
[Federal Register Volume 82, Number 77 (Monday, April 24, 2017)]
[Notices]
[Pages 18942-18943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08162]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80477; File No. 4-707]


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

April 18, 2017.
    On March 9, 2017, ISE Mercury, LLC (``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 March 21, 2017.\3\ The Commission received no comments on 
the proposal. This order declares the Exchange's proposed MRVP 
effective.
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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. 80259 (March 16, 
2017), 82 FR 14556 (``Notice'').
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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,\4\ 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.\5\ In accordance with Rule 19d-1(c)(2) under 
the Act,\6\ 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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    \4\ 17 CFR 240.19d-1(c)(1).
    \5\ 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.
    \6\ 17 CFR 240.19d-1(c)(2).
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    The Exchange proposed to include in its MRVP the procedures and 
violations currently included in Exchange Rule 1614 (``Imposition of 
Fines for Minor Rule Violations''), which had been incorporated by 
reference from the International Securities Exchange's rule book.\7\ 
According to the Exchange's proposed MRVP, under Exchange Rule 1614, 
the Exchange may impose a fine (not to exceed $2,500) on any Member, or 
person associated with or employed by a Member, for any rule listed in 
Rule 1614(d).\8\ The Exchange shall serve the person against whom a 
fine is imposed with a written statement setting forth the rule or 
rules violated, the act or omission constituting each such violation, 
the fine imposed, and the date by which such determination becomes 
final or by which such determination must be contested. If the person 
against whom the fine is imposed pays the fine, such payment shall be 
deemed to be a waiver of such person's right to a disciplinary 
proceeding and any review of the matter under the Exchange rules. Any 
person against whom a fine is imposed may contest the Exchange's 
determination by filing with the Exchange a written answer, at which 
point the matter shall become a disciplinary proceeding.
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    \7\ The Exchange received its grant of registration on January 
29, 2016, which included approving the rules that govern the 
Exchange. See Securities Exchange Act Release No. 76998 (Jan. 29, 
2016), 81 FR 6066 (Feb. 4, 2016).
    \8\ Under the proposed MRVP, violations of the following rules 
would be appropriate for disposition under the MRVP: Rule 412 
(Position Limits); Rule 1403 (Focus Reports); Rule 1404 (Requests 
for Trade Data); Rule 723 (Price Improvement Mechanism for Crossing 
Transactions); Rule 717 (Order Entry); Rule 803 (Quotation 
Parameters); Rule 805 (Execution of Orders in Appointed Options); 
Rule 419 (Mandatory Systems Testing); Rule 1100 (Exercise of Options 
Contracts); Rule 415 (Reports Related to Position Limits); and Rule 
804(e) (Continuous Quotes). See Notice, supra note 3.
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    Once the Exchange'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.\9\
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    \9\ The Exchange attached a sample form of the quarterly report 
with its submission to the Commission.
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    The Commission finds that the proposal is consistent with the 
public interest, the protection of investors, or 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 
1614. The Commission believes that the violation of an SRO's rules, as 
well as Commission rules, is a serious matter. However, Exchange Rule 
1614 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 ISE Mercury, LLC, File No. 4-707, 
be, and hereby is, declared effective.
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    \11\ Id.


[[Page 18943]]


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    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08162 Filed 4-21-17; 8:45 am]
BILLING CODE 8011-01-P


