Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of Regulatory Responsibilities Among the American Stock Exchange LLC, the Boston Stock Exchange, Inc., the Chicago Board Options Exchange, Incorporated, the International Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., and the Philadelphia Stock Exchange, Inc., 63637-63642 [E7-21980]
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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change. The text of
these statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
equity transaction fees effective
November 1, 2007. Member
Organizations are currently charged a
transaction fee of $.0004 per share on at
the opening and at the opening only
orders 3 in equity securities (excluding
ETFs) whether they are providing or
taking liquidity. Under the proposed
amendment, Member Organizations will
no longer be charged this fee.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the objectives of section 6 of the Act 4
in general and furthers the objectives of
section 6(b)(4) of the Act 5 in particular,
in that it is designed to provide for the
equitable allocation of reasonable dues,
fees, and other charges among its
members and other persons using its
facilities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
3 NYSE Rule 13 defines an at the opening or at
the opening only order as a market or limited price
order which is to be executed on the opening trade
of the stock on the Exchange or, if the Exchange
opens the stock on a quote, the opening trade in the
stock on another market center to which such order
or part thereof has been routed in compliance with
Regulation NMS, and any such order or portion
thereof not so executed is to be treated as cancelled.
4 15 U.S.C. 78f.
5 15 U.S.C. 78f(b)(4).
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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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has become effective upon filing
pursuant to section 19(b)(3)(A) of the
Act 6 and Rule 19b–4(f)(2) 7 thereunder,
because it establishes or changes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such 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
(https://www.sec.gov/rules/sro.shtml); or
• Send an e-mail to
rule-comments@sec.gov. Please include
File Number SR–NYSE–2007–100 on
the subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSE–2007–100. 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 Commissions
Internet Web site
(https://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
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be
available for inspection and copying at
the principal office of the NYSE. 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 SR–NYSE–2007–100 and
should be submitted on or before
November 30, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.8
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–21983 Filed 11–8–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56731; File No. 4–551]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule
17d–2; Notice of Filing of Proposed
Plan for the Allocation of Regulatory
Responsibilities Among the American
Stock Exchange LLC, the Boston
Stock Exchange, Inc., the Chicago
Board Options Exchange,
Incorporated, the International
Securities Exchange, LLC, Financial
Industry Regulatory Authority, Inc.,
NYSE Arca, Inc., and the Philadelphia
Stock Exchange, Inc.
November 1, 2007.
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 October
30, 2007, the American Stock Exchange
LLC (‘‘Amex’’), the Boston Stock
Exchange, Inc. (‘‘BSE’’), the Chicago
Board Options Exchange, Incorporated
(‘‘CBOE’’), the International Securities
Exchange, LLC (‘‘ISE’’), Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’), NYSE Arca, Inc. (‘‘NYSE
Arca’’), and the Philadelphia Stock
8 17
CFR 200.30–3(a)(12).
U.S.C. 78q(d).
2 17 CFR 240.17d–2.
6 15
U.S.C. 78s(b)(3)(A).
7 17 CFR 19b–4(f)(2).
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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Notices
Exchange, Inc. (‘‘Phlx’’) (collectively,
‘‘Participants’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) a plan for the
allocation of regulatory responsibilities.
The Commission is publishing this
notice to solicit comments on the 17d–
2 plan from interested persons.
I. Introduction
Section 19(g)(1) of the Act,3 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or national securities
association to examine for, and enforce
compliance by, its members and persons
associated with its members with the
Act, the rules and regulations
thereunder, and the SRO’s own rules,
unless the SRO is relieved of this
responsibility pursuant to section
17(d) 4 or section 19(g)(2) 5 of the Act.
Without this relief, the statutory
obligation of each individual SRO could
result in a pattern of multiple
examinations of broker-dealers that
maintain memberships in more than one
SRO (‘‘common members’’). Such
regulatory duplication would add
unnecessary expenses for common
members and their SROs.
Section 17(d)(1) of the Act 6 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.7 With respect to
a common member, section 17(d)(1)
authorizes the Commission, by rule or
order, to relieve an SRO of the
responsibility to receive regulatory
reports, to examine for and enforce
compliance with applicable statutes,
rules, and regulations, or to perform
other specified regulatory functions.
To implement section 17(d)(1), the
Commission adopted two rules: Rule
17d–1 and Rule 17d–2 under the Act.8
Rule 17d–1 authorizes the Commission
to name a single SRO as the designated
examining authority (‘‘DEA’’) to
examine common members for
compliance with the financial
responsibility requirements imposed by
the Act, or by Commission or SRO
rules.9 When an SRO has been named as
a common member’s DEA, all other
SROs to which the common member
3 15
U.S.C. 78s(g)(1).
U.S.C. 78q(d).
5 15 U.S.C. 78s(g)(2).
6 15 U.S.C. 78q(d)(1).
7 See Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
9 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
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4 15
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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.10
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities with respect
to their common members. Under
paragraph (c) of Rule 17d–2, the
Commission may declare such a plan
effective if, after providing for notice
and comment, it determines that the
plan is necessary or appropriate in the
public interest and for the protection of
investors, to foster cooperation and
coordination among the SROs, to
remove impediments to, and foster the
development of, a national market
system and a national clearance and
settlement system, and is in conformity
with the factors set forth in section 17(d)
of the Act. Commission approval of a
plan filed pursuant to Rule 17d–2
relieves an SRO of those regulatory
responsibilities allocated by the plan to
another SRO.
II. The Plan
The proposed plan is intended to
reduce regulatory duplication for
brokers or dealers that are members of
two or more of the Participants by
allocating regulatory responsibility for
certain options-related market
surveillance matters among the
Participants.11 Under the plan, a
Participant will serve as the Designated
Options Surveillance Regulator
(‘‘DOSR’’) for each common member
10 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
11 The proposed plan is wholly separate from the
multiparty options agreement made pursuant to
Rule 17d–2 by and among the Amex, BSE, CBOE,
ISE, NASD (n/k/a FINRA), the New York Stock
Exchange LCC, NYSE Arca, and Phlx involving the
allocation of regulatory responsibilities with respect
to common members for compliance with common
rules relating to the conduct of broker-dealers of
accounts for listed options or index warrants
entered into on December 1, 2006, and as may be
amended from time to time. See Securities
Exchange Act Release Nos. 55145 (January 22,
2007), 72 FR 3882 (January 26, 2007) (File No. S7–
966) (notice) and 55532 (March 26, 2007), 72 FR
15729 (April 2, 2007) (File No. S7–966) (order).
