Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Declaring Effective a Proposed Plan for the Allocation of Regulatory Responsibilities Among the Financial Industry Regulatory Authority, Inc., New York Stock Exchange LLC, NYSE Regulation, Inc. and NYSE Amex LLC, 39353-39362 [E9-18762]
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Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices
through December 31, 2009, the fee
otherwise due from SEC-registered
advisers is waived, and for initial
applications to register as an investment
adviser with the SEC filed from August
1, 2009 through December 31, 2009, the
fee otherwise due from the applicant is
waived.
By the Commission.
Dated: July 31, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–18761 Filed 8–5–09; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60409; File No. 4–587]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Notice of Filing and Order Declaring
Effective a Proposed Plan for the
Allocation of Regulatory
Responsibilities Among the Financial
Industry Regulatory Authority, Inc.,
New York Stock Exchange LLC, NYSE
Regulation, Inc. and NYSE Amex LLC
July 30, 2009.
Notice is hereby given that the
Securities and Exchange Commission
(‘‘Commission’’ or ‘‘SEC’’) has issued an
Order pursuant to Section 17(d) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 17d–2 thereunder 2
approving and declaring effective a plan
dated December 15, 2008 for the
allocation of regulatory responsibilities
(‘‘17d–2 Plan’’ or the ‘‘Plan’’) filed with
the Commission on July 29, 2009
pursuant to Rule 17d–2 of the Act, by
the New York Stock Exchange LLC
(‘‘NYSE’’), NYSE Regulation, Inc.
(‘‘NYSE Regulation’’), NYSE Amex LLC
(‘‘NYSE Amex’’), and the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (each individually, a ‘‘Party’’
and collectively, the ‘‘Parties’’).
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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)
1 15
U.S.C. 78q(d).
CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
2 17
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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
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
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).
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).
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39353
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.
II. Proposed Plan
On January 17, 2008, NYSE Euronext,
Inc. and The Amex Membership
Corporation, a New York not-for-profit
company and parent of the American
Stock Exchange LLC (‘‘Amex’’) entered
into an Agreement and Plan of Merger,
whereby NYSE Euronext would acquire
Amex and as a result, Amex would
become a wholly-owned subsidiary of
NYSE Group, Inc. and would be
renamed ‘‘NYSE Amex.’’ 10 In
connection with the merger, the
Commission approved proposed rule
changes to permit the merger and
related transactions, including the
adoption of an operating agreement for
NYSE Amex.11 The Commission also
approved an NYSE Amex rule proposal
to adopt new rules governing member
organizations, member firm conduct,
and equity trading.12 NYSE Amex’s new
membership and member conduct rules
are closely modeled on, and largely
identical to, existing NYSE membership
and firm conduct rules,13 many of
which are ‘‘common rules’’ under the
existing 17d–2 plan between NYSE and
FINRA.14
The purpose of the Plan is to add
NYSE Amex as a party to the existing
17d–2 plan by and among National
Association of Securities Dealers, Inc.
10 On March 13, 2009, the exchange then known
as NYSE Alternext U.S. LLC filed for immediate
effectiveness a proposal to change its name to NYSE
Amex LLC. See Securities Exchange Act Release
No. 59575 (March 13, 2009), 74 FR 11803 (March
19, 2009) (SR–NYSEALTR–2009–24).
11 See Securities Exchange Act Release No. 58673
(September 29, 2008), 73 FR 57707 (October 3,
2008) (SR–Amex–2008–62 and SR–NYSE–2008–
60).
12 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex–2008–63).
13 See id. at 58995.
14 See id.; See also Securities Exchange Act
Release No. 56148 (July 26, 2007), 72 FR 42146
(August 1, 2007) (order declaring effective the plan
between NYSE and FINRA).
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Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices
(‘‘NASD’’) (n/k/a FINRA), NYSE, and
NYSE Regulation without altering the
scope of that plan. Accordingly, the
proposed 17d–2 Plan is intended to
reduce regulatory duplication for firms
that are common members of either
NYSE and FINRA or NYSE Amex and
FINRA. Pursuant to the proposed 17d–
2 Plan, FINRA would assume certain
examination, enforcement, and
surveillance responsibilities for
members of either NYSE and FINRA or
NYSE Amex and FINRA as well as the
associated persons therewith (‘‘Common
Members’’) with respect to certain rules.
