Rules of Practice Governing Disapproval Proceedings for SRO Proposed Rule

Rules of Practice Governing Disapproval Proceedings for SRO Proposed Rule

Change Filings and For Proposed NMS Plans and Plan Amendments

Reg. §201.100.

Scope of the Rules of Practice.

(a) Unless provided otherwise, these Rules of Practice govern proceedings before the

Commission under the statutes that it administers.

(b) These rules do not apply to:

(1) Investigations, except where made specifically applicable by the Rules Relating to

Investigations, part 203 of this chapter; or

(2) Action taken by the duty officer pursuant to delegated authority under 17 CFR

200.43.

(3) Initiation of proceedings for SRO proposed rule changes under 17 CFR 201.700701, except where made specifically applicable therein.

(c) The Commission, upon its determination that to do so would serve the interests of

justice and not result in prejudice to the parties to the proceeding, may by order direct, in a

particular proceeding, that an alternative procedure shall apply or that compliance with an

otherwise applicable rule is unnecessary.

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Reg. §201.103.

Construction of Rules.

(a) The Rule of Practice shall be construed and administered to secure the just,

speedy, and inexpensive determination of every proceeding.

(b) In any particular proceeding, to the extent that there is a conflict between these

rules and a procedural requirement contained in any statute, or any rule or form adopted

thereunder, the latter shall control.

(c) For purposes of these rules:

(1) Any term in the singular includes the plural, and any term in the plural includes

the singular, if such use would be appropriate;

(2) Any use of a masculine, feminine, or neuter gender encompasses such other

genders as would be appropriate; and

(3) Unless the context requires otherwise, counsel for a party may take any action

required or permitted to be taken by such party.

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Reg. §201.104.

Business Hours.

The Headquarters office of the Commission, at 100 F Street, NE, Washington

D.C.20549, is open each day, except Saturdays, Sundays, and Federal legal holidays, from 9

a.m. to 5:30 p.m., Eastern Standard Time or Eastern Daylight Saving Time, whichever is

currently in effect in Washington, D.C. Federal legal holidays consist of New Year’s Day;

Birthday of Martin Luther King, Jr.; President’s Day; Memorial Day; Independence Day; Labor

Day; Columbus Day; Veteran’s Day; Thanksgiving Day; Christmas Day; and any other day

appointed as a holiday in Washington, D.C. by the President or the Congress of the United

States.

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Reg. §201.160.

(a)

Time Computation.

Computation. In computing any period of time prescribed in or allowed by

these Rules of Practice or by order of the Commission, the day of the act, event, or default from

which the designated period of time begins to run shall not be included. The last day of the

period so computed shall be included unless it is a Saturday, Sunday, or Federal legal holiday

(as defined in §201.104), in which event the period runs until the end of the next day that is not

a Saturday, Sunday, or Federal legal holiday. Intermediate Saturdays, Sundays, and Federal

legal holidays shall be excluded from the computation when the period of time prescribed or

allowed is seven days or less, not including any additional time allowed for service by mail in

paragraph (b) of this section. If on the day a filing is to be made, weather or other conditions

have caused the Secretary’s office or other designated filing location to close, the filing deadline

shall be extended to the end of the next day that is neither a Saturday, a Sunday, nor a Federal

legal holiday.

(b)

Additional time for service by mail. If service is made by mail, three days

shall be added to the prescribed period for response unless an order of the Commission or the

hearing officer specifies a date certain for filing. In the event an order of the Commission or

the hearing officer specifies a date certain for filing, no time shall be added for service by mail.

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Reg. §201.700.

(a)

Initiation of proceedings for SRO proposed rule changes and for proposed

NMS plans and plan amendments.

Rules of Practice. For purposes of these Rules of Practice contained at 17 CFR 201.700-

701, the following Rules of Practice apply:

(1) Rule 103, 17 CFR 201.103 (Construction of Rules);

(2) Rule 104, 17 CFR 201.104 (Business Hours); and

(3) Rule 160, 17 CFR 201.160 (Time Computation).

(b) Institution of proceedings; notice and opportunity to submit written views.

(1)

Generally. If the Commission determines to initiate proceedings to determine

whether a self- regulatory organization’s proposed rule change or whether a proposed national

market system (“NMS”) plan or a proposed amendment to an effective NMS plan (proposed

NMS plan or NMS plan amendment hereinafter collectively referred to as “NMS plan filing”)

should be disapproved, it shall provide notice thereof to the self-regulatory organization that filed

the proposed rule change or to the NMS plan participants, as well as all interested parties and the

public, by publication in the Federal Register of the grounds for disapproval under

consideration.