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assigned to it and will assume
regulatory responsibility with respect to
that common member’s compliance
with applicable common rules for
certain accounts. As proposed, the plan
currently is limited to review of
expiring exercise declarations pursuant
to the common rules listed in proposed
Exhibit A. The full text of the proposed
17d–2 plan is as follows:
*
*
*
*
*
AGREEMENT BY AND AMONG THE
American Stock Exchange LLC, the
Boston Stock Exchange, Inc., the
Chicago Board Options Exchange,
Incorporated, the International
Securities Exchange LLC, Financial
Industry Regulatory Authority, Inc.,
NYSE Arca, Inc., and the Philadelphia
Stock Exchange, Inc., Pursuant to Rule
17d–2 under the Securities Exchange
Act of 1934
This agreement (this ‘‘Agreement’’),
by and among the American Stock
Exchange LLC (‘‘Amex’’), the Boston
Stock Exchange, Inc. (‘‘BSE’’), the
Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’), the
International Securities Exchange LLC
(‘‘ISE’’), Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’), NYSE Arca,
Inc. (‘‘Arca’’), and the Philadelphia
Stock Exchange, Inc. (‘‘PHLX’’), is made
this 10th day of October, 2007, pursuant
to section 17(d) of the Securities
Exchange Act of 1934, as amended (the
‘‘Exchange Act’’), and Rule 17d–2
thereunder (‘‘Rule 17d–2’’), which
allows for a joint plan among selfregulatory organizations (‘‘SROs’’) to
allocate regulatory obligations with
respect to brokers or dealers that are
members of two or more of the parties
to this Agreement (‘‘Common
Members’’). The Amex, BSE, CBOE, ISE,
FINRA, Arca, and PHLX are collectively
referred to herein as the ‘‘Participants’’
and individually, each a ‘‘Participant.’’
This Agreement shall be administered
by a committee known as the Options
Surveillance Group (the ‘‘OSG’’ or
‘‘Group’’), as described in section V
hereof. Unless defined in this
Agreement or the context otherwise
requires, the terms used herein shall
have the meanings assigned thereto by
the Exchange Act and the rules and
regulations thereunder.
WHEREAS, the Participants desire to
eliminate regulatory duplication with
respect to SRO market surveillance of
Common Member 1 activities with
1 In the case of the BSE, members are those
persons who are Options Participants (as defined in
the Boston Options Exchange LLC Rules).
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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Notices
regard to certain common rules relating
to listed options (‘‘Options’’); and
WHEREAS, for this purpose, the
Participants desire to execute and file
this Agreement with the Securities and
Exchange Commission (the ‘‘SEC’’ or
‘‘Commission’’) pursuant to Rule 17d–2.
NOW, THEREFORE, in consideration
of the mutual covenants contained in
this Agreement, the Participants agree as
follows:
I. Except as otherwise provided in this
Agreement, each Participant shall
assume Regulatory Responsibility (as
defined below) for the Common
Members that are allocated or assigned
to such Participant in accordance with
the terms of this Agreement and shall be
relieved of its Regulatory Responsibility
as to the remaining Common Members.
For purposes of this Agreement, a
Participant shall be considered to be the
Designated Options Surveillance
Regulator (‘‘DOSR’’) for each Common
Member that is allocated to it in
accordance with Section VII.
II. As used in this Agreement, the
term ‘‘Regulatory Responsibility’’ shall
mean surveillance, investigation and
enforcement responsibilities relating to
compliance by the Common Members
with such Options rules of the
Participants as the Participants shall
determine are substantially similar and
shall approve from time to time, insofar
as such rules relate to market
surveillance (collectively, the ‘‘Common
Rules’’). For the purposes of this
Agreement the list of Common Rules is
attached as Exhibit A hereto, which may
only be amended upon unanimous
written agreement by the Participants.
The DOSR assigned to each Common
Member shall assume Regulatory
Responsibility with regard to that
Common Member’s compliance with the
applicable Common Rules for certain
accounts.2 A DOSR may perform its
Regulatory Responsibility or enter an
agreement to transfer or assign such
responsibilities to a national securities
exchange registered with the SEC under
section 6(a) of the Exchange Act or a
national securities association registered
with the SEC under section 15A of the
Exchange Act. A DOSR may not transfer
or assign its Regulatory Responsibility
to an association registered for the
limited purpose of regulating the
activities of members who are registered
as brokers or dealers in security futures
products.
2 Certain accounts shall include customer (‘‘C’’ as
classified by the Options Clearing Corporation
(‘‘OCC’’)) and firm (‘‘F’’ as classified by OCC)
accounts, as well as other accounts, such as market
maker accounts as the Participants shall, from time
to time, identify as appropriate to review.
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The term ‘‘Regulatory Responsibility’’
does not include, and each Participant
shall retain full responsibility with
respect to:
(a) Surveillance, investigative and
enforcement responsibilities other than
those included in the definition of
Regulatory Responsibility;
(b) any aspects of the rules of a
Participant that are not substantially
similar to the Common Rules or that are
allocated for a separate surveillance
purpose under any other agreement
made pursuant to Rule 17d–2. Any such
aspects of a Common Rule will be noted
as excluded on Exhibit A.
III. Each year within 30 days of the
anniversary date of the commencement
of operation of this Agreement, or more
frequently if required by changes in the
rules of a Participant, each Participant
shall submit to the other Participants,
through the Chair of the OSG, an
updated list of Common Rules for
review. This updated list may add
Common Rules to Exhibit A, shall delete
from Exhibit A rules of that Participant
that are no longer identical or
substantially similar to the Common
Rules, and shall confirm that the
remaining rules of the Participant
included on Exhibit A continue to be
identically or substantially similar to
the Common Rules. Within 30 days
from the date that each Participant has
received revisions to Exhibit A from the
Chair of the OSG, each Participant shall
confirm in writing to the Chair of the
OSG whether that Participant’s rules
listed in Exhibit A are Common Rules.
IV. Apparent violation of another
Participant’s rules discovered by a
DOSR, but which rules are not within
the scope of the discovering DOSR’s
Regulatory Responsibility, shall be
referred to the relevant Participant for
such action as is deemed appropriate by
that Participant. Notwithstanding the
foregoing, nothing contained herein
shall preclude a DOSR in its discretion
from requesting that another Participant
conduct an investigative or enforcement
proceeding (‘‘Proceeding’’) on a matter
for which the requesting DOSR has
Regulatory Responsibility. If such other
Participant agrees, the Regulatory
Responsibility in such case shall be
deemed transferred to the accepting
Participant and confirmed in writing by
the Participants involved. Additionally,
nothing in this Agreement shall prevent
another Participant on whose market
potential violative activity took place
from conducting its own Proceeding on
a matter. The Participant conducting the
Proceeding shall advise the assigned
DOSR. Each Participant agrees, upon
request, to make available promptly all
relevant files, records and/or witnesses
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63639
necessary to assist another Participant
in a Proceeding.
