Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing of the Plan for Allocation of Regulatory Responsibilities Between NYSE Arca, Inc. and the National Association of Securities Dealers, Inc., 43823-43828 [E6-12429]

Download as PDF 43823 Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / Notices Document ADAMS accession No. Revised License Amendment Request for Changing the Method of Determining Exceedances of the Combined Radium Groundwater Protection Standard in Source Materials License SUA–1475. Revised License Amendment Request for Changing the Method of Determining Exceedances of the Combined Radium Groundwater Protection Standard in Source Materials License SUA–1475. Environmental Assessment of License Amendment Request for Changing Ground Water Protection Standards in Source Materials License SUA–1475. ML060730043 February 22, 2006. ML061220286 April 7, 2006. ML061870630 July 21, 2006. If you do not have access to ADAMS or if there are problems in accessing the documents located in ADAMS, contact the NRC’s Public Document Room (PDR) Reference staff at 800–397–4209, 301– 415–4737, or by e-mail, to pdr@nrc.gov. These documents may also be viewed electronically on the public computers located at the NRC’s PDR, O1 F21, One White Flint North, 11555 Rockville Pike, Rockville, MD 20852. The PDR reproduction contractor will copy documents for a fee. Dated at Rockville, Maryland this 26th day of July, 2006. For The Nuclear Regulatory Commission. Paul Michalak, Project Manager, Fuel Cycle Facilities Branch, Division of Fuel Cycle Safety and Safeguards, Office of Nuclear Material Safety and Safeguards. [FR Doc. E6–12445 Filed 8–1–06; 8:45 am] BILLING CODE 7590–01–P RAILROAD RETIREMENT BOARD Proposed Collection; Comment Request In accordance with the requirement of Section 3506 (c)(2)(A) of the Paperwork Reduction Act of 1995 which provides opportunity for public comment on new or revised data collections, the Railroad Retirement Board (RRB) will publish periodic summaries of proposed data collections. Comments are invited on: (a) Whether the proposed information collection is necessary for the proper performance of the functions of the agency, including whether the information has practical utility; (b) the accuracy of the RRB’s estimate of the burden of the collection of the information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden related to the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. Title and purpose of information collection: Vocational Report; OMB 3220–0141. Section 2 of the Railroad Retirement Act (RRA) provides for payment of disability annuities to wwhite on PROD1PC61 with NOTICES SUMMARY: VerDate Aug<31>2005 16:40 Aug 01, 2006 Jkt 208001 qualified employees and widow(ers). The establishment of permanent disability for work in the applicants ‘‘regular occupation’’ or for work in any regular employment is prescribed in 20 CFR 220.12 and 220.13 respectively. The RRB utilizes Form G–251, Vocational Report, to obtain an applicant’s work history. This information is used by the RRB to determine the effect of a disability on an applicant’s ability to work. Form G–251 is designed for use with the RRB’s disability benefit application forms and is provided to all applicants for employee disability annuities and to those applicants for a widow(er)’s disability annuity who indicate that they have been employed at some time. Completion is required to obtain or retain a benefit. One response is requested of each respondent. The RRB proposes no changes to Form G–251. The completion time for Form G–251 is estimated at between 30 and 40 minutes per response. The RRB estimates that approximately 6,000 Form G–251’s are completed annually. Additional Information or Comments: To request more information or to obtain a copy of the information collection justification, forms, and/or supporting material, please call the RRB Clearance Officer at (312) 751–3363 or send an e-mail request to Charles.Mierzwa@RRB.GOV. Comments regarding the information collection should be addressed to Ronald J. Hodapp, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611–2092 or send an e-mail to Ronald.Hodapp@RRB.GOV. Written comments should be received within 60 days of this notice. Charles Mierzwa, Clearance Officer. [FR Doc. E6–12431 Filed 8–1–06; 8:45 am] Closed Meeting. 100 F Street, NE., Washington, STATUS: PLACE: DC. DATE AND TIME OF PREVIOUSLY ANNOUNCED MEETING: August 1, 2006 at 2 p.m. Date and Time Change. The Closed Meeting scheduled for Tuesday, August 1, 2006 at 2 p.m., has been changed to Friday, August 4, 2006 at 2 p.m. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551–5400. CHANGE IN THE MEETINGS: Dated: July 31, 2006. Jill M. Peterson, Assistant Secretary. [FR Doc. 06–6669 Filed 7–31–06; 3:52 pm] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54224; File No. 4–523] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d– 2; Notice of Filing of the Plan for Allocation of Regulatory Responsibilities Between NYSE Arca, Inc. and the National Association of Securities Dealers, Inc. July 27, 2006. 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 January 20, 2006, NYSE Arca, Inc.3 (‘‘NYSE Arca’’) and the National Association of Securities Dealers, Inc. (‘‘NASD’’) 1 15 BILLING CODE 7905–01–P U.S.C. 78q(d). CFR 240.17d–2. 3 NYSE Arca, Inc. was formerly called the Pacific Exchange, Inc. (‘‘PCX’’). On March 6, 2006, PCX filed with the Commission a proposed rule change, which was effective upon filing, to change the name of the PCX, as well as several other related entities, to reflect Archipelago Holdings, Inc.’s (‘‘Archipelago’’) recent acquisition of PCX and the merger of the New York Stock Exchange, Inc. with Archipelago. See Securities Exchange Act Release No. 53615 (April 7, 2006), 71 FR 19226 (April 13, 2006). 2 17 SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meeting FEDERAL REGISTER CITATION OF PREVIOUS ANNOUNCEMENT: 71 FR 42888, July 28, 2006. PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 Date E:\FR\FM\02AUN1.SGM 02AUN1 43824 Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / Notices (together with the NYSE Arca, the ‘‘Parties’’) filed with the Securities and Exchange Commission (‘‘Commission’’) an amended and restated plan for the allocation of regulatory responsibilities. On July 25, 2006, the Parties submitted a revised amended and restated plan. The Commission is publishing this notice to solicit comments on the revised amended and restated 17d–2 plan from interested persons. I. Introduction Section 19(g)(1) of the Act,4 among other things, requires every selfregulatory organization (‘‘SRO’’) registered as either a national securities exchange or registered 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) 5 or 19(g)(2) 6 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. Section 17(d)(1) of the Act 7 was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.8 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. To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d–1 and Rule 17d–2 under the Act.9 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.10 When an SRO has been named 4 15 U.S.C. 78s(g)(1). U.S.C. 78q(d). 6 15 U.S.C. 78s(g)(2). 7 15 U.S.C. 78q(d)(1). 8 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). 9 17 CFR 240.17d–1 and 17 CFR 240.17d–2, respectively. 10 See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18809 (May 3, 1976). wwhite on PROD1PC61 with NOTICES 5 15 VerDate Aug<31>2005 16:40 Aug 01, 2006 Jkt 208001 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. To address regulatory duplication in these and other areas, the Commission adopted Rule 17d–2 under the Act.11 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. II. Proposed Plan The Parties currently operate pursuant to a 17d–2 plan in which the NASD assumed certain inspection, examination, and enforcement responsibility for common members with respect to certain applicable laws, rules, and regulations (the ‘‘current NASD–PCX 17d–2 Plan’’).12 On 11 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49093 (November 8, 1976). 