[Federal Register Volume 77, Number 238 (Tuesday, December 11, 2012)]
[Notices]
[Pages 73711-73716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29843]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68363; File No. S7-966]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing and Order Approving and Declaring
Effective an Amendment to the Plan for the Allocation of Regulatory
Responsibilities Among the BATS Exchange, Inc., BOX Options Exchange,
LLC, the Chicago Board Options Exchange, Incorporated, C2 Options
Exchange, Incorporated, the International Securities Exchange, LLC,
Financial Industry Regulatory Authority, Inc., Miami International
Securities Exchange, LLC, the New York Stock Exchange LLC, NYSE MKT
LLC, NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc.,
and NASDAQ OMX PHLX, LLC. Concerning Options-Related Sales Practice
Matters
December 5, 2012.
Notice is hereby given that the Securities and Exchange Commission
(``Commission'') has issued an Order, pursuant to Section 17(d) of the
Securities Exchange Act of 1934 (``Act''),\1\ approving and declaring
effective an amendment to the plan for allocating regulatory
responsibility filed on November 20, 2012, pursuant to Rule 17d-2 of
the Act,\2\ by the BATS Exchange, Inc. (``BATS''), BOX Options
Exchange, LLC (``BOX'') the Chicago Board Options Exchange,
Incorporated (``CBOE''), C2 Options Exchange, Incorporated (``C2''),
the International Securities Exchange, LLC (``ISE''), Financial
Industry Regulatory Authority, Inc. (``FINRA''), Miami International
Securities Exchange, LLC (``MIAX''), the New York Stock Exchange LLC
(``NYSE''), NYSE MKT LLC (``NYSE MKT''), NYSE Arca, Inc. (``Arca''),
The NASDAQ Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc. (``BX''),
and NASDAQ OMX PHLX, Inc. (``Phlx'') (collectively, ``SRO
participants'').
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\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
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I. Introduction
Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act.
Without this relief, the statutory obligation of each individual SRO
could result in a pattern of multiple examinations of broker-dealers
that maintain memberships in more than one SRO (``common members'').
Such regulatory duplication would add unnecessary expenses for common
members and their SROs.
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\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d).
\5\ 15 U.S.C. 78s(g)(2).
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Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\7\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
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\6\ 15 U.S.C. 78q(d)(1).
\7\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\9\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
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\8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\9\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
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To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits
SROs to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for notice and comment, it determines that the plan is
necessary or appropriate in the public interest and for the protection
of investors, to foster cooperation and coordination among the SROs, to
remove impediments to, and foster the development of, a national market
system and a national clearance and settlement system, and is in
conformity with the factors set forth in Section 17(d) of the Act.
Commission approval of a plan filed pursuant to Rule 17d-2 relieves an
SRO of those regulatory responsibilities allocated by the plan to
another SRO.
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\10\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
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II. The Plan
On September 8, 1983, the Commission approved the SRO participants'
plan for allocating regulatory responsibilities pursuant to Rule 17d-
2.\11\ On May 23, 2000, the Commission approved an amendment to the
plan that added the ISE as a participant.\12\ On November 8, 2002, the
[[Page 73712]]
Commission approved another amendment that replaced the original plan
in its entirety and, among other things, allocated regulatory
responsibilities among all the participants in a more equitable
manner.\13\ On February 5, 2004, the parties submitted an amendment to
the plan, primarily to include the Boston Stock Exchange, which was
establishing a new options trading facility to be known as the Boston
Options Exchange (``BOX''), as an SRO participant.\14\ On December 5,
2007, the parties submitted an amendment to the plan to, among other
things, provide that the National Association of Securities Dealers
(``NASD'') (n/k/a the Financial Industry Regulatory Authority, Inc. or
``FINRA'') and NYSE are Designated Options Examining Authorities under
the plan.\15\ On June 5, 2008, the parties submitted an amendment to
the plan primarily to remove the NYSE as a Designated Options Examining
Authority, leaving FINRA as the sole Designated Options Examining
Authority for all common members that are members of FINRA.\16\ On
February 9, 2010, the parties submitted a proposed amendment to the
plan to add BATS and C2 as SRO participants and to reflect the name
changes of the American Stock Exchange LLC to the NYSE Amex LLC, the
Boston Stock Exchange, Inc., to the NASDAQ OMX BX, Inc. and the
Philadelphia Stock Exchange, Inc. to the NASDAQ OMX PHLX, Inc. \17\ On
May 2, 2012, the parties submitted a proposed plan amendment to add BOX
as an SRO participant, and to amend Section XIII of the plan to set
forth a revised procedure for adding new participants to the plan.\18\
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\11\ See Securities Exchange Act Release No. 20158 (September 8,
1983), 48 FR 41256 (September 14, 1983).