V. The OSG shall be composed of one
representative designated by each of the
Participants (a ‘‘Representative’’). Each
Participant shall also designate one or
more persons as its alternate
representative(s) (an ‘‘Alternate
Representative’’). In the absence of the
Representative, the Alternate
Representative shall assume the powers,
duties and responsibilities of the
Representative. Each Participant may at
any time replace its Representative and/
or its Alternate Representative to the
Group.3 A majority of the OSG shall
constitute a quorum and, unless
otherwise required, the affirmative vote
of a majority of the Representatives
present (in person, by telephone or by
written consent) shall be necessary to
constitute action by the Group. The
Group will have a Chair, Vice Chair and
Secretary. A different Participant will
assume each position on a rotating basis
for a one-year term. In the event that a
Participant replaces a Representative
who is acting as Chair, Vice Chair or
Secretary, the newly appointed
Representative shall assume the
position of Chair, Vice Chair, or
Secretary (as applicable) vacated by the
Participant’s former Representative. In
the event a Participant cannot fulfill its
duties as Chair, the Participant serving
as Vice Chair shall substitute for the
Chair and complete the subject
unfulfilled term. All notices and other
communications for the OSG are to be
sent in care of the Chair and, as
appropriate, to each Representative.
VI. The OSG shall determine the
times and locations of Group meetings,
provided that the Chair, acting alone,
may also call a meeting of the Group in
the event the Chair determines that
there is good cause to do so. To the
extent reasonably possible, notice of any
meeting shall be given at least ten
business days prior to the meeting date.
Representatives shall always be given
the option of participating in any
meeting telephonically at their own
expense rather than in person.
VII. No less frequently than every two
years, in such manner as the Group
deems appropriate, the OSG shall
allocate Common Members that conduct
an Options business among the
Participants (‘‘Allocation’’), and the
Participant to which a Common Member
is allocated will serve as the DOSR for
that Common Member. Any Allocation
shall be based on the following
principles, except to the extent all
3 A Participant must give notice to the Chair of
the Group of such a change.
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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Notices
affected Participants consent to one or
more different principles:
(a) The OSG may not allocate a
Common Member to a Participant
unless the Common Member is a
member of that Participant.
(b) To the extent practicable, Common
Members that conduct an Options
business shall be allocated among the
Participants of which they are members
in such manner as to equalize as nearly
as possible the allocation among such
Participants, provided that no Common
Members shall be allocated to FINRA.
For example, if sixteen Common
Members that conduct an Options
business are members only of three
Participants, none of which is FINRA,
those Common Members shall be
allocated among the three Participants
such that no Participant is allocated
more than six such members and no
Participant is allocated less than five
such members. If, in the previous
example, one of the three Participants is
FINRA, the sixteen Common Members
would be allocated evenly between the
remaining Participants, so that the two
non-FINRA Participants would be
allocated eight Common Members each.
(c) To the extent practicable,
Allocation shall take into account the
amount of Options activity conducted
by each Common Member in order to
most evenly divide the Common
Members with the largest amount of
activity among the Participants of which
they are members. Allocation will also
take into account similar allocations
pursuant to other plans or agreements to
which the Common Members are party
to maintain consistency in oversight of
the Common Members.4
(d) To the extent practicable,
Allocation of Common Members to
Participants will be rotated among the
applicable Participants such that a
Common Member shall not be allocated
to a Participant to which that Common
Member was allocated within the
previous two years. The assignment of
DOSRs pursuant to the Allocation is
attached as Exhibit B hereto, and will be
updated from time to time to reflect
Common Member Allocation changes.
(e) The Group may reallocate
Common Members from time to time, as
it deems appropriate.
(f) Whenever a Common Member
ceases to be a member of its DOSR, the
DOSR shall promptly inform the Group,
which shall review the matter and
allocate the Common Member to
another Participant.
4 For example, if one Participant was allocated a
Common Member by another regulatory group that
Participant would be assigned to be the DOSR of
that Common Member, unless there is good cause
not to make that assignment.
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(g) A DOSR may request that a
Common Member to which it is
assigned be reallocated to another
Participant by giving 30 days written
notice to the Chair of the OSG. The
Group, in its discretion, may approve
such request and reallocate the Common
Member to another Participant.
(h) All determinations by the Group
with respect to Allocation shall be made
by the affirmative vote of a majority of
the Participants that, at the time of such
determination, share the applicable
Common Member being allocated; a
Participant shall not be entitled to vote
on any Allocation relating to a Common
Member unless the Common Member is
a member of such Participant.
VIII. Each DOSR shall conduct routine
surveillance reviews to detect violations
of the applicable Common Rules by
each Common Member allocated to it
with a frequency (daily, weekly,
monthly, quarterly, semi-annually or
annually as noted on Exhibit A) not less
than that determined by the Group. The
other Participants agree that, upon
request, relevant information in their
respective files relative to a Common
Member will be made available to the
applicable DOSR.
At each meeting of the OSG, each
Participant shall be prepared to report
on the status of its surveillance program
for the previous quarter and any period
prior thereto that has not previously
been reported to the Group. In the event
a DOSR believes it will not be able to
complete its Regulatory Responsibility
for its allocated Common Members, it
will so advise the Group in writing
promptly. The Group will undertake to
remedy this situation by reallocating the
subject Common Members among the
remaining Participants. In such
instance, the Group may determine to
impose a regulatory fee for services
provided to the DOSR that was unable
to fulfill its Regulatory Responsibility.
IX. Each Participant will, upon
request, promptly furnish a copy of the
report or applicable portions thereof
relating to any investigation made
pursuant to the provisions of this
Agreement to each other Participant of
which the Common Member under
investigation is a member.
X. Each Participant will routinely
populate a common database, to be
accessed by the Group relating to any
formal regulatory action taken during
the course of a Proceeding with respect
to the Common Rules concerning a
Common Member.
XI. Any written notice required or
permitted to be given under this
Agreement shall be deemed given if sent
by certified mail, return receipt
requested, to any Participant to the
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attention of that Participant’s
Representative, to the Participant’s
principal place of business or by e-mail
at such address as the Representative
shall have filed in writing with the
Chair.
XII. The costs incurred by each
Participant in discharging its Regulatory
Responsibility under this Agreement are
not reimbursable. However, any of the
Participants may agree that one or more
will compensate the other(s) for costs
incurred.
XIII. The Participants shall notify the
Common Members of this Agreement by
means of a uniform joint notice
approved by the Group. Each
Participant will notify the Common
Members that have been allocated to it
that such Participant will serve as DOSR
for that Common Member.
XIV. This Agreement shall be effective
upon approval of the Commission. This
Agreement may only be amended in
writing duly approved by each
Participant. All amendments to this
Agreement, excluding changes to
Exhibits A and B, must be filed with
and approved by the Commission.
