[Federal Register Volume 81, Number 9 (Thursday, January 14, 2016)]
[Notices]
[Pages 1971-1976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00567]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76856; File No. 4-694]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of
Regulatory Responsibilities Between the Financial Industry Regulatory
Authority, Inc. and the National Stock Exchange, Inc.
January 8, 2016.
Pursuant to Section 17(d) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that
on December 23, 2015, the National Stock Exchange, Inc. (``NSX'') and
the Financial Industry Regulatory Authority, Inc. (``FINRA'') (together
with NSX, the ``Parties'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') a plan for the allocation of
regulatory responsibilities, dated December 22, 2015 (``17d-2 Plan'' or
the ``Plan''). The Commission is publishing this notice to solicit
comments on the 17d-2 Plan from interested persons.
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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) or Section 19(g)(2) of the Act.\4\ 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'') for
compliance with certain rules that are substantially identical across
multiple SROs. 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) and 15 U.S.C. 78s(g)(2), respectively.
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Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\6\ 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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\5\ 15 U.S.C. 78q(d)(1).
\6\ 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.\7\ 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
[[Page 1972]]
rules.\8\ 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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\7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\8\ 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.\9\ 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 appropriate 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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\9\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
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II. Proposed Plan
The proposed 17d-2 Plan is intended to reduce regulatory
duplication for firms that are common members of both NSX and
FINRA.\10\ Pursuant to the proposed 17d-2 Plan, FINRA would assume
certain examination and enforcement responsibilities for common members
with respect to certain applicable laws, rules, and regulations.
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\10\ The proposed 17d-2 Plan refers to these common members as
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
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The text of the Plan delineates the proposed regulatory
responsibilities with respect to the Parties. Included in the proposed
Plan is an exhibit (the ``National Stock Exchange (``NSX'') Rules
Certification for 17d-2 Agreement with FINRA,'' referred to herein as
the ``Certification'') that lists every NSX rule, and select federal
securities laws, rules, and regulations, for which FINRA would bear
responsibility under the Plan for overseeing and enforcing with respect
to NSX members that are also members of FINRA and the associated
persons therewith (``Dual Members'').
Specifically, under the 17d-2 Plan, FINRA would assume examination
and enforcement responsibility relating to compliance by Dual Members
with the rules of NSX that are substantially similar to the applicable
rules of FINRA,\11\ as well as any provisions of the federal securities
laws and the rules and regulations thereunder delineated in the
Certification (``Common Rules''). In the event that a Dual Member is
the subject of an investigation relating to a transaction on NSX, the
plan acknowledges that NSX may, in its discretion, exercise concurrent
jurisdiction and responsibility for such matter.\12\
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\11\ See paragraph 1(b) of the proposed 17d-2 Plan (defining
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan
(defining Regulatory Responsibilities). Paragraph 2 of the Plan
provides that annually, or more frequently as required by changes in
either NSX rules or FINRA rules, the parties shall review and
update, if necessary, the list of Common Rules. Further, paragraph 3
of the Plan provides that NSX shall furnish FINRA with a list of
Dual Members, and shall update the list no less frequently than once
each calendar quarter.
\12\ See paragraph 6 of the proposed 17d-2 Plan.
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Under the Plan, NSX would retain full responsibility for
surveillance and enforcement with respect to trading activities or
practices involving NSX's own marketplace, including, without
limitation, registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules); its
duties as a DEA pursuant to Rule 17d-1 under the Act; and any NSX rules
that are not Common Rules.\13\
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\13\ See paragraph 2 of the proposed 17d-2 Plan.
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The text of the proposed 17d-2 Plan is as follows:
Agreement Between Financial Industry Regulatory Authority, Inc. and
National Stock Exchange, Inc. Pursuant to Rule 17d-2 Under the
Securities Exchange Act of 1934
This Agreement, by and between the Financial Industry Regulatory
Authority, Inc. (``FINRA'') and the National Stock Exchange, Inc.
(``NSX''), is made this 22nd day of December, 2015 (the ``Agreement''),
pursuant to Section 17(d) of the Securities Exchange Act of 1934, as
amended (the ``Exchange Act'') and Rule 17d-2 thereunder, which permits
agreements between self-regulatory organizations to allocate regulatory
responsibility to eliminate regulatory duplication. FINRA and NSX may
be referred to individually as a ``party'' and together as the
``parties.''