\12\ See Securities Exchange Act Release No. 42816 (May 23,
2000), 65 FR 34759 (May 31, 2000).
\13\ See Securities Exchange Act Release No. 46800 (November 8,
2002), 67 FR 69774 (November 19, 2002).
\14\ See Securities Exchange Act Release No. 49197 (February 5,
2004), 69 FR 7046 (February 12, 2004).
\15\ See Securities Exchange Act Release No. 55532 (March 26,
2007), 72 FR 15729 (April 2, 2007).
\16\ See Securities Exchange Act Release No. 57987 (June 18,
2008), 73 FR 36156 (June 25, 2008).
\17\ See Securities Exchange Act Release No. 61589 (February 25,
2010), 75 FR 9976 (March 4, 2010).
\18\ See Securities Exchange Act Release No. 66974 (May 11,
2012), 77 FR 29705 (May 18, 2012).
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The plan reduces regulatory duplication for a large number of firms
currently members of two or more of the SRO participants by allocating
regulatory responsibility for certain options-related sales practice
matters to one of the SRO participants. Generally, under the plan, the
SRO participant responsible for conducting options-related sales
practice examinations of a firm, and investigating options-related
customer complaints and terminations for cause of associated persons of
that firm, is known as the firm's ``Designated Options Examining
Authority'' (``DOEA''). Pursuant to the plan, any other SRO of which
the firm is a member is relieved of these responsibilities during the
period in which the firm is assigned to another SRO acting as that
firm's DOEA.
III. Proposed Amendment to the Plan
On November 20, 2012, the parties submitted a proposed amendment to
the plan. The primary purpose of the amendment is to add MIAX as an SRO
participant. The amendment also reflects the name change of the NYSE
Amex LLC to NYSE MKT LLC. The text of the proposed amended 17d-2 plan
is as follows (additions are italicized; deletions are [bracketed]):
* * * * *
Agreement by and among BATS Exchange, Inc., BOX Options Exchange, LLC,
the Chicago Board Options Exchange, Incorporated, C2 Options Exchange,
Incorporated, the International Securities Exchange, LLC, Financial
Industry Regulatory Authority, Inc., [the] Miami International
Securities Exchange, LLC, the New York Stock Exchange LLC, the NYSE
[Amex] MKT LLC, the NYSE Arca, Inc., The NASDAQ Stock Market LLC,
NASDAQ OMX BX, Inc. and the NASDAQ OMX PHLX LLC Pursuant to Rule 17d-2
under the Securities Exchange Act of 1934.
This agreement (``Agreement''), by and among BATS Exchange, Inc.,
BOX Options Exchange, LLC, the Chicago Board Options Exchange,
Incorporated, C2 Options Exchange, Incorporated, the International
Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc.
(``FINRA''), Miami International Securities Exchange, LLC, The NASDAQ
Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc., the New York Stock
Exchange LLC (``NYSE''), the NYSE [Amex] MKT LLC, the NYSE Arca, Inc.,
and the NASDAQ OMX PHLX LLC, hereinafter collectively referred to as
the Participants, is made this [25th] 19th day of [April] November,
2012, pursuant to the provisions of Rule 17d-2 under the Securities
Exchange Act of 1934 (the ``Exchange Act''), which allows for plans
among self-regulatory organizations to allocate regulatory
responsibility. This Agreement shall be administered by a committee
known as the Options Self-Regulatory Council (the ``Council'').
This Agreement amends and restates the agreement entered into among
the Participants on [February 5, 2010] April 25, 2012, entitled
``Agreement by and among BATS Exchange, Inc., BOX Options Exchange,
LLC, the Chicago Board Options Exchange, Incorporated, C2 Options
Exchange, Incorporated, the International Securities Exchange, LLC,
Financial Industry Regulatory Authority, Inc., the New York Stock
Exchange LLC, NYSE Amex LLC, the NYSE Arca, Inc., the NASDAQ Stock
Market LLC, NASDAQ OMX BX, Inc. and the NASDAQ OMX PHLX, Inc., Pursuant
to Rule 17d-2 under the Securities Exchange Act of 1934.''