XV. Any Participant may manifest its
intention to cancel its participation in
this Agreement at any time upon
providing written notice to (i) the Group
six months prior to the date of such
cancellation, or such other period as all
the Participants may agree, and (ii) the
Commission. Upon receipt of the notice
the Group shall allocate, in accordance
with the provisions of this Agreement,
those Common Members for which the
canceling Participant was the DOSR.
The canceling Participant shall retain its
Regulatory Responsibility and other
rights, privileges and duties pursuant to
this Agreement until the Group has
completed the reallocation as described
above, and the Commission has
approved the cancellation.
XVI. The cancellation of its
participation in this Agreement by any
Participant shall not terminate this
Agreement as to the remaining
Participants. This Agreement will only
terminate following notice to the
Commission, in writing, by the then
Participants that they intend to
terminate the Agreement and the
expiration of the applicable notice
period. Such notice shall be given at
least six months prior to the intended
date of termination, or such other period
as all the Participants may agree. Such
termination will become effective upon
Commission approval.
XVII. Participation in the Group shall
be strictly limited to the Participants
and no other party shall have any right
to attend or otherwise participate in the
Group except with the unanimous
E:\FR\FM\09NON1.SGM
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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Notices
approval of all Participants.
Notwithstanding the foregoing, any
national securities exchange registered
with the SEC under Section 6(a) of the
Act or any national securities
association registered with the SEC
under section 15A of the Act may
become a Participant to this Agreement
provided that: (i) Such applicant has
adopted rules substantially similar to
the Common Rules, and received
approval thereof from the SEC; (ii) such
applicant has provided each Participant
with a signed statement whereby the
applicant agrees to be bound by the
terms of this Agreement to the same
effect as though it had originally signed
this Agreement and (iii) an amended
agreement reflecting the addition of
such applicant as a Participant has been
filed with and approved by the
Commission.
XVIII. This Agreement is wholly
separate from the multiparty Agreement
made pursuant to Rule 17d–2 by and
among the Amex, BSE, CBOE, ISE,
NASD, the New York Stock Exchange,
LLC, Arca and PHLX 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 December 1,
2006, and as may be amended from time
to time.
directors, governors, officers, employees
or representatives. No warranties,
express or implied, are made by the
Participants, individually or as a group,
or by the OSG with respect to any
Regulatory Responsibility to be
performed hereunder.
Limitation of Liability
No Participant nor the Group nor any
of their respective directors, governors,
officers, employees or representatives
shall be liable to any other Participant
in this Agreement for any liability, loss
or damage resulting from or claimed to
have resulted from any delays,
inaccuracies, errors or omissions with
respect to the provision of Regulatory
Responsibility as provided hereby or for
the failure to provide any such
Regulatory Responsibility, except with
respect to such liability, loss or damages
as shall have been suffered by one or
more of the Participants and caused by
the willful misconduct of one or more
of the other Participants or its respective
Pursuant to section 17(d)(1)(A) of the
Exchange Act and Rule 17d–2, the
Participants join in requesting the
Commission, upon its approval of this
Agreement or any part thereof, to relieve
the Participants that are party to this
Agreement and are not the DOSR as to
a Common Member of any and all
Regulatory Responsibility with respect
to the matters allocated to the DOSR.
This Agreement may be executed in
any number of counterparts, each of
which shall be deemed to be an original,
but all such counterparts shall together
constitute one and the same Agreement.
In Witness Whereof, the Participants
hereto have executed this Agreement as
of the date and year first above written.
Relief From Responsibility
EXHIBIT A.—COMMON RULES
SRO
Description of rule
Frequency of
review
Exchange rule number
Violation I: Expiring Exercise Declarations (EED)—For Listed Equity Options Expiring: The Third Saturday Following the third Friday of a Month,
Quarterly, AND for Listed FLEX Options.
mstockstill on PROD1PC66 with NOTICES
Amex .............
BOX ...............
CBOE ............
FINRA ...........
ISE ................
NYSEArca .....
PHLX .............
Exercise
Exercise
Exercise
Exercise
Exercise
Exercise
Exercise
of
of
of
of
of
of
of
Options Contracts ...........
Options Contracts ...........
Options Contracts ...........
Options Contracts ...........
Options Contracts ...........
Options Contracts ...........
Equity Options Contracts
III. Date of Effectiveness of the
Proposed Plan and Timing for
Commission Action
Pursuant to section 17(d)(1) of the
Act 12 and Rule 17d–2 thereunder,13
after November 30, 2007, the
Commission may, by written notice,
declare the plan submitted by the Amex,
BSE, CBOE, ISE, FINRA, NYSE Arca
and the Phlx, File No. 4–551, to be
effective if the Commission finds that
the plan, or any part thereof, 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
12 15
13 17
23:48 Nov 08, 2007
transactions and in conformity with the
factors set forth in section 17(d) of the
Act.
IV. Solicitation of Comments
In order to assist the Commission in
determining whether to approve the
17d–2 plan, 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 (https://www.sec.gov/
rules/other.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number 4–551 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
U.S.C. 78q(d)(1).
CFR 240.17d–2.
VerDate Aug<31>2005
Amex Rule 980 .................................................................................
BOX Rule 7.1 ...................................................................................
CBOE Rule 11.1 ...............................................................................
NASD Rule 2860 ..............................................................................
ISE Rule 1100 ..................................................................................
NYSEArca Rule 6.24 ........................................................................
PHLX Rule 1042 ..............................................................................
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At
At
At
At
At
At
At
Expiration.
Expiration.
Expiration.
Expiration.
Expiration.
Expiration.
Expiration.
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number 4–551. 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 (https://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
E:\FR\FM\09NON1.SGM
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Federal Register / Vol. 72, No. 217 / Friday, November 9, 2007 / Notices
Room, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of the plan also will be available for
inspection and copying at the principal
offices of Amex, BSE, CBOE, ISE,
FINRA, NYSE Arca and the Phlx. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number 4–551 and should be submitted
on or before November 30, 2007.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–21980 Filed 11–8–07; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
Environmental Impact Statement:
Worcester County, MD
Federal Highway
Administration (FHWA), DOT.
ACTION: Notice of intent.
mstockstill on PROD1PC66 with NOTICES
AGENCY:
SUMMARY: The FHWA is issuing this
notice to advise the public that an
Environmental Impact Statement will be
prepared for a proposed bridge project
in Worcester County, Maryland. The
purpose of the EIS is to provide
information and analyses for decisions
on the project in accordance with the
policies and purposes of the National
Environmental Policy Act.
FOR FURTHER INFORMATION CONTACT: Mr.
Daniel W. Johnson, Environmental
Program Leader, Federal Highway
Administration, City Crescent Building,
10 South Howard Street, Suite 2450,
Telephone: (410) 779–7154.