This Agreement replaces and restates the agreement entered into
between the parties on June 20, 1977 as amended, entitled ``Agreement
Between the National Association of Securities Dealers, Inc. and the
Cincinnati Stock Exchange Pursuant to SEC Rule 17d-2 Under the
Securities Exchange Act of 1934,'' and any subsequent amendments
thereafter.
WHEREAS, FINRA and NSX desire to reduce duplication in the
examination of their Dual Members (as defined herein) and in the filing
and processing of certain registration and membership records; and
WHEREAS, FINRA and NSX desire to execute an agreement covering such
subjects pursuant to the provisions of Rule 17d-2 under the Exchange
Act and to file such agreement with the Securities and Exchange
Commission (the ``SEC'' or ``Commission'') for its approval.
NOW, THEREFORE, in consideration of the mutual covenants contained
hereinafter, FINRA and NSX hereby agree as follows:
1. Definitions. Unless otherwise defined in this Agreement or the
context otherwise requires, the terms used in this Agreement shall have
the same meaning as they have under the Exchange Act and the rules and
regulations thereunder. As used in this Agreement, the following terms
shall have the following meanings:
(a) ``NSX Rules'' or ``FINRA Rules'' shall mean: (i) The rules of
NSX or (ii) the rules of FINRA, respectively, as the rules of an
exchange or association are defined in Exchange Act Section 3(a)(27).
(b) ``Common Rules'' shall mean NSX Rules that are substantially
similar to the applicable FINRA Rules and certain provisions of the
Exchange Act and SEC rules set forth on Exhibit 1 in that examination
for compliance with such provisions and rules would not require FINRA
to develop one or more new examination standards, modules, procedures,
or criteria in order to analyze the application of the provision or
rule, or a Dual Member's activity, conduct, or output in relation to
such provision or rule; provided, however Common Rules shall not
include the application of the SEC, NSX or FINRA rules as they pertain
to violations of insider trading activities, which is covered by a
separate 17d-2 Agreement by and among the NSX Exchange, Inc., NSX Y-
Exchange, Inc., Chicago Board Options Exchange, Inc., Chicago Stock
[[Page 1973]]
Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial
Industry Regulatory Authority, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX
PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc.,
New York Stock Exchange LLC, NYSE Amex LLC, NYSE Arca, Inc., and NYSE
Regulation, Inc., approved by the SEC on December 16, 2011 as the same
may be amended from time to time.
(c) ``Dual Members'' shall mean those NSX members that are also
members of FINRA and the associated persons therewith.
(d) ``Effective Date'' shall be the date this Agreement is approved
by the Commission.
(e) ``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with FINRA's Code of Procedure
(the Rule 9000 Series) and other applicable FINRA procedural rules, to
determine whether violations of Common Rules have occurred, and if such
violations are deemed to have occurred, the imposition of appropriate
sanctions as specified under FINRA's Code of Procedure and sanctions
guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities and Enforcement Responsibilities relating to
compliance by the Dual Members with the Common Rules and the provisions
of the Exchange Act and the rules and regulations thereunder, and other
applicable laws, rules and regulations, each as set forth on Exhibit 1
attached hereto.
2. Regulatory and Enforcement Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
NSX furnished FINRA with a current list of Common Rules and certified
to FINRA that such rules that are NSX Rules are substantially similar
to the corresponding FINRA Rules (the ``Certification''). FINRA hereby
agrees that the rules listed in the Certification are Common Rules as
defined in this Agreement. Each year following the Effective Date of
this Agreement, or more frequently if required by changes in either the
rules of NSX or FINRA, NSX shall submit an updated list of Common Rules
to FINRA for review which shall add NSX Rules not included in the
current list of Common Rules that qualify as Common Rules as defined in
this Agreement; delete NSX Rules included in the current list of Common
Rules that no longer qualify as Common Rules as defined in this
Agreement; and confirm that the remaining rules on the current list of
Common Rules continue to be NSX Rules that qualify as Common Rules as
defined in this Agreement. Within 30 days of receipt of such updated
list, FINRA shall confirm in writing whether the rules listed in any
updated list are Common Rules as defined in this Agreement.