12 See Securities Exchange Act Release Nos. 14095 (October 25, 1977), 42 FR 57198 (November 1, 1977) (File No. 4–267) (notice of 1977 Agreement); 15191 (September 26, 1978), 43 FR 46093 (October 5, 1978) (File No. 4–267) (order granting temporary approval); 15722 (April 12, 1979), 44 FR 23616 (April 20, 1979) (File No. 4– 267) (extension of time to file amendments); 15941 (June 21, 1979) (File No. 4–267), SEC Docket, Vol. 17, no. 14, page 995 (July 3, 1979) (further extension of time to file required amendments); 16462 (January 2, 1980), 45 FR 2121 (January 10, 1980) (File No. 4–267) (order granting temporary approval); 16591 (February 20, 1980), 45 FR 12573 (February 26, 1980) (File No. 4–267) (notice of 1980 Amendment); 16719 (April 2, 1980), 45 FR 23841 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 September 22, 2005, the Commission approved a proposed rule change submitted by PCX, the predecessor to NYSE Arca,13 relating to the acquisition of PCX Holdings, Inc. by Archipelago.14 In that filing, PCX committed to amend the current NASD–PCX 17d–2 Plan within 90 days of the Commission’s approval of SR–PCX–2005–90 to expand the scope of the NASD’s regulatory functions under the plan so as to encompass all of the regulatory oversight and enforcement responsibilities with respect to the broker-dealer affiliate of Archipelago, Archipelago Securities, L.L.C.15 This time period has been extended three times.16 On January 20, 2006, the Parties submitted an amended and restated 17d–2 plan for review and approval by the Commission. On July 25, 2006, the Parties submitted a revised amended and restated plan. The revised amended and restated plan is intended to replace and supersede the current NASD–PCX 17d–2 Plan and all prior amendments thereto in their entirety. The revised amended and restated 17d–2 plan is intended to reduce regulatory duplication for firms that are common members of NYSE Arca and the NASD. The text of the plan delineates regulatory responsibilities with respect to the Parties, including responsibility for NYSE Arca rules. Included in the revised amended and restated plan is an attachment (‘‘NYSE Arca Rules Certification for 17d–2 Agreement with NASD,’’ referred to herein as the ‘‘Certification’’) that lists every NYSE Arca rule and the federal securities laws and rules and regulations thereunder for which, under the plan, the NASD would bear responsibility for overseeing and enforcing with respect to common members. In particular, under the revised amended and restated 17d–2 plan, the NASD would assume examination and enforcement responsibility relating to compliance by dual members and persons associated therewith with the rules of NYSE Arca that are substantially similar to the rules (April 8, 1980) (File No. 4–267) (order granting temporary approval); and 16858 (May 30, 1980), 45 FR 37927 (June 5, 1980) (File No. 4–267) (approval order). 13 See supra note 3. 14 See Securities Exchange Act Release No. 52497 (September 22, 2005), 70 FR 56949 (September 29, 2005) (approving SR–PCX–2005–90, as amended). 15 Archipelago Securities acts as the outbound order router for the NYSE Arca Marketplace (formerly, the Archipelago Exchange, or ArcaEx), the equities trading facility of NYSE Arca. 16 See Securities Exchange Act Release Nos. 52995 (December 21, 2005), 70 FR 77232 (December 29, 2005); 53545 (March 23, 2006), 71 FR 16183 (March 30, 2006); and 54046 (June 26, 2006), 71 FR 37965 (July 3, 2006). E:\FR\FM\02AUN1.SGM 02AUN1 Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / Notices of the NASD (‘‘Common Rules’’), as well as any provisions of the federal securities laws and the rules and regulations thereunder delineated in the Certification.17 Under the plan, NYSE Arca would retain full responsibility for surveillance and enforcement with respect to trading activities or practices involving NYSE Arca’s own marketplace; registration pursuant to its unique rules (i.e., non-common rules); its duties as a Designated Examining Authority pursuant to Rule 17d–1 under the Act; and any rules that are not substantially similar to the rules of the NASD, except for NYSE Arca rules for any broke-dealer subsidiary of Archipelago.18 The text of the revised amended and restated 17d–2 plan is as follows: wwhite on PROD1PC61 with NOTICES Agreement Between the NASD and NYSA Arca, Inc. Pursuant to Sec Rule 17d–2 Under the Securities Exchange Act of 1934 This Agreement, between the National Association of Securities Dealers, Inc. (‘‘NASD’’) and the NYSE Arca, Inc. (‘‘NYSE Arca’’), is made this 25th day of July, 2006, pursuant to the provisions of SEC Rule 17d–2 under the Securities Exchange Act of 1934 which calls for agreements between self-regulatory organizations for plans to reduce or eliminate regulatory duplication. This Agreement supersedes and replaces Agreements entered into between the parties on May 27, 1977 and January 20, 2006, entitled ‘‘Agreement Between the National Association of Securities Dealers, Inc. and the Pacific Stock Exchange, Inc. Pursuant to SEC Rule 17d–2 Under the Securities Exchange Act of 1934,’’ and any subsequent amendments thereafter. Whereas, NASD and NYSE Arca are desirous of reducing duplication in the examination of their dual members (a broker-dealer firm which is a member of both NASD and NYSE Arca) and in the filing and processing of certain registration and membership records; and Whereas, NASD and NYSE Arca are desirous of executing a plan covering such subjects pursuant to the provisions of Rule 17d–2 and filing such with the Commission for its approval. Now, therefore, in consideration of the mutual covenants contained 17 See paragraph 2 of the revised amended and restated 17d–2 plan. The Commission notes that there is only one federal security law rule on the Certification, Rule 200 of Regulation SHO. 18 See id. Apparent violations of such NYSE Arca rules by any broker-dealer subsidiary of Archipelago will be processed by, and enforcement proceedings will be conducted by, the NASD. See paragraph 5 of the revised amended and restated 17d–2 plan. VerDate Aug<31>2005 16:40 Aug 01, 2006 Jkt 208001 hereafter, the said NASD and NYSE Arca hereby agree as follows: 1. That NASD will assume regulatory responsibilities for all firms who are members of NYSE Arca and NASD (‘‘dual members’’). NYSE Arca shall furnish NASD with a current list of dual members, which shall be updated no less frequently than once each quarter. 2. For purposes of this plan, the term ‘‘regulatory responsibilities’’ shall mean the examination and enforcement responsibility relating to compliance by the dual members and persons associated therewith with the rules of NYSE Arca that are substantially similar to the rules of NASD in that the NYSE Arca’s rule would not require NASD to develop one or more new examination standards, modules, procedures, or criteria in order to analyze the application of the rule, or a dual member’s activity, conduct, or output in relation to such rule, (the ‘‘Common Rules’’). Prior to the effective date of this Agreement, NYSE Arca shall furnish NASD with a current list of Common Rules (‘‘Certification’’), and NASD will confirm in writing whether the rules listed in the Certification are Common Rules as defined in this Agreement. Each year following the commencement of operation of this Agreement, or more frequently if required by changes in either the rules of NYSE Arca or NASD, NYSE Arca shall submit an updated list of Common Rules to NASD for review which shall add NYSE Arca rules not included in the current list of Common Rules that qualify as Common Rules as defined in this Agreement; delete NYSE Arca 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 NYSE Arca rules that qualify as Common Rules as defined in this Agreement. Within 30 days of receipt of such updated list, NASD will confirm in writing whether the rules listed in any updated list are Common Rules as defined in this Agreement. Regulatory responsibilities under this Agreement shall also extend to those provisions of the federal securities laws and rules and regulations thereunder listed in the Certification. The term ‘‘enforcement responsibility’’ shall mean the conduct of appropriate proceedings, in accordance with the NASD Code of Procedure (the Rule 9000 Series) and other applicable NASD procedural rules, to determine whether violations of pertinent laws, rules or regulations have occurred, and if such violations are deemed to have occurred, the PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 43825 imposition of appropriate sanctions as specified under the NASD’s Code of Procedure and sanctions guidelines. Notwithstanding anything herein to the contrary, it is explicitly understood that the term ‘‘regulatory responsibilities’’ does not include, and NYSE Arca will retain full responsibility for (unless otherwise addressed by separate agreement or rule): (a) Surveillance and enforcement with respect to trading activities or practices involving NYSE Arca’s own marketplace, including without limitation NYSE Arca’s rules relating to the rights and obligations of market makers; (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 Act; and (d) Any rules of NYSE Arca that are not substantially similar to the rules of NASD, except for NYSE Arca rules for any broker-dealer subsidiary of Archipelago Holdings, Inc. as provided in paragraph 5. 