WHEREAS, the Participants are desirous of allocating regulatory
responsibilities with respect to broker-dealers, and persons associated
therewith, that are members \1\ of more than one Participant (the
``Common Members'') and conduct a public business for compliance with
Common Rules (as hereinafter defined) relating to the conduct by
broker-dealers of accounts for listed options, index warrants, currency
index warrants and currency warrants (collectively, ``Covered
Securities''); and
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\1\ In the case of BOX Options Exchange, LLC (``BOX''), NASDAQ
OMX BX, Inc. (``BX'') and NASDAQ members are those persons who are
options participants (as defined in the BOX, BX and NASDAQ Options
Market Rules).
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WHEREAS, the Participants are desirous of executing a plan for this
purpose pursuant to the provisions of Rule 17d-2 and filing such plan
with the Securities and Exchange Commission (``SEC'' or the
``Commission'') for its approval;
NOW, THEREFORE, in consideration of the mutual covenants contained
hereafter, the Participants agree as follows:
I. As used herein the term Designated Options Examining
Authority (``DOEA'') shall mean: (1) FINRA insofar as it shall
perform Regulatory Responsibility (as hereinafter defined) for its
broker-dealer members that also are members of another Participant
or (2) the Designated Examination Authority (``DEA'') pursuant to
SEC Rule 17d-1 under the Securities Exchange Act (``Rule 17d-1'')
for a broker-dealer that is a member of a more than one Participant
(but not a member of FINRA).
II. As used herein, the term ``Regulatory Responsibility'' shall
mean the examination and enforcement responsibilities relating to
compliance by Common Members with the rules of the applicable
Participant that are substantially similar to the rules of the other
Participants (the ``Common Rules''), insofar as they apply to the
conduct of accounts for Covered Securities. A list of the current
Common Rules of each Participant applicable to the conduct of
accounts for Covered Securities is attached hereto as Exhibit A.
Each year within 30 days of the anniversary date of the commencement
of operation of this Agreement, each Participant shall submit in
writing to FINRA and each DEA
[[Page 73713]]
performing as a DOEA for any members of such Participant any
revisions to Exhibit A reflecting changes in the rules of the
Participant, and confirm that all other rules of the Participant
listed in Exhibit A continue to meet the definition of Common Rules
as defined in this Agreement. Within 30 days from the date that
FINRA and each DEA performing as a DOEA has received revisions and/
or confirmation that no change has been made to Exhibit A from all
Participants, FINRA and each DEA performing as a DOEA shall confirm
in writing to each Participant whether the rules listed in any
updated Exhibit A are Common Rules as defined in this Agreement.
Notwithstanding anything herein to the contrary, it is explicitly
understood that the term ``Regulatory Responsibility'' does not
include, and each of the Participants shall (unless allocated
pursuant to Rule 17d-2 otherwise than under this Agreement) retain
full responsibility for, each of the following:
(a) Surveillance and enforcement with respect to trading
activities or practices involving its own marketplace, including
without limitation its rules relating to the rights and obligations
of specialists and other market makers;
(b) Registration pursuant to its applicable rules of associated
persons;
(c) Discharge of its duties and obligations as a DEA; and
(d) Evaluation of advertising, responsibility for which shall
remain with the Participant to which a Common Member submits same
for approval.
III. Apparent violations of another Participant's rules
discovered by a DOEA, but which rules are not within the scope of
the discovering DOEA's Regulatory Responsibility, shall be referred
to the relevant Participant for such action as the Participant to
which such matter has been referred deems appropriate.
Notwithstanding the foregoing, nothing contained herein shall
preclude a DOEA in its discretion from requesting that another
Participant conduct an enforcement proceeding on a matter for which
the requesting DOEA has Regulatory Responsibility. If such other
Participants agree, the Regulatory Responsibility in such case shall
be deemed transferred to the accepting Participant and confirmed in
writing by the Participants involved. Each Participant agrees, upon
request, to make available promptly all relevant files, records and/
or witnesses necessary to assist another Participant in an
investigation or enforcement proceeding.
IV. The Council shall be composed of one representative
designated by each of the Participants. Each Participant shall also
designate one or more persons as its alternate representative(s). In
the absence of the representative of a Participant, such alternate
representative shall have the same powers, duties and
responsibilities as the representative. Each Participant may, at any
time, by notice to the then Chair of the Council, replace its
representative and/or its alternate representative on such Council.