Notwithstanding anything herein to the contrary, it is explicitly
understood that the term ``Regulatory Responsibilities'' does not
include, and NSX shall retain full responsibility for (unless otherwise
addressed by separate agreement or rule) (collectively, the ``Retained
Responsibilities'') the following:
(a) Surveillance, examination, investigation and enforcement with
respect to trading activities or practices involving NSX's own
marketplace;
(b) registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of its duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
(d) any NSX Rules that are not Common Rules.
3. Dual Members. Prior to the Effective Date, NSX shall furnish
FINRA with a current list of Dual Members, which shall be updated no
less frequently than once each quarter.
4. No Charge. There shall be no charge to NSX by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter provided.
FINRA shall provide NSX with ninety (90) days advance written notice in
the event FINRA decides to impose any charges to NSX for performing the
Regulatory Responsibilities under this Agreement. If FINRA determines
to impose a charge, NSX shall have the right at the time of the
imposition of such charge to terminate this Agreement; provided,
however, that FINRA's Regulatory Responsibilities under this Agreement
shall continue until the Commission approves the termination of this
Agreement.
5. Applicability of Certain Laws, Rules, Regulations or Orders.
Notwithstanding any provision hereof, this Agreement shall be subject
to any statute, or any rule or order of the Commission. To the extent
such statute, rule, order or action is inconsistent with this
Agreement, the statute, rule, order or action shall supersede the
provision(s) hereof to the extent necessary for them to be properly
effectuated and the provision(s) hereof in that respect shall be null
and void.
6. Notification of Violations.
(a) In the event that FINRA becomes aware of apparent violations of
any NSX Rules, which are not listed as Common Rules, discovered
pursuant to the performance of the Regulatory Responsibilities assumed
hereunder, FINRA shall notify NSX of those apparent violations for such
response as NSX deems appropriate.
(b) In the event that NSX becomes aware of apparent violations of
any Common Rules, discovered pursuant to the performance of the
Retained Responsibilities, NSX shall notify FINRA of those apparent
violations and such matters shall be handled by FINRA as provided in
this Agreement.
(c) Apparent violations of Common Rules shall be processed by, and
enforcement proceedings in respect thereto shall be conducted by FINRA
as provided hereinbefore; provided, however, that in the event a Dual
Member is the subject of an investigation relating to a transaction on
NSX, NSX may in its discretion assume concurrent jurisdiction and
responsibility.
(d) Each party agrees to make available promptly all files, records
and witnesses necessary to assist the other in its investigation or
proceedings.
7. Continued Assistance.
(a) FINRA shall make available to NSX all information obtained by
FINRA in the performance by it of the Regulatory Responsibilities
hereunder with respect to the Dual Members subject to this Agreement.
In particular, and not in limitation of the foregoing, FINRA shall
furnish NSX any information it obtains about Dual Members which
reflects adversely on their financial condition. NSX shall make
available to FINRA any information coming to its attention that
reflects adversely on the financial condition of Dual Members or
indicates possible violations of applicable laws, rules or regulations
by such firms.
(b) The parties agree that documents or information shared shall be
held in confidence, and used only for the purposes of carrying out
their respective regulatory obligations. Neither party shall assert
regulatory or other privileges as against the other with respect to
documents or information that is required to be shared pursuant to this
Agreement.
(c) The sharing of documents or information between the parties
pursuant to this Agreement shall not be deemed a waiver as against
third parties of regulatory or other privileges relating to the
discovery of documents or information.
8. Statutory Disqualifications. When FINRA becomes aware of a
statutory
[[Page 1974]]
disqualification as defined in the Exchange Act with respect to a Dual
Member, FINRA shall determine pursuant to Sections 15A(g) and/or
Section 6(c) of the Exchange Act the acceptability or continued
applicability of the person to whom such disqualification applies and
keep NSX advised of its actions in this regard for such subsequent
proceedings as NSX may initiate.
9. Customer Complaints. NSX shall forward to FINRA copies of all
customer complaints involving Dual Members received by NSX relating to
FINRA's Regulatory Responsibilities under this Agreement. It shall be
FINRA's responsibility to review and take appropriate action in respect
to such complaints.
10. Advertising. FINRA shall assume responsibility to review the
advertising of Dual Members subject to the Agreement, provided that
such material is filed with FINRA in accordance with FINRA's filing
procedures and is accompanied with any applicable filing fees set forth
in FINRA Rules.
