Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and the Boston Stock Exchange, Incorporated, 78402-78409 [E8-30321]

Download as PDF 78402 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–59101; File No. 4–575] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d– 2; Notice of Filing of Proposed Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and the Boston Stock Exchange, Incorporated December 15, 2008. Pursuant to Section 17(d) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 17d–2 thereunder,2 notice is hereby given that on December 8, 2008, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) and the Boston Stock Exchange, Incorporated (‘‘BX’’) (together with FINRA, the ‘‘Parties’’) filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) a plan for the allocation of regulatory responsibilities, dated December 5, 2008 (‘‘17d–2 Plan’’ or the ‘‘Plan’’). 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) or Section 19(g)(2) of the Act.4 Without this relief, the statutory obligation of each individual SRO could result in a pattern of multiple examinations of broker-dealers that maintain memberships in more than one SRO (‘‘common members’’). Such regulatory duplication would add unnecessary expenses for common members and their SROs. Section 17(d)(1) of the Act 5 was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.6 With respect to 1 15 U.S.C. 78q(d). CFR 240.17d–2. 3 15 U.S.C. 78s(g)(1). 4 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively. 5 15 U.S.C. 78q(d)(1). 6 See Securities Act Amendments of 1975, Report of the Senate Committee on Banking, Housing, and Urban Affairs to Accompany S. 249, S. Rep. No. 94– 75, 94th Cong., 1st Session 32 (1975). mstockstill on PROD1PC66 with NOTICES 2 17 VerDate Aug<31>2005 19:07 Dec 19, 2008 Jkt 217001 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.7 Rule 17d–1 authorizes the Commission to name a single SRO as the designated examining authority (‘‘DEA’’) to examine common members for compliance with the financial responsibility requirements imposed by the Act, or by Commission or SRO rules.8 When an SRO has been named as a common member’s DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d–1 deals only with an SRO’s obligations to enforce member compliance with financial responsibility requirements. Rule 17d–1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including sales practices and trading activities and practices. To address regulatory duplication in these and other areas, the Commission adopted Rule 17d–2 under the Act.9 Rule 17d–2 permits SROs to propose joint plans for the allocation of regulatory responsibilities with respect to their common members. Under paragraph (c) of Rule 17d–2, the Commission may declare such a plan effective if, after providing for appropriate notice and comment, it determines that the plan is necessary or appropriate in the public interest and for the protection of investors; to foster cooperation and coordination among the SROs; to remove impediments to, and foster the development of, a national market system and a national clearance and settlement system; and is in conformity with the factors set forth in Section 17(d) of the Act. Commission approval of a plan filed pursuant to Rule 17d–2 relieves an SRO of those regulatory responsibilities allocated by the plan to another SRO. 7 17 CFR 240.17d–1 and 17 CFR 240.17d–2, respectively. 8 See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). 9 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 II. Proposed Plan On August 29, 2008, BX was acquired by The NASDAQ OMX Group, Inc. (‘‘NASDAQ OMX’’). At the time of this acquisition, BX was not operating a venue for trading cash equities. BX has since proposed to adopt a new rulebook with rules governing membership, the regulatory obligations of members, listing, and equity trading.10 The proposed new BX rules, in particular the member conduct rules that would be the Common Rules under the proposed Plan, are based to a substantial extent on the rules of the NASDAQ Stock Market LLC (‘‘NASDAQ Exchange’’),11 which, in turn, are based to a substantial extent on the comparable rules of FINRA. The NASDAQ Exchange currently is party to a 17d–2 plan with FINRA.12 The proposed Plan would allocate regulatory responsibility between BX and FINRA in a manner similar to the allocation of regulatory responsibility that currently exists between the NASDAQ Exchange and FINRA. Accordingly, the proposed 17d–2 Plan is intended to reduce regulatory duplication for firms that are common members of both FINRA and BX.13 Pursuant to the proposed 17d–2 Plan, FINRA would assume certain examination and enforcement responsibilities for common members with respect to certain applicable laws, rules, and regulations. The text of the Plan delineates the proposed regulatory responsibilities with respect to the Parties. Included in the proposed Plan is an exhibit (the ‘‘Rules Certification for 17d–2 Agreement with FINFA,’’ referred to herein as the ‘‘Certification’’) that lists every BX rule, and select federal securities laws, rules, and regulations, for which FINRA would bear responsibility under the Plan for overseeing and enforcing with respect to BX members that are also members of FINRA and the associated persons therewith (‘‘Dual Members’’). Specifically, under the 17d–2 Plan, FINRA would assume examination and enforcement responsibility relating to compliance by Dual Members with the rules of BX that are substantially similar 10 See Securities Exchange Act Release No. 58927 (November 10, 2008), 73 FR 69685 (November 19, 2008) (SR–BSE–2008–48) (notice of proposed rule change). 11 See id. at 73 FR 69686. 12 See Securities Exchange Act Release No. 54136 (July 12, 2006), 71 FR 40759 (July 18, 2006) (File No. 4–517) (order approving and declaring effective the plan between the NASDAQ Exchange and NASD (n/k/a FINRA)). 13 The proposed 17d–2 Plan refers to these common members as ‘‘Dual Members.’’ See Paragraph 1(c) of the proposed 17d–2 Plan. E:\FR\FM\22DEN1.SGM 22DEN1 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices to the applicable rules of FINRA, as well as any provisions of the federal securities laws and the rules and regulations thereunder delineated in the Certification (‘‘Common Rules’’).14 Common Rules would not include the application of any BX rule or FINRA rule, or any rule or regulation under the Act, to the extent that it pertains to violations of insider trading activities, because such matters are covered by a separate multiparty agreement under Rule 17d–2.15 In the event that a Dual Member is the subject of an investigation relating to a transaction on BX, the plan acknowledges that BX may, in its discretion, exercise concurrent jurisdiction and responsibility for such matter.16 Under the Plan, BX would retain full responsibility for surveillance, examination, investigation, and enforcement with respect to trading activities or practices involving BX’s own marketplace; registration pursuant to its applicable rules of associated persons (i.e., registration rules that are not Common Rules); its duties and obligations as a DEA pursuant to Rule 17d–1 under the Act; and any BX rules that are not Common Rules.17 The text of the proposed 17d–2 Plan is as follows: mstockstill on PROD1PC66 with NOTICES AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND BOSTON STOCK EXCHANGE, INCORPORATED PURSUANT TO RULE 17d–2 UNDER THE SECURITIES EXCHANGE ACT OF 1934 This Agreement, by and between the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) and Boston Stock Exchange, Incorporated (‘‘BX’’), is made this 5th day of December, 2008 (the ‘‘Agreement’’), pursuant to Section 17(d) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’) and Rule 17d–2 thereunder, which permits agreements between self-regulatory 14 See paragraph 1(b) of the proposed 17d–2 Plan (defining Common Rules). See also paragraph 1(f) of the proposed 17d–2 Plan (defining Regulatory Responsibilities). Paragraph 2 of the Plan provides that annually, or more frequently as required by changes in either BX rules or FINRA rules, the parties shall review and update, if necessary, the list of Common Rules. Further, paragraph 3 of the Plan provides that BX shall furnish FINRA with a list of Dual Members, and shall update the list no less frequently than once each calendar quarter. 15 See Securities Exchange Act Release No. 58806 (October 17, 2008), 73 FR 63216 (October 23, 2008) (File No. 4–566) (notice of filing and order approving and declaring effective the plan). The Certification identifies two Common Rules that may also be addressed in the context of regulating insider trading activities pursuant to the separate multiparty agreement. 16 See paragraph 6 of the proposed 17d–2 Plan. 17 See paragraph 2 of the proposed 17d–2 Plan. VerDate Aug<31>2005 19:07 Dec 19, 2008 Jkt 217001 organizations to allocate regulatory responsibility to eliminate regulatory duplication. FINRA and BX may be referred to individually as a ‘‘party’’ and together as the ‘‘parties.’’ Whereas, FINRA and BX desire to reduce duplication in the examination of their Dual Members (as defined herein) and in the filing and processing of certain registration and membership records; and Whereas, FINRA and BX desire to execute an agreement covering such subjects pursuant to the provisions of Rule 17d–2 under the Exchange Act and to file such agreement with the Securities and Exchange Commission (the ‘‘SEC’’ or ‘‘Commission’’) for its approval. Now, therefore, in consideration of the mutual covenants contained hereinafter, FINRA and BX hereby agree as follows: 1. Definitions. Unless otherwise defined in this Agreement or the context otherwise requires, the terms used in this Agreement shall have the same meaning as they have under the Exchange Act and the rules and regulations thereunder. As used in this Agreement, the following terms shall have the following meanings: (a) ‘‘BX Rules’’ or ‘‘FINRA Rules’’ shall mean: (i) The rules of BX, or (ii) the rules of FINRA, respectively, as the rules of an exchange or association are defined in Exchange Act Section 3(a)(27). (b) ‘‘Common Rules’’ shall mean BX Rules that are substantially similar to the applicable FINRA Rules and certain provisions of the Exchange Act and SEC rules set forth on Exhibit 1 in that examination for compliance with such provisions and rules would not require FINRA to develop one or more new examination standards, modules, procedures, or criteria in order to analyze the application of the provision or rule, or a Dual Member’s activity, conduct, or output in relation to such provision or rule; provided, however, Common Rules shall not include the application of the SEC, BX or FINRA rules as they pertain to violations of insider trading activities, which is covered by a separate 17d–2 Agreement by and among the American Stock Exchange, LLC, BATS Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., and Philadelphia Stock PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 78403 Exchange, Inc. approved by the Commission on October 17, 2008. (c) ‘‘Dual Members’’ shall mean those BX members that are also members of FINRA and the associated persons therewith. (d) ‘‘Effective Date’’ shall have the meaning set forth in paragraph 14. (e) ‘‘Enforcement Responsibilities’’ shall mean the conduct of appropriate proceedings, in accordance with FINRA’s Code of Procedure (the NASD Rule 9000 Series) and other applicable FINRA procedural rules, to determine whether violations of Common Rules have occurred, and if such violations are deemed to have occurred, the imposition of appropriate sanctions as specified under FINRA’s Code of Procedure and sanctions guidelines. (f) ‘‘Regulatory Responsibilities’’ shall mean the examination responsibilities and Enforcement Responsibilities relating to compliance by the Dual Members with the Common Rules and the provisions of the Exchange Act and the rules and regulations thereunder, and other applicable laws, rules and regulations, each as set forth on Exhibit 1 attached hereto. 2. Regulatory and Enforcement Responsibilities. FINRA shall assume Regulatory Responsibilities and Enforcement Responsibilities for Dual Members. Attached as Exhibit 1 to this Agreement and made part hereof, BX furnished FINRA with a current list of Common Rules and certified to FINRA that such rules that are BX Rules are substantially similar to the corresponding FINRA Rules (the ‘‘Certification’’). FINRA hereby agrees that the rules listed in the Certification are Common Rules as defined in this Agreement. Each year following the Effective Date of this Agreement, or more frequently if required by changes in either the rules of BX or FINRA, BX shall submit an updated list of Common Rules to FINRA for review which shall add BX Rules not included in the current list of Common Rules that qualify as Common Rules as defined in this Agreement; delete BX 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 BX Rules that qualify as Common Rules as defined in this Agreement. Within 30 days of receipt of such updated list, FINRA shall confirm in writing whether the rules listed in any updated list are Common Rules as defined in this Agreement. Notwithstanding anything herein to the contrary, it is explicitly understood that the term ‘‘Regulatory Responsibilities’’ E:\FR\FM\22DEN1.SGM 22DEN1 mstockstill on PROD1PC66 with NOTICES 78404 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices does not include, and BX shall retain full responsibility for (unless otherwise addressed by separate agreement or rule) (collectively, the ‘‘Retained Responsibilities’’) the following: (a) Surveillance, examination, investigation and enforcement with respect to trading activities or practices involving BX’s own marketplace; (b) Registration pursuant to its applicable rules of associated persons (i.e., registration rules that are not Common Rules); (c) Discharge of its duties and obligations as a Designated Examining Authority pursuant to Rule 17d–1 under the Exchange Act; and (d) Any BX Rules that are not Common Rules. 3. Dual Members. Prior to the Effective Date, BX shall furnish FINRA with a current list of Dual Members, which shall be updated no less frequently than once each quarter. 