A majority of the Council shall constitute a quorum and, unless
specifically otherwise required, the affirmative vote of a majority
of the Council members present (in person, by telephone or by
written consent) shall be necessary to constitute action by the
Council. The representative from FINRA shall serve as Chair of the
Council. All notices and other communications for the Council shall
be sent to it in care of the Chair or to each of the
representatives.
V. The Council shall determine the times and locations of
Council meetings, provided that the Chair, acting alone, may also
call a meeting of the Council in the event the Chair determines that
there is good cause to do so. To the extent reasonably possible,
notice of any meeting shall be given at least ten-business days
prior thereto. Notwithstanding anything herein to the contrary,
representatives shall always be given the option of participating in
any meeting telephonically at their own expense rather than in
person.
VI. FINRA shall have Regulatory Responsibility for all Common
Members that are members of FINRA. For the purpose of fulfilling the
Participants' Regulatory Responsibilities for Common Members that
are not members of FINRA, the Participant that is the DEA shall
serve as the DOEA. All Participants shall promptly notify the DOEAs
no later than the next scheduled meeting of any change in membership
of Common Members. A DOEA may request that a Common Member that is
allocated to it be reallocated to another DOEA by giving thirty days
written notice thereof. The DOEAs in their discretion may approve
such request and reallocate such Common Member to another DOEA.
VII. Each DOEA shall conduct an examination of each Common
Member. The Participants agree that, upon request, relevant
information in their respective files relative to a Common Member
will be made available to the applicable DOEA. At each meeting of
the Council, each DOEA shall be prepared to report on the status of
its examination program for the previous quarter and any period
prior thereto that has not previously been reported to the Council.
VIII. Each DOEA will promptly furnish a copy of the Examination
report, relating to Covered Securities, of any examination made
pursuant to the provisions of this Agreement to each other
Participant of which the Common Member examined is a member.
IX. Each DOEA's Regulatory Responsibility shall for each Common
Member allocated to it include investigations into terminations
``for cause'' of associated persons relating to Covered Securities,
unless such termination is related solely to another Participant's
market. In the latter instance, that Participant to whose market the
termination for cause relates shall discharge Regulatory
Responsibility with respect to such termination for cause. In
connection with a DOEA's examination, investigation and/or
enforcement proceeding regarding a Covered Security-related
termination for cause, the other Participants of which the Common
Member is a member shall furnish, upon request, copies of all
pertinent materials related thereto in their possession. As used in
this Section, ``for cause'' shall include, without limitation,
terminations characterized on Form U5 under the label ``Permitted to
Resign,'' ``Discharge'' or ``Other.''
X. Each DOEA shall discharge the Regulatory Responsibility for
each Common Member allocated to it relative to a Covered Securities-
related customer complaint \2\ unless such complaint is uniquely
related to another Participant's market. In the latter instance, the
DOEA shall forward the matter to that Participant to whose market
the matter relates, and the latter shall discharge Regulatory
Responsibility with respect thereto. If a Participant receives a
customer complaint for a Common Member related to a Covered Security
for which the Participant is not the DOEA, the Participant shall
promptly forward a copy of such complaint to the DOEA.
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\2\ For purposes of complaints, they can be reported pursuant to
Form U4, Form U5 or RE-3 and any amendments thereto.
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XI. Any written notice required or permitted to be given under
this Agreement shall be deemed given if sent by certified mail,
return receipt requested, or by a comparable means of electronic
communication to each Participant entitled to receipt thereof, to
the attention of the Participant's representative on the Council at
the Participant's then principal office or by email at such address
as the representative shall have filed in writing with the Chair.
XII. The Participants shall notify the Common Members of this
Agreement by means of a uniform joint notice approved by the
Council.
XIII. This Agreement may be amended to add a new Participant
provided that such Participant does not assume Regulatory
Responsibility, solely by an amendment by FINRA and such new
Participant. All other Participants expressly consent to allow FINRA
to add new Participants to this Agreement as provided above. FINRA
will promptly notify all Participants of any such amendments to add
new Participants. All other amendments to this Agreement must be
approved in writing by each Participant. All amendments, including
adding a new Participant, must be filed with and approved by the SEC
before they become effective.
XIV. Any of the Participants may manifest its intention to
cancel its participation in this Agreement at any time by giving the
Council written notice thereof at least 90 days prior to the
effective date of such cancellation. Upon receipt of such notice the
Council shall allocate, in accordance with the provisions of this
Agreement, any Common Members for which the petitioning party was
the DOEA. Until such time as the Council has completed the
reallocation described above; the petitioning Participant shall
retain all its rights, privileges, duties and obligations hereunder.