The text of the Plan delineates the
proposed regulatory responsibilities
with respect to the Parties. Included in
the proposed Plan is Exhibit 1 (the ‘‘List
of Common Rules’’) that lists every
NYSE rule, and NYSE Amex Equities
rule, for which FINRA would bear
responsibility under the Plan for
overseeing and enforcing with respect to
Common Members.
Specifically, under the 17d–2 Plan,
FINRA would assume examination and
enforcement responsibility relating to
compliance by Common Members with
the rules of NYSE and NYSE Amex that
are substantially similar to the
applicable rules of FINRA (‘‘Common
Rules’’).15 The 17d–2 Plan would not
include the application of any Common
Rule to the extent that it pertains to
matters covered by a separate agreement
under Rule 17d–2.16 In the event that a
Common Member is the subject of an
investigation, examination, or
enforcement proceeding, the 17d–2 Plan
acknowledges that any Party may, in its
discretion, exercise concurrent
jurisdiction.17
While NYSE Amex has adopted a
number of NYSE member firm conduct
rules, NYSE Amex equities rules do not
include all NYSE rules.18 Accordingly,
15 See
paragraph 1(a) of the proposed 17d–2 Plan.
e.g., the Multiparty Agreement made
pursuant to Rule 17d–2 of the Exchange Act among
the American Stock Exchange LLC, the BATS
Exchange, Inc., the Boston Stock Exchange, Inc., the
CBOE Stock Exchange, LLC, the Chicago Stock
Exchange, Inc., Financial Industry Regulatory
Authority, Inc., the International Securities
Exchange, LLC, the NASDAQ Stock Market LLC,
the National Stock Exchange, Inc., the New York
Stock Exchange, LLC, NYSE Arca Inc., NYSE
Regulation, Inc., and the Philadelphia Stock
Exchange, Inc., approved by the Commission on
October 17, 2008, as may be amended from time to
time, involving the allocation of regulatory
responsibilities with respect to common members
for compliance with the surveillance, investigation,
and enforcement of common insider trading rules.
See Securities Exchange Act Release No. 58806
(October 17, 2008), 73 FR 63216 (October 23, 2008);
see also paragraph 20 of the proposed 17d–2 Plan.
17 See paragraph 7 of the proposed 17d–2 Plan.
18 For example, NYSE Amex has not adopted
rules based on the following NYSE products:
Cabinet Securities (NYSE Rule 85), Options (NYSE
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16 See,
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certain Common Rules between NYSE
and FINRA that have not been adopted
by NYSE Amex (e.g., NYSE Rule 414
and the NYSE Series 700 Rules) will not
be Common Rules among NYSE, NYSE
Amex, and FINRA. In addition, certain
other NYSE Amex equities trading rules
that qualify as Common Rules have been
modified to reflect the difference in
products trading at NYSE Amex (e.g.,
NYSE Amex Equities Rules 345
(Employees—Registration, Approval,
Records) and 408 (Discretionary Power
in Customers’ Accounts)).
Under the Plan, each of NYSE and
NYSE Amex would retain full
responsibility for surveillance and
enforcement with respect to trading
activities or practices involving the
systems and facilities of the respective
exchange. Each of NYSE and NYSE
Amex also would retain regulatory
responsibility for examinations of
conduct or action of a Common Member
that is not covered under the Common
Rules and/or by related Federal
regulations or laws; processing of
applications for membership in the
respective exchange; qualification and
registration of member firm personnel to
effect transactions on the floor of the
exchange; and regulatory responsibility
for the application of any Common Rule
as it pertains to matters other than
member firm regulation.19
The text of the proposed 17d–2 Plan
is as follows:
*
*
*
*
*
Agreement by and Among Financial
Industry Regulatory Authority, Inc., New
York Stock Exchange LLC, NYSE
Regulation, Inc., and NYSE Amex LLC
Pursuant to SEC Rule 17d–2
Promulgated by the Securities and
Exchange Commission Under the
Securities Exchange Act of 1934
This Agreement, (‘‘Agreement’’) by
and among Financial Industry
Regulatory Authority, Inc., a Delaware
non-stock, not-for-profit membership
corporation (‘‘FINRA’’), New York Stock
Exchange LLC, a New York limited
liability company (‘‘NYSE LLC’’), NYSE
Regulation, Inc., a New York not-forprofit corporation and an indirectly
wholly-owned subsidiary of NYSE
Group, Inc. (‘‘NYSE Regulation’’), and
NYSE Amex LLC (‘‘NYSE Amex’’), a
Delaware limited liability company and
wholly-owned subsidiary of NYSE
Group, Inc. (herein collectively referred
to as the ‘‘Participants’’), dated as of
Series 700 Rules), Index and Currency Warrants
(NYSE Rule 414), and Basket Trades (NYSE Series
800 Rules).
19 See paragraphs 2(d) and 2(e) of the proposed
17d–2 Plan.
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December 15, 2008, pursuant to the
provisions of Rule 17d–2 promulgated
by the Securities and Exchange
Commission (the ‘‘Commission’’) under
the Securities Exchange Act of 1934, as
amended (the ‘‘Act’’), which authorizes
agreements between self-regulatory
organizations for plans to reduce or
eliminate regulatory duplication.
This Agreement amends and restates
the agreement entered into among
National Association of Securities
Dealers, Inc. (‘‘NASD’’ n/k/a FINRA),
NYSE LLC, and NYSE Regulation on
July 30, 2007, entitled ‘‘Agreement
between National Association of
Securities Dealers, Inc., New York Stock
Exchange LLC, and NYSE Regulation,
Inc., pursuant to SEC Rule 17d–2
promulgated by the Securities and
Exchange Commission under the
Securities Exchange Act of 1934’’ (the
‘‘July 30, 2007 Agreement’’).
Whereas, NYSE Euronext, a Delaware
corporation and the parent entity of
NYSE Group (as hereinafter defined),
and The Amex Membership
Corporation, a New York not-for-profit
corporation and parent company of the
American Stock Exchange LLC
(‘‘Amex’’), entered into an Agreement
and Plan of Merger, dated January 17,
2008 (‘‘Merger Agreement’’), whereby,
through a series of mergers, on October
1, 2008, NYSE Euronext acquired Amex
(‘‘Merger Transaction’’) and as a result
of these mergers, Amex became a
wholly-owned subsidiary of NYSE
Group and was renamed NYSE Amex;
and
Whereas, the Participants are desirous
of reducing duplication in the
regulation of broker-dealer firms and
associated persons therewith that are
members of NYSE, NYSE Amex, and
FINRA (‘‘Common Members’’) and
allocating regulatory responsibilities
with respect to such Common Members
and for which they are subject to
Common Rules (as hereinafter defined);
and
Whereas, the Participants intend that
FINRA will perform various functions
formerly performed by NYSE
Regulation; and
Whereas, the Participants intend this
Agreement to describe the functions to
be performed by FINRA pursuant to
Section 17(d) of the Act and Rule 17d–
2 promulgated thereunder, and intend
to file such with the Commission for its
approval.
Now, therefore, in consideration of
the foregoing, the mutual covenants
contained hereinafter, and other good
and valuable consideration, the
Participants hereby agree as follows:
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Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices
1. Assumption of Regulatory
Responsibilities
(a) On the effective date, which shall
be the date that the Commission has
declared effective this Agreement,
FINRA will assume regulatory
responsibilities for all Common
Members for the list of rules attached as
Exhibit 1 (‘‘Common Rules’’) to this
Agreement and made part hereof
including examination, enforcement
and surveillance responsibilities for
such Common Rules to the extent that
such responsibilities involve member
firm regulation (the ‘‘Regulatory
Responsibilities’’). The Participants
agree that the NYSE and NYSE Amex
rules listed on Exhibit 1 are identical or
substantially similar to the
corresponding FINRA rule.
(b) FINRA shall not charge NYSE or
NYSE Amex for performing the
Regulatory Responsibilities except for
the reasonable notification expenses and
travel and out-of-pocket expenses, as
provided in paragraphs 4(c) and 5.
