Chicago Board Options Exchange

Longer Period Designated for Consideration of Complex Orders Proposal

On April 23, the SEC designated June 6, 2014 as the date by which it will approve, disapprove or institute disapproval proceedings regarding the Chicago Board Options Exchange’s proposed amendment of its rules regarding complex orders. SEC Release No. 34- 72008.

Chicago Mercantile Exchange

Administrative Late Fee Approved

On April 22, the SEC approved the Chicago Mercantile Exchange’s proposed amendment to CME Rule 980, which sets out required records and reports for clearing members of CME, to add new paragraph F. The new paragraph provides for administrative fees to be imposed for late submissions of reports and other financial information to CME’s Financial and Regulatory Surveillance Department. Under the new paragraph, the Department would be able to assess clearing members a $1,000 administrative fee for each required submission that is not received by the due date and time. SEC Release No. 34-71987.

Financial Industry Regulatory Authority

Regulatory Overreach?

On April 24, Reuters reported the insurance industry objects to a provision of the Financial Industry Regulatory Authority’s proposal that would require brokers to disclose signing bonuses they receive when changing firms. Insurers claim that FINRA has no authority to require brokers to disclose the compensation they receive for selling insurance products. Overreaching Claims.

FINRA Expands Background Check Requirements

On April 24, the Financial Industry Regulatory Authority’s Board of Governors approved amendments to FINRA’s supervision rule that would expand the obligations of firms to check the background of applicants for registration, including first-time applications as well as transfers, to verify the accuracy and completeness of the information contained in an applicant’s Form U4. Firms would also be required to adopt written procedures in this area that include searching public records. Separately, FINRA also plans to perform an initial search of public financial records for all registered representatives. Additionally, FINRA will conduct a search of publicly available criminal records for all registered individuals who have not been fingerprinted within the last five years. Once these searches are completed, FINRA will conduct periodic reviews of public records to ascertain the accuracy and completeness of the information available to investors, regulators and firms. FINRA is also considering whether additional data from the CRD system used by regulators should be included in BrokerCheck. FINRA’s Chief Economist has initiated a study to see if there is a meaningful relationship between that data, which includes failed examinations, and broker misconduct. FINRA Press Release.

2014 GASB Accounting Support Fee

On April 21, the Financial Industry Regulatory Authority advised that in accordance with a SEC order, it has established an accounting support fee to adequately fund the annual budget of the Governmental Accounting Standards Board (“GASB”). The GASB Accounting Support Fee is collected on a quarterly basis from member firms that report trades to the Municipal Securities Rulemaking Board. Each member firm’s assessment is based on the member firm’s portion of the total par value of municipal securities transactions reported by all FINRA member firms to the MSRB during the previous quarter. FINRA will assess and collect a total of $6,159,100 to adequately fund the GASB’s annual budget by collecting $1,539,775 from its member firms each calendar quarter beginning in April 2014. FINRA Regulatory Notice 14-17.

Prohibited Conditions Related to Expungement of Customer Dispute Information

On April 17, the SEC provided notice of the Financial Industry Regulatory Authority’s proposed adoption of FINRA Rule 2081 to prohibit member firms and associated persons from conditioning or seeking to condition settlement of a dispute with a customer on, or to otherwise compensate the customer for, the customer’s agreement to consent to, or not to oppose, the firm’s or associated person’s request to expunge such customer dispute information from the Central Registration Depository. Comments should be submitted on or before May 14, 2014. SEC Release No. 34-71959.

International Securities Exchange

Longer Period Designated for Consideration of Complex Orders Proposal

On April 23, the SEC designated June 12, 2014 as the date by which it will approve, disapprove or institute disapproval proceedings regarding the International Securities Exchange’s proposed amendment of its rules regarding complex orders. SEC Release No. 34- 72006.

Miami International Securities Exchange

Execution and Routing Amendments Approved

On April 17, the SEC approved the Miami International Securities Exchange’s proposed revisions to MIAX Rules 515 and 529, which govern the execution and routing of orders. The revisions amend the existing “price protection” provisions in those rules that apply to non-Market Maker orders to permit market participants to specify the level of price protection on an order by order basis and allow for executions of non-Market Maker orders at additional price points. SEC Release No. 34-71968.

NASDAQ OMX Group

Longer Period Designated for Consideration of Proposed Managed ETF Rules

On April 23, the SEC designated June 10, 2014 as the date by which it will approve, disapprove or institute disapproval proceedings regarding the NASDAQ Stock Market’s proposed adoption of NASDAQ Rule 5745, which would govern the listing and trading of Exchange-Traded Managed Fund Shares, and to amend related references under NASDAQ Rules 4120, 5615, IM-5615-4, and 5940. SEC Release No. 34-72007.

Removal of Re-Transmission Fees Proposed

On April 22, the SEC provided notice of the NASDAQ Stock Market’s filing of a proposal that removes from the Exchange rules fee provisions with respect to re-transmission of “Third-Party Data” that NASDAQ receives from multiple sources and then re-transmits via multiple channels. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of April 28. SEC Release No. 34-71990.

Amendments to Closing Cross Rules Proposed

On April 17, the SEC provided notice of the NASDAQ Stock Market’s filing of a proposed amendment to Exchange Rule 4754 governing the NASDAQ Closing Cross to accommodate changes in market structure triggered by Phase 2 of the Plan to Address Extraordinary Market Volatility submitted to the Commission pursuant to Rule 608 of Regulation NMS (“LULD Plan”). Specifically, NASDAQ proposes to clarify the rule governing the operation of the Cross in circumstances where a pause triggered under the LULD Plan would be triggered after 3:50 p.m. EST. Comments should be submitted on or before May 14, 2014. SEC Release No. 34-71961.