XV. The cancellation of its participation in this Agreement by
any Participant shall not terminate this Agreement as to the
remaining Participants. This Agreement will only terminate following
notice to the Commission, in writing, by the then Participants that
they intend to terminate the Agreement and the expiration of the
applicable notice period. Such notice shall be given at least six
months prior to the intended date of termination, provided that in
the event a notice of cancellation is
[[Page 73714]]
received from a Participant that, assuming the effectiveness
thereof, would result in there being just one remaining member of
the Council, notice to the Commission of termination of this
Agreement shall be given promptly upon the receipt of such notice of
cancellation, which termination shall be effective upon the
effectiveness of the cancellation that triggered the notice of
termination to the Commission.
XVI. No Participant nor the Council nor any of their respective
directors, governors, officers, employees or representatives shall
be liable to any other Participant in this Agreement for any
liability, loss or damage resulting from or claimed to have resulted
from any delays, inaccuracies, errors or omissions with respect to
the provision of Regulatory Responsibility as provided hereby or for
the failure to provide any such Responsibility, except with respect
to such liability, loss or damages as shall have been suffered by
one or more of the Participants and caused by the willful misconduct
of one or more of the other participants or their respective
directors, governors, officers, employees or representatives. No
warranties, express or implied, are made by any or all of the
Participants or the Council with respect to any Regulatory
Responsibility to be performed by each of them hereunder.
XVII. Pursuant to Section 17(d)(1)(A) of the Securities Exchange
Act of 1934 and Rule 17d-2 promulgated pursuant thereto, the
Participants join in requesting the Securities and Exchange
Commission, upon its approval of this Agreement or any part thereof,
to relieve those Participants which are from time to time
participants in this Agreement which are not the DOEA as to a Common
Member of any and all Regulatory Responsibility with respect to the
matters allocated to the DOEA.
REVISED November 19, 2012
EXHIBIT A
RULES ENFORCED UNDER 17d-2 AGREEMENT
Pursuant to Section II of the Agreement by and among BATS Exchange,
Inc. (``BATS''), BOX Options Exchange, LLC (``BOX''), the Chicago Board
Options Exchange, Incorporated (``CBOE''), C2 Options Exchange,
Incorporated (``C2''), the International Securities Exchange, LLC
(``ISE''), Financial Industry Regulatory Authority, Inc. (``FINRA''),
Miami International Securities Exchange, LLC (``MIAX''), The NASDAQ
Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc. (``BX''), the New
York Stock Exchange LLC (``NYSE''), the NYSE [Amex] MKT LLC (``NYSE
[Amex] MKT''), the NYSE Arca, Inc. (``NYSE ARCA''), and the NASDAQ OMX
PHLX LLC (``PHLX'') pursuant to Rule 17d-2 under the Securities
Exchange Act of 1934 dated November 19, 2012 (the ``Agreement''), a
revised list of the current Common Rules of each Participant, as
compared to those of FINRA, applicable to the conduct of accounts for
Covered Securities is set forth in this Exhibit A.