3. There shall be no charge to NYSE Arca by NASD for performing the stated regulatory responsibilities under this plan except as hereinafter provided. NASD will provide NYSE Arca with ninety (90) days advance written notice in the event NASD decides to impose any charges to NYSE Arca for performing the stated regulatory responsibilities under this plan. If it becomes necessary to impose a charge, NYSE Arca shall have the right at the time of the imposition of such to terminate this Agreement; provided, however, that NASD’s regulatory responsibilities under this Agreement shall continue until the SEC approves the termination of this Agreement. 4. Notwithstanding any provision hereof, this Agreement shall be subject to any statute, or any rule or order of the Securities and Exchange Commission, or industry agreement, restructuring the regulatory framework of the securities industry or reassigning regulatory responsibilities between self-regulatory organizations. To the extent such is inconsistent with this Agreement, such shall supersede the provisions hereof to the extent necessary for them to be properly effectuated and the provisions hereof in that respect shall be null and void. 5. Should NASD become aware of apparent violations of NYSE Arca’s rules, which are not listed as Common Rules, discovered pursuant to the performance of the regulatory E:\FR\FM\02AUN1.SGM 02AUN1 wwhite on PROD1PC61 with NOTICES 43826 Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / Notices responsibilities assumed hereunder, NASD will notify NYSE Arca of those apparent violations. With respect to apparent violations of any NYSE Arca rules by any broker-dealer subsidiary of NYSE Arca’s parent company, Archipelago Holdings, Inc., NASD shall not make referrals to NYSE Arca pursuant to this Item 5. Such apparent violations shall be processed by, and enforcement proceedings in respect thereto will be conducted by, NASD as provided in this agreement. Apparent violations of all other applicable rules, including violations of the various securities acts, and rules and regulations thereunder, will be processed by, and enforcement proceedings in respect thereto will be conducted by NASD as provided hereinbefore; provided however that in the event a covered dual member or a person associated therewith is the subject of an investigation relating to a transaction on NYSE Arca, NYSE Arca may in its discretion assume concurrent jurisdiction and responsibility. Each party agrees to make available promptly all files, records and witnesses necessary to assist the other in its investigation or proceedings. 6. NASD will make available to NYSE Arca all information obtained by it in the performance by it of the regulatory responsibilities hereunder in respect to the firms which are subject to this Agreement. In particular, and not in limitation of the foregoing, NASD will furnish NYSE Arca any information it obtains about dual members which reflects adversely on their financial condition and which should be known by NYSE Arca or any subsidiaries thereof. It is understood that such information is of an extremely sensitive nature and, accordingly, NYSE Arca agrees to take all reasonable steps to maintain its confidentiality. NYSE Arca will supply NASD 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. 7. Dual members subject to this agreement will be required to submit, and NASD will be responsible for processing and acting upon all applications submitted on behalf of allied persons, partners, officers, registered personnel and any other person required to be approved by the rules of both NYSE Arca and NASD or associated with dual members thereof. NASD shall advise NYSE Arca monthly of any changes of allied members, partners, officers, registered personnel and other persons required to be approved by the rules of both NYSE VerDate Aug<31>2005 16:40 Aug 01, 2006 Jkt 208001 Arca and NASD. Dual members will be required to send to NASD all letters, termination notices or other material respecting these individuals. When as a result of processing said submissions NASD becomes aware of a statutory disqualification as defined in the Securities Exchange Act of 1934 with respect to a dual member or person associated with a dual member, NASD will determine pursuant to sections 15A(g) and/or section 6(c) the acceptability or continued applicability of the person to whom such disqualification applies and keep NYSE Arca advised of its actions in this regard. NASD will also be responsible for processing and, if required, acting upon all requests for the opening, address changes, and terminations of branch offices by dual members and any other applications required of dual members under the Common Rules as they may be amended from time to time. NASD will advise NYSE Arca monthly of the opening, address change and termination of branch and main offices of dual members and the names of such branch office managers. 8. NYSE Arca shall forward to NASD copies of all customer complaints involving dual members and persons associated therewith received by it relating to NASD’s regulatory responsibilities under this Agreement. It shall be NASD’s responsibility to review and take appropriate action in respect to such complaints. 9. NASD shall assume responsibility to review the advertising of dual members subject to the Agreement, provided that such material is filed with NASD in accordance with NASD’s filing procedures and is accompanied with any applicable filing fees. Such review will be made in accordance with then applicable NASD rules and interpretations. In all cases of dual members subject to this Agreement, the advertising of dual members shall be subject only to compliance with appropriate NASD rules and interpretations. 10. Nothing contained in this Agreement shall restrict or in any way encumber the right of NASD or NYSE Arca to conduct special or cause examinations of dual members and persons associated therewith as NASD or NYSE Arca, in their sole discretions, shall deem appropriate. 11. NYSE Arca recognizes that, pursuant to this Agreement, NASD will maintain an available and appropriate mechanism for considering and acting upon requests by dual members for extensions of time pursuant to Federal Reserve Regulation T and SEC Rule PO 00000 Frm 00117 Fmt 4703 Sfmt 4703 15c3–3 of the Securities Exchange Act of 1934. NASD will keep NYSE Arca informed with respect to its activities in granting extensions of time pursuant to Regulation T and Rule 15c3–3 to dual members in such form and content as reasonably determined by NASD. 12. Should a dispute arise between the parties as to the operation of this Agreement, NYSE Arca and NASD 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. 13. This Agreement may be cancelled by NYSE Arca or NASD at any time with the approval of the Securities and Exchange Commission upon one (1) year’s written notice, except as provided in paragraph 3. 14. This Agreement shall be effective upon approval of the Securities and Exchange Commission. 15. This Agreement is wholly separate from the multiparty Agreement made pursuant to SEC Rule 17d–2 of the Securities Exchange Act of 1934 between the American Stock Exchange LLC, the Boston Stock Exchange, Inc., the Chicago Board Options Exchange, Inc., the International Securities Exchange, Inc., the National Association of Securities Dealers, Inc., the New York Stock Exchange, Inc., the Pacific Exchange, Inc., and the Philadelphia Stock Exchange involving the allocation of regulatory responsibilities with respect to common members for compliance with common rules relating to the conduct by broker-dealers of accounts for listed options or index warrants entered into on January 14, 2004, and as may be amended from time to time. Limitation of Liability Neither NASD nor NYSE Arca nor any of their respective directors, governors, officers or employees shall be liable to the other party to this plan 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 NASD or NYSE Arca 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 E:\FR\FM\02AUN1.SGM 02AUN1 Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / Notices by NASD or NYSE Arca with respect to any of the responsibilities to be performed by each of them hereunder. Relief From Responsibility Pursuant to Sections 17(d)(1)(A) and 19(g) of the Securities Exchange Act of 1934 and Rule 17d–2 promulgated pursuant thereto, NASD and NYSE Arca join in requesting the Commission, upon its approval of this plan or any part thereof, to relieve NYSE Arca of any and all responsibilities with respect to matters allocated to NASD pursuant to this plan. NYSE Arca Certification NYSE Arca Rules Certification for 17d– 2 Agreement With NASD NYSE Arca, Inc. hereby certifies that the requirements contained in the rules listed below for NYSE Arca Equities, Inc., a wholly-owned subsidiary, are identical to, or substantially similar to, comparable NASD rules (‘‘Common Rules’’) as of July 2006.19 Rule Description 2.15 ..... Responsibilities of Non-Resident Firms. Employees of ETP Holder Registration. ETP Books and Records. Adherence to Law. Prohibited Acts. Front-Running of Block Transactions. Disciplinary Action By Other Organizations. Miscellaneous Prohibitions. Trading Ahead of Customer Limit Orders. Anti-Money Laundering Compliance Program. Supervision. Account Approval. Suitability. Discretionary Accounts. Supervision of Accounts. Customer Complaints. Prior Approval of Certain Communications to Customers. Register with the Corporation. Office Supervision. Designation of Firm Principal. Guarantees. Sharing Profits—Losses. Account Supervision. Customer Records. 