4. No Charge. There shall be no charge to BX by FINRA for performing the Regulatory Responsibilities and Enforcement Responsibilities under this Agreement except as hereinafter provided. FINRA shall provide BX with ninety (90) days advance written notice in the event FINRA decides to impose any charges to BX for performing the Regulatory Responsibilities under this Agreement. If FINRA determines to impose a charge, BX shall have the right at the time of the imposition of such charge to terminate this Agreement; provided, however, that FINRA’s Regulatory Responsibilities under this Agreement shall continue until the Commission approves the termination of this Agreement. 5. Reassignment of Regulatory Responsibilities. Notwithstanding any provision hereof, this Agreement shall be subject to any statute, or any rule or order of the Commission reassigning Regulatory Responsibilities between self-regulatory organizations. To the extent such action is inconsistent with this Agreement, such action 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. 6. Notification of Violations. In the event that FINRA becomes aware of apparent violations of any BX Rules, which are not listed as Common Rules, discovered pursuant to the performance of the Regulatory Responsibilities assumed hereunder, FINRA shall notify BX of those apparent violations for such response as BX deems appropriate. In the event that BX becomes aware of apparent violations of any Common Rules, discovered pursuant to the performance of the Retained VerDate Aug<31>2005 19:07 Dec 19, 2008 Jkt 217001 Responsibilities, BX shall notify FINRA of those apparent violations and such matters shall be handled by FINRA as provided in this Agreement. Each party agrees to make available promptly all files, records and witnesses necessary to assist the other in its investigation or proceedings. Apparent violations of Common Rules, FINRA Rules, federal securities laws, and rules and regulations thereunder, shall be processed by, and enforcement proceedings in respect thereto shall be conducted by FINRA as provided hereinbefore; provided, however, that in the event a Dual Member is the subject of an investigation relating to a transaction on BX, BX may in its discretion assume concurrent jurisdiction and responsibility. 7. Continued Assistance. (a) FINRA shall make available to BX all information obtained by FINRA in the performance by it of the Regulatory Responsibilities hereunder with respect to the Dual Members subject to this Agreement. In particular, and not in limitation of the foregoing, FINRA shall furnish BX any information it obtains about Dual Members which reflects adversely on their financial condition. BX shall make available to FINRA any information coming to its attention that reflects adversely on the financial condition of Dual Members or indicates possible violations of applicable laws, rules or regulations by such firms. (b) The parties agree that documents or information shared shall be held in confidence, and used only for the purposes of carrying out their respective regulatory obligations. Neither party shall assert regulatory or other privileges as against the other with respect to documents or information that is required to be shared pursuant to this Agreement. (c) The sharing of documents or information between the parties pursuant to this Agreement shall not be deemed a waiver as against third parties of regulatory or other privileges relating to the discovery of documents or information. 8. Dual Member Applications. (a) Dual Members subject to this Agreement shall be required to submit, and FINRA shall 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 BX and FINRA or associated with Dual Members thereof. Upon request, FINRA shall advise BX of any changes of allied members, partners, officers, registered personnel and other persons required to be PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 approved by the rules of both BX and FINRA. (b) Dual Members shall be required to send to FINRA all letters, termination notices or other material respecting the individuals listed in paragraph 8(a). (c) When as a result of processing such submissions FINRA becomes aware of a statutory disqualification as defined in the Exchange Act with respect to a Dual Member, FINRA shall determine pursuant to Sections 15A(g) and/or Section 6(c) of the Exchange Act the acceptability or continued applicability of the person to whom such disqualification applies and keep BX advised of its actions in this regard for such subsequent proceedings as BX may initiate. (d) Notwithstanding the foregoing, FINRA shall not review the membership application, reports, filings, fingerprint cards, notices, or other writings filed to determine if such documentation submitted by a broker or dealer, or a person associated therewith or other persons required to register or qualify by examination meets the BX requirements for general membership or for specified categories of membership or participation in BX, such as Equities Market Maker, Equities ECN, Order Entry Firm, or any similar type of BX membership or participation that is created after this Agreement is executed. FINRA shall not review applications or other documentation filed to request a change in the rights or status described in this paragraph 8(d), including termination or limitation on activities, of a member or a participant of BX, or a person associated with, or requesting association with, a member or participant of BX. 9. Branch Office Information. FINRA shall 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 with respect to the Common Rules as they may be amended from time to time. Upon request, FINRA shall advise BX of the opening, address change and termination of branch and main offices of Dual Members and the names of such branch office managers. 10. Customer Complaints. BX shall forward to FINRA copies of all customer complaints involving Dual Members received by BX relating to FINRA’s Regulatory Responsibilities under this Agreement. It shall be FINRA’s responsibility to review and take appropriate action in respect to such complaints. 11. Advertising. FINRA shall assume responsibility to review the advertising E:\FR\FM\22DEN1.SGM 22DEN1 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices of Dual Members subject to the Agreement, provided that such material is filed with FINRA in accordance with FINRA’s filing procedures and is accompanied with any applicable filing fees set forth in FINRA Rules. 12. No Restrictions on Regulatory Action. Nothing contained in this Agreement shall restrict or in any way encumber the right of either party to conduct its own independent or concurrent investigation, examination or enforcement proceeding of or against Dual Members, as either party, in its sole discretion, shall deem appropriate or necessary. 13. Termination. This Agreement may be terminated by BX or FINRA at any time upon the approval of the Commission after one (1) year’s written notice to the other party, except as provided in paragraph 4. 14. Effective Date. This Agreement shall be effective upon approval of the Commission. 15. Arbitration. In the event of a dispute between the parties as to the operation of this Agreement, BX and FINRA hereby agree that any such dispute shall be settled by arbitration in Washington, DC. in accordance with the rules of the American Arbitration Association then in effect, or such other procedures as the parties may mutually agree upon. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. Each party acknowledges that the timely and complete performance of its obligations pursuant to this Agreement is critical to the business and operations of the other party. In the event of a dispute between the parties, the parties shall continue to perform their respective obligations under this Agreement in good faith during the resolution of such dispute unless and until this Agreement is terminated in accordance with its provisions. Nothing in this Section 15 shall interfere with a party’s right to terminate this Agreement as set forth herein. 16. Notification of Members. BX and FINRA shall notify Dual Members of this Agreement after the Effective Date by means of a uniform joint notice. 17. Amendment. This Agreement may be amended in writing duly approved by each party. All such amendments must be filed with and approved by the Commission before they become effective. 18. Limitation of Liability. Neither FINRA nor BX nor any of their respective directors, governors, officers or employees shall be liable to the other party to this Agreement for any liability, loss or damage resulting from or claimed to have resulted from any delays, inaccuracies, errors or omissions with respect to the provision of Regulatory Responsibilities as provided hereby or for the failure to provide any such responsibility, except with respect to such liability, loss or damages as shall have been suffered by one or the other of FINRA or BX and caused by the willful misconduct of the other party or their respective directors, governors, officers or employees. No warranties, express or implied, are made by FINRA or BX with respect to any of the responsibilities to be performed by each of them hereunder. 19. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d– 2 thereunder, FINRA and BX join in requesting the Commission, upon its approval of this Agreement or any part thereof, to relieve BX of any and all responsibilities with respect to matters 78405 allocated to FINRA pursuant to this Agreement; provided, however, that this Agreement shall not be effective until the Effective Date. 20. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and such counterparts together shall constitute one and the same instrument. In witness whereof, each party has executed or caused this Agreement to be executed on its behalf by a duly authorized officer as of the date first written above. Boston Stock Exchange, Incorporated By: lllllllllllllllllll Name: Title: Financial Industry Regulatory Authority, Inc. By: lllllllllllllllllll Name: Title: Exhibit 1 Boston Stock Exchange, Incorporated (‘‘BX’’) hereby certifies that the requirements contained in the BX rules listed below are identical to, or substantially similar to, the NASD and FINRA rules noted below: RULES CERTIFICATION FOR 17d–2 AGREEMENT WITH FINRA BX Rule FINRA (or NASD) Rule IM–1002–2. Status of Sole Proprietors and Registered Representatives Serving in the Armed Forces. IM–1002–3. Failure to Register Personnel .............................................. IM–1002–4. Branch Offices and Offices of Supervisory Jurisdiction ....... NASD IM–1000–2. Status of Sole Proprietors and Registered Representatives Serving in the Armed Forces. NASD IM–1000–3. Failure to Register Personnel. NASD IM–1000–4. Branch Offices and Offices of Supervisory Jurisdiction. NASD Rule 1011. Definitions. NASD Rule 1012. General Provisions (provisions relating to Rule 1017 and registration of branch offices only). NASD Rule 1014. Department Decision (provisions relating to Rule 1017 only). NASD Rule 1017. Application for Approval of Change in Ownership, Control, or Business Operations. NASD Rule 1021. Registration Requirements. NASD Rule 1022. Categories of Principal Registration. NASD IM–1022–2. Limited Principal—General Securities Sales Supervisor. NASD Rule 1031. Registration Requirements. NASD Rule 1032. Categories of Representative Registration. NASD Rule 1050. Research Analysts. NASD Rule 1060. Persons Exempt from Registration. mstockstill on PROD1PC66 with NOTICES 1011. Definitions ....................................................................................... 1012. General Provisions (provisions relating to Rule 1017 and registration of branch offices only).. 1014. Department Decision (provisions relating to Rule 1017 only). ...... 1017. Application for Approval of Change in Ownership, Control, or Business Operations.. 1021. Registration Requirements ............................................................. 1022. Categories of Principal Registration ............................................... IM–1022–2. Limited Principal—General Securities Sales Supervisor. .... 1031. 1032. 1050. 1060. Registration Requirements ............................................................. Categories of Representative Registration .................................... Research Analysts ......................................................................... Persons Exempt from Registration ................................................ VerDate Aug<31>2005 19:07 Dec 19, 2008 Jkt 217001 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 E:\FR\FM\22DEN1.SGM 22DEN1 78406 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices RULES CERTIFICATION FOR 17d–2 AGREEMENT WITH FINRA—Continued BX Rule FINRA (or NASD) Rule 1070. Qualification Examinations and Waiver of Requirements .............. NASD Rule 1070. Qualification Examinations and Waiver of Requirements. NASD Rule 1080. Confidentiality of Examinations. NASD Rule 1090. Foreign Members. NASD Rule 1120. Continuing Education Requirements. NASD Rule 1140. Electronic Filing Rules. NASD Rule 1150. Executive Representative. NASD Rule 1160. Contact Information Requirements. FINRA 2010. Standards of Commercial Honor and Principles of Trade *. NASD IM–2110–2. Trading Ahead of Customer Limit Orders. NASD IM–2110–3. Front Running Policy. NASD IM–2110–4. Trading Ahead of Research Reports. NASD IM–2110–5. Anti-Intimidation/Coordination. NASD IM–2110–6. Confirmation of Callable Common Stock. NASD IM–2110–7. Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes. NASD 2111. Trading Ahead of Customer Market Orders. FINRA Rule 2020. Use of Manipulative, Deceptive or Other Fraudulent Devices *. NASD Rule 2210. Communications with the Public. NASD IM–2210–1. Guidelines to Ensure That Communications With the Public Are Not Misleading. NASD Rule 2211. Institutional Sales Material and Correspondence. NASD Rule 2212. Telemarketing. NASD Rule 2240. Disclosure of Control Relationship with Issuer. NASD Rule 2250. Disclosure of Participation or Interest in Primary or Secondary Distribution. NASD Rule 2260. Forwarding of Proxy and Other Materials. NASD IM–2260. Suggested Rates of Reimbursement. NASD Rule 2270. Disclosure of Financial Condition to Customers. FINRA Rule 5150. Fairness Opinions. NASD Rule 2310. Recommendations to Customers (Suitability). NASD IM–2310–2. Fair Dealing with Customers. NASD IM–2310–3. Suitability Obligations to Institutional Customers. NASD Rule 2320. Best Execution and Interpositioning. NASD IM–2320. Interpretive Guidance with Respect to Best Execution Requirements. NASD Rule 2330. Customers’ Securities or Funds. NASD IM–2330. Segregation of Customers’ Securities. NASD Rule 2340. Customer Account Statements. NASD Rule 2341. Margin Disclosure Statement. NASD Rule 2342. SIPC Information. NASD Rule 2360. Approval Procedures for Day Trading Accounts. NASD Rule 2361. Day-Trading Risk Disclosure Statement. NASD Rule 2370. Borrowing From or Lending to Customers. NASD Rule 2430. Charges for Services Performed. NASD Rule 2441. Net Transactions with Customers. NASD Rule 2460. Payments for Market Making. NASD Rule 2510. Discretionary Accounts. NASD Rule 2520. Margin Requirements. NASD Rule 2810. Direct Participation Programs. NASD Rule 2830. Investment Company Securities. NASD Rule 2841. General. NASD Rule 2842. Definitions. NASD Rule 2843. Account Approval. NASD Rule 2844. Suitability. NASD Rule 2845. Discretionary Accounts. NASD Rule 2846. Supervision of Accounts. NASD Rule 2847. Customer Complaints. NASD Rule 2848. Communications with the Public and Customers Concerning Index Warrants, Currency Index Warrants, and Currency Warrants NASD Rule 2849. Maintenance. of Records. NASD Rule 2850. Position Limits. NASD Rule 2851. Exercise Limits. NASD Rule 2853. Liquidation of Index Warrant Positions. NASD Rule 2910. Disclosure of Financial Condition to Other Members. NASD Rule 3010. Supervision. NASD IM–3010–1. Standards for Reasonable Review. NASD Rule 3011. Anti-Money Laundering Compliance Program. NASD IM–3011–1. Independent Testing Requirements. 1080. 1090. 1120. 1140. 1150. 1160. 2110. Confidentiality of Examinations ...................................................... Foreign Members ........................................................................... Continuing Education Requirements .............................................. Electronic Filing Rules .................................................................... Executive Representative ............................................................... Contact Information Requirements ................................................ Standards of Commercial Honor and Principles of Trade * ........... IM–2110–2. Trading Ahead of Customer Limit Orders ............................ IM–2110–3. Front Running Policy ............................................................ IM–2110–4. Trading Ahead of Research Reports ................................... IM–2110–5. Anti-Intimidation/Coordination .............................................. IM–2110–6. Confirmation of Callable Common Stock ............................. IM–2110–7. Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes. 2111. Trading Ahead of Customer Market Orders .................................. 2120. Use of Manipulative, Deceptive or Other Fraudulent Devices * .... mstockstill on PROD1PC66 with NOTICES 2210. Communications with the Public .................................................... IM–2210–1. Guidelines to Ensure That Communications With the Public Are Not Misleading. 2211. Institutional Sales Material and Correspondence .......................... 2212. Telemarketing ................................................................................. 2240. Disclosure of Control Relationship with Issuer .............................. 2250. Disclosure of Participation or Interest in Primary or Secondary Distribution. 2260. Forwarding of Proxy and Other Materials ...................................... IM–2260. Suggested Rates of Reimbursement ....................................... 2270. Disclosure of Financial Condition to Customers ............................ 2290. Fairness Opinions .......................................................................... 2310. Recommendations to Customers (Suitability) ................................ IM–2310–2. Fair Dealing with Customers ................................................ IM–2310–3. Suitability Obligations to Institutional Customers ................. 2320. Best Execution and Interpositioning ............................................... IM–2320. Interpretive Guidance with Respect to Best Execution Requirements. 2330. Customers’ Securities or Funds ..................................................... IM–2330. Segregation of Customers’ Securities ...................................... 2340. Customer Account Statements ...................................................... 2341. Margin Disclosure Statement ......................................................... 2342. SIPC Information ............................................................................ 2360. Approval Procedures for Day Trading Accounts ........................... 2361. Day-Trading Risk Disclosure Statement ........................................ 2370. Borrowing From or Lending to Customers ..................................... 2430. Charges for Services Performed .................................................... 2441. Net Transactions with Customers .................................................. 2460. Payments for Market Making ......................................................... 2510. Discretionary Accounts ................................................................... 2520. Margin Requirements ..................................................................... 2810. Direct Participation Programs ........................................................ 2830. Investment Company Securities .................................................... 2841. General ........................................................................................... 2842. Definitions ....................................................................................... 2843. Account Approval ........................................................................... 2844. Suitability ........................................................................................ 2845. Discretionary Accounts ................................................................... 2846. Supervision of Accounts ................................................................. 2847. Customer Complaints ..................................................................... 2848. Communications with the Public and Customers Concerning Index Warrants, Currency Index Warrants, and Currency Warrants. 2849. Maintenance of Records ................................................................ 2850. Position Limits ................................................................................ 2851. Exercise Limits ............................................................................... 2853. Liquidation of Index Warrant Positions .......................................... 2910. Disclosure of Financial Condition to Other Members .................... 3010. Supervision ..................................................................................... IM–3010–1. Standards for Reasonable Review ...................................... 3011. Anti-Money Laundering Compliance Program ............................... IM–3011–1. Independent Testing Requirements ..................................... VerDate Aug<31>2005 19:07 Dec 19, 2008 Jkt 217001 PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 E:\FR\FM\22DEN1.SGM 22DEN1 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices 78407 RULES CERTIFICATION FOR 17d–2 AGREEMENT WITH FINRA—Continued BX Rule FINRA (or NASD) Rule IM–3011–2. Review of Anti-Money Laundering Compliance Person Information. 3012. Supervisory Control System ........................................................... 3013. Annual Certification of Compliance and Supervisory Processes .. NASD IM–3011–2. Review of Anti-Money Laundering Compliance Person Information. NASD Rule 3012. Supervisory Control System. FINRA Rule 3130. Annual Certification of Compliance and Supervisory Processes. FINRA Rule 3130. Annual Certification of Compliance and Supervisory Processes. NASD Rule 3020. Fidelity Bonds. NASD Rule 3030. Outside Business Activities of an Associated Person. NASD Rule 3040. Private Securities Transactions of an Associated Person. NASD Rule 3050. Transactions for or by Associated Persons. FINRA Rule 3220. Influencing or Rewarding Employees of Others. NASD Rule 3070. Reporting Requirements. NASD Rule 3080. Disclosure to Associated Persons When Signing Form U–4. FINRA Rule 2070. Transactions Involving FINRA Employees. NASD Rule 3110. Books and Records NASD IM–3110. Customer Account Information. NASD Rule 3120. Use of Information Obtained in Fiduciary Capacity. NASD Rule 3121. Custodian of the Record. NASD Rule 3130. Regulation of Activities of Members Experiencing Financial and/or Operational Difficulties. NASD IM–3130 Restrictions on Member’s Activity. NASD Rule 3140. Approval of Change in Exempt Status Under SEC Rule 15c3–3. NASD Rule 3150. Reporting Requirements for Clearing Firms. NASD IM–3150. Exemptive Relief. NASD Rule 3160. Extensions of Time under Regulation T and SEC Rule 15c3–3. NASD Rule 3220. Adjustment of Open Orders. NASD Rule 3230. Clearing Agreements. NASD Rule 3310. Publication of Transactions and Quotations. NASD IM–3310. Manipulative and Deceptive Quotations. NASD Rule 3320. Offers at Stated Prices. NASD Rule 3330. Payment Designed to Influence Market Prices, Other than Paid Advertising. NASD Rule 3340. Prohibition on Transactions, Publication of Quotations, or Publication of Indications of Interest During Trading Halts. FINRA Rule 6140. Other Trading Practices. FINRA Rule 4560. Short-Interest Reporting. NASD Rule 3370. Prompt Receipt and Delivery of Securities. NASD Rule 3380. Order Entry and Execution Practices. NASD Rule 3510. Business Continuity Plans. NASD Rule 3520. Emergency Contact Information. FINRA Rule 7410. Definitions. FINRA Rule 7420. Applicability. FINRA Rule 7430. Synchronization of Member Business Clocks. FINRA Rule 7440. Recording of Order Information. FINRA Rule 7450. Order Data Transmission Requirements. FINRA Rule 7460. Violation of Order Audit Trail System Rules. FINRA Rule 7470. Exemption to the Order Recording and Data Transmission Requirements. FINRA Rule 8110. Availability of Manual to Customers. FINRA Rule 8120. Definitions. FINRA Rule 10100. Administrative Provisions. FINRA IM–10100. Failure to Act Under Provisions of Code of Arbitration Procedure. FINRA Rule 10101. Matters Eligible for Submission. FINRA Rule 10102. National Arbitration and Mediation Committee. NASD Rule 11100. Scope of Uniform Practice Code. NASD Rule 11110. The Exchange’s Regulation Department. NASD IM–11110. Refusal to Abide by Rulings of the Exchange’s Regulation Department Staff. NASD Rule 11120. Definitions. NASD Rule 11130. When, As and If Issued/Distributed Contracts. NASD IM–11130. Standard Form of ‘‘When, As and If Issued’’ or ‘‘When, As and If Distributed’’ Contract. NASD Rule 11140. Transactions in Securities ‘‘Ex-Dividend,’’ ‘‘ExRights’’ or ‘‘Ex-Warrants’’. IM–3013. Annual Compliance and Supervision Certification ................... 3020. Fidelity Bonds ................................................................................. 3030. Outside Business Activities of an Associated Person ................... 3040. Private Securities Transactions of an Associated Person ............. 3050. 3060. 3070. 3080. Transactions for or by Associated Persons ................................... Influencing or Rewarding Employees of Others ............................ Reporting Requirements ................................................................ Disclosure to Associated Persons When Signing Form U–4 ........ 3090. Transactions Involving Exchange Employees ............................... 3110. Books and Records ........................................................................ IM–3110. Customer Account Information ................................................. 3120. Use of Information Obtained in Fiduciary Capacity ....................... 3121. Custodian of the Record ................................................................ 3130. Regulation of Activities of Members Experiencing Financial and/ or Operational Difficulties. IM–3130 Restrictions on Member’s Activity ............................................. 3140. Approval of Change in Exempt Status Under SEC Rule 15c3–3 3150. Reporting Requirements for Clearing Firms .................................. IM–3150. Exemptive Relief ...................................................................... 3160. Extensions of Time under Regulation T and SEC Rule 15c3–3 ... mstockstill on PROD1PC66 with NOTICES 3220. Adjustment of Open Orders ........................................................... 3230. Clearing Agreements ...................................................................... 3310. Publication of Transactions and Quotations .................................. IM–3310. Manipulative and Deceptive Quotations .................................. 3320. Offers at Stated Prices ................................................................... 3330. Payment Designed to Influence Market Prices, Other than Paid Advertising. 3340. Prohibition on Transactions, Publication of Quotations, or Publication of Indications of Interest During Trading Halts. 3351. Trading Practices ........................................................................... 3360. Short-Interest Reporting ................................................................. 3370. Prompt Receipt and Delivery of Securities .................................... 3380. Order Entry and Execution Practices ............................................. 3510. Business Continuity Plans .............................................................. 3520. Emergency Contact Information ..................................................... 6951. Definitions ....................................................................................... 6952. Applicability ..................................................................................... 6953. Synchronization of Member Business Clocks ................................ 