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Opening of Accounts
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NYSE [Amex] MKT...................... Rules 411, 921 and 1101
BATS................................. Rule 26.2
BOX.................................. Rule 4020 \1\
CBOE................................. Rule 9.7
C2*.................................. CBOE Rule 9.7
ISE.................................. Rule 608
FINRA................................ Rules 2360(b)(16) and 2352
NYSE................................. Rule 721 \2\
MIAX................................. Rule 1307
PHLX................................. Rule 1024(b) and (c) \3\
NYSE ARCA............................ Options Rules 9.2(a) and 9.18(b)
and Equities Rule 8.4
BX................................... Chapter XI, Section 9
NASDAQ............................... Chapter XI, Section 7
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Supervision
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NYSE [Amex] MKT...................... Rules 411, 922 and 1104
BATS................................. Rule 26.3
BOX.................................. Rule 4030
CBOE................................. Rule 9.8
C2................................... CBOE Rule 9.8
ISE.................................. Rule 609
FINRA................................ Rules 2360(b)(20),
2360(b)(17)(B), 2360(b)(16)(E),
2355 and 2358
MIAX................................. Rule 1308
NYSE................................. N/A
PHLX................................. Rule 1025
NYSE ARCA............................ Options Rules 9.2(b) and
9.18(d)(2)(G) and Equities Rule
8.7
BX................................... Chapter XI, Section 10
NASDAQ............................... Chapter XI, Section 8
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Suitability
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NYSE [Amex] MKT...................... Rules 923 and 1102
BATS................................. Rule 26.4
BOX.................................. Rule 4040
CBOE................................. Rule 9.9
C2................................... CBOE Rule 9.9
ISE.................................. Rule 610
FINRA................................ Rule 2360(b)(19) and 2353
MIAX................................. Rule 1309
NYSE................................. Rule 723
PHLX................................. Rule 1026
NYSE ARCA............................ Options Rule 9.18(c) and Equities
Rule 8.5
BX................................... Chapter XI, Section 11
NASDAQ............................... Chapter XI, Section 9
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Discretionary Accounts
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NYSE MKT [Amex]...................... Rules 421, 924 and 1103
BATS................................. Rule 26.5 \4\
BOX.................................. Rule 4050 \4\
CBOE................................. Rule 9.10
C2................................... CBOE Rule 9.10
ISE.................................. Rule 611
FINRA................................ Rules 2360(b)(18) and 2354
MIAX................................. Rule 1310
NYSE................................. N/A
PHLX................................. Rule 1027
NYSE ARCA............................ Options Rule 9.18(e) and Equities
Rule 8.6
BX................................... Chapter XI, Section 12
NASDAQ............................... Chapter XI, Section 10
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Customer Communications (Advertising)
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NYSE MKT [Amex]...................... Rules 991 and 1106
BATS................................. Rule 26.16
BOX.................................. Rule 4170
CBOE................................. Rule 9.21 \5\
C2................................... CBOE Rule 9.21 \5\
ISE.................................. Rule 623 \6\
FINRA................................ Rules 2220 and 2357
MIAX................................. Rule 1322
NYSE................................. N/A
PHLX................................. N/A
NYSE ARCA............................ Options Rules 9.21(a) and 9.21(b)
BX................................... Chapter XI, Section 24
NASDAQ............................... Chapter XI, Section 22
------------------------------------------------------------------------
Customer Complaints
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NYSE MKT [Amex]...................... Rules 932 and 1105
BATS................................. Rule 26.17
BOX.................................. Rule 4190
CBOE................................. Rule 9.23
C2................................... CBOE Rule 9.23
ISE.................................. Rule 625
FINRA................................ FINRA Rules 2360(b)(17)(A) and
2356
MIAX................................. Rule 1324
NYSE................................. Rules 732
PHLX................................. Rule 1070
NYSE ARCA............................ Options Rule 9.18(I) and Equities
Rule 8.8
BX................................... Chapter XI, Section 26
NASDAQ............................... Chapter XI, Section 24
------------------------------------------------------------------------
Customer Statements
------------------------------------------------------------------------
NYSE MKT [Amex]...................... Rules 419 and 930
BATS................................. Rule 26.7
BOX.................................. Rule 4070
CBOE................................. Rule 9.12
C2................................... CBOE Rule 9.12
ISE.................................. Rules 613
FINRA................................ Rule 2360(b)(15)
MIAX................................. Rule 1312
NYSE................................. Rules 730
PHLX................................. Rule 1032
NYSE ARCA............................ Options Rule 9.18(j)
BX................................... Chapter XI, Sections 14
NASDAQ............................... Chapter XI, Section 12
------------------------------------------------------------------------
Confirmations
------------------------------------------------------------------------
NYSE MKT [Amex]...................... Rule 925
BATS................................. Rule 26.6
BOX.................................. Rule 4060 \7\
CBOE................................. Rule 9.11
C2................................... CBOE Rule 9.11
ISE.................................. Rule 612
FINRA................................ Rule 2360(b)(12)
MIAX................................. Rule 1311
NYSE................................. Rules 725\8\