2.21 ..... 2.24 ..... 6.1 ....... 6.2 ....... 6.6 ....... 6.13 ..... 6.15 ..... 6.16 ..... 6.17 ..... 6.18 ..... 8.4 ....... 8.5 ....... 8.6 ....... 8.7 ....... 8.8 ....... 8.9 ....... wwhite on PROD1PC61 with NOTICES 9.1(a) ... 9.1(c) ... 9.1(d) ... 9.1(e) ... 9.1(f) .... 9.2(b) ... 9.2(c) ... 19 The Commission notes that the Certification attached to the executed revised amended and restated plan also includes references to the NASD rules to which the Common Rules are identical or substantially similar. Further, the Certification notes that, with respect to several of the NYSE Arca rules, NYSE Arca will be responsible for any significant differences between its rule and the comparable NASD rule identified, until such time amendments to such rule(s) may be approved. A copy of the revised amended and restated plan, including the Certification, is available on the Commission’s Web site at http://www.sec.gov. VerDate Aug<31>2005 16:40 Aug 01, 2006 Jkt 208001 IV. Solicitation of Comments Rule Description 9.3(a) ... 9.3(b) ... Employee Accounts. ETP Holder and Allied Person Accounts. Proxies Voting. Solicitation Expense. Discretion as to Customers’ Accounts. Records of Discretionary Accounts. Pledging Customer Securities. Use of Customer Securities. Customer Protection—Reserves and Custody of Securities. Agreements for Use of Customer Securities. Assuming Losses. Confirmations. COD Orders—Partial Delivery. Long Sales. Account Designation. Statements of Account to Customers. Books and Records. Transfer of Accounts. Telemarketing. Policy. Advertisements. Sales Literature—Market Letters. Radio, Television, Telephone and Other Reports. Standards. Registration of Representatives. Regulatory Element. Borrowing From or Lending to Customers. 9.4 ....... 9.5 ....... 9.6(a) ... 9.6(b) 9.7(a) 9.7(b) 9.7(c) ... ... ... ... 9.7(d) ... 9.10 9.11 9.12 9.13 9.14 9.15 ..... ..... ..... ..... ..... ..... 9.17 ..... 9.19 ..... 9.20(b) 9.21(a) 9.22(a) 9.23 ..... 9.24 ..... 9.25 9.27 9.27 9.29 ..... ..... ..... ..... In addition, the following provisions of the Securities Exchange Act of 1934, and rules and regulations thereunder, shall be part of this 17d–2 Agreement: Rule 200 of Regulation SHO-Definition of ‘‘Short Sale’’ and Marking Requirements. III. Date of Effectiveness of the Proposed Plan and Timing for Commission Action Pursuant to Section 17(d)(1) of the Act 20 and Rule 17d–2 thereunder,21 after August 23, 2006, the Commission may, by written notice, declare the plan submitted by NYSE Arca and the NASD, File No. 4–523, 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. 20 15 21 17 PO 00000 U.S.C. 78q(d)(1). CFR 240.17d–2. Frm 00118 Fmt 4703 In order to assist the Commission in determining whether to approve the revised amended and restated 17d–2 plan and to relieve NYSE Arca of the responsibilities which would be assigned to the NASD, 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 e-mail to rulecomments@sec.gov. Please include File Number 4–523 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number 4–523. This file number should be included on the subject line if E-mail 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 inspection and copying in the Commission’s Public Reference Room. Copies of the plan also will be available for inspection and copying at the principal office of the Exchange. 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 4–523 and should be submitted on or before August 23, 2006. 22 17 Sfmt 4703 43827 E:\FR\FM\02AUN1.SGM CFR 200.30–3(a)(34). 02AUN1 43828 Federal Register / Vol. 71, No. 148 / Wednesday, August 2, 2006 / Notices For the Commission, by the Division of Market Regulation, pursuant to delegated authority.22 J. Lynn Taylor, Assistant Secretary. [FR Doc. E6–12429 Filed 8–1–06; 8:45 am] comments it received regarding the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. CHX has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change [Release No.34–54222; File No. SR–CHX– 2006–21] 1. Purpose Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Participant Fees and Credits July 26, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 11, 2006, the Chicago Stock Exchange, Inc. (‘‘CHX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by CHX. The Exchange filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change CHX proposes to amend its Participant Fee Schedule (the ‘‘Fee Schedule’’) to clarify monthly applicability of the Exchange’s SelfRegulatory Organization Fee (‘‘SRO Fee’’). The text of this proposed rule change is available on the Exchange’s Web site at (http://www.chx.com/rules/ proposed_rules.htm), at the principal office of the Exchange, and in the Commission’s Public Reference Room. Through this proposal, the Exchange seeks to clarify monthly applicability of the Exchange’s SRO Fee. The Exchange’s Fee Schedule has for many years contained a provision establishing an SRO Fee of $100. Prior to the Exchange’s demutualization in February of 2005, this provision of the Fee Schedule indicated that the SRO Fee was ‘‘$100 per member and member organization per month.’’ In connection with the demutualization rule changes, this provision was modified to delete the ‘‘per month’’ reference. Despite the deletion of the ‘‘per month’’ reference, the Exchange did not intend to modify its long-standing practice of assessing the SRO Fee on a monthly basis. Indeed, since the provision was modified in February of 2005, the Exchange has consistently billed each CHX participant for the $100 SRO Fee on a monthly basis and the Exchange intends to continue this monthly assessment. To eliminate any confusion, however, the Exchange is submitting this proposed rule change to the Fee Schedule to reincorporate the ‘‘per month’’ language. 2. Statutory Basis CHX believes that the proposed rule change is consistent with the provisions of Section 6(b)(4) of the Act 5 in that it provides for the equitable allocation of reasonable dues, fees and other charges among its members. B. Self-Regulatory Organization’s Statement on Burden on Competition wwhite on PROD1PC61 with NOTICES II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change CHX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. In its filing with the Commission, CHX included statements concerning the purpose of, and basis for, the proposed rule change and discussed any C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(iii). 4 17 CFR 240.19b–4(f)(2). 2 17 VerDate Aug<31>2005 16:40 Aug 01, 2006 III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change establishes or changes a due, fee or other charge imposed by the Exchange and therefore has become effective pursuant to Section 19(b)(3)(A) of the Act 6 and Rule 19b–4(f)(2) thereunder.7 At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such proposed rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File No. SR–CHX–2006–21 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–CHX–2006–21. This file number should be included on the subject line if e-mail 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/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change 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 inspection and copying in the Commission’s Public Reference 6 15 5 15 Jkt 208001 PO 00000 U.S.C. 78f(b)(4). Frm 00119 Fmt 4703 7 17 Sfmt 4703 E:\FR\FM\02AUN1.SGM U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). 02AUN1