SUPPLEMENTARY INFORMATION: The
FHWA, in cooperation with the
Maryland State Highway
Administration, U.S. Army Corps of
Engineers, US Environmental Protection
Agency, US Coast Guard, Maryland
Department of the Environment, US
Fish and Wildlife Service, and National
Marine Fisheries Service will prepare an
Environmental Impact Statement (EIS)
for roadway improvements which
address operational inadequacies, safety
concerns, and structural deficiencies of
the US 50 crossing of the Sinepuxent
Bay, Worcester County, MD.
14 17
CFR 200.30–3(a)(34).
VerDate Aug<31>2005
23:48 Nov 08, 2007
The study will also address the need
to safely accommodate the navigational
needs of boaters, pedestrian and bicycle
traffic, and the recreational needs of
fishermen. Pedestrians, fishermen, and
cyclists currently share a narrow fivefoot sidewalk along the existing bridge,
which creates potential conflicts among
the various users. Finally, the study will
investigate aesthetic enhancements to
any crossing representative of a coastal
gateway resort.
Alternatives under consideration
include taking no action and four build
alternatives with various options for a
new bridge or bridge reconstruction.
Under all of these alternatives, the
existing bridge would be retained for
possible use by pedestrians, cyclists and
fisherman. The bridge is eligible for
inclusion in the National Register of
Historic Places.
Letters describing the proposed action
and soliciting comments will be sent to
appropriate Federal, State, and local
government agencies, and to private
organizations and citizens and citizen
groups who have previously expressed
or are known to have an interest in this
proposal. It is anticipated that a Public
Hearing will be held in the Spring of
2008. A Draft EIS will be available for
public and agency review and comment
prior to the Public Hearing. Public
notice will be given of the availability
of the Draft EIS for review and of the
time and place of the hearing. A
Scoping Meeting was held in March of
2005, and Open House Public
Workshops were held in Ocean City in
June and October of 2005, June of 2006
and May/June of 2007, to solicit
opinions and ideas on proposed
improvements from local citizens.
To ensure that the full range of issues
related to this proposed action are
addressed and all significant issues
identified, comments and suggestions
are invited from all interested parties.
Comments or questions concerning
these proposed action and EIS should be
directed to the FHWA at the address
provided above.
(Catalog of Federal Domestic Assistance
Program Number 20.205, Highway Research,
Planning and Construction. The regulation
implementing Executive Order 12372
regarding intergovernmental consultation of
Federal programs and activities apply to this
program).
Issued on: November 5, 2007.
Daniel W. Johnson,
Environmental Program Leader, Baltimore,
Maryland.
[FR Doc. 07–5599 Filed 11–8–07; 8:45 am]
BILLING CODE 4910–22–M
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DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
Notice of Final Federal Agency Actions
on the Newberg Dundee
Transportation Improvement Project
(Tier 1), Oregon 99W: Yamhill County,
OR
Federal Highway
Administration (FHWA), DOT.
ACTION: Notice of Limitation on Claims
for Judicial Review of Actions by
FHWA.
AGENCY:
SUMMARY: This notice announces actions
taken by the FHWA that are final within
the meaning of 23 U.S.C. 139(l)(1). The
actions relate to a proposed highway
project, the Newberg Dundee
Transportation Improvement Project
(Tier 1), Oregon 99W, extending
approximately 11 miles from the eastern
terminus east of Newberg in the Rex Hill
area, to the western terminus where
Oregon 99W intersects with OR18
(McDougal Corner) west of Dundee, near
Dayton in the County of Yamhill, State
of Oregon. The Federal actions, taken as
a result of a tiered environmental review
process under the National
Environmental Policy Act, 42 U.S.C.
4321–4351 (NEPA), and implementing
regulations on tiering, 40 CFR 1502.20,
40 CFR 1508.28, and 23 CFR part 771,
determined certain issues related to the
proposed project. Those Tier 1 decisions
will be used by Federal agencies in
subsequent proceedings, including
decisions whether to grant licenses,
permits, and approvals for the highway
project. Tier 1 decisions also may be
relied upon by State and local agencies
in proceedings on the proposed project.
DATES: By this notice, the FHWA is
advising the public that it has made
decisions that are subject to 23 U.S.C.
139(l)(1) and are final within the
meaning of that law. A claim seeking
judicial review of the Tier 1 Federal
agency decisions on the proposed
highway project will be barred unless
the claim is filed on or before May 7,
2008. If the Federal law that authorizes
judicial review of a claim provides a
time period of less than 180 days for
filing such claim, then that shorter time
period still applies.
FOR FURTHER INFORMATION CONTACT: For
the FHWA: Ms. Michelle Eraut,
Environmental Program Manager,
Federal Highway Administration, 530
Center Street, NE., Suite 100, Salem,
Oregon 97301; telephone 503–587–
4716. You may also contact Ms. Lisa
Ansell, Project Manager, Oregon
Department of Transportation, 885
Airport Road SE., Building P, Salem,
E:\FR\FM\09NON1.SGM
09NON1
]]>Agencies
[Federal Register Volume 72, Number 217 (Friday, November 9, 2007)]
[Notices]
[Pages 63637-63642]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-21980]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56731; File No. 4-551]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of
Regulatory Responsibilities Among the American Stock Exchange LLC, the
Boston Stock Exchange, Inc., the Chicago Board Options Exchange,
Incorporated, the International Securities Exchange, LLC, Financial
Industry Regulatory Authority, Inc., NYSE Arca, Inc., and the
Philadelphia Stock Exchange, Inc.
November 1, 2007.
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 October 30, 2007, the American Stock Exchange LLC (``Amex''), the
Boston Stock Exchange, Inc. (``BSE''), the Chicago Board Options
Exchange, Incorporated (``CBOE''), the International Securities
Exchange, LLC (``ISE''), Financial Industry Regulatory Authority, Inc.
(``FINRA''), NYSE Arca, Inc. (``NYSE Arca''), and the Philadelphia
Stock
[[Page 63638]]
Exchange, Inc. (``Phlx'') (collectively, ``Participants'') filed with
the Securities and Exchange Commission (``Commission'') a plan for the
allocation of regulatory responsibilities. The Commission is publishing
this notice to solicit comments on the 17d-2 plan from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to section 17(d) \4\ or section 19(g)(2) \5\ of the Act.
Without this relief, the statutory obligation of each individual SRO
could result in a pattern of multiple examinations of broker-dealers
that maintain memberships in more than one SRO (``common members'').
Such regulatory duplication would add unnecessary expenses for common
members and their SROs.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d).
\5\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\7\ With
respect to a common member, section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q(d)(1).
