On August 19th, the SEC voted to overturn a rule exception that allowed a proposed national market system (NMS) plan fee amendment to become effective upon filing before review and comment by investors and other market participants. The fee exception contained in Rule 608(b)(3)(1) of Regulation NMS allowed a fee amendment to become effective immediately upon filing with the SEC, and an NMS plan could start charging the new fee before an opportunity for public comment and without SEC action. Also, Rule 608 did not include specific timelines for public notice and SEC action on NMS plan proposals.
These changes are aimed to help ensure that NMS plan fees meet legal requirements under the Exchange Act, including assuring that they are fair and reasonable before they are implemented. Rescinding the provision that allowed effectiveness upon fee amendment filing provides investors and other market participants an opportunity to share their views before they are charged a new or changed fee.
With the new changes, before a new or changed fee can be charged, the following is required:
- public notice of any planned NMS plan fee amendment
- an opportunity for public comment
- SEC approval by order
The revised procedures also specify timelines for SEC action and will provide more clarity to NMS plan participants and the public on when such action can be expected, adding certainty to the process for NMS plan participants. These procedures are modeled after the legal framework for rule filings by self-governing organizations under Section 19 of the Securities Exchange Act of 1934. The revised procedures also require email filing of NMS plans and plan amendments or other information required by Rule 608(a).
Specifically, the SEC is modifying the procedures initiated in Rule 608(b)(1) and (2) that apply to proposed new NMS plans and plan amendments, including fee amendments. Amended Rule 608(b)(1) introduces 90-day and 15-day timeframes for the SEC to send notice to the Federal Register of the filing of proposed NMS plans and plan amendments. Upon notice publication, the SEC must approve, disapprove or institute proceedings on the filing.
The amendments will be effective 30 days after publication in the Federal Register.
Sources:
SEC Adopts Requirements to Ensure Public Notice, Comment, and Approval Prior to Effectiveness of NMS Plan Fees (sec.gov)
Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee Amendments and Modified Procedures for Proposed NMS Plans and Plan Amendments (sec.gov)