PHLX................................. Rule 1028
NYSE ARCA............................ Options Rule 9.18(f)
BX................................... Chapter XI, Section 13
NASDAQ............................... Chapter XI, Section 11
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[[Page 73715]]
Allocation of Exercise Assignment Notices
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NYSE MKT [Amex]...................... Rule 981
BATS................................. Rule 23.2
BOX.................................. Rule 9010
CBOE................................. Rule 11.2
C2................................... CBOE Rule 11.2
ISE.................................. Rule1101
FINRA................................ Rule 2360(b)(23)(C)
MIAX................................. Rule 701
NYSE................................. Rule 781
PHLX................................. Rule 1043
NYSE ARCA............................ Options Rule 6.25(a)
BX................................... Chapter VII, Section 2
NASDAQ............................... Chapter VIII, Section 2
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Disclosure Documents
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NYSE MKT [Amex]...................... Rules 921 and 926
BATS................................. Rule 26.10
BOX.................................. Rule 4100
CBOE................................. Rule 9.15
C2................................... CBOE Rule 9.15
ISE.................................. Rule 616
FINRA................................ Rule 2360(b)(11)
MIAX................................. Rule 1315
NYSE................................. Rule 726 (a) and (c)
PHLX................................. Rule 1024(b)(v), 1029
NYSE ARCA............................ Options Rule 9.18(g)
BX................................... Chapter XI, Section 17
NASDAQ............................... Chapter XI, Section 15
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Branch Offices of Member Organizations
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NYSE MKT [Amex]...................... Rule 922(d) \9\
BOX.................................. Rule 4010(b)
CBOE................................. Rule 9.6
C2................................... CBOE Rule 9.6
ISE.................................. Rule 607
FINRA................................ Rules 2360(b)(20)(B) and 2355
MIAX................................. 1306
NYSE................................. N/A
PHLX................................. N/A
NYSE ARCA............................ Options Rule 9.18(m)
BX................................... Chapter XI, Section 8
NASDAQ............................... Chapter XI, Section 6
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Prohibition Against Guarantees
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NYSE MKT [Amex]...................... Rule 390
BATS................................. Rule 26.13
BOX.................................. Rule 4130
CBOE................................. Rule 9.18
C2................................... CBOE Rule 9.18
ISE.................................. Rules 619
FINRA................................ Rule 2150(b)
MIAX................................. Rule 1318
NYSE................................. Rule 2150(b)
PHLX................................. Rule 777
NYSE ARCA............................ Options Rule 9.1(e)
BX................................... Chapter XI, Sections 20 and 21
NASDAQ............................... Chapter XI, Sections 18 and 19
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Sharing in Accounts
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NYSE MKT [Amex]...................... Rule 390
BATS................................. Rule 26.14
BOX.................................. Rule 4140
CBOE................................. Rule 9.18(b)
C2................................... CBOE Rule 9.18(b)
ISE.................................. Rule 620 \10\
FINRA................................ Rule 2150(c)
MIAX................................. Rule 1319
NYSE................................. Rules 2150(c)
PHLX................................. N/A
NYSE ARCA............................ Options Rule 9.1(f)
BX................................... Chapter XI, Section 21
NASDAQ............................... Chapter XI, Section 19 \11\
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Registration of Rop
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NYSE MKT [Amex]...................... Rule 920
BATS................................. 17.2(g)(1), (2), (6) and (7)
BOX.................................. Rule 2020(c)(1), (e)(1) and IM-
2040-4 and IM-2040-5(b)
CBOE................................. Rule 9.2
C2................................... CBOE Rule 9.2
ISE.................................. Rule 601
FINRA................................ NASD Rules 1022(f) & IM-1022-1
MIAX................................. Rule 1301
NYSE................................. N/A
PHLX................................. Rule 1024(a)(i)
NYSE ARCA............................ Options Rule 9.26
BX................................... Chapter XI, Section 2
NASDAQ............................... Chapter XI, Section 2
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Certification of Registered Personnel
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NYSE MKT [Amex]...................... Rule 920
BATS................................. Rule 2.5 Interpretation .01(c)
and 11.4(e)
BOX.................................. IM-2040-3
CBOE................................. Rule 9.3
C2................................... CBOE Rule 9.3
ISE.................................. Rule 602
FINRA................................ NASD Rule 1032(d)
MIAX................................. Rule 1302
NYSE................................. N/A
PHLX................................. Rule 1024
NYSE ARCA............................ Options Rule 9.27(a)
BX................................... Chapter XI, Section 3
NASDAQ............................... Chapter XI, Section 3
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* Pursuant to C2 Chapters 9 and 11, the rules contained in CBOE Chapters
IX and XI and referenced herein shall apply to C2.
\1\ FINRA shall not have any Regulatory Responsibility regarding the
requirement for designation of Senior Options Principal and Compliance
Options Principal.
\2\ FINRA shall not have any Regulatory Responsibility regarding opening
short uncovered option accounts requirements.
\3\ FINRA shall not have any Regulatory Responsibility regarding foreign
currency option requirements specified in any of the PHLX rules in
this Exhibit A.