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2. Scope of Regulatory Responsibilities
(a) Whenever a Participant proposes
to make a change to the substance of any
of the Common Rules, before filing such
proposal with the SEC, it shall inform
the other Participants to determine
whether the other Participants will
agree to promptly propose a conforming
change to its version of the Common
Rule. In the event the Participants do
not agree to propose conforming
changes, the Participants agree that they
will file with the SEC for approval an
amendment to this Agreement deleting
such rule from the list of Common
Rules, such amendment to be effective
no earlier than the date of SEC approval
of the change to the Common Rule
proposed by the NYSE, NYSE Amex, or
FINRA, as the case may be.
(b) Common Rulebook. FINRA
intends to create a single set of Rules to
replace the FINRA NASD Rules and the
NYSE Rules incorporated by FINRA.
There is a substantial likelihood that
each FINRA rule that would replace an
existing NYSE Rule incorporated by
FINRA and applicable to Common
Members would be substantially
different from the then-existing NYSE
Rule or NYSE Amex Rule. In such case,
pursuant to paragraph 2(a) above, NYSE
and NYSE Amex would need to file
with the Commission a proposal to
amend their respective corresponding
Rules to conform to the new FINRA
Rule. As provided in Section 13, the
Participants may make certain
amendments to the list of Common
Rules in Exhibit 1 without constituting
an amendment to this Agreement.
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(c) Each year within 30 days of the
anniversary date of Commission
approval of this Agreement, or more
frequently if required by changes in the
rules of a Participant, NYSE and NYSE
Amex will submit to FINRA an updated
list of Common Rules for review. This
updated list may add to Exhibit 1 rules
that qualify as Common Rules, shall
delete from Exhibit 1 rules of that
Participant that are no longer identical
or substantially similar to the Common
Rules, and shall confirm that the
remaining rules of the Participant
included on Exhibit 1 continue to
qualify as Common Rules. Within 30
days from the date that FINRA has
received revisions to Exhibit 1, FINRA
shall confirm in writing to NYSE and
NYSE Amex whether the rules listed in
Exhibit 1 are Common Rules.
(d) Notwithstanding anything
contained in this Agreement to the
contrary, NYSE shall retain regulatory
responsibility for the following
(collectively, the ‘‘NYSE Retained
Responsibilities’’):
(i) Examinations of conduct or action
by a Common Member that is otherwise
covered by NYSE rules that are not
Common Rules (the ‘‘NYSE-only
Rules’’) and/or by related Federal laws
or regulations;
(ii) Surveillance of, and investigation
and enforcement with respect to,
conduct or action undertaken in
connection with trading on or through
the systems and facilities of the NYSE,
or conduct or actions by a Common
Member that are otherwise covered by
NYSE-only Rules, additionally, in all
such cases, surveillance, investigation
and enforcement with respect to how
such conduct may constitute a violation
of applicable Federal laws or
regulations;
(iii) Processing of applications for
trading licenses or other indicia of
membership in the NYSE, including
without limitation applying NYSE’s
rules relating to the rights and
obligations of Common Members that
hold a trading license to effect
transactions on the floor of the NYSE or
through any systems or facilities of the
NYSE;
(iv) Qualification and registration of
member firm personnel to effect
transactions or work as Floor employees
on the Floor of the NYSE, pursuant to
the NYSE’s applicable rules regarding
qualifications and registration; and
(v) The application of any Common
Rule as it pertains to matters other than
member firm regulation, including
matters relating to NYSE’s exclusive
responsibility for (ii)–(iv) above (the
‘‘Non-Exclusive Common Rules’’). The
Participants have identified the Non-
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39355
Exclusive Common Rules, which are
specifically designated on Exhibit 1, as
those rules for which both NYSE and
FINRA will bear responsibility when
performing their respective regulatory
responsibilities.