6954. Recording of Order Information ..................................................... 6955. Order Data Transmission Requirements ....................................... 6956. Violation of Order Audit Trail System Rules .................................. 6958. Exemption to the Order Recording and Data Transmission Requirements. 8110. Availability of Manual to Customers ............................................... 8120. Definitions ....................................................................................... 10100. Jurisdiction .................................................................................... IM–10100. Failure to Act Under Provisions of Code of Arbitration Procedure. 10101. Matters Eligible for Submission .................................................... 10102. Non-Waiver of Objects and Purposes ......................................... 11100. Scope of Uniform Practice Code ................................................. 11110. The Exchange’s Regulation Department ..................................... IM–11110. Refusal to Abide by Rulings of the Exchange’s Regulation Department Staff. 11120. Definitions ..................................................................................... 11130. When, As and If Issued/Distributed Contracts ............................. IM–11130. Standard Form of ‘‘When, As and If Issued’’ or ‘‘When, As and If Distributed’’ Contract. 11140. Transactions in Securities ‘‘Ex-Dividend,’’ ‘‘Ex-Rights’’ or ‘‘ExWarrants’’. VerDate Aug<31>2005 19:07 Dec 19, 2008 Jkt 217001 PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 E:\FR\FM\22DEN1.SGM 22DEN1 78408 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices RULES CERTIFICATION FOR 17d–2 AGREEMENT WITH FINRA—Continued BX Rule FINRA (or NASD) Rule 11150. Transactions ‘‘Ex-Interest’’ in Bonds Which Are Dealt in ‘‘Flat’’ .. NASD Rule 11150. Transactions ‘‘Ex-Interest’’ in Bonds Which Are Dealt in ‘‘Flat’’. NASD Rule 11160. ‘‘Ex’’ Liquidating Payments. NASD Rule 11170. Transactions in ‘‘Part-Redeemed’’ Bonds. NASD Rule 11190. Reconfirmation and Pricing Service Participants. NASD Rule 11210. Sent By Each Party. NASD IM–11210. Uniform Comparison Form. NASD Rule 11220. Description of Securities. NASD Rule 11310. Book-Entry Settlement. NASD Rule 11320. Dates of Delivery. NASD Rule 11330. Payment. NASD Rule 11340. Stamp Taxes. NASD Rule 11350. Part Delivery. NASD Rule 11360. Units of Delivery. NASD IM–11360. Uniform Delivery Ticket Form. NASD Rule 11361. Units of Delivery—Stocks. NASD Rule 11362. Units of Delivery—Bonds. NASD Rule 11363. Units of Delivery—Unit Investment Trust Securities. NASD Rule 11364. Units of Delivery—Certificates of Deposit for Bonds. NASD IM–11364. Trading Securities As ‘‘Units’’ or Bonds ‘‘With Stock’’. NASD Rule 11410. Acceptance of Draft. NASD Rule 11510. Delivery of Temporary Certificates. NASD Rule 11520. Delivery of Mutilated Securities. NASD Rule 11530. Delivery of Securities Called for Redemption or Which Are Deemed Worthless. NASD Rule 11540. Delivery Under Government Regulations. NASD Rule 11550. Assignments and Powers of Substitution; Delivery of Registered Securities. NASD IM–11550. Uniform Transfer Instructions Form. NASD Rule 11560. Certificate of Company Whose Transfer Books Are Closed. NASD IM–11560. Sample Ownership Transfer Indemnification Stamp. NASD Rule 11570. Certificates in Various Names. NASD Rule 11571. Certificate in Name of Corporation. NASD IM–11571. Sample Certificate and Authorizing Resolution/Certificate of Incumbency. NASD Rule 11572. Certificate in Name of Firm. NASD Rule 11573. Certificate in Name of Dissolved Firm Succeeded by New Firm. NASD Rule 11574. Certificate in Name of Deceased Person, Trustee, etc. NASD IM–11574. Sample Limited Partnership Change of Trustee Form. NASD Rule 11610. Liability for Expenses. NASD Rule 11620. Computation of Interest. NASD Rule 11630. Due-Bills and Due-Bill Checks. NASD IM–11630. Sample Due-Bill Forms. NASD Rule 11640. Claims for Dividends, Rights, Interest, etc. NASD Rule 11650. Transfer Fees NASD Rule 11710. General Provisions. NASD IM–11710. Uniform Reclamation Form. NASD Rule 11720. Irregular Delivery—Transfer Refused—Lost or Stolen Securities. NASD IM–11720. Obligations of Members Who Discover Securities in Their Possession to Which They Are Not Entitled. NASD Rule 11730. Called Securities. NASD Rule 11740. Marking to the Market. NASD Rule 11810. Buying-In. NASD IM–11810. Sample Buy-In Forms. NASD Rule 11820. Selling-Out. NASD Rule 11840. Rights and Warrants. NASD IM–11840. Sample Letter of Indemnity. NASD Rule 11860. Acceptance and Settlement of COD Orders. NASD Rule 11870. Customer Account Transfer Contracts. NASD IM–11870. Sample Transfer Instruction Forms. NASD Rule 11880. Settlement of Syndicate Accounts. 11160. ‘‘Ex’’ Liquidating Payments .......................................................... 11170. Transactions in ‘‘Part-Redeemed’’ Bonds .................................... 11190. Reconfirmation and Pricing Service Participants ......................... 11210. Sent By Each Party ...................................................................... IM–11210. Uniform Comparison Form ..................................................... 11220. Description of Securities .............................................................. 11310. Book-Entry Settlement ................................................................. 11320. Dates of Delivery .......................................................................... 11330. Payment ....................................................................................... 11340. Stamp Taxes ................................................................................ 11350. Part Delivery ................................................................................. 11360. Units of Delivery ........................................................................... IM–11360. Uniform Delivery Ticket Form ................................................ 11361. Units of Delivery—Stocks ............................................................. 11362. Units of Delivery—Bonds ............................................................. 11363. Units of Delivery—Unit Investment Trust Securities .................... 11364. Units of Delivery—Certificates of Deposit for Bonds ................... IM–11364. Trading Securities As ‘‘Units’’ or Bonds ‘‘With Stock’’ ........... 11410. Acceptance of Draft ...................................................................... 11510. Delivery of Temporary Certificates ............................................... 11520. Delivery of Mutilated Securities .................................................... 11530. Delivery of Securities Called for Redemption or Which Are Deemed Worthless. 11540. Delivery Under Government Regulations .................................... 11550. Assignments and Powers of Substitution; Delivery of Registered Securities. IM–11550. Uniform Transfer Instructions Form ....................................... 11560. Certificate of Company Whose Transfer Books Are Closed ....... IM–11560. Sample Ownership Transfer Indemnification Stamp ............. 11570. Certificates in Various Names ...................................................... 11571. Certificate in Name of Corporation .............................................. IM–11571. Sample Certificate and Authorizing Resolution/Certificate of Incumbency. 11572. Certificate in Name of Firm .......................................................... 11573. Certificate in Name of Dissolved Firm Succeeded by New Firm 11574. Certificate in Name of Deceased Person, Trustee, etc. .............. IM–11574. Sample Limited Partnership Change of Trustee Form .......... mstockstill on PROD1PC66 with NOTICES 11610. Liability for Expenses ................................................................... 11620. Computation of Interest ................................................................ 11630. Due-Bills and Due-Bill Checks ..................................................... IM–11630. Sample Due-Bill Forms .......................................................... 11640. Claims for Dividends, Rights, Interest, etc. .................................. 11650. Transfer Fees ............................................................................... 11710. General Provisions ....................................................................... IM–11710. Uniform Reclamation Form .................................................... 11720. Irregular Delivery—Transfer Refused—Lost or Stolen Securities IM–11720. Obligations of Members Who Discover Securities in Their Possession to Which They Are Not Entitled. 11730. Called Securities .......................................................................... 11740. Marking to the Market .................................................................. 11810. Buying-In ...................................................................................... IM–11810. Sample Buy-In Forms ............................................................ 11820. Selling-Out .................................................................................... 11840. Rights and Warrants .................................................................... IM–11840. Sample Letter of Indemnity .................................................... 11860. Acceptance and Settlement of COD Orders ................................ 11870. Customer Account Transfer Contracts ......................................... IM–11870. Sample Transfer Instruction Forms ........................................ 11880. Settlement of Syndicate Accounts ............................................... * FINRA shall not perform Regulatory or Enforcement Responsibilities under this Agreement for these rules as they pertain to violations of insider trading activities, which is covered by a separate 17d–2 Agreement by and among the American Stock Exchange, LLC, BATS Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., and Philadelphia Stock Exchange, Inc. as approved by the SEC on October 17, 2008. VerDate Aug<31>2005 19:07 Dec 19, 2008 Jkt 217001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\22DEN1.SGM 22DEN1 Federal Register / Vol. 73, No. 246 / Monday, December 22, 2008 / Notices The following provisions are covered by the Agreement between the Parties: • SEC ’34 Act Section 28(e) Effect on Existing Law • SEC ’34 Act Rule 10b–10 Confirmation of Transactions • SEC ’34 Act Rule 203 of Regulation SHO Borrowing and Delivery Requirements • SEC ’34 Act Rule 606 of Regulation NMS Disclosure of Order Routing Information • SEC ’34 Act Rule 607 of Regulation NMS Customer Account Statements • FINRA shall not perform Regulatory or Enforcement Responsibilities under this Agreement for these rules as they pertain to violations of insider trading activities, which is covered by a separate 17d–2 Agreement by and among the American Stock Exchange, LLC, BATS Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE Arca Inc., NYSE Regulation, Inc., and Philadelphia Stock Exchange, Inc. as approved by the SEC on October 17, 2008. * * * * * III. Date of Effectiveness of the Proposed Plan and Timing for Commission Action Pursuant to Section 17(d)(1) of the Act 18 and Rule 17d–2 thereunder,19 after January 6, 2009, the Commission may, by written notice, declare the plan submitted by BX and FINRA, File No. 4–575, to be effective if the Commission finds that the plan is necessary or appropriate in the public interest and for the protection of investors, to foster cooperation and coordination among self-regulatory organizations, or to remove impediments to and foster the development of the national market system and a national system for the clearance and settlement of securities transactions and in conformity with the factors set forth in Section 17(d) of the Act. mstockstill on PROD1PC66 with NOTICES IV. Solicitation of Comments In order to assist the Commission in determining whether to approve the proposed 17d–2 Plan and to relieve BX of the responsibilities which would be assigned to FINRA, interested persons are invited to submit written data, views, and arguments concerning the foregoing. Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION 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 4–575 on the subject line. [Release No. 34–59095; File No. SR–BATS– 2008–012] Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Fees for Use of the Exchange December 12, 2008. Paper comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number 4–575. 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, on official business days between the hours of 10 am and 3 pm. Copies of the plan also will be available for inspection and copying at the principal offices of BX and FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number 4–575 and should be submitted on or before January 6, 2009. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Florence E. Harmon, Acting Secretary. [FR Doc. E8–30321 Filed 12–19–08; 8:45 am] BILLING CODE 8011–01–P 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 December 9, 2008, BATS Exchange, Inc. (‘‘BATS’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. BATS has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b–4(f)(2) thereunder,4 which renders the proposed rule change 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 The Exchange proposes to modify its fee schedule applicable to use of the Exchange effective December 12, 2008 in order to (i) implement new pricing for orders routed away from the Exchange that are executed at dark liquidity venues as part of the Exchange’s routing strategies, and (ii) substitute the current fee schedule with a fee schedule in a revised format. The text of the proposed rule change is available at the Exchange’s Web site at http://www.batstrading.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 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 and discussed any comments it received on the 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b–4(f)(2). 2 17 18 15 19 17 U.S.C. 78q(d)(1). CFR 240.17d–2. VerDate Aug<31>2005 21:29 Dec 19, 2008 20 17 Jkt 217001 78409 PO 00000 CRF 200.30–3(a)(34). Frm 00126 Fmt 4703 Sfmt 4703 E:\FR\FM\22DEN1.SGM 22DEN1