\7\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------
To implement section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\9\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
---------------------------------------------------------------------------
\8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\9\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits
SROs to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for notice and comment, it determines that the plan is
necessary or appropriate in the public interest and for the protection
of investors, to foster cooperation and coordination among the SROs, to
remove impediments to, and foster the development of, a national market
system and a national clearance and settlement system, and is in
conformity with the factors set forth in section 17(d) of the Act.
Commission approval of a plan filed pursuant to Rule 17d-2 relieves an
SRO of those regulatory responsibilities allocated by the plan to
another SRO.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. The Plan
The proposed plan is intended to reduce regulatory duplication for
brokers or dealers that are members of two or more of the Participants
by allocating regulatory responsibility for certain options-related
market surveillance matters among the Participants.\11\ Under the plan,
a Participant will serve as the Designated Options Surveillance
Regulator (``DOSR'') for each common member assigned to it and will
assume regulatory responsibility with respect to that common member's
compliance with applicable common rules for certain accounts. As
proposed, the plan currently is limited to review of expiring exercise
declarations pursuant to the common rules listed in proposed Exhibit A.
The full text of the proposed 17d-2 plan is as follows:
* * * * *
---------------------------------------------------------------------------
\11\ The proposed plan is wholly separate from the multiparty
options agreement made pursuant to Rule 17d-2 by and among the Amex,
BSE, CBOE, ISE, NASD (n/k/a FINRA), the New York Stock Exchange LCC,
NYSE Arca, and Phlx involving the allocation of regulatory
responsibilities with respect to common members for compliance with
common rules relating to the conduct of broker-dealers of accounts
for listed options or index warrants entered into on December 1,
2006, and as may be amended from time to time. See Securities
Exchange Act Release Nos. 55145 (January 22, 2007), 72 FR 3882
(January 26, 2007) (File No. S7-966) (notice) and 55532 (March 26,
2007), 72 FR 15729 (April 2, 2007) (File No. S7-966) (order).
---------------------------------------------------------------------------
AGREEMENT BY AND AMONG THE American Stock Exchange LLC, the Boston
Stock Exchange, Inc., the Chicago Board Options Exchange, Incorporated,
the International Securities Exchange LLC, Financial Industry
Regulatory Authority, Inc., NYSE Arca, Inc., and the Philadelphia Stock
Exchange, Inc., Pursuant to Rule 17d-2 under the Securities Exchange
Act of 1934
This agreement (this ``Agreement''), by and among the American
Stock Exchange LLC (``Amex''), the Boston Stock Exchange, Inc.
(``BSE''), the Chicago Board Options Exchange, Incorporated (``CBOE''),
the International Securities Exchange LLC (``ISE''), Financial Industry
Regulatory Authority, Inc. (``FINRA''), NYSE Arca, Inc. (``Arca''), and
the Philadelphia Stock Exchange, Inc. (``PHLX''), is made this 10th day
of October, 2007, pursuant to section 17(d) of the Securities Exchange
Act of 1934, as amended (the ``Exchange Act''), and Rule 17d-2
thereunder (``Rule 17d-2''), which allows for a joint plan among self-
regulatory organizations (``SROs'') to allocate regulatory obligations
with respect to brokers or dealers that are members of two or more of
the parties to this Agreement (``Common Members''). The Amex, BSE,
CBOE, ISE, FINRA, Arca, and PHLX are collectively referred to herein as
the ``Participants'' and individually, each a ``Participant.'' This
Agreement shall be administered by a committee known as the Options
Surveillance Group (the ``OSG'' or ``Group''), as described in section
V hereof. Unless defined in this Agreement or the context otherwise
requires, the terms used herein shall have the meanings assigned
thereto by the Exchange Act and the rules and regulations thereunder.
WHEREAS, the Participants desire to eliminate regulatory
duplication with respect to SRO market surveillance of Common Member
\1\ activities with
[[Page 63639]]
regard to certain common rules relating to listed options
(``Options''); and
---------------------------------------------------------------------------
\1\ In the case of the BSE, members are those persons who are
Options Participants (as defined in the Boston Options Exchange LLC
Rules).
---------------------------------------------------------------------------
WHEREAS, for this purpose, the Participants desire to execute and
file this Agreement with the Securities and Exchange Commission (the
``SEC'' or ``Commission'') pursuant to Rule 17d-2.
NOW, THEREFORE, in consideration of the mutual covenants contained
in this Agreement, the Participants agree as follows:
I. Except as otherwise provided in this Agreement, each Participant
shall assume Regulatory Responsibility (as defined below) for the
Common Members that are allocated or assigned to such Participant in
accordance with the terms of this Agreement and shall be relieved of
its Regulatory Responsibility as to the remaining Common Members. For
purposes of this Agreement, a Participant shall be considered to be the
Designated Options Surveillance Regulator (``DOSR'') for each Common
Member that is allocated to it in accordance with Section VII.
II. As used in this Agreement, the term ``Regulatory
Responsibility'' shall mean surveillance, investigation and enforcement
responsibilities relating to compliance by the Common Members with such
Options rules of the Participants as the Participants shall determine
are substantially similar and shall approve from time to time, insofar
as such rules relate to market surveillance (collectively, the ``Common
Rules''). For the purposes of this Agreement the list of Common Rules
is attached as Exhibit A hereto, which may only be amended upon
unanimous written agreement by the Participants. The DOSR assigned to
each Common Member shall assume Regulatory Responsibility with regard
to that Common Member's compliance with the applicable Common Rules for
certain accounts.\2\ A DOSR may perform its Regulatory Responsibility
or enter an agreement to transfer or assign such responsibilities to a
national securities exchange registered with the SEC under section 6(a)
of the Exchange Act or a national securities association registered
with the SEC under section 15A of the Exchange Act. A DOSR may not
transfer or assign its Regulatory Responsibility to an association
registered for the limited purpose of regulating the activities of
members who are registered as brokers or dealers in security futures
products.
---------------------------------------------------------------------------
\2\ Certain accounts shall include customer (``C'' as classified
by the Options Clearing Corporation (``OCC'')) and firm (``F'' as
classified by OCC) accounts, as well as other accounts, such as
market maker accounts as the Participants shall, from time to time,
identify as appropriate to review.
---------------------------------------------------------------------------
The term ``Regulatory Responsibility'' does not include, and each
Participant shall retain full responsibility with respect to:
(a) Surveillance, investigative and enforcement responsibilities
other than those included in the definition of Regulatory
Responsibility;
(b) any aspects of the rules of a Participant that are not
substantially similar to the Common Rules or that are allocated for a
separate surveillance purpose under any other agreement made pursuant
to Rule 17d-2. Any such aspects of a Common Rule will be noted as
excluded on Exhibit A.