(e) Notwithstanding anything
contained in this Agreement to the
contrary, NYSE Amex shall retain
regulatory responsibility for the
following (collectively, the ‘‘NYSE
Amex Retained Responsibilities’’):
(i) Examinations of conduct or action
by a Common Member that is otherwise
covered by NYSE Amex rules that are
not Common Rules (the ‘‘NYSE Amexonly Rules’’) and/or by related Federal
laws or regulations;
(ii) Surveillance of, and investigation
and enforcement with respect to,
conduct or action undertaken in
connection with trading on or through
the systems and facilities of the NYSE
Amex, or conduct or actions by a
Common Member that are otherwise
covered by NYSE Amex-only Rules,
additionally, in all such cases,
surveillance, investigation and
enforcement with respect to how such
conduct may constitute a violation of
applicable Federal laws or regulations;
(iii) Processing of applications for
trading licenses or other indicia of
membership in the NYSE Amex,
including without limitation applying
NYSE Amex rules relating to the rights
and obligations of Common Members
that hold a trading license to effect
transactions on the floor of the NYSE
Amex or through any systems or
facilities of the NYSE Amex;
(iv) Qualification and registration of
member firm personnel to effect
transactions or work as Floor employees
on the Floor of the NYSE Amex,
pursuant to the NYSE Amex’s
applicable rules regarding qualifications
and registration; and
(v) The application of any Common
Rule as it pertains to matters other than
member firm regulation, including
matters relating to NYSE Amex’s
exclusive responsibility for (ii)–(iv)
above (the ‘‘Non-Exclusive Common
Rules’’). The Participants have
identified the Non-Exclusive Common
Rules, which are specifically designated
on Exhibit 1, as those rules for which
both NYSE Amex and FINRA will bear
responsibility when performing their
respective regulatory responsibilities.
3. Violations
(a) Should FINRA become aware of
potential violations of another
Participant’s rules that are not within
the scope of the Regulatory
Responsibilities, FINRA will promptly
notify the other Participant of those
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potential violations, and such matters
will be handled by the Participant
responsible for those regulatory
responsibilities.
(b) Should a Participant other than
FINRA become aware of potential
violations of Common Rules, the
Participant will promptly notify FINRA
of those potential violations, and such
matters will be handled by FINRA as
provided in this Agreement.
4. Applications for, Qualification for,
and Termination of, Membership
(a)(i) Common Members subject to
this Agreement will be required to
submit to FINRA, and FINRA will be
responsible for processing, and acting
upon, all applications (each an
‘‘Application’’) submitted on behalf of
the Common Member and any
individual associated with such
Common Member required to be
approved by the rules of NYSE, NYSE
Amex, and FINRA (collectively, an
‘‘Applicant’’).
(ii) Promptly upon receipt of any
complete Application, but in any event
no later than seven (7) business days
thereafter, FINRA shall advise NYSE
and NYSE Amex of the qualifications
and registration status of the Applicant
required to be approved pursuant to the
rules of NYSE, NYSE Amex, and
FINRA. The NYSE and NYSE Amex
each reserve the right to require
additional qualifications or registrations
prior to approving an Applicant as a
member of the NYSE and NYSE Amex,
pursuant to the process described in
NYSE and NYSE Amex rules.
(b) FINRA shall promptly advise
NYSE and NYSE Amex of information
regarding changes in status of any
person required to be approved
pursuant to the rules of NYSE, NYSE
Amex, and FINRA that relates to a
statutory disqualification, involuntary
termination from employment or any
other submission made to FINRA
pursuant to Incorporated NYSE Rule
351(a)–(c). The NYSE and NYSE Amex
each reserve the right to disqualify a
member pursuant to the process
described in their respective rules.
(c) Common Members will be
required to send to FINRA all letters,
termination notices or other material
respecting persons required to be
approved pursuant to the rules of NYSE,
NYSE Amex, and FINRA. When as a
result of processing said submissions
FINRA becomes aware of a statutory
disqualification as defined in the Act
with respect to a Common Member or
person associated with a Common
Member, FINRA will determine
pursuant to Section 15A(g) or 6(c) of the
Act the acceptability or continued
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acceptability of the person to whom
such disqualification applies but will
not make a determination regarding
NYSE or NYSE Amex membership or
participation, or association of a person
with an NYSE or NYSE Amex member.
FINRA shall advise the other
Participants in writing of its actions in
this regard. The other Participants shall,
within 30 days of receiving such
information from FINRA, determine
whether to permit a Common Member
that has been determined to be
statutorily disqualified by FINRA from
becoming or remaining an NYSE or
NYSE Amex member or a participant, or
a person associated with a member. The
other Participant will advise FINRA of
its decision.
The other Participant will reimburse
FINRA for reasonable expenses incurred
in notifying a Participant of FINRA’s
decision regarding a statutory
disqualification under Section 15A(g) or
Section 6(c) of the Act.