Agencies

[Federal Register Volume 73, Number 246 (Monday, December 22, 2008)]
[Notices]
[Pages 78402-78409]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30321]



[[Page 78402]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59101; File No. 4-575]


Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of 
Regulatory Responsibilities Between the Financial Industry Regulatory 
Authority, Inc. and the Boston Stock Exchange, Incorporated

December 15, 2008.
    Pursuant to Section 17(d) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that 
on December 8, 2008, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') and the Boston Stock Exchange, Incorporated (``BX'') 
(together with FINRA, the ``Parties'') filed with the Securities and 
Exchange Commission (``Commission'' or ``SEC'') a plan for the 
allocation of regulatory responsibilities, dated December 5, 2008 
(``17d-2 Plan'' or the ``Plan''). The Commission is publishing this 
notice to solicit comments on the 17d-2 Plan from interested persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or national securities association to examine for, 
and enforce compliance by, its members and persons associated with its 
members with the Act, the rules and regulations thereunder, and the 
SRO's own rules, unless the SRO is relieved of this responsibility 
pursuant to Section 17(d) or Section 19(g)(2) of the Act.\4\ Without 
this relief, the statutory obligation of each individual SRO could 
result in a pattern of multiple examinations of broker-dealers that 
maintain memberships in more than one SRO (``common members''). Such 
regulatory duplication would add unnecessary expenses for common 
members and their SROs.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
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    Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\6\ With 
respect to a common member, Section 17(d)(1) authorizes the Commission, 
by rule or order, to relieve an SRO of the responsibility to receive 
regulatory reports, to examine for and enforce compliance with 
applicable statutes, rules, and regulations, or to perform other 
specified regulatory functions.
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    \5\ 15 U.S.C. 78q(d)(1).
    \6\ See Securities Act Amendments of 1975, Report of the Senate 
Committee on Banking, Housing, and Urban Affairs to Accompany S. 
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\7\ Rule 17d-1 authorizes the 
Commission to name a single SRO as the designated examining authority 
(``DEA'') to examine common members for compliance with the financial 
responsibility requirements imposed by the Act, or by Commission or SRO 
rules.\8\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
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    \7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \8\ See Securities Exchange Act Release No. 12352 (April 20, 
1976), 41 FR 18808 (May 7, 1976).
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    To address regulatory duplication in these and other areas, the 
Commission adopted Rule 17d-2 under the Act.\9\ Rule 17d-2 permits SROs 
to propose joint plans for the allocation of regulatory 
responsibilities with respect to their common members. Under paragraph 
(c) of Rule 17d-2, the Commission may declare such a plan effective if, 
after providing for appropriate notice and comment, it determines that 
the plan is necessary or appropriate in the public interest and for the 
protection of investors; to foster cooperation and coordination among 
the SROs; to remove impediments to, and foster the development of, a 
national market system and a national clearance and settlement system; 
and is in conformity with the factors set forth in Section 17(d) of the 
Act. Commission approval of a plan filed pursuant to Rule 17d-2 
relieves an SRO of those regulatory responsibilities allocated by the 
plan to another SRO.
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    \9\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
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II. Proposed Plan

    On August 29, 2008, BX was acquired by The NASDAQ OMX Group, Inc. 
(``NASDAQ OMX''). At the time of this acquisition, BX was not operating 
a venue for trading cash equities. BX has since proposed to adopt a new 
rulebook with rules governing membership, the regulatory obligations of 
members, listing, and equity trading.\10\ The proposed new BX rules, in 
particular the member conduct rules that would be the Common Rules 
under the proposed Plan, are based to a substantial extent on the rules 
of the NASDAQ Stock Market LLC (``NASDAQ Exchange''),\11\ which, in 
turn, are based to a substantial extent on the comparable rules of 
FINRA. The NASDAQ Exchange currently is party to a 17d-2 plan with 
FINRA.\12\ The proposed Plan would allocate regulatory responsibility 
between BX and FINRA in a manner similar to the allocation of 
regulatory responsibility that currently exists between the NASDAQ 
Exchange and FINRA.
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    \10\ See Securities Exchange Act Release No. 58927 (November 10, 
2008), 73 FR 69685 (November 19, 2008) (SR-BSE-2008-48) (notice of 
proposed rule change).
    \11\ See id. at 73 FR 69686.
    \12\ See Securities Exchange Act Release No. 54136 (July 12, 
2006), 71 FR 40759 (July 18, 2006) (File No. 4-517) (order approving 
and declaring effective the plan between the NASDAQ Exchange and 
NASD (n/k/a FINRA)).
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    Accordingly, the proposed 17d-2 Plan is intended to reduce 
regulatory duplication for firms that are common members of both FINRA 
and BX.\13\ Pursuant to the proposed 17d-2 Plan, FINRA would assume 
certain examination and enforcement responsibilities for common members 
with respect to certain applicable laws, rules, and regulations.
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    \13\ The proposed 17d-2 Plan refers to these common members as 
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
---------------------------------------------------------------------------

    The text of the Plan delineates the proposed regulatory 
responsibilities with respect to the Parties. Included in the proposed 
Plan is an exhibit (the ``Rules Certification for 17d-2 Agreement with 
FINFA,'' referred to herein as the ``Certification'') that lists every 
BX rule, and select federal securities laws, rules, and regulations, 
for which FINRA would bear responsibility under the Plan for overseeing 
and enforcing with respect to BX members that are also members of FINRA 
and the associated persons therewith (``Dual Members'').
    Specifically, under the 17d-2 Plan, FINRA would assume examination 
and enforcement responsibility relating to compliance by Dual Members 
with the rules of BX that are substantially similar

[[Page 78403]]

to the applicable rules of FINRA, as well as any provisions of the 
federal securities laws and the rules and regulations thereunder 
delineated in the Certification (``Common Rules'').\14\ Common Rules 
would not include the application of any BX rule or FINRA rule, or any 
rule or regulation under the Act, to the extent that it pertains to 
violations of insider trading activities, because such matters are 
covered by a separate multiparty agreement under Rule 17d-2.\15\ In the 
event that a Dual Member is the subject of an investigation relating to 
a transaction on BX, the plan acknowledges that BX may, in its 
discretion, exercise concurrent jurisdiction and responsibility for 
such matter.\16\
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    \14\ See paragraph 1(b) of the proposed 17d-2 Plan (defining 
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan 
(defining Regulatory Responsibilities). Paragraph 2 of the Plan 
provides that annually, or more frequently as required by changes in 
either BX rules or FINRA rules, the parties shall review and update, 
if necessary, the list of Common Rules. Further, paragraph 3 of the 
Plan provides that BX shall furnish FINRA with a list of Dual 
Members, and shall update the list no less frequently than once each 
calendar quarter.
    \15\ See Securities Exchange Act Release No. 58806 (October 17, 
2008), 73 FR 63216 (October 23, 2008) (File No. 4-566) (notice of 
filing and order approving and declaring effective the plan). The 
Certification identifies two Common Rules that may also be addressed 
in the context of regulating insider trading activities pursuant to 
the separate multiparty agreement.
    \16\ See paragraph 6 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------

    Under the Plan, BX would retain full responsibility for 
surveillance, examination, investigation, and enforcement with respect 
to trading activities or practices involving BX's own marketplace; 
registration pursuant to its applicable rules of associated persons 
(i.e., registration rules that are not Common Rules); its duties and 
obligations as a DEA pursuant to Rule 17d-1 under the Act; and any BX 
rules that are not Common Rules.\17\
---------------------------------------------------------------------------

    \17\ See paragraph 2 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------

    The text of the proposed 17d-2 Plan is as follows:
AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND 
BOSTON STOCK EXCHANGE, INCORPORATED PURSUANT TO RULE 17d-2 UNDER THE 
SECURITIES EXCHANGE ACT OF 1934
    This Agreement, by and between the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and Boston Stock Exchange, Incorporated 
(``BX''), is made this 5th day of December, 2008 (the ``Agreement''), 
pursuant to Section 17(d) of the Securities Exchange Act of 1934 (the 
``Exchange Act'') and Rule 17d-2 thereunder, which permits agreements 
between self-regulatory organizations to allocate regulatory 
responsibility to eliminate regulatory duplication. FINRA and BX may be 
referred to individually as a ``party'' and together as the 
``parties.''
    Whereas, FINRA and BX desire to reduce duplication in the 
examination of their Dual Members (as defined herein) and in the filing 
and processing of certain registration and membership records; and
    Whereas, FINRA and BX desire to execute an agreement covering such 
subjects pursuant to the provisions of Rule 17d-2 under the Exchange 
Act and to file such agreement with the Securities and Exchange 
Commission (the ``SEC'' or ``Commission'') for its approval.
    Now, therefore, in consideration of the mutual covenants contained 
hereinafter, FINRA and BX hereby agree as follows:
    1. Definitions. Unless otherwise defined in this Agreement or the 
context otherwise requires, the terms used in this Agreement shall have 
the same meaning as they have under the Exchange Act and the rules and 
regulations thereunder. As used in this Agreement, the following terms 
shall have the following meanings:
    (a) ``BX Rules'' or ``FINRA Rules'' shall mean: (i) The rules of 
BX, or (ii) the rules of FINRA, respectively, as the rules of an 
exchange or association are defined in Exchange Act Section 3(a)(27).
    (b) ``Common Rules'' shall mean BX Rules that are substantially 
similar to the applicable FINRA Rules and certain provisions of the 
Exchange Act and SEC rules set forth on Exhibit 1 in that examination 
for compliance with such provisions and rules would not require FINRA 
to develop one or more new examination standards, modules, procedures, 
or criteria in order to analyze the application of the provision or 
rule, or a Dual Member's activity, conduct, or output in relation to 
such provision or rule; provided, however, Common Rules shall not 
include the application of the SEC, BX or FINRA rules as they pertain 
to violations of insider trading activities, which is covered by a 
separate 17d-2 Agreement by and among the American Stock Exchange, LLC, 
BATS Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, 
LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory 
Authority, Inc., International Securities Exchange, LLC, The NASDAQ 
Stock Market LLC, National Stock Exchange, Inc., New York Stock 
Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., and Philadelphia 
Stock Exchange, Inc. approved by the Commission on October 17, 2008.
    (c) ``Dual Members'' shall mean those BX members that are also 
members of FINRA and the associated persons therewith.
    (d) ``Effective Date'' shall have the meaning set forth in 
paragraph 14.
    (e) ``Enforcement Responsibilities'' shall mean the conduct of 
appropriate proceedings, in accordance with FINRA's Code of Procedure 
(the NASD Rule 9000 Series) and other applicable FINRA procedural 
rules, to determine whether violations of Common Rules have occurred, 
and if such violations are deemed to have occurred, the imposition of 
appropriate sanctions as specified under FINRA's Code of Procedure and 
sanctions guidelines.
    (f) ``Regulatory Responsibilities'' shall mean the examination 
responsibilities and Enforcement Responsibilities relating to 
compliance by the Dual Members with the Common Rules and the provisions 
of the Exchange Act and the rules and regulations thereunder, and other 
applicable laws, rules and regulations, each as set forth on Exhibit 1 
attached hereto.
    2. Regulatory and Enforcement Responsibilities. FINRA shall assume 
Regulatory Responsibilities and Enforcement Responsibilities for Dual 
Members. Attached as Exhibit 1 to this Agreement and made part hereof, 
BX furnished FINRA with a current list of Common Rules and certified to 
FINRA that such rules that are BX Rules are substantially similar to 
the corresponding FINRA Rules (the ``Certification''). FINRA hereby 
agrees that the rules listed in the Certification are Common Rules as 
defined in this Agreement. Each year following the Effective Date of 
this Agreement, or more frequently if required by changes in either the 
rules of BX or FINRA, BX shall submit an updated list of Common Rules 
to FINRA for review which shall add BX Rules not included in the 
current list of Common Rules that qualify as Common Rules as defined in 
this Agreement; delete BX 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 BX Rules that qualify as Common Rules as 
defined in this Agreement. Within 30 days of receipt of such updated 
list, FINRA shall confirm in writing whether the rules listed in any 
updated list are Common Rules as defined in this Agreement. 
Notwithstanding anything herein to the contrary, it is explicitly 
understood that the term ``Regulatory Responsibilities''