11. No Restrictions on Regulatory Action. Nothing contained in this
Agreement shall restrict or in any way encumber the right of either
party to conduct its own independent or concurrent investigation,
examination or enforcement proceeding of or against Dual Members, as
either party, in its sole discretion, shall deem appropriate or
necessary.
12. Termination. This Agreement may be terminated by NSX or FINRA
at any time upon the approval of the Commission after one (1) year's
written notice to the other party, except as provided in paragraph 4.
13. Arbitration. In the event of a dispute between the parties as
to the operation of this Agreement, NSX and FINRA hereby agree that any
such dispute shall be settled by arbitration in Washington, DC in
accordance with the rules of the American Arbitration Association then
in effect, or such other procedures as the parties may mutually agree
upon. Judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Each party acknowledges that
the timely and complete performance of its obligations pursuant to this
Agreement is critical to the business and operations of the other
party. In the event of a dispute between the parties, the parties shall
continue to perform their respective obligations under this Agreement
in good faith during the resolution of such dispute unless and until
this Agreement is terminated in accordance with its provisions. Nothing
in this Section 13 shall interfere with a party's right to terminate
this Agreement as set forth herein.
14. Separate Agreement. This Agreement is wholly separate from the
following agreements: (1) The multiparty agreement for insider trading
activities, which is covered by a separate 17d-2 Agreement by and among
NSX Exchange, Inc., NSX-Y Exchange, Inc., Chicago Board Options
Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange
Inc., EDGX Exchange Inc., Financial Industry Regulatory Authority,
Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, The NASDAQ Stock Market
LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE
Amex LLC, and NYSE Arca Inc. effective December 16, 2011, as may be
amended from time to time and (2) the multiparty 17d-2 agreement
relating to Regulation NMS rules by and among NSX Exchange, Inc., NSX-Y
Exchange, Inc., BOX Options Exchange LLC, Chicago Board Options
Exchange, Incorporated, C2 Options Exchange, Incorporated, Chicago
Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., FINRA,
International Securities Exchange, LLC, ISE Gemini, LLC, Miami
International Securities Exchange, LLC, The NASDAQ Stock Market LLC,
NASDAQ OMX BOX, Inc., NASDAQ OMX PHLX, Inc., National Stock Exchange,
Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.
effective October 29, 2015 as may be amended from time to time.
15. Notification of Members. NSX and FINRA shall notify Dual
Members of this Agreement after the Effective Date by means of a
uniform joint notice.
16. Amendment. This Agreement may be amended in writing duly
approved by each party. All such amendments must be filed with and
approved by the Commission before they become effective.
17. Limitation of Liability. Neither FINRA nor NSX nor any of their
respective directors, governors, officers or employees shall be liable
to the other party to 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 Responsibilities 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 the other of
FINRA or NSX and caused by the willful misconduct of the other party or
their respective directors, governors, officers or employees. No
warranties, express or implied, are made by FINRA or NSX with respect
to any of the responsibilities to be performed by each of them
hereunder.
18. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and NSX
join in requesting the Commission, upon its approval of this Agreement
or any part thereof, to relieve NSX of any and all responsibilities
with respect to matters allocated to FINRA pursuant to this Agreement;
provided, however, that this Agreement shall not be effective until the
Effective Date.
19. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and such
counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each party has executed or caused this
Agreement to be executed on its behalf by a duly authorized officer as
of the date first written above.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
By Name:---------------------------------------------------------------
Title:
NATIONAL STOCK EXCHANGE, INC.
By Name:---------------------------------------------------------------
Title:
EXHIBIT 1
National Stock Exchange (``NSX'') Rules Certification for 17d-2
Agreement With FINRA
NSX hereby certifies that the requirements contained in the rules
listed below are identical to, or substantially similar to, the
comparable FINRA Rule, NASD Rule, Exchange Act provision or SEC rule
identified (``Common Rules'').
[[Page 1975]]
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Finra Rule, NASD Rule, Exchange
NSX Rule: Act Provision or SEC Rule:
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Rule 3.1 Business Conduct of Members*.. FINRA Rule 2010 Standards of
Commercial Honor and
Principles of Trade.* \1\
Rule 3.2 Violations Prohibited*........ FINRA Rule 2010 Standards of
Commercial Honor and
Principles of Trade and FINRA
Rule 3110 Supervision.* \2\
Rule 3.3 Use of Fraudulent Devices*.... FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Device.*
Rule 3.5(a) Advertising Practices...... FINRA Rule 2210(d)(1)(B)
Communications with the
Public.