(i) Prior to notice. If the Commission determines to institute proceedings prior

to initial publication by the Commission of the notice of the self-regulatory

organization’s proposed rule change or the notice of the NMS plan filing in the Federal

Register, then the Commission shall publish notice of the proposed rule change or the

NMS plan filing simultaneously with a brief summary of the grounds for disapproval

under consideration.

(ii) Subsequent to notice. If the Commission determines to institute proceedings

subsequent to initial publication by the Commission of the notice of the self-regulatory

organization’s proposed rule change or the notice of the NMS plan filing in the Federal

Register, then the Commission shall publish separately in the Federal Register a brief

summary of the grounds for disapproval under consideration.

(iii) Service of an order instituting proceedings. In addition to publication in the

Federal Register of the grounds for disapproval under consideration, the Secretary, or

another duly authorized officer of the Commission, shall serve a copy of the grounds for

disapproval under consideration to the self-regulatory organization that filed the

proposed rule change by serving notice to the person listed as the contact person on the

cover page of the Form 19b-4 filing and shall serve a copy of the grounds for

disapproval under consideration to the NMS plan participants by serving notice to the

contact person for the NMS plan. Notice shall be made by delivering a copy of the

order to such contact person either by any method specified in § 201.141(a) or by

electronic means including email.

(2)

Notice of the grounds for disapproval under consideration. The grounds for

disapproval under consideration shall include a brief statement of the matters of fact and law on

which the Commission instituted the proceedings, including the areas in which the Commission

may have questions or may need to solicit additional information on the proposed rule change or

NMS plan filing. The Commission may consider during the course of the proceedings additional

matters of fact and law beyond what was set forth in its notice of the grounds for disapproval

under consideration.

(3)

Demonstration of consistency with the Exchange Act.

(i) The burden to demonstrate that a proposed rule change is consistent with the

Exchange Act and the rules and regulations issued thereunder that are applicable to the

self-regulatory organization is on the self-regulatory organization that proposed the rule

change. As reflected in the General Instructions to Form 19b-4, the Form is designed to

elicit information necessary for the public to provide meaningful comment on the

proposed rule change and for the Commission to determine whether the proposed rule

change is consistent with the requirements of the Exchange Act and the rules and

regulations thereunder applicable to the self-regulatory organization. The selfregulatory organization must provide all information elicited by the Form, including the

exhibits, and must present the information in a clear and comprehensible manner. In

particular, the self-regulatory organization must explain why the proposed rule change is

consistent with the requirements of the Exchange Act and the rules and regulations

thereunder applicable to the self-regulatory organization. A mere assertion that the

proposed rule change is consistent with those requirements, or that another selfregulatory organization has a similar rule in place, is not sufficient. Instead, the

description of the proposed rule change, its purpose and operation, its effect, and a legal

analysis of its consistency with applicable requirements must all be sufficiently detailed

and specific to support an affirmative Commission finding. Any failure of the selfregulatory organization to provide the information elicited by Form 19b-4 may result in

the Commission not having a sufficient basis to make an affirmative finding that a

proposed rule change is consistent with the Exchange Act and the rules and regulations

issued thereunder that are applicable to the self-regulatory organization.

(ii) The burden to demonstrate that a NMS plan filing is consistent with the

Exchange Act and the rules and regulations issued thereunder that are applicable to

NMS plans is on the plan participants that filed the NMS plan filing. In particular, these

plan participants must explain why the NMS plan filing is consistent with the

requirements of the Exchange Act and the rules and regulations thereunder applicable to

NMS plans. A mere assertion that the NMS plan filing is consistent with those

requirements is not sufficient. Instead, the description of the NMS plan filing, its

purpose and operation, its effect, and a legal analysis of its consistency with applicable

requirements must all be sufficiently detailed and specific to support an affirmative

Commission finding. Any failure of the plan participants that filed the NMS plan filing

to provide such detail and specificity may result in the Commission not having a

sufficient basis to make an affirmative finding that a NMS plan filing is consistent with

the Exchange Act and the rules and regulations issued thereunder that are applicable to

NMS plans.

(c) Conduct of hearings.

(1)

Initial comment period in writing. Unless otherwise specified by the Commission

in its notice of grounds for disapproval under consideration, all interested persons will be given

an opportunity to submit written data, views, and arguments concerning the proposed rule

change or NMS plan filing under consideration and whether the Commission should approve or

disapprove the proposed rule change or NMS plan filing.

(i) The self-regulatory organization that submitted the proposed rule change may

file a written statement in support of its proposed rule change demonstrating, in specific

detail, how such proposed rule change is consistent with the requirements of the

Exchange Act and the rules and regulations thereunder applicable to the self-regulatory

organization, including a response to each of the grounds for disapproval under

consideration. Such statement may include specific representations or undertakings by

the self-regulatory organization. The Commission will specify in the summary of the

grounds for disapproval under consideration the length of the initial comment period.