FINRA will also be responsible for
processing and, if required, acting upon
all requests for the opening, address
changes, and terminations of branch
offices by Common Members and any
other applications required of Common
Members under the Common Rules.
5. Information Sharing
The Participants agree to share
information as follows:
(a) General.
A Participant shall promptly furnish
to the other Participants any
information that it determines indicates
possible financial or operational
problems that may affect the continued
ability of any Common Member to
conduct business.
(b) Reports and Other Documents.
A Participant shall upon request
promptly make available to the other
Participants at no cost any existing
financial, operational, or related report
filed with that Participant by a Common
Member, as well as any existing files,
information on customer complaints,
termination notices, copies of an
examination report, examination
workpapers, investigative material,
enforcement referrals or other
documents involving compliance with
the Federal securities laws and
regulations and the rules of the
Participants by the Common Member, or
other documents in the possession of
the Participant relating to the Common
Member as necessary to assist the other
Participants in fulfilling their Retained
Responsibilities.
(c) Third-party Complaints.
If a Participant receives a copy of a
complaint from any third party,
including but not limited to a report
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from a Common Member pursuant to
FINRA Incorporated NYSE Rule 351 or
NYSE Amex Equities Rule 351, relating
to possible violations by a Common
Member or persons associated with a
Common Member that is not within the
scope of that Participant’s regulatory
responsibilities and is within the scope
of another Participant’s regulatory
responsibilities, that Participant shall
promptly forward to the other
Participant copies of such complaints.
The Participant with the regulatory
`
responsibilities vis-a-vis such complaint
shall have responsibility to review and
take any appropriate action with respect
to such complaint.
(d) Information on Formal and
Informal Discipline.
A Participant shall promptly make
available to the other Participants
information on (1) formal disciplinary
actions taken by that Participant
involving a Common Member or
persons associated with a Common
Member; and (2) informal disciplinary
actions taken by that Participant
involving a Common Member. For
purposes of this paragraph (d), informal
disciplinary actions shall mean
Cautionary Actions and MRVP (if
FINRA) and Letters of Education, Letters
of Admonition, and Summary Fines (if
NYSE or NYSE Amex).
(e) Participants to Make Personnel
Available as Witnesses.
A Participant shall make its personnel
available to the other Participants to
serve as testimonial or non-testimonial
witnesses as necessary to assist the
respective Participant in fulfilling the
self-regulatory responsibilities retained
by it under this Agreement. The
Participant requiring the services of
such witnesses shall pay all reasonable
travel and other out-of-pocket expenses
incurred by the other Participant’s
employees to the extent that the
requesting Participant requires such
employees to serve as a witness, and
provide information or other assistance
pursuant to this Agreement.
(f) Confidentiality. The Participants
agree that documents or information
shared shall be held in confidence, and
be used only for the purposes of
carrying out their respective regulatory
obligations. No Participant shall assert
regulatory or other privileges as against
the others with respect to documents or
information that is required to be shared
pursuant to this Agreement.
(g) No Waiver of Privilege. The
sharing of documents or information
among the Participants 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.
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(h) Periodic Meetings. The
Participants agree that they shall
conduct regular joint meetings among
them for the purposes of reporting on
the conduct of the Regulatory
Responsibilities and current
investigations involving significant rule
violations by a Common Member, and
identifying issues or concerns with
respect to the regulation of Common
Members.
6. Arbitration of Disputes Under This
Agreement
(a) Regulatory Services Manager. The
Participants hereby each appoint the
employee identified on Exhibit 2 hereto
as its respective Regulatory Services
Manager (the ‘‘Regulatory Services
Manager’’) to, among other things,
resolve disputes pursuant to Section
6(b) of this Agreement and oversee dayto-day management of the services and
activities contemplated by this
Agreement. On reasonable prior written
notice to the other, the Participants shall
each have the right to replace its
respective Regulatory Services Manager
with an employee or officer with
comparable knowledge, expertise and
decision-making authority.