Rule 3.5(c) Advertising Practices...... FINRA Rule 2210(d)(1)
Communications with the
Public.
Rule 3.5(g) Advertising Practices...... FINRA Rule 2210(d)(1)(B)
Communications with the
Public.
Rule 3.5(h) Advertising Practices...... FINRA Rule 2210(d)(1)(B)
Communications with the
Public.
Rule 3.6 Fair Dealing with Customers... FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Device and
FINRA Rule 2111
Suitability.\3\
Rule 3.7(a) and .01 Recommendations to FINRA Rule 2111 Suitability.
Customers.
Rule 3.8(a) The Prompt Receipt and FINRA Rule 11860 COD Orders.
Delivery of Securities.
Rule 3.9 Charges for Services Performed FINRA Rule 2122 Charges for
Services Performed.
Rule 3.10 Use of Information........... FINRA Rule 2060 Use of
Information Obtained in
Fiduciary Capacity.
Rule 3.11 Publication of Transactions FINRA Rule 5210 Publication of
and Quotations. Transactions and Quotations.
\4\
Rule 3.12 Offers at Stated Prices...... FINRA Rule 5220 Offers at
Stated Prices.
Rule 3.13 Payment Designed to Influence FINRA Rule 5230 Payments
Market Prices, Other than Paid Involving Publications that
Advertising. Influence the Market Price of
a Security. \5\
Rule 3.14 Disclosure on Confirmations.. FINRA Rule 2232(a) Customer
Confirmations and SEC Rule 10b-
10 Confirmation of
Transactions.
Rule 3.15 Disclosure of Control........ FINRA Rule 2262 Disclosure of
Control Relationship With
Issuer.
Rule 3.16 Discretionary Accounts....... NASD Rule 2510 Discretionary
Accounts. \6\
Rule 3.17 Customer's Securities or FINRA Rule 2150(a) Customers'
Funds. Securities or Funds--Improper
Use.
Rule 3.18 Prohibition Against FINRA Rule 2150(b) Customers'
Guarantees. Securities or Funds--
Prohibition Against
Guarantees.
Rule 3.19 Sharing in Accounts; Extent FINRA Rule 2150(c)(1)
Permissible. Customers' Securities or
Funds--Sharing in Accounts;
Extent Permissible.
Rule 3.21 Telephone Solicitation....... FINRA Rule 3230 Telemarketing.
Rule 4.1 Requirements*................. FINRA Rule 4511 General
Requirements.* \7\
Rule 4.3 Record of Written Complaints.. FINRA Rule 4513 Records of
Written.
Rule 5.1 Written Procedures*........... FINRA Rule 3110(b) Supervision--
Written Procedures.* \8\
Rule 5.2 Responsibility of Members..... FINRA Rule 3110(a) and (b)(7)
Supervision.*
Rule 5.3 Records*...................... FINRA Rule 3110(a)
Supervision.*
Rule 5.4 Review of Activities.......... FINRA Rule 3110(c) and (d)
Supervision--Internal
Inspections/Review of
Transactions and
Correspondence.* \9\
Rule 5.6 Anti-Money Laundering FINRA Rule 3310 Anti-Money
Compliance Program. Laundering Compliance
Program.\10\
Rule 5.7 Annual Certification of FINRA Rule 3130 Annual
Compliance and Supervisory Processes. Certification of Compliance
and Supervisory Processes.\11\
Rule 11.1(c) Hours of Trading.......... FINRA Rule 2265 Extended Hours
Trading Risk Disclosure.
Rule 11.21(b) Short Sales.............. FINRA Rule 6182 Trade Reporting
of Short Sales.\11\
Rule 11.22 Locking or Crossing FINRA Rule 6240 Prohibition
Quotations in NMS Stocks. from Locking or Crossing
Quotation in NMS Stocks.
Rule 11.24 Limit Up-Limit Down......... FINRA Rule 6190(a)(1) and (2)
Compliance with Regulation NMS
Plan to Address Extraordinary
Market Volatility.