Agencies

[Federal Register Volume 71, Number 148 (Wednesday, August 2, 2006)]
[Notices]
[Pages 43823-43828]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-12429]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54224; File No. 4-523]


 Program for Allocation of Regulatory Responsibilities Pursuant 
to Rule 17d-2; Notice of Filing of the Plan for Allocation of 
Regulatory Responsibilities Between NYSE Arca, Inc. and the National 
Association of Securities Dealers, Inc.

July 27, 2006.
    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 January 20, 2006, NYSE Arca, Inc.\3\ (``NYSE Arca'') and the 
National Association of Securities Dealers, Inc. (``NASD'')

[[Page 43824]]

(together with the NYSE Arca, the ``Parties'') filed with the 
Securities and Exchange Commission (``Commission'') an amended and 
restated plan for the allocation of regulatory responsibilities. On 
July 25, 2006, the Parties submitted a revised amended and restated 
plan. The Commission is publishing this notice to solicit comments on 
the revised amended and restated 17d-2 plan from interested persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
    \3\ NYSE Arca, Inc. was formerly called the Pacific Exchange, 
Inc. (``PCX''). On March 6, 2006, PCX filed with the Commission a 
proposed rule change, which was effective upon filing, to change the 
name of the PCX, as well as several other related entities, to 
reflect Archipelago Holdings, Inc.'s (``Archipelago'') recent 
acquisition of PCX and the merger of the New York Stock Exchange, 
Inc. with Archipelago. See Securities Exchange Act Release No. 53615 
(April 7, 2006), 71 FR 19226 (April 13, 2006).
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I. Introduction

    Section 19(g)(1) of the Act,\4\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or registered 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) \5\ or 19(g)(2) \6\ 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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    \4\ 15 U.S.C. 78s(g)(1).
    \5\ 15 U.S.C. 78q(d).
    \6\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------

    Section 17(d)(1) of the Act \7\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\8\ 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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    \7\ 15 U.S.C. 78q(d)(1).
    \8\ 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.\9\ 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.\10\ 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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    \9\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \10\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18809 (May 3, 1976).
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    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\11\ 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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    \11\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49093 (November 8, 1976).
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II. Proposed Plan

