are in 
[brackets].

PROPOSED AMENDMENT TEXT

    Additions underlined; deletions bracketed \15\
---------------------------------------------------------------------------

    \15\ The marked additions and deletions show the proposed 
changes to the current Selection Plan without taking into account 
Amendment No.1. The effect of the proposed additions and deletions 
on the Selection Plan, taking into account Amendment No. 1, would be 
renumbering Section V.(B)(3) as Section V.(B)(4).
---------------------------------------------------------------------------

Plan Processor Evaluation and Selection Plan

V. Selection Committee

    * * *

(B) Voting

    * * *
    (3) No Bidding Participant shall vote in any [the second] round set 
forth [in Section VI(E)(4)] below if a Bid submitted by or including 
the Participant or an Affiliate of the Participant is a part of such 
[the second] round.
    * * *

VI. RFP Bid Evaluation and Plan Processor Selection

    * * *

(E) Selection of Plan Processor Under the CAT NMS Plan

    * * *
    (2) Each Participant shall have one vote in each round, except that 
no Bidding Participant shall be entitled to vote in any [the second] 
round if the Participant's Bid, a Bid submitted by an Affiliate of the 
Participant, or a Bid including the Participant or an Affiliate of the 
Participant is considered in such [the second] round. [Until the second 
round, Bidding Participants may vote for any Shortlisted Bid.]
    (3) First Round Voting by the Selection Committee
    (a) In the first round of voting, each Voting Senior Officer, 
subject to the recusal provisions in Paragraph (E)(2) above, shall 
select a first and second choice from among the Shortlisted Bids.
    * * *

[FR Doc. 2015-15364 Filed 6-22-15; 8:45 am]
 BILLING CODE 8011-01-P