[[Page 78404]]

does not include, and BX shall retain full responsibility for (unless 
otherwise addressed by separate agreement or rule) (collectively, the 
``Retained Responsibilities'') the following:
    (a) Surveillance, examination, investigation and enforcement with 
respect to trading activities or practices involving BX's own 
marketplace;
    (b) Registration pursuant to its applicable rules of associated 
persons (i.e., registration rules that are not Common Rules);
    (c) Discharge of its duties and obligations as a Designated 
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
    (d) Any BX Rules that are not Common Rules.
    3. Dual Members. Prior to the Effective Date, BX shall furnish 
FINRA with a current list of Dual Members, which shall be updated no 
less frequently than once each quarter.
    4. No Charge. There shall be no charge to BX by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter provided. 
FINRA shall provide BX with ninety (90) days advance written notice in 
the event FINRA decides to impose any charges to BX for performing the 
Regulatory Responsibilities under this Agreement. If FINRA determines 
to impose a charge, BX shall have the right at the time of the 
imposition of such charge to terminate this Agreement; provided, 
however, that FINRA's Regulatory Responsibilities under this Agreement 
shall continue until the Commission approves the termination of this 
Agreement.
    5. Reassignment of Regulatory Responsibilities. Notwithstanding any 
provision hereof, this Agreement shall be subject to any statute, or 
any rule or order of the Commission reassigning Regulatory 
Responsibilities between self-regulatory organizations. To the extent 
such action is inconsistent with this Agreement, such action 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.
    6. Notification of Violations. In the event that FINRA becomes 
aware of apparent violations of any BX Rules, which are not listed as 
Common Rules, discovered pursuant to the performance of the Regulatory 
Responsibilities assumed hereunder, FINRA shall notify BX of those 
apparent violations for such response as BX deems appropriate. In the 
event that BX becomes aware of apparent violations of any Common Rules, 
discovered pursuant to the performance of the Retained 
Responsibilities, BX shall notify FINRA of those apparent violations 
and such matters shall be handled by FINRA as provided in this 
Agreement. Each party agrees to make available promptly all files, 
records and witnesses necessary to assist the other in its 
investigation or proceedings. Apparent violations of Common Rules, 
FINRA Rules, federal securities laws, and rules and regulations 
thereunder, shall be processed by, and enforcement proceedings in 
respect thereto shall be conducted by FINRA as provided hereinbefore; 
provided, however, that in the event a Dual Member is the subject of an 
investigation relating to a transaction on BX, BX may in its discretion 
assume concurrent jurisdiction and responsibility.
    7. Continued Assistance.
    (a) FINRA shall make available to BX all information obtained by 
FINRA in the performance by it of the Regulatory Responsibilities 
hereunder with respect to the Dual Members subject to this Agreement. 
In particular, and not in limitation of the foregoing, FINRA shall 
furnish BX any information it obtains about Dual Members which reflects 
adversely on their financial condition. BX shall make available to 
FINRA any information coming to its attention that reflects adversely 
on the financial condition of Dual Members or indicates possible 
violations of applicable laws, rules or regulations by such firms.
    (b) The parties agree that documents or information shared shall be 
held in confidence, and used only for the purposes of carrying out 
their respective regulatory obligations. Neither party shall assert 
regulatory or other privileges as against the other with respect to 
documents or information that is required to be shared pursuant to this 
Agreement.
    (c) The sharing of documents or information between the parties 
pursuant to this Agreement shall not be deemed a waiver as against 
third parties of regulatory or other privileges relating to the 
discovery of documents or information.
    8. Dual Member Applications.
    (a) Dual Members subject to this Agreement shall be required to 
submit, and FINRA shall 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 BX and FINRA or associated with Dual 
Members thereof. Upon request, FINRA shall advise BX of any changes of 
allied members, partners, officers, registered personnel and other 
persons required to be approved by the rules of both BX and FINRA.
    (b) Dual Members shall be required to send to FINRA all letters, 
termination notices or other material respecting the individuals listed 
in paragraph 8(a).
    (c) When as a result of processing such submissions FINRA becomes 
aware of a statutory disqualification as defined in the Exchange Act 
with respect to a Dual Member, FINRA shall determine pursuant to 
Sections 15A(g) and/or Section 6(c) of the Exchange Act the 
acceptability or continued applicability of the person to whom such 
disqualification applies and keep BX advised of its actions in this 
regard for such subsequent proceedings as BX may initiate.
    (d) Notwithstanding the foregoing, FINRA shall not review the 
membership application, reports, filings, fingerprint cards, notices, 
or other writings filed to determine if such documentation submitted by 
a broker or dealer, or a person associated therewith or other persons 
required to register or qualify by examination meets the BX 
requirements for general membership or for specified categories of 
membership or participation in BX, such as Equities Market Maker, 
Equities ECN, Order Entry Firm, or any similar type of BX membership or 
participation that is created after this Agreement is executed. FINRA 
shall not review applications or other documentation filed to request a 
change in the rights or status described in this paragraph 8(d), 
including termination or limitation on activities, of a member or a 
participant of BX, or a person associated with, or requesting 
association with, a member or participant of BX.
    9. Branch Office Information. FINRA shall 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 with respect to the 
Common Rules as they may be amended from time to time. Upon request, 
FINRA shall advise BX of the opening, address change and termination of 
branch and main offices of Dual Members and the names of such branch 
office managers.
    10. Customer Complaints. BX shall forward to FINRA copies of all 
customer complaints involving Dual Members received by BX relating to 
FINRA's Regulatory Responsibilities under this Agreement. It shall be 
FINRA's responsibility to review and take appropriate action in respect 
to such complaints.
    11. Advertising. FINRA shall assume responsibility to review the 
advertising

[[Page 78405]]

of Dual Members subject to the Agreement, provided that such material 
is filed with FINRA in accordance with FINRA's filing procedures and is 
accompanied with any applicable filing fees set forth in FINRA Rules.
    12. No Restrictions on Regulatory Action. Nothing contained in this 
Agreement shall restrict or in any way encumber the right of either 
party to conduct its own independent or concurrent investigation, 
examination or enforcement proceeding of or against Dual Members, as 
either party, in its sole discretion, shall deem appropriate or 
necessary.
    13. Termination. This Agreement may be terminated by BX or FINRA at 
any time upon the approval of the Commission after one (1) year's 
written notice to the other party, except as provided in paragraph 4.
    14. Effective Date. This Agreement shall be effective upon approval 
of the Commission.
    15. Arbitration. In the event of a dispute between the parties as 
to the operation of this Agreement, BX and FINRA hereby agree that any 
such dispute shall be settled by arbitration in Washington, DC. in 
accordance with the rules of the American Arbitration Association then 
in effect, or such other procedures as the parties may mutually agree 
upon. Judgment on the award rendered by the arbitrator(s) may be 
entered in any court having jurisdiction. Each party acknowledges that 
the timely and complete performance of its obligations pursuant to this 
Agreement is critical to the business and operations of the other 
party. In the event of a dispute between the parties, the parties shall 
continue to perform their respective obligations under this Agreement 
in good faith during the resolution of such dispute unless and until 
this Agreement is terminated in accordance with its provisions. Nothing 
in this Section 15 shall interfere with a party's right to terminate 
this Agreement as set forth herein.
    16. Notification of Members. BX and FINRA shall notify Dual Members 
of this Agreement after the Effective Date by means of a uniform joint 
notice.
    17. Amendment. This Agreement may be amended in writing duly 
approved by each party. All such amendments must be filed with and 
approved by the Commission before they become effective.
    18. Limitation of Liability. Neither FINRA nor BX nor any of their 
respective directors, governors, officers or employees shall be liable 
to the other party to this Agreement for any liability, loss or damage 
resulting from or claimed to have resulted from any delays, 
inaccuracies, errors or omissions with respect to the provision of 
Regulatory Responsibilities as provided hereby or for the failure to 
provide any such responsibility, except with respect to such liability, 
loss or damages as shall have been suffered by one or the other of 
FINRA or BX and caused by the willful misconduct of the other party or 
their respective directors, governors, officers or employees. No 
warranties, express or implied, are made by FINRA or BX with respect to 
any of the responsibilities to be performed by each of them hereunder.
    19. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and BX 
join in requesting the Commission, upon its approval of this Agreement 
or any part thereof, to relieve BX of any and all responsibilities with 
respect to matters allocated to FINRA pursuant to this Agreement; 
provided, however, that this Agreement shall not be effective until the 
Effective Date.
    20. Severability. Any term or provision of this Agreement that is 
invalid or unenforceable in any jurisdiction shall, as to such 
jurisdiction, be ineffective to the extent of such invalidity or 
unenforceability without rendering invalid or unenforceable the 
remaining terms and provisions of this Agreement or affecting the 
validity or enforceability of any of the terms or provisions of this 
Agreement in any other jurisdiction.
    21. Counterparts. This Agreement may be executed in one or more 
counterparts, each of which shall be deemed an original, and such 
counterparts together shall constitute one and the same instrument.
    In witness whereof, each party has executed or caused this 
Agreement to be executed on its behalf by a duly authorized officer as 
of the date first written above.

Boston Stock Exchange, Incorporated

By:--------------------------------------------------------------------

Name:

Title:

Financial Industry Regulatory Authority, Inc.

By:--------------------------------------------------------------------

Name:

Title:

Exhibit 1

    Boston Stock Exchange, Incorporated (``BX'') hereby certifies that 
the requirements contained in the BX rules listed below are identical 
to, or substantially similar to, the NASD and FINRA rules noted below:

           Rules Certification For 17d-2 Agreement With FINRA
------------------------------------------------------------------------
                BX Rule                        FINRA (or NASD) Rule
------------------------------------------------------------------------
IM-1002-2. Status of Sole Proprietors    NASD IM-1000-2. Status of Sole
 and Registered Representatives Serving   Proprietors and Registered
 in the Armed Forces.                     Representatives Serving in the
                                          Armed Forces.
IM-1002-3. Failure to Register           NASD IM-1000-3. Failure to
 Personnel.                               Register Personnel.
IM-1002-4. Branch Offices and Offices    NASD IM-1000-4. Branch Offices
 of Supervisory Jurisdiction.             and Offices of Supervisory
                                          Jurisdiction.
1011. Definitions......................  NASD Rule 1011. Definitions.
1012. General Provisions (provisions     NASD Rule 1012. General
 relating to Rule 1017 and registration   Provisions (provisions
 of branch offices only)..                relating to Rule 1017 and
                                          registration of branch offices
                                          only).
1014. Department Decision (provisions    NASD Rule 1014. Department
 relating to Rule 1017 only)..            Decision (provisions relating
                                          to Rule 1017 only).
1017. Application for Approval of        NASD Rule 1017. Application for
 Change in Ownership, Control, or         Approval of Change in
 Business Operations..                    Ownership, Control, or
                                          Business Operations.
1021. Registration Requirements........  NASD Rule 1021. Registration
                                          Requirements.
1022. Categories of Principal            NASD Rule 1022. Categories of
 Registration.                            Principal Registration.
IM-1022-2. Limited Principal--General    NASD IM-1022-2. Limited
 Securities Sales Supervisor..            Principal--General Securities
                                          Sales Supervisor.
1031. Registration Requirements........  NASD Rule 1031. Registration
                                          Requirements.
1032. Categories of Representative       NASD Rule 1032. Categories of
 Registration.                            Representative Registration.
1050. Research Analysts................  NASD Rule 1050. Research
                                          Analysts.
1060. Persons Exempt from Registration.  NASD Rule 1060. Persons Exempt
                                          from Registration.