    The Parties currently operate pursuant to a 17d-2 plan in which the 
NASD assumed certain inspection, examination, and enforcement 
responsibility for common members with respect to certain applicable 
laws, rules, and regulations (the ``current NASD-PCX 17d-2 Plan'').\12\ 
On September 22, 2005, the Commission approved a proposed rule change 
submitted by PCX, the predecessor to NYSE Arca,\13\ relating to the 
acquisition of PCX Holdings, Inc. by Archipelago.\14\ In that filing, 
PCX committed to amend the current NASD-PCX 17d-2 Plan within 90 days 
of the Commission's approval of SR-PCX-2005-90 to expand the scope of 
the NASD's regulatory functions under the plan so as to encompass all 
of the regulatory oversight and enforcement responsibilities with 
respect to the broker-dealer affiliate of Archipelago, Archipelago 
Securities, L.L.C.\15\ This time period has been extended three 
times.\16\
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    \12\ See Securities Exchange Act Release Nos. 14095 (October 25, 
1977), 42 FR 57198 (November 1, 1977) (File No. 4-267) (notice of 
1977 Agreement); 15191 (September 26, 1978), 43 FR 46093 (October 5, 
1978) (File No. 4-267) (order granting temporary approval); 15722 
(April 12, 1979), 44 FR 23616 (April 20, 1979) (File No. 4-267) 
(extension of time to file amendments); 15941 (June 21, 1979) (File 
No. 4-267), SEC Docket, Vol. 17, no. 14, page 995 (July 3, 1979) 
(further extension of time to file required amendments); 16462 
(January 2, 1980), 45 FR 2121 (January 10, 1980) (File No. 4-267) 
(order granting temporary approval); 16591 (February 20, 1980), 45 
FR 12573 (February 26, 1980) (File No. 4-267) (notice of 1980 
Amendment); 16719 (April 2, 1980), 45 FR 23841 (April 8, 1980) (File 
No. 4-267) (order granting temporary approval); and 16858 (May 30, 
1980), 45 FR 37927 (June 5, 1980) (File No. 4-267) (approval order).
    \13\ See supra note 3.
    \14\ See Securities Exchange Act Release No. 52497 (September 
22, 2005), 70 FR 56949 (September 29, 2005) (approving SR-PCX-2005-
90, as amended).
    \15\ Archipelago Securities acts as the outbound order router 
for the NYSE Arca Marketplace (formerly, the Archipelago Exchange, 
or ArcaEx), the equities trading facility of NYSE Arca.
    \16\ See Securities Exchange Act Release Nos. 52995 (December 
21, 2005), 70 FR 77232 (December 29, 2005); 53545 (March 23, 2006), 
71 FR 16183 (March 30, 2006); and 54046 (June 26, 2006), 71 FR 37965 
(July 3, 2006).
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     On January 20, 2006, the Parties submitted an amended and restated 
17d-2 plan for review and approval by the Commission. On July 25, 2006, 
the Parties submitted a revised amended and restated plan. The revised 
amended and restated plan is intended to replace and supersede the 
current NASD-PCX 17d-2 Plan and all prior amendments thereto in their 
entirety. The revised amended and restated 17d-2 plan is intended to 
reduce regulatory duplication for firms that are common members of NYSE 
Arca and the NASD. The text of the plan delineates regulatory 
responsibilities with respect to the Parties, including responsibility 
for NYSE Arca rules. Included in the revised amended and restated plan 
is an attachment (``NYSE Arca Rules Certification for 17d-2 Agreement 
with NASD,'' referred to herein as the ``Certification'') that lists 
every NYSE Arca rule and the federal securities laws and rules and 
regulations thereunder for which, under the plan, the NASD would bear 
responsibility for overseeing and enforcing with respect to common 
members. In particular, under the revised amended and restated 17d-2 
plan, the NASD would assume examination and enforcement responsibility 
relating to compliance by dual members and persons associated therewith 
with the rules of NYSE Arca that are substantially similar to the rules

[[Page 43825]]

of the NASD (``Common Rules''), as well as any provisions of the 
federal securities laws and the rules and regulations thereunder 
delineated in the Certification.\17\ Under the plan, NYSE Arca would 
retain full responsibility for surveillance and enforcement with 
respect to trading activities or practices involving NYSE Arca's own 
marketplace; registration pursuant to its unique rules (i.e., non-
common rules); its duties as a Designated Examining Authority pursuant 
to Rule 17d-1 under the Act; and any rules that are not substantially 
similar to the rules of the NASD, except for NYSE Arca rules for any 
broke-dealer subsidiary of Archipelago.\18\
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    \17\ See paragraph 2 of the revised amended and restated 17d-2 
plan. The Commission notes that there is only one federal security 
law rule on the Certification, Rule 200 of Regulation SHO.
    \18\ See id. Apparent violations of such NYSE Arca rules by any 
broker-dealer subsidiary of Archipelago will be processed by, and 
enforcement proceedings will be conducted by, the NASD. See 
paragraph 5 of the revised amended and restated 17d-2 plan.
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    The text of the revised amended and restated 17d-2 plan is as 
follows:

Agreement Between the NASD and NYSA Arca, Inc. Pursuant to Sec Rule 
17d-2 Under the Securities Exchange Act of 1934