(ii) The NMS plan participants may file a written statement in support of a NMS

plan filing demonstrating, in specific detail, how such NMS plan filing is consistent with

the requirements of the Exchange Act and the rules and regulations thereunder

applicable to NMS plans, including a response to each of the grounds for disapproval

under consideration. Such statement may include specific representations or

undertakings by the plan participants. The Commission will specify in the summary of

the grounds for disapproval under consideration the length of the initial comment period.

(2)

Oral. The Commission, in its sole discretion, may determine whether any issues

relevant to approval or disapproval would be facilitated by the opportunity for an oral

presentation of views.

(3)

Rebuttal.

(i) At the end of the initial comment period, the self-regulatory organization that

filed the proposed rule change will be given an opportunity to respond to any comments

received. The self-regulatory organization may voluntarily file, or the Commission may

request a self-regulatory organization to file, a response to a comment received

regarding any aspect of the proposed rule change under consideration to assist the

Commission in determining whether the proposed rule change should be disapproved.

The Commission will specify in the summary of the grounds for disapproval under

consideration the length of the rebuttal period.

(ii)

At the end of the initial comment period, the NMS plan participants will

be given an opportunity to respond to any comments received. The plan participants

may voluntarily file, or the Commission may request the plan participants to file, a

response to a comment received regarding any aspect of such NMS plan filing under

consideration to assist the Commission in determining whether such NMS plan filing

should be disapproved. The Commission will specify in the summary of the grounds for

disapproval under consideration the length of the rebuttal period.

(4)

Non-response.

(i) Any failure by the self-regulatory organization to provide a complete

response, within the applicable time period specified, to a comment letter received or to

the Commission’s grounds for disapproval under consideration may result in the

Commission not having a sufficient basis to make an affirmative finding that a proposed

rule change is consistent with the Exchange Act and the rules and regulations issued

thereunder that are applicable to the self-regulatory organization.

(ii) Any failure by the NMS plan participants to provide a complete response,

within the applicable time period specified, to a comment letter received or to the

Commission’s grounds for disapproval under consideration may result in the

Commission not having a sufficient basis to make an affirmative finding that a NMS

plan filing is consistent with the Exchange Act and the rules and regulations issued

thereunder that are applicable to NMS plans.

(d) Record before the Commission.

(1)

Filing of papers with the Commission. Filing of papers with the Commission shall

be made by filing them with the Secretary, including through electronic means. In its notice

setting forth the grounds for disapproval under consideration for a proposed rule change or a

NMS plan filing, the Commission shall inform interested parties of the methods by which they

may submit written comments and arguments for or against Commission approval.

(2)

Public availability of materials received. During the conduct of the proceedings,

the Commission generally will make available publicly all written comments it receives without

change. In its notice setting forth the grounds for disapproval under consideration for a proposed

rule change or a NMS plan filing, the Commission shall inform interested parties of the methods

by which they may view all written communications relating to the proposed rule change or a

NMS plan filing 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.

(3)

Record before the Commission. The Commission shall determine each matter on

the basis of the record.

(i) The record shall consist of the proposed rule change filed on Form 19b-4 by

the self- regulatory organization, including all attachments and exhibits thereto, and all

written materials received from any interested parties on the proposed rule change,

including the self-regulatory organization that filed the proposed rule change, through

the means identified by the Commission as provided in paragraph (d)(1) of this section,

as well as any written materials that reflect communications between the Commission

and any interested parties.

(ii) The record shall consist of the NMS plan filing filed by the plan participants,

including all attachments and exhibits thereto, and all written materials received from

any interested parties on such NMS plan filing, including the plan participants, through

the means identified by the Commission as provided in paragraph (d)(1) of this section,

as well as any written materials that reflect communications between the Commission

and any interested parties.

(e)

Amended notice not required. The Commission is not required to amend its notice of

grounds for disapproval under consideration in order to consider, during the course of the

proceedings, additional matters of fact and law beyond what was set forth in the notice of the

grounds for disapproval under consideration.

Reg. § 201.701

(a)

Issuance of order.

At any time following conclusion of the rebuttal period specified in 17 CFR

201.700(c)(3)(i), the Commission may issue an order approving or disapproving the selfregulatory organization’s proposed rule change together with a written statement of the reasons

therefor.

(b)

At any time following conclusion of the rebuttal period specified in 17 CFR

201.700(c)(3)(ii), the Commission may issue an order approving or disapproving the proposed

national market system plan or proposed amendment to an effective national market system plan

together with a written statement of the reasons therefor.