III. Each year within 30 days of the anniversary date of the
commencement of operation of this Agreement, or more frequently if
required by changes in the rules of a Participant, each Participant
shall submit to the other Participants, through the Chair of the OSG,
an updated list of Common Rules for review. This updated list may add
Common Rules to Exhibit A, shall delete from Exhibit A rules of that
Participant that are no longer identical or substantially similar to
the Common Rules, and shall confirm that the remaining rules of the
Participant included on Exhibit A continue to be identically or
substantially similar to the Common Rules. Within 30 days from the date
that each Participant has received revisions to Exhibit A from the
Chair of the OSG, each Participant shall confirm in writing to the
Chair of the OSG whether that Participant's rules listed in Exhibit A
are Common Rules.
IV. Apparent violation of another Participant's rules discovered by
a DOSR, but which rules are not within the scope of the discovering
DOSR's Regulatory Responsibility, shall be referred to the relevant
Participant for such action as is deemed appropriate by that
Participant. Notwithstanding the foregoing, nothing contained herein
shall preclude a DOSR in its discretion from requesting that another
Participant conduct an investigative or enforcement proceeding
(``Proceeding'') on a matter for which the requesting DOSR has
Regulatory Responsibility. If such other Participant agrees, the
Regulatory Responsibility in such case shall be deemed transferred to
the accepting Participant and confirmed in writing by the Participants
involved. Additionally, nothing in this Agreement shall prevent another
Participant on whose market potential violative activity took place
from conducting its own Proceeding on a matter. The Participant
conducting the Proceeding shall advise the assigned DOSR. Each
Participant agrees, upon request, to make available promptly all
relevant files, records and/or witnesses necessary to assist another
Participant in a Proceeding.
V. The OSG shall be composed of one representative designated by
each of the Participants (a ``Representative''). Each Participant shall
also designate one or more persons as its alternate representative(s)
(an ``Alternate Representative''). In the absence of the
Representative, the Alternate Representative shall assume the powers,
duties and responsibilities of the Representative. Each Participant may
at any time replace its Representative and/or its Alternate
Representative to the Group.\3\ A majority of the OSG shall constitute
a quorum and, unless otherwise required, the affirmative vote of a
majority of the Representatives present (in person, by telephone or by
written consent) shall be necessary to constitute action by the Group.
The Group will have a Chair, Vice Chair and Secretary. A different
Participant will assume each position on a rotating basis for a one-
year term. In the event that a Participant replaces a Representative
who is acting as Chair, Vice Chair or Secretary, the newly appointed
Representative shall assume the position of Chair, Vice Chair, or
Secretary (as applicable) vacated by the Participant's former
Representative. In the event a Participant cannot fulfill its duties as
Chair, the Participant serving as Vice Chair shall substitute for the
Chair and complete the subject unfulfilled term. All notices and other
communications for the OSG are to be sent in care of the Chair and, as
appropriate, to each Representative.
---------------------------------------------------------------------------
\3\ A Participant must give notice to the Chair of the Group of
such a change.
---------------------------------------------------------------------------
VI. The OSG shall determine the times and locations of Group
meetings, provided that the Chair, acting alone, may also call a
meeting of the Group in the event the Chair determines that there is
good cause to do so. To the extent reasonably possible, notice of any
meeting shall be given at least ten business days prior to the meeting
date. Representatives shall always be given the option of participating
in any meeting telephonically at their own expense rather than in
person.
VII. No less frequently than every two years, in such manner as the
Group deems appropriate, the OSG shall allocate Common Members that
conduct an Options business among the Participants (``Allocation''),
and the Participant to which a Common Member is allocated will serve as
the DOSR for that Common Member. Any Allocation shall be based on the
following principles, except to the extent all
[[Page 63640]]
affected Participants consent to one or more different principles:
(a) The OSG may not allocate a Common Member to a Participant
unless the Common Member is a member of that Participant.
(b) To the extent practicable, Common Members that conduct an
Options business shall be allocated among the Participants of which
they are members in such manner as to equalize as nearly as possible
the allocation among such Participants, provided that no Common Members
shall be allocated to FINRA. For example, if sixteen Common Members
that conduct an Options business are members only of three
Participants, none of which is FINRA, those Common Members shall be
allocated among the three Participants such that no Participant is
allocated more than six such members and no Participant is allocated
less than five such members. If, in the previous example, one of the
three Participants is FINRA, the sixteen Common Members would be
allocated evenly between the remaining Participants, so that the two
non-FINRA Participants would be allocated eight Common Members each.
(c) To the extent practicable, Allocation shall take into account
the amount of Options activity conducted by each Common Member in order
to most evenly divide the Common Members with the largest amount of
activity among the Participants of which they are members. Allocation
will also take into account similar allocations pursuant to other plans
or agreements to which the Common Members are party to maintain
consistency in oversight of the Common Members.\4\
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\4\ For example, if one Participant was allocated a Common
Member by another regulatory group that Participant would be
assigned to be the DOSR of that Common Member, unless there is good
cause not to make that assignment.
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(d) To the extent practicable, Allocation of Common Members to
Participants will be rotated among the applicable Participants such
that a Common Member shall not be allocated to a Participant to which
that Common Member was allocated within the previous two years. The
assignment of DOSRs pursuant to the Allocation is attached as Exhibit B
hereto, and will be updated from time to time to reflect Common Member
Allocation changes.
(e) The Group may reallocate Common Members from time to time, as
it deems appropriate.
(f) Whenever a Common Member ceases to be a member of its DOSR, the
DOSR shall promptly inform the Group, which shall review the matter and
allocate the Common Member to another Participant.
(g) A DOSR may request that a Common Member to which it is assigned
be reallocated to another Participant by giving 30 days written notice
to the Chair of the OSG. The Group, in its discretion, may approve such
request and reallocate the Common Member to another Participant.
(h) All determinations by the Group with respect to Allocation
shall be made by the affirmative vote of a majority of the Participants
that, at the time of such determination, share the applicable Common
Member being allocated; a Participant shall not be entitled to vote on
any Allocation relating to a Common Member unless the Common Member is
a member of such Participant.
VIII. Each DOSR shall conduct routine surveillance reviews to
detect violations of the applicable Common Rules by each Common Member
allocated to it with a frequency (daily, weekly, monthly, quarterly,
semi-annually or annually as noted on Exhibit A) not less than that
determined by the Group. The other Participants agree that, upon
request, relevant information in their respective files relative to a
Common Member will be made available to the applicable DOSR.
At each meeting of the OSG, each Participant shall be prepared to
report on the status of its surveillance program for the previous
quarter and any period prior thereto that has not previously been
reported to the Group. In the event a DOSR believes it will not be able
to complete its Regulatory Responsibility for its allocated Common
Members, it will so advise the Group in writing promptly. The Group
will undertake to remedy this situation by reallocating the subject
Common Members among the remaining Participants. In such instance, the
Group may determine to impose a regulatory fee for services provided to
the DOSR that was unable to fulfill its Regulatory Responsibility.