    This Agreement, between the National Association of Securities 
Dealers, Inc. (``NASD'') and the NYSE Arca, Inc. (``NYSE Arca''), is 
made this 25th day of July, 2006, pursuant to the provisions of SEC 
Rule 17d-2 under the Securities Exchange Act of 1934 which calls for 
agreements between self-regulatory organizations for plans to reduce or 
eliminate regulatory duplication.
    This Agreement supersedes and replaces Agreements entered into 
between the parties on May 27, 1977 and January 20, 2006, entitled 
``Agreement Between the National Association of Securities Dealers, 
Inc. and the Pacific Stock Exchange, Inc. Pursuant to SEC Rule 17d-2 
Under the Securities Exchange Act of 1934,'' and any subsequent 
amendments thereafter.
    Whereas, NASD and NYSE Arca are desirous of reducing duplication in 
the examination of their dual members (a broker-dealer firm which is a 
member of both NASD and NYSE Arca) and in the filing and processing of 
certain registration and membership records; and
    Whereas, NASD and NYSE Arca are desirous of executing a plan 
covering such subjects pursuant to the provisions of Rule 17d-2 and 
filing such with the Commission for its approval.
    Now, therefore, in consideration of the mutual covenants contained 
hereafter, the said NASD and NYSE Arca hereby agree as follows:
    1. That NASD will assume regulatory responsibilities for all firms 
who are members of NYSE Arca and NASD (``dual members''). NYSE Arca 
shall furnish NASD with a current list of dual members, which shall be 
updated no less frequently than once each quarter.
    2. For purposes of this plan, the term ``regulatory 
responsibilities'' shall mean the examination and enforcement 
responsibility relating to compliance by the dual members and persons 
associated therewith with the rules of NYSE Arca that are substantially 
similar to the rules of NASD in that the NYSE Arca's rule would not 
require NASD to develop one or more new examination standards, modules, 
procedures, or criteria in order to analyze the application of the 
rule, or a dual member's activity, conduct, or output in relation to 
such rule, (the ``Common Rules''). Prior to the effective date of this 
Agreement, NYSE Arca shall furnish NASD with a current list of Common 
Rules (``Certification''), and NASD will confirm in writing whether the 
rules listed in the Certification are Common Rules as defined in this 
Agreement. Each year following the commencement of operation of this 
Agreement, or more frequently if required by changes in either the 
rules of NYSE Arca or NASD, NYSE Arca shall submit an updated list of 
Common Rules to NASD for review which shall add NYSE Arca rules not 
included in the current list of Common Rules that qualify as Common 
Rules as defined in this Agreement; delete NYSE Arca 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 NYSE Arca rules that 
qualify as Common Rules as defined in this Agreement. Within 30 days of 
receipt of such updated list, NASD will confirm in writing whether the 
rules listed in any updated list are Common Rules as defined in this 
Agreement. Regulatory responsibilities under this Agreement shall also 
extend to those provisions of the federal securities laws and rules and 
regulations thereunder listed in the Certification.
    The term ``enforcement responsibility'' shall mean the conduct of 
appropriate proceedings, in accordance with the NASD Code of Procedure 
(the Rule 9000 Series) and other applicable NASD procedural rules, to 
determine whether violations of pertinent laws, rules or regulations 
have occurred, and if such violations are deemed to have occurred, the 
imposition of appropriate sanctions as specified under the NASD's Code 
of Procedure and sanctions guidelines. Notwithstanding anything herein 
to the contrary, it is explicitly understood that the term ``regulatory 
responsibilities'' does not include, and NYSE Arca will retain full 
responsibility for (unless otherwise addressed by separate agreement or 
rule):
    (a) Surveillance and enforcement with respect to trading activities 
or practices involving NYSE Arca's own marketplace, including without 
limitation NYSE Arca's rules relating to the rights and obligations of 
market makers;
    (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 Act; and
    (d) Any rules of NYSE Arca that are not substantially similar to 
the rules of NASD, except for NYSE Arca rules for any broker-dealer 
subsidiary of Archipelago Holdings, Inc. as provided in paragraph 5.
    3. There shall be no charge to NYSE Arca by NASD for performing the 
stated regulatory responsibilities under this plan except as 
hereinafter provided. NASD will provide NYSE Arca with ninety (90) days 
advance written notice in the event NASD decides to impose any charges 
to NYSE Arca for performing the stated regulatory responsibilities 
under this plan. If it becomes necessary to impose a charge, NYSE Arca 
shall have the right at the time of the imposition of such to terminate 
this Agreement; provided, however, that NASD's regulatory 
responsibilities under this Agreement shall continue until the SEC 
approves the termination of this Agreement.
    4. Notwithstanding any provision hereof, this Agreement shall be 
subject to any statute, or any rule or order of the Securities and 
Exchange Commission, or industry agreement, restructuring the 
regulatory framework of the securities industry or reassigning 
regulatory responsibilities between self-regulatory organizations. To 
the extent such is inconsistent with this Agreement, such shall 
supersede the provisions hereof to the extent necessary for them to be 
properly effectuated and the provisions hereof in that respect shall be 
null and void.
    5. Should NASD become aware of apparent violations of NYSE Arca's 
rules, which are not listed as Common Rules, discovered pursuant to the 
performance of the regulatory

[[Page 43826]]

responsibilities assumed hereunder, NASD will notify NYSE Arca of those 
apparent violations. With respect to apparent violations of any NYSE 
Arca rules by any broker-dealer subsidiary of NYSE Arca's parent 
company, Archipelago Holdings, Inc., NASD shall not make referrals to 
NYSE Arca pursuant to this Item 5. Such apparent violations shall be 
processed by, and enforcement proceedings in respect thereto will be 
conducted by, NASD as provided in this agreement. Apparent violations 
of all other applicable rules, including violations of the various 
securities acts, and rules and regulations thereunder, will be 
processed by, and enforcement proceedings in respect thereto will be 
conducted by NASD as provided hereinbefore; provided however that in 
the event a covered dual member or a person associated therewith is the 
subject of an investigation relating to a transaction on NYSE Arca, 
NYSE Arca may in its discretion assume concurrent jurisdiction and 
responsibility. Each party agrees to make available promptly all files, 
records and witnesses necessary to assist the other in its 
investigation or proceedings.
    6. NASD will make available to NYSE Arca all information obtained 
by it in the performance by it of the regulatory responsibilities 
hereunder in respect to the firms which are subject to this Agreement. 
In particular, and not in limitation of the foregoing, NASD will 
furnish NYSE Arca any information it obtains about dual members which 
reflects adversely on their financial condition and which should be 
known by NYSE Arca or any subsidiaries thereof. It is understood that 
such information is of an extremely sensitive nature and, accordingly, 
NYSE Arca agrees to take all reasonable steps to maintain its 
confidentiality. NYSE Arca will supply NASD 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.
    7. Dual members subject to this agreement will be required to 
submit, and NASD will be responsible for processing and acting upon all 
applications submitted on behalf of allied persons, partners, officers, 
registered personnel and any other person required to be approved by 
the rules of both NYSE Arca and NASD or associated with dual members 
thereof. NASD shall advise NYSE Arca monthly of any changes of allied 
members, partners, officers, registered personnel and other persons 
required to be approved by the rules of both NYSE Arca and NASD. Dual 
members will be required to send to NASD all letters, termination 
notices or other material respecting these individuals. When as a 
result of processing said submissions NASD becomes aware of a statutory 
disqualification as defined in the Securities Exchange Act of 1934 with 
respect to a dual member or person associated with a dual member, NASD 
will determine pursuant to sections 15A(g) and/or section 6(c) the 
acceptability or continued applicability of the person to whom such 
disqualification applies and keep NYSE Arca advised of its actions in 
this regard.
    NASD will also be responsible for processing and, if required, 
acting upon all requests for the opening, address changes, and 
terminations of branch offices by dual members and any other 
applications required of dual members under the Common Rules as they 
may be amended from time to time. NASD will advise NYSE Arca monthly of 
the opening, address change and termination of branch and main offices 
of dual members and the names of such branch office managers.
    8. NYSE Arca shall forward to NASD copies of all customer 
complaints involving dual members and persons associated therewith 
received by it relating to NASD's regulatory responsibilities under 
this Agreement. It shall be NASD's responsibility to review and take 
appropriate action in respect to such complaints.
    9. NASD shall assume responsibility to review the advertising of 
dual members subject to the Agreement, provided that such material is 
filed with NASD in accordance with NASD's filing procedures and is 
accompanied with any applicable filing fees. Such review will be made 
in accordance with then applicable NASD rules and interpretations. In 
all cases of dual members subject to this Agreement, the advertising of 
dual members shall be subject only to compliance with appropriate NASD 
rules and interpretations.
    10. Nothing contained in this Agreement shall restrict or in any 
way encumber the right of NASD or NYSE Arca to conduct special or cause 
examinations of dual members and persons associated therewith as NASD 
or NYSE Arca, in their sole discretions, shall deem appropriate.
    11. NYSE Arca recognizes that, pursuant to this Agreement, NASD 
will maintain an available and appropriate mechanism for considering 
and acting upon requests by dual members for extensions of time 
pursuant to Federal Reserve Regulation T and SEC Rule 15c3-3 of the 
Securities Exchange Act of 1934. NASD will keep NYSE Arca informed with 
respect to its activities in granting extensions of time pursuant to 
Regulation T and Rule 15c3-3 to dual members in such form and content 
as reasonably determined by NASD.
    12. Should a dispute arise between the parties as to the operation 
of this Agreement, NYSE Arca and NASD 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.
    13. This Agreement may be cancelled by NYSE Arca or NASD at any 
time with the approval of the Securities and Exchange Commission upon 
one (1) year's written notice, except as provided in paragraph 3.
    14. This Agreement shall be effective upon approval of the 
Securities and Exchange Commission.
    15. This Agreement is wholly separate from the multiparty Agreement 
made pursuant to SEC Rule 17d-2 of the Securities Exchange Act of 1934 
between the American Stock Exchange LLC, the Boston Stock Exchange, 
Inc., the Chicago Board Options Exchange, Inc., the International 
Securities Exchange, Inc., the National Association of Securities 
Dealers, Inc., the New York Stock Exchange, Inc., the Pacific Exchange, 
Inc., and the Philadelphia Stock Exchange involving the allocation of 
regulatory responsibilities with respect to common members for 
compliance with common rules relating to the conduct by broker-dealers 
of accounts for listed options or index warrants entered into on 
January 14, 2004, and as may be amended from time to time.
Limitation of Liability
    Neither NASD nor NYSE Arca nor any of their respective directors, 
governors, officers or employees shall be liable to the other party to 
this plan 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 NASD or NYSE Arca 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