[[Page 78406]]

 
1070. Qualification Examinations and     NASD Rule 1070. Qualification
 Waiver of Requirements.                  Examinations and Waiver of
                                          Requirements.
1080. Confidentiality of Examinations..  NASD Rule 1080. Confidentiality
                                          of Examinations.
1090. Foreign Members..................  NASD Rule 1090. Foreign
                                          Members.
1120. Continuing Education Requirements  NASD Rule 1120. Continuing
                                          Education Requirements.
1140. Electronic Filing Rules..........  NASD Rule 1140. Electronic
                                          Filing Rules.
1150. Executive Representative.........  NASD Rule 1150. Executive
                                          Representative.
1160. Contact Information Requirements.  NASD Rule 1160. Contact
                                          Information Requirements.
2110. Standards of Commercial Honor and  FINRA 2010. Standards of
 Principles of Trade *.                   Commercial Honor and
                                          Principles of Trade *.
IM-2110-2. Trading Ahead of Customer     NASD IM-2110-2. Trading Ahead
 Limit Orders.                            of Customer Limit Orders.
IM-2110-3. Front Running Policy........  NASD IM-2110-3. Front Running
                                          Policy.
IM-2110-4. Trading Ahead of Research     NASD IM-2110-4. Trading Ahead
 Reports.                                 of Research Reports.
IM-2110-5. Anti-Intimidation/            NASD IM-2110-5. Anti-
 Coordination.                            Intimidation/Coordination.
IM-2110-6. Confirmation of Callable      NASD IM-2110-6. Confirmation of
 Common Stock.                            Callable Common Stock.
IM-2110-7. Interfering With the          NASD IM-2110-7. Interfering
 Transfer of Customer Accounts in the     With the Transfer of Customer
 Context of Employment Disputes.          Accounts in the Context of
                                          Employment Disputes.
2111. Trading Ahead of Customer Market   NASD 2111. Trading Ahead of
 Orders.                                  Customer Market Orders.
2120. Use of Manipulative, Deceptive or  FINRA Rule 2020. Use of
 Other Fraudulent Devices *.              Manipulative, Deceptive or
                                          Other Fraudulent Devices *.
2210. Communications with the Public...  NASD Rule 2210. Communications
                                          with the Public.
IM-2210-1. Guidelines to Ensure That     NASD IM-2210-1. Guidelines to
 Communications With the Public Are Not   Ensure That Communications
 Misleading.                              With the Public Are Not
                                          Misleading.
2211. Institutional Sales Material and   NASD Rule 2211. Institutional
 Correspondence.                          Sales Material and
                                          Correspondence.
2212. Telemarketing....................  NASD Rule 2212. Telemarketing.
2240. Disclosure of Control              NASD Rule 2240. Disclosure of
 Relationship with Issuer.                Control Relationship with
                                          Issuer.
2250. Disclosure of Participation or     NASD Rule 2250. Disclosure of
 Interest in Primary or Secondary         Participation or Interest in
 Distribution.                            Primary or Secondary
                                          Distribution.
2260. Forwarding of Proxy and Other      NASD Rule 2260. Forwarding of
 Materials.                               Proxy and Other Materials.
IM-2260. Suggested Rates of              NASD IM-2260. Suggested Rates
 Reimbursement.                           of Reimbursement.
2270. Disclosure of Financial Condition  NASD Rule 2270. Disclosure of
 to Customers.                            Financial Condition to
                                          Customers.
2290. Fairness Opinions................  FINRA Rule 5150. Fairness
                                          Opinions.
2310. Recommendations to Customers       NASD Rule 2310. Recommendations
 (Suitability).                           to Customers (Suitability).
IM-2310-2. Fair Dealing with Customers.  NASD IM-2310-2. Fair Dealing
                                          with Customers.
IM-2310-3. Suitability Obligations to    NASD IM-2310-3. Suitability
 Institutional Customers.                 Obligations to Institutional
                                          Customers.
2320. Best Execution and                 NASD Rule 2320. Best Execution
 Interpositioning.                        and Interpositioning.
IM-2320. Interpretive Guidance with      NASD IM-2320. Interpretive
 Respect to Best Execution Requirements.  Guidance with Respect to Best
                                          Execution Requirements.
2330. Customers' Securities or Funds...  NASD Rule 2330. Customers'
                                          Securities or Funds.
IM-2330. Segregation of Customers'       NASD IM-2330. Segregation of
 Securities.                              Customers' Securities.
2340. Customer Account Statements......  NASD Rule 2340. Customer
                                          Account Statements.
2341. Margin Disclosure Statement......  NASD Rule 2341. Margin
                                          Disclosure Statement.
2342. SIPC Information.................  NASD Rule 2342. SIPC
                                          Information.
2360. Approval Procedures for Day        NASD Rule 2360. Approval
 Trading Accounts.                        Procedures for Day Trading
                                          Accounts.
2361. Day-Trading Risk Disclosure        NASD Rule 2361. Day-Trading
 Statement.                               Risk Disclosure Statement.
2370. Borrowing From or Lending to       NASD Rule 2370. Borrowing From
 Customers.                               or Lending to Customers.
2430. Charges for Services Performed...  NASD Rule 2430. Charges for
                                          Services Performed.
2441. Net Transactions with Customers..  NASD Rule 2441. Net
                                          Transactions with Customers.
2460. Payments for Market Making.......  NASD Rule 2460. Payments for
                                          Market Making.
2510. Discretionary Accounts...........  NASD Rule 2510. Discretionary
                                          Accounts.
2520. Margin Requirements..............  NASD Rule 2520. Margin
                                          Requirements.
2810. Direct Participation Programs....  NASD Rule 2810. Direct
                                          Participation Programs.
2830. Investment Company Securities....  NASD Rule 2830. Investment
                                          Company Securities.
2841. General..........................  NASD Rule 2841. General.
2842. Definitions......................  NASD Rule 2842. Definitions.
2843. Account Approval.................  NASD Rule 2843. Account
                                          Approval.
2844. Suitability......................  NASD Rule 2844. Suitability.
2845. Discretionary Accounts...........  NASD Rule 2845. Discretionary
                                          Accounts.
2846. Supervision of Accounts..........  NASD Rule 2846. Supervision of
                                          Accounts.
2847. Customer Complaints..............  NASD Rule 2847. Customer
                                          Complaints.
2848. Communications with the Public     NASD Rule 2848. Communications
 and Customers Concerning Index           with the Public and Customers
 Warrants, Currency Index Warrants, and   Concerning Index Warrants,
 Currency Warrants.                       Currency Index Warrants, and
                                          Currency Warrants
2849. Maintenance of Records...........  NASD Rule 2849. Maintenance. of
                                          Records.
2850. Position Limits..................  NASD Rule 2850. Position
                                          Limits.
2851. Exercise Limits..................  NASD Rule 2851. Exercise
                                          Limits.
2853. Liquidation of Index Warrant       NASD Rule 2853. Liquidation of
 Positions.                               Index Warrant Positions.
2910. Disclosure of Financial Condition  NASD Rule 2910. Disclosure of
 to Other Members.                        Financial Condition to Other
                                          Members.
3010. Supervision......................  NASD Rule 3010. Supervision.
IM-3010-1. Standards for Reasonable      NASD IM-3010-1. Standards for
 Review.                                  Reasonable Review.
3011. Anti-Money Laundering Compliance   NASD Rule 3011. Anti-Money
 Program.                                 Laundering Compliance Program.
IM-3011-1. Independent Testing           NASD IM-3011-1. Independent
 Requirements.                            Testing Requirements.

[[Page 78407]]

 
IM-3011-2. Review of Anti-Money          NASD IM-3011-2. Review of Anti-
 Laundering Compliance Person             Money Laundering Compliance
 Information.                             Person Information.
3012. Supervisory Control System.......  NASD Rule 3012. Supervisory
                                          Control System.
3013. Annual Certification of            FINRA Rule 3130. Annual
 Compliance and Supervisory Processes.    Certification of Compliance
                                          and Supervisory Processes.
IM-3013. Annual Compliance and           FINRA Rule 3130. Annual
 Supervision Certification.               Certification of Compliance
                                          and Supervisory Processes.
3020. Fidelity Bonds...................  NASD Rule 3020. Fidelity Bonds.
3030. Outside Business Activities of an  NASD Rule 3030. Outside
 Associated Person.                       Business Activities of an
                                          Associated Person.
3040. Private Securities Transactions    NASD Rule 3040. Private
 of an Associated Person.                 Securities Transactions of an
                                          Associated Person.
3050. Transactions for or by Associated  NASD Rule 3050. Transactions
 Persons.                                 for or by Associated Persons.
3060. Influencing or Rewarding           FINRA Rule 3220. Influencing or
 Employees of Others.                     Rewarding Employees of Others.
3070. Reporting Requirements...........  NASD Rule 3070. Reporting
                                          Requirements.
3080. Disclosure to Associated Persons   NASD Rule 3080. Disclosure to
 When Signing Form U-4.                   Associated Persons When
                                          Signing Form U-4.
3090. Transactions Involving Exchange    FINRA Rule 2070. Transactions
 Employees.                               Involving FINRA Employees.
3110. Books and Records................  NASD Rule 3110. Books and
                                          Records
IM-3110. Customer Account Information..  NASD IM-3110. Customer Account
                                          Information.
3120. Use of Information Obtained in     NASD Rule 3120. Use of
 Fiduciary Capacity.                      Information Obtained in
                                          Fiduciary Capacity.
3121. Custodian of the Record..........  NASD Rule 3121. Custodian of
                                          the Record.
3130. Regulation of Activities of        NASD Rule 3130. Regulation of
 Members Experiencing Financial and/or    Activities of Members
 Operational Difficulties.                Experiencing Financial and/or
                                          Operational Difficulties.
IM-3130 Restrictions on Member's         NASD IM-3130 Restrictions on
 Activity.                                Member's Activity.
3140. Approval of Change in Exempt       NASD Rule 3140. Approval of
 Status Under SEC Rule 15c3-3.            Change in Exempt Status Under
                                          SEC Rule 15c3-3.
3150. Reporting Requirements for         NASD Rule 3150. Reporting
 Clearing Firms.                          Requirements for Clearing
                                          Firms.
IM-3150. Exemptive Relief..............  NASD IM-3150. Exemptive Relief.
3160. Extensions of Time under           NASD Rule 3160. Extensions of
 Regulation T and SEC Rule 15c3-3.        Time under Regulation T and
                                          SEC Rule 15c3-3.
3220. Adjustment of Open Orders........  NASD Rule 3220. Adjustment of
                                          Open Orders.
3230. Clearing Agreements..............  NASD Rule 3230. Clearing
                                          Agreements.
3310. Publication of Transactions and    NASD Rule 3310. Publication of
 Quotations.                              Transactions and Quotations.
IM-3310. Manipulative and Deceptive      NASD IM-3310. Manipulative and
 Quotations.                              Deceptive Quotations.
3320. Offers at Stated Prices..........  NASD Rule 3320. Offers at
                                          Stated Prices.
3330. Payment Designed to Influence      NASD Rule 3330. Payment
 Market Prices, Other than Paid           Designed to Influence Market
 Advertising.                             Prices, Other than Paid
                                          Advertising.
3340. Prohibition on Transactions,       NASD Rule 3340. Prohibition on
 Publication of Quotations, or            Transactions, Publication of
 Publication of Indications of Interest   Quotations, or Publication of
 During Trading Halts.                    Indications of Interest During
                                          Trading Halts.
3351. Trading Practices................  FINRA Rule 6140. Other Trading
                                          Practices.
3360. Short-Interest Reporting.........  FINRA Rule 4560. Short-Interest
                                          Reporting.
3370. Prompt Receipt and Delivery of     NASD Rule 3370. Prompt Receipt
 Securities.                              and Delivery of Securities.
3380. Order Entry and Execution          NASD Rule 3380. Order Entry and
 Practices.                               Execution Practices.
3510. Business Continuity Plans........  NASD Rule 3510. Business
                                          Continuity Plans.
3520. Emergency Contact Information....  NASD Rule 3520. Emergency
                                          Contact Information.
6951. Definitions......................  FINRA Rule 7410. Definitions.
6952. Applicability....................  FINRA Rule 7420. Applicability.
6953. Synchronization of Member          FINRA Rule 7430.
 Business Clocks.                         Synchronization of Member
                                          Business Clocks.
6954. Recording of Order Information...  FINRA Rule 7440. Recording of
                                          Order Information.
6955. Order Data Transmission            FINRA Rule 7450. Order Data
 Requirements.                            Transmission Requirements.
6956. Violation of Order Audit Trail     FINRA Rule 7460. Violation of
 System Rules.                            Order Audit Trail System
                                          Rules.
6958. Exemption to the Order Recording   FINRA Rule 7470. Exemption to
 and Data Transmission Requirements.      the Order Recording and Data
                                          Transmission Requirements.
8110. Availability of Manual to          FINRA Rule 8110. Availability
 Customers.                               of Manual to Customers.
8120. Definitions......................  FINRA Rule 8120. Definitions.
10100. Jurisdiction....................  FINRA Rule 10100.
                                          Administrative Provisions.
IM-10100. Failure to Act Under           FINRA IM-10100. Failure to Act
 Provisions of Code of Arbitration        Under Provisions of Code of
 Procedure.                               Arbitration Procedure.
10101. Matters Eligible for Submission.  FINRA Rule 10101. Matters
                                          Eligible for Submission.
10102. Non-Waiver of Objects and         FINRA Rule 10102. National
 Purposes.                                Arbitration and Mediation
                                          Committee.
11100. Scope of Uniform Practice Code..  NASD Rule 11100. Scope of
                                          Uniform Practice Code.
11110. The Exchange's Regulation         NASD Rule 11110. The Exchange's
 Department.                              Regulation Department.
IM-11110. Refusal to Abide by Rulings    NASD IM-11110. Refusal to Abide
 of the Exchange's Regulation             by Rulings of the Exchange's
 Department Staff.                        Regulation Department Staff.
11120. Definitions.....................  NASD Rule 11120. Definitions.
11130. When, As and If Issued/           NASD Rule 11130. When, As and
 Distributed Contracts.                   If Issued/Distributed
                                          Contracts.
IM-11130. Standard Form of ``When, As    NASD IM-11130. Standard Form of
 and If Issued'' or ``When, As and If     ``When, As and If Issued'' or
 Distributed'' Contract.                  ``When, As and If
                                          Distributed'' Contract.
11140. Transactions in Securities ``Ex-  NASD Rule 11140. Transactions
 Dividend,'' ``Ex-Rights'' or ``Ex-       in Securities ``Ex-Dividend,''
 Warrants''.                              ``Ex-Rights'' or ``Ex-
                                          Warrants''.