\4\ FINRA shall not have any Regulatory Responsibility to enforce this
rule as to time and price discretion in institutional accounts. In
addition FINRA shall not have any Regulatory Responsibility regarding
BOX Rule 4050(a)(2).
\5\ FINRA shall not have any Regulatory Responsibility regarding CBOE's
and C2's requirements to the extent that a customer would meet FINRA's
definition of Institutional Investor and Institutional Sales Material
but would not meet the requirements for such definitions in under
CBOE's and C2's rule.
\6\ FINRA shall not have any Regulatory Responsibility regarding ISE's
requirements to the extent that a customer would meet FINRA's
definition of Institutional Investor and Institutional Sales Material
but would not meet the requirements for such definitions in under such
rule. In addition, FINRA shall not have any Regulatory Responsibility
regarding ISE's requirements regarding approval of all market letters.
\7\ FINRA shall not have any Regulatory Responsibility regarding the
requirement in confirmations to distinguish between BOX option
transactions and other transactions in option contracts.
\8\ FINRA shall not have any Regulatory Responsibility regarding the
requirement in confirmations to distinguish between NYSE option
transactions and other transactions in option contracts.
\9\ FINRA shall only have Regulatory Responsibility for the first
paragraph and shall not have any Regulatory Responsibility regarding
the requirements for debt options.
\10\ FINRA shall not have any Regulatory Responsibility regarding ISE's
requirements to the extent its rule does not contain an exception to
permit sharing in the profits and losses of an account.
\11\ FINRA shall not have any Regulatory Responsibility regarding
NASDAQ's requirements to the extent such rules do not contain an
exception addressing immediate family.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml); or
Send an email to [email protected]. Please include
File Number S7-966 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number S7-966. 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/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed plan that are filed with the
Commission, and all written communications relating to the proposed
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
[[Page 73716]]
site viewing and printing in the Commission's Public Reference Room, on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of the plan also will be available for inspection and copying at
the principal offices of BATS, BOX, CBOE, C2, ISE, FINRA, MIAX, NYSE,
NYSE MKT, Arca, NASDAQ, BX and the Phlx. 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 S7-966 and should be submitted on or before
January 2, 2013.
V. Discussion
The Commission continues to believe that the proposed plan is an
achievement in cooperation among the SRO participants. The Plan, as
amended, will reduce unnecessary regulatory duplication by allocating
to the designated SRO the responsibility for certain options-related
sales practice matters that would otherwise be performed by multiple
SROs. The plan promotes efficiency by reducing costs to firms that are
members of more than one of the SRO participants. In addition, because
the SRO participants coordinate their regulatory functions in
accordance with the plan, the plan promotes, and will continue to
promote, investor protection.
Under paragraph (c) of Rule 17d-2, the Commission may, after
appropriate notice and comment, declare a plan, or any part of a plan,
effective. In this instance, the Commission believes that appropriate
notice and comment can take place after the proposed amendment is
effective. The primary purpose of the amendment is to add MIAX as an
SRO participant. By declaring it effective today, the amended Plan can
become effective and be implemented without undue delay.\19\ The
Commission notes that the prior version of this plan immediately prior
to this proposed amendment was published for comment and the Commission
did not receive any comments thereon.\20\ Furthermore, the Commission
does not believe that the amendment to the plan raises any new
regulatory issues that the Commission has not previously considered.
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\19\ On December 3, 2012, the Commission granted MIAX's
application for registration as a national securities exchange. See
Securities Exchange Act Release No. 68341 (File No. 10-207).
\20\ See supra note 18 (citing to Securities Exchange Act
Release No. 66974).
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VI. Conclusion
This order gives effect to the amended plan submitted to the
Commission that is contained in File No. S7-966.
It is therefore ordered, pursuant to Section 17(d) of the Act,\21\
that the amended plan dated November 19, 2012, by and between the BATS,
BOX, CBOE, C2, ISE, FINRA, MIAX, NYSE, NYSE MKT, Arca, NASDAQ, BX and
the Phlx filed pursuant to Rule 17d-2 on November 20, 2012 is hereby
approved and declared effective.
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\21\ 15 U.S.C. 78q(d).
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It is further ordered that those SRO participants that are not the
DOEA as to a particular common member are relieved of those regulatory
responsibilities allocated to the common member's DOEA under the
amended plan to the extent of such allocation.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(34).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-29843 Filed 12-10-12; 8:45 am]
BILLING CODE 8011-01-P