(b) Dispute Resolution. Except as
otherwise expressly set forth in this
Agreement, any dispute arising out of or
relating to this Agreement shall be
submitted for resolution to the
Regulatory Services Managers. In the
event the Regulatory Services Managers
fail to resolve a dispute pursuant to this
Section 6(b) within a reasonable time of
receiving notice of such dispute from a
Participant, then the Participants shall
refer the dispute to the employee
identified on Exhibit 2 as its respective
Senior Officer (the ‘‘Senior Officer’’) and
such Senior Officers shall attempt in
good faith to conclusively resolve any
such dispute. On reasonable prior
written notice to the other, the
Participants shall each have the right to
replace its respective Senior Officer
with an officer with comparable rank,
knowledge, expertise and decisionmaking authority. If the Senior Officers
are unable to resolve the dispute
amicably within 30 days, the dispute
will be resolved by binding arbitration
between or among the Participants as
provided herein. Arbitration shall be
conducted by a single arbitrator agreed
upon by the Participants in accordance
with the arbitration rules of the
American Arbitration Association (the
‘‘AAA’’); provided, that, if the
Participants cannot agree on the identity
of the arbitrator, then the arbitrator shall
be chosen by the AAA in accordance
with its rules. All arbitration hearings
shall be conducted in New York, New
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York. Each Participant shall pay its own
costs for the arbitration, with the cost of
the arbitrator to be equally divided
between or among the Participants;
provided, that the arbitrator may, in his
or her discretion, award reasonable
attorneys’ fees and expenses to the
prevailing Participant. The arbitrator
will have no authority to award punitive
damages or any other damages not
measured by the prevailing Participant’s
actual damages, and may not, in any
event, make any ruling, finding or
award that does not conform to the
terms and conditions of this Agreement.
A judgment upon an award may be
entered in any court having jurisdiction.
No Participant or the arbitrator may
disclose the existence, content, or
results of any arbitration hereunder
without the prior written consent of the
other Participants, other than to the
Commission. Except as otherwise
expressly set forth in this Agreement,
the procedures set forth in this Section
6(b) must be satisfied as a condition
precedent to a Participant commencing
any arbitration in connection with any
dispute arising hereunder. A
Participant’s failure to comply with the
preceding sentence shall constitute
cause for the dismissal without
prejudice of any such arbitration.
(c) Continuity of Services. Each
Participant acknowledges that the
timely and complete performance of its
obligations pursuant to this Agreement
is critical to the business and operations
of the other Participants. In the event of
a dispute between or among the
Participant, the Participants will
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 6(c)
will interfere with a Participant’s right
to terminate this Agreement as set forth
in this Agreement.
7. No Restrictions on Regulatory Action
Nothing contained in this Agreement
shall restrict or in any way encumber
the right of a Participant to conduct its
own independent or concurrent
investigation, examination or
enforcement proceeding of or against
Common Members, as a Participant, in
its sole discretion, shall deem
appropriate or necessary.
8. Limitation of Liability
None of the Participants nor any of
their respective directors, governors,
officers, employees, affiliates or agents
shall be liable to any other Participants
or such Participant’s directors,
governors, officers, employees, affiliates
PO 00000
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Sfmt 4703
39357
or agents for any liability, loss or
damage resulting from any delays,
inaccuracies, errors or omissions with
respect to its performing or failing to
perform its obligations under this
Agreement, except as otherwise
provided for under the Act or for any
liability, loss or damage resulting from
the gross negligence, willful
misconduct, reckless disregard or
breach of confidentiality by a
Participant or its directors, governors,
officers, employees, affiliates or agents.
The Participants understand and agree
with each other that the Regulatory
Responsibilities are being performed on
a good faith and best effort basis and no
warranties, express or implied, are made
by any Participant to any other
Participant with respect to any of the
obligations to be performed by the
Participants hereunder.
9. Commission Approval
(a) The Participants agree to file
promptly this Agreement with the
Commission for its review and approval.
This Agreement shall be effective upon
approval of the Commission.
(b) If approved by the Commission,
FINRA will notify Common Members of
the general terms of the Agreement and
its impact on such members. The notice
will be sent on behalf of all Participants
and, prior to being sent, NYSE and
NYSE Amex will review and approve
the notice.
10. Applicability of Certain Laws
Notwithstanding any provision
hereof, this Agreement shall be subject
to any applicable Federal or State
statute, or any rule or order of the
Commission reassigning regulatory
responsibilities between self-regulatory
organizations. To the extent such
statute, rule, or order is inconsistent
with one or more provisions of this
Agreement, such statute, rule, or order
shall supersede the provision(s) hereof
to the extent necessary to be properly
effectuated and the provision(s) hereof
in that respect shall be null and void.