IX. Each Participant will, upon request, promptly furnish a copy of
the report or applicable portions thereof relating to any investigation
made pursuant to the provisions of this Agreement to each other
Participant of which the Common Member under investigation is a member.
X. Each Participant will routinely populate a common database, to
be accessed by the Group relating to any formal regulatory action taken
during the course of a Proceeding with respect to the Common Rules
concerning a Common Member.
XI. Any written notice required or permitted to be given under this
Agreement shall be deemed given if sent by certified mail, return
receipt requested, to any Participant to the attention of that
Participant's Representative, to the Participant's principal place of
business or by e-mail at such address as the Representative shall have
filed in writing with the Chair.
XII. The costs incurred by each Participant in discharging its
Regulatory Responsibility under this Agreement are not reimbursable.
However, any of the Participants may agree that one or more will
compensate the other(s) for costs incurred.
XIII. The Participants shall notify the Common Members of this
Agreement by means of a uniform joint notice approved by the Group.
Each Participant will notify the Common Members that have been
allocated to it that such Participant will serve as DOSR for that
Common Member.
XIV. This Agreement shall be effective upon approval of the
Commission. This Agreement may only be amended in writing duly approved
by each Participant. All amendments to this Agreement, excluding
changes to Exhibits A and B, must be filed with and approved by the
Commission.
XV. Any Participant may manifest its intention to cancel its
participation in this Agreement at any time upon providing written
notice to (i) the Group six months prior to the date of such
cancellation, or such other period as all the Participants may agree,
and (ii) the Commission. Upon receipt of the notice the Group shall
allocate, in accordance with the provisions of this Agreement, those
Common Members for which the canceling Participant was the DOSR. The
canceling Participant shall retain its Regulatory Responsibility and
other rights, privileges and duties pursuant to this Agreement until
the Group has completed the reallocation as described above, and the
Commission has approved the cancellation.
XVI. The cancellation of its participation in this Agreement by any
Participant shall not terminate this Agreement as to the remaining
Participants. This Agreement will only terminate following notice to
the Commission, in writing, by the then Participants that they intend
to terminate the Agreement and the expiration of the applicable notice
period. Such notice shall be given at least six months prior to the
intended date of termination, or such other period as all the
Participants may agree. Such termination will become effective upon
Commission approval.
XVII. Participation in the Group shall be strictly limited to the
Participants and no other party shall have any right to attend or
otherwise participate in the Group except with the unanimous
[[Page 63641]]
approval of all Participants. Notwithstanding the foregoing, any
national securities exchange registered with the SEC under Section 6(a)
of the Act or any national securities association registered with the
SEC under section 15A of the Act may become a Participant to this
Agreement provided that: (i) Such applicant has adopted rules
substantially similar to the Common Rules, and received approval
thereof from the SEC; (ii) such applicant has provided each Participant
with a signed statement whereby the applicant agrees to be bound by the
terms of this Agreement to the same effect as though it had originally
signed this Agreement and (iii) an amended agreement reflecting the
addition of such applicant as a Participant has been filed with and
approved by the Commission.
XVIII. This Agreement is wholly separate from the multiparty
Agreement made pursuant to Rule 17d-2 by and among the Amex, BSE, CBOE,
ISE, NASD, the New York Stock Exchange, LLC, Arca and PHLX 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 December 1, 2006, and as may be amended from time to time.
Limitation of Liability
No Participant nor the Group nor any of their respective directors,
governors, officers, employees or representatives shall be liable to
any other Participant in this Agreement for any liability, loss or
damage resulting from or claimed to have resulted from any delays,
inaccuracies, errors or omissions with respect to the provision of
Regulatory Responsibility as provided hereby or for the failure to
provide any such Regulatory Responsibility, except with respect to such
liability, loss or damages as shall have been suffered by one or more
of the Participants and caused by the willful misconduct of one or more
of the other Participants or its respective directors, governors,
officers, employees or representatives. No warranties, express or
implied, are made by the Participants, individually or as a group, or
by the OSG with respect to any Regulatory Responsibility to be
performed hereunder.
Relief From Responsibility
Pursuant to section 17(d)(1)(A) of the Exchange Act and Rule 17d-2,
the Participants join in requesting the Commission, upon its approval
of this Agreement or any part thereof, to relieve the Participants that
are party to this Agreement and are not the DOSR as to a Common Member
of any and all Regulatory Responsibility with respect to the matters
allocated to the DOSR.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such counterparts
shall together constitute one and the same Agreement.
In Witness Whereof, the Participants hereto have executed this
Agreement as of the date and year first above written.
Exhibit A.--Common Rules
----------------------------------------------------------------------------------------------------------------
Frequency of
SRO Description of rule Exchange rule number review
----------------------------------------------------------------------------------------------------------------
Violation I: Expiring Exercise Declarations (EED)--For Listed Equity Options Expiring: The Third Saturday
Following the third Friday of a Month, Quarterly, AND for Listed FLEX Options.
----------------------------------------------------------------------------------------------------------------
Amex.......................... Exercise of Options Amex Rule 980........................ At Expiration.
Contracts.
BOX........................... Exercise of Options BOX Rule 7.1......................... At Expiration.
Contracts.
CBOE.......................... Exercise of Options CBOE Rule 11.1....................... At Expiration.
Contracts.
FINRA......................... Exercise of Options NASD Rule 2860....................... At Expiration.
Contracts.
ISE........................... Exercise of Options ISE Rule 1100........................ At Expiration.
Contracts.
NYSEArca...................... Exercise of Options NYSEArca Rule 6.24................... At Expiration.
Contracts.
PHLX.......................... Exercise of Equity PHLX Rule 1042....................... At Expiration.
Options Contracts.
----------------------------------------------------------------------------------------------------------------
III. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to section 17(d)(1) of the Act \12\ and Rule 17d-2
thereunder,\13\ after November 30, 2007, the Commission may, by written
notice, declare the plan submitted by the Amex, BSE, CBOE, ISE, FINRA,
NYSE Arca and the Phlx, File No. 4-551, to be effective if the
Commission finds that the plan, or any part thereof, 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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\12\ 15 U.S.C. 78q(d)(1).
\13\ 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 17d-2 plan, 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 (https://
www.sec.gov/rules/other.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number 4-551 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 4-551. 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 (https://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
[[Page 63642]]
Room, on official business days between the hours of 10 a.m. and 3 p.m.
Copies of the plan also will be available for inspection and copying at
the principal offices of Amex, BSE, CBOE, ISE, FINRA, NYSE Arca and the
Phlx. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number 4-551
and should be submitted on or before November 30, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(34).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-21980 Filed 11-8-07; 8:45 am]
BILLING CODE 8011-01-P