[[Page 43827]]

by NASD or NYSE Arca with respect to any of the responsibilities to be 
performed by each of them hereunder.
Relief From Responsibility
    Pursuant to Sections 17(d)(1)(A) and 19(g) of the Securities 
Exchange Act of 1934 and Rule 17d-2 promulgated pursuant thereto, NASD 
and NYSE Arca join in requesting the Commission, upon its approval of 
this plan or any part thereof, to relieve NYSE Arca of any and all 
responsibilities with respect to matters allocated to NASD pursuant to 
this plan.

NYSE Arca Certification

NYSE Arca Rules Certification for 17d-2 Agreement With NASD
    NYSE Arca, Inc. hereby certifies that the requirements contained in 
the rules listed below for NYSE Arca Equities, Inc., a wholly-owned 
subsidiary, are identical to, or substantially similar to, comparable 
NASD rules (``Common Rules'') as of July 2006.\19\
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    \19\ The Commission notes that the Certification attached to the 
executed revised amended and restated plan also includes references 
to the NASD rules to which the Common Rules are identical or 
substantially similar. Further, the Certification notes that, with 
respect to several of the NYSE Arca rules, NYSE Arca will be 
responsible for any significant differences between its rule and the 
comparable NASD rule identified, until such time amendments to such 
rule(s) may be approved. A copy of the revised amended and restated 
plan, including the Certification, is available on the Commission's 
Web site at http://www.sec.gov.

------------------------------------------------------------------------
               Rule                             Description
------------------------------------------------------------------------
2.15.............................  Responsibilities of Non-Resident
                                    Firms.
2.21.............................  Employees of ETP Holder Registration.
2.24.............................  ETP Books and Records.
6.1..............................  Adherence to Law.
6.2..............................  Prohibited Acts.
6.6..............................  Front-Running of Block Transactions.
6.13.............................   Disciplinary Action By Other
                                    Organizations.
6.15.............................   Miscellaneous Prohibitions.
6.16.............................   Trading Ahead of Customer Limit
                                    Orders.
6.17.............................   Anti-Money Laundering Compliance
                                    Program.
6.18.............................   Supervision.
8.4..............................  Account Approval.
8.5..............................  Suitability.
8.6..............................  Discretionary Accounts.
8.7..............................  Supervision of Accounts.
8.8..............................  Customer Complaints.
8.9..............................  Prior Approval of Certain
                                    Communications to Customers.
9.1(a)...........................  Register with the Corporation.
9.1(c)...........................  Office Supervision.
9.1(d)...........................  Designation of Firm Principal.
9.1(e)...........................  Guarantees.
9.1(f)...........................  Sharing Profits--Losses.
9.2(b)...........................  Account Supervision.
9.2(c)...........................  Customer Records.
9.3(a)...........................  Employee Accounts.
9.3(b)...........................  ETP Holder and Allied Person
                                    Accounts.
9.4..............................  Proxies Voting.
9.5..............................  Solicitation Expense.
9.6(a)...........................  Discretion as to Customers' Accounts.
9.6(b)...........................  Records of Discretionary Accounts.
9.7(a)...........................  Pledging Customer Securities.
9.7(b)...........................  Use of Customer Securities.
9.7(c)...........................  Customer Protection--Reserves and
                                    Custody of Securities.
9.7(d)...........................  Agreements for Use of Customer
                                    Securities.
9.10.............................  Assuming Losses.
9.11.............................  Confirmations.
9.12.............................  COD Orders--Partial Delivery.
9.13.............................  Long Sales.
9.14.............................  Account Designation.
9.15.............................  Statements of Account to Customers.
9.17.............................  Books and Records.
9.19.............................  Transfer of Accounts.
9.20(b)..........................  Telemarketing.
9.21(a)..........................  Policy.
9.22(a)..........................  Advertisements.
9.23.............................  Sales Literature--Market Letters.
9.24.............................  Radio, Television, Telephone and
                                    Other Reports.
9.25.............................  Standards.
9.27.............................  Registration of Representatives.
9.27.............................  Regulatory Element.
9.29.............................  Borrowing From or Lending to
                                    Customers.
------------------------------------------------------------------------

In addition, the following provisions of the Securities Exchange Act of 
1934, and rules and regulations thereunder, shall be part of this 17d-2 
Agreement: Rule 200 of Regulation SHO-Definition of ``Short Sale'' and 
Marking Requirements.

III. Date of Effectiveness of the Proposed Plan and Timing for 
Commission Action

    Pursuant to Section 17(d)(1) of the Act \20\ and Rule 17d-2 
thereunder,\21\ after August 23, 2006, the Commission may, by written 
notice, declare the plan submitted by NYSE Arca and the NASD, File No. 
4-523, 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.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78q(d)(1).
    \21\ 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 revised amended and restated 17d-2 plan and to relieve NYSE Arca of 
the responsibilities which would be assigned to the NASD, 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 e-mail to rule-comments@sec.gov. Please include 
File Number 4-523 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number 4-523. This file number 
should be included on the subject line if E-mail 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 inspection and copying in the 
Commission's Public Reference Room. Copies of the plan also will be 
available for inspection and copying at the principal office of the 
Exchange. 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 4-523 
and should be submitted on or before August 23, 2006.
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    \22\ 17 CFR 200.30-3(a)(34).


[[Page 43828]]


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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-12429 Filed 8-1-06; 8:45 am]
BILLING CODE 8010-01-P