Rule 12.10 Best Execution.............. FINRA Rule 5310 Best Execution
and Interpositioning.\12\
Rule 13.2 Failure to Deliver and Regulation SHO Rule 200 and
Failure to Receive \13\. 203.
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\1\ FINRA shall not have Regulatory Responsibilities regarding .01 of
NSX Rule 3.1.
\2\ FINRA shall only have Regulatory Responsibilities regarding the
first phrase of the NSX rule regarding prohibitions from violating the
Securities Exchange Act of 1934 and the rules and regulations
thereunder; responsibility for the remainder of the rule shall remain
with NSX.
\3\ FINRA shall not have Regulatory Responsibilities regarding .01 of
NSX Rule 3.6.
\4\ FINRA shall not have Regulatory Responsibilities with regard to the
requirement to report to NSX.
\5\ FINRA shall not have Regulatory Responsibilities with regard to the
prohibitions set forth under subsection (a) of FINRA Rule 5230 to the
extent subsections (b)(2) or (b)(3) of the rule apply.
\6\ FINRA shall not have Regulatory Responsibilities for the NSX rule to
the extent the exception in FINRA Rule 2510(d)(2) applies.
\7\ FINRA shall not have Regulatory Responsibilities regarding
requirements to keep records ``in conformity with . . . Exchange
Rules;'' responsibility for such requirement remains with NSX.
\8\ FINRA shall not have Regulatory Responsibilities regarding
requirements to assure compliance with Exchange Rules; responsibility
for such requirement remains with NSX.
\9\ FINRA shall not have Regulatory Responsibilities regarding the NSX
requirement to annually inspect each office of the ETP Holder (other
than as required by the FINRA rule to annually inspect each OSJ and
any branch office that supervises one or more non-branch locations).
\10\ FINRA shall not have Regulatory Responsibilities regarding
notification to NSX.
\11\ FINRA shall not have Regulatory Responsibilities regarding
certification as to compliance with NSX rules, the requirement that
the certification be delivered to NSX, and the requirement that the
report is titled in a manner indicating that it is responsive to NSX
Rule 5.7.
\12\ FINRA shall not have Regulatory Responsibilities regarding .01 of
NSX Rule 12.10.
\13\ FINRA shall only have Regulatory Responsibilities regarding Rules
200 and 203 of Regulation SHO.
* FINRA shall not have any Regulatory Responsibilities for these rules
as they pertain to violations of insider trading activities, which is
covered by a separate 17d-2 Agreement by and among NSX Exchange, Inc.,
NSX-Y Exchange, Inc., Chicago Board Options Exchange, Incorporated,
Chicago Stock Exchange, Inc., EDGA Exchange Inc., EDGX Exchange Inc.,
Financial Industry Regulatory Authority, Inc., NASDAQ OMX BX, Inc.,
NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock
Exchange, Inc., New York Stock Exchange, LLC, NYSE Amex LLC, and NYSE
Arca Inc. effective December 16, 2011, as may be amended from time to
time.
[[Page 1976]]
In addition, the following provisions shall be part of this 17d-2
Agreement:
Securities Exchange Act of 1934:
Section 15(f)
* * * * *
III. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the Act \14\ and Rule 17d-2
thereunder,\15\ after January 29, 2016, the Commission may, by written
notice, declare the plan submitted by NSX and FINRA, File No. 4-694, to
be effective if the Commission finds that the plan is necessary or
appropriate in the public interest and for the protection of investors,
to foster cooperation and coordination among self-regulatory
organizations, or to remove impediments to and foster the development
of the national market system and a national system for the clearance
and settlement of securities transactions and in conformity with the
factors set forth in Section 17(d) of the Act.
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\14\ 15 U.S.C. 78q(d)(1).
\15\ 17 CFR 240.17d-2.
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IV. Solicitation of Comments
In order to assist the Commission in determining whether to approve
the proposed 17d-2 Plan and to relieve NSX of the responsibilities
which would be assigned to FINRA, 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 4-694 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street NE., Washington,
DC 20549-1090.
All submissions should refer to File Number 4-694. 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 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 NSX
and FINRA. 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 4-694
and should be submitted on or before January 29, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
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\16\ 17 CFR 200.30-3(a)(34).
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[FR Doc. 2016-00567 Filed 1-13-16; 8:45 am]
BILLING CODE 8011-01-P