[[Page 78408]]

 
11150. Transactions ``Ex-Interest'' in   NASD Rule 11150. Transactions
 Bonds Which Are Dealt in ``Flat''.       ``Ex-Interest'' in Bonds Which
                                          Are Dealt in ``Flat''.
11160. ``Ex'' Liquidating Payments.....  NASD Rule 11160. ``Ex''
                                          Liquidating Payments.
11170. Transactions in ``Part-           NASD Rule 11170. Transactions
 Redeemed'' Bonds.                        in ``Part-Redeemed'' Bonds.
11190. Reconfirmation and Pricing        NASD Rule 11190. Reconfirmation
 Service Participants.                    and Pricing Service
                                          Participants.
11210. Sent By Each Party..............  NASD Rule 11210. Sent By Each
                                          Party.
IM-11210. Uniform Comparison Form......  NASD IM-11210. Uniform
                                          Comparison Form.
11220. Description of Securities.......  NASD Rule 11220. Description of
                                          Securities.
11310. Book-Entry Settlement...........  NASD Rule 11310. Book-Entry
                                          Settlement.
11320. Dates of Delivery...............  NASD Rule 11320. Dates of
                                          Delivery.
11330. Payment.........................  NASD Rule 11330. Payment.
11340. Stamp Taxes.....................  NASD Rule 11340. Stamp Taxes.
11350. Part Delivery...................  NASD Rule 11350. Part Delivery.
11360. Units of Delivery...............  NASD Rule 11360. Units of
                                          Delivery.
IM-11360. Uniform Delivery Ticket Form.  NASD IM-11360. Uniform Delivery
                                          Ticket Form.
11361. Units of Delivery--Stocks.......  NASD Rule 11361. Units of
                                          Delivery--Stocks.
11362. Units of Delivery--Bonds........  NASD Rule 11362. Units of
                                          Delivery--Bonds.
11363. Units of Delivery--Unit           NASD Rule 11363. Units of
 Investment Trust Securities.             Delivery--Unit Investment
                                          Trust Securities.
11364. Units of Delivery--Certificates   NASD Rule 11364. Units of
 of Deposit for Bonds.                    Delivery--Certificates of
                                          Deposit for Bonds.
IM-11364. Trading Securities As          NASD IM-11364. Trading
 ``Units'' or Bonds ``With Stock''.       Securities As ``Units'' or
                                          Bonds ``With Stock''.
11410. Acceptance of Draft.............  NASD Rule 11410. Acceptance of
                                          Draft.
11510. Delivery of Temporary             NASD Rule 11510. Delivery of
 Certificates.                            Temporary Certificates.
11520. Delivery of Mutilated Securities  NASD Rule 11520. Delivery of
                                          Mutilated Securities.
11530. Delivery of Securities Called     NASD Rule 11530. Delivery of
 for Redemption or Which Are Deemed       Securities Called for
 Worthless.                               Redemption or Which Are Deemed
                                          Worthless.
11540. Delivery Under Government         NASD Rule 11540. Delivery Under
 Regulations.                             Government Regulations.
11550. Assignments and Powers of         NASD Rule 11550. Assignments
 Substitution; Delivery of Registered     and Powers of Substitution;
 Securities.                              Delivery of Registered
                                          Securities.
IM-11550. Uniform Transfer Instructions  NASD IM-11550. Uniform Transfer
 Form.                                    Instructions Form.
11560. Certificate of Company Whose      NASD Rule 11560. Certificate of
 Transfer Books Are Closed.               Company Whose Transfer Books
                                          Are Closed.
IM-11560. Sample Ownership Transfer      NASD IM-11560. Sample Ownership
 Indemnification Stamp.                   Transfer Indemnification
                                          Stamp.
11570. Certificates in Various Names...  NASD Rule 11570. Certificates
                                          in Various Names.
11571. Certificate in Name of            NASD Rule 11571. Certificate in
 Corporation.                             Name of Corporation.
IM-11571. Sample Certificate and         NASD IM-11571. Sample
 Authorizing Resolution/Certificate of    Certificate and Authorizing
 Incumbency.                              Resolution/Certificate of
                                          Incumbency.
11572. Certificate in Name of Firm.....  NASD Rule 11572. Certificate in
                                          Name of Firm.
11573. Certificate in Name of Dissolved  NASD Rule 11573. Certificate in
 Firm Succeeded by New Firm.              Name of Dissolved Firm
                                          Succeeded by New Firm.
11574. Certificate in Name of Deceased   NASD Rule 11574. Certificate in
 Person, Trustee, etc..                   Name of Deceased Person,
                                          Trustee, etc.
IM-11574. Sample Limited Partnership     NASD IM-11574. Sample Limited
 Change of Trustee Form.                  Partnership Change of Trustee
                                          Form.
11610. Liability for Expenses..........  NASD Rule 11610. Liability for
                                          Expenses.
11620. Computation of Interest.........  NASD Rule 11620. Computation of
                                          Interest.
11630. Due-Bills and Due-Bill Checks...  NASD Rule 11630. Due-Bills and
                                          Due-Bill Checks.
IM-11630. Sample Due-Bill Forms........  NASD IM-11630. Sample Due-Bill
                                          Forms.
11640. Claims for Dividends, Rights,     NASD Rule 11640. Claims for
 Interest, etc..                          Dividends, Rights, Interest,
                                          etc.
11650. Transfer Fees...................  NASD Rule 11650. Transfer Fees
11710. General Provisions..............  NASD Rule 11710. General
                                          Provisions.
IM-11710. Uniform Reclamation Form.....  NASD IM-11710. Uniform
                                          Reclamation Form.
11720. Irregular Delivery--Transfer      NASD Rule 11720. Irregular
 Refused--Lost or Stolen Securities.      Delivery--Transfer Refused--
                                          Lost or Stolen Securities.
IM-11720. Obligations of Members Who     NASD IM-11720. Obligations of
 Discover Securities in Their             Members Who Discover
 Possession to Which They Are Not         Securities in Their Possession
 Entitled.                                to Which They Are Not
                                          Entitled.
11730. Called Securities...............  NASD Rule 11730. Called
                                          Securities.
11740. Marking to the Market...........  NASD Rule 11740. Marking to the
                                          Market.
11810. Buying-In.......................  NASD Rule 11810. Buying-In.
IM-11810. Sample Buy-In Forms..........  NASD IM-11810. Sample Buy-In
                                          Forms.
11820. Selling-Out.....................  NASD Rule 11820. Selling-Out.
11840. Rights and Warrants.............  NASD Rule 11840. Rights and
                                          Warrants.
IM-11840. Sample Letter of Indemnity...  NASD IM-11840. Sample Letter of
                                          Indemnity.
11860. Acceptance and Settlement of COD  NASD Rule 11860. Acceptance and
 Orders.                                  Settlement of COD Orders.
11870. Customer Account Transfer         NASD Rule 11870. Customer
 Contracts.                               Account Transfer Contracts.
IM-11870. Sample Transfer Instruction    NASD IM-11870. Sample Transfer
 Forms.                                   Instruction Forms.
11880. Settlement of Syndicate Accounts  NASD Rule 11880. Settlement of
                                          Syndicate Accounts.
------------------------------------------------------------------------
* FINRA shall not perform Regulatory or Enforcement Responsibilities
  under this Agreement for these rules as they pertain to violations of
  insider trading activities, which is covered by a separate 17d-2
  Agreement by and among the American Stock Exchange, LLC, BATS
  Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, LLC,
  Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority,
  Inc., International Securities Exchange, LLC, The NASDAQ Stock Market
  LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE
  Arca Inc., NYSE Regulation, Inc., and Philadelphia Stock Exchange,
  Inc. as approved by the SEC on October 17, 2008.


[[Page 78409]]

    The following provisions are covered by the Agreement between the 
Parties:
     SEC '34 Act Section 28(e) Effect on Existing Law
     SEC '34 Act Rule 10b-10 Confirmation of Transactions
     SEC '34 Act Rule 203 of Regulation SHO Borrowing and 
Delivery Requirements
     SEC '34 Act Rule 606 of Regulation NMS Disclosure of Order 
Routing Information
     SEC '34 Act Rule 607 of Regulation NMS Customer Account 
Statements
     FINRA shall not perform Regulatory or Enforcement 
Responsibilities under this Agreement for these rules as they pertain 
to violations of insider trading activities, which is covered by a 
separate 17d-2 Agreement by and among the American Stock Exchange, LLC, 
BATS Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, 
LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory 
Authority, Inc., International Securities Exchange, LLC, The NASDAQ 
Stock Market LLC, National Stock Exchange, Inc., New York Stock 
Exchange LLC, NYSE Arca Inc., NYSE Regulation, Inc., and Philadelphia 
Stock Exchange, Inc. as approved by the SEC on October 17, 2008.
* * * * *

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

    Pursuant to Section 17(d)(1) of the Act \18\ and Rule 17d-2 
thereunder,\19\ after January 6, 2009, the Commission may, by written 
notice, declare the plan submitted by BX and FINRA, File No. 4-575, to 
be effective if the Commission finds that the plan is necessary or 
appropriate in the public interest and for the protection of investors, 
to foster cooperation and coordination among self-regulatory 
organizations, or to remove impediments to and foster the development 
of the national market system and a national system for the clearance 
and settlement of securities transactions and in conformity with the 
factors set forth in Section 17(d) of the Act.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78q(d)(1).
    \19\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------

IV. Solicitation of Comments

    In order to assist the Commission in determining whether to approve 
the proposed 17d-2 Plan and to relieve BX of the responsibilities which 
would be assigned to FINRA, interested persons are invited to submit 
written data, views, and arguments concerning the foregoing. Comments 
may be submitted by any of the following methods:

Electronic comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/other.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number 4-575 on the subject line.

Paper comments

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

All submissions should refer to File Number 4-575. 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, on official business days between 
the hours of 10 am and 3 pm. Copies of the plan also will be available 
for inspection and copying at the principal offices of BX and FINRA. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number 4-575 and should 
be submitted on or before January 6, 2009.

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CRF 200.30-3(a)(34).

Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-30321 Filed 12-19-08; 8:45 am]
BILLING CODE 8011-01-P