11. Definitions
Unless otherwise defined in this
Agreement, or unless the context
otherwise requires, the terms used in
this Agreement shall have the same
meaning as they have under the Act and
the rules and regulations promulgated
by the Commission thereunder.
12. 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
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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.
13. Amendment
This Agreement may be amended in
writing duly approved by each
Participant. All such amendments, other
than modifications to the list of
Common Rules in Exhibit 1 pursuant to
(i) a Commission order or other effective
proposed rule change to FINRA
approving the deletion of an NYSE Rule
incorporated by FINRA or the creation
of a FINRA rule to replace an NYSE
Rule incorporated by FINRA, and (ii) a
Commission order or other effective
proposed rule change to NYSE or NYSE
Amex approving the deletion of an
NYSE or NYSE Amex Equities Rule or
an amendment to an NYSE or NYSE
Amex rule that makes such NYSE or
NYSE Amex rule substantially identical
to a FINRA rule, must be filed with and
approved by the Commission before
they become effective.
14. Termination
This Agreement may be terminated by
a Participant at any time upon the
approval of the Commission after 180
days written notice to the other
Participants.
jlentini on DSKJ8SOYB1PROD with NOTICES
15. General
The Participants agree to perform all
acts and execute all supplementary
instruments or documents that may be
reasonably necessary or desirable to
carry out the provisions of this
Agreement.
16. Liaison and Notices
All questions regarding the
implementation of this Agreement shall
be directed to the persons identified in
subsections (a), (b) and (c), as
applicable, below. All notices and other
communications required or permitted
to be given under this Agreement shall
be in writing and shall be deemed to
have been duly given upon (i) actual
receipt by the notified Participant or (ii)
constructive receipt (as of the date
marked on the return receipt) if sent by
certified or registered mail, return
receipt requested, to the following
addresses:
(a) If to NYSE Regulation: NYSE
Regulation, Inc., 11 Wall Street, New
York, New York 10005. Telephone:
(212) 656–3000. Facsimile: (212) 656–
8101. Attention: General Counsel,
Regulatory Services Manager.
(b) If to New York Stock Exchange
LLC: New York Stock Exchange LLC, 11
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17:04 Aug 05, 2009
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Wall Street, New York, NY 10005.
Telephone: (212) 656–3000. Facsimile:
(212) 656–8101. Attention: General
Counsel.
(c) If to FINRA: Financial Industry
Regulatory Authority, Inc., 1735 K
Street, NW., Washington, DC 20006–
1500. Telephone: (202) 728–8071.
Facsimile: (202) 728–8075. Attention:
General Counsel, Regulatory Services
Manager.
(d) If to NYSE Amex LLC: NYSE
Amex LLC, 11 Wall Street, New York,
NY 10005. Telephone: (212) 656–3000.
Facsimile: (212) 656–8101. Attention:
General Counsel, Regulatory Services
Manager.
17. Relief From Regulatory
Responsibility
Pursuant to Section 17(d)(1)(A) of the
Act, and Rule 17d-2 thereunder, the
Participants jointly request the SEC,
upon its approval of this Agreement, to
relieve the NYSE and NYSE Amex of
any and all responsibilities with respect
to the matters allocated to FINRA
pursuant to this Agreement for purposes
of Sections 17(d) and 19(g) of the Act.
18. Governing Law
This Agreement shall be deemed to
have been made in the State of New
York, and shall be construed and
enforced in accordance with the law of
the State of New York, without
reference to principles of conflicts of
laws thereof. Each of the Participants
hereby consents to submit to the
jurisdiction of the courts by or for the
State of New York or the United States
District Court for the Southern District
of New York in connection with any
action or proceeding relating to this
Agreement.
19. Survival of Provisions
Provisions intended by their terms or
context to survive and continue
notwithstanding delivery of the
regulatory services by FINRA, the
payment of the price by the NYSE or
NYSE Amex, and any termination of
this Agreement shall survive and
continue.
20. Prior Agreements
This Agreement is wholly separate
from: (a) The multiparty Agreement
made pursuant to Rule 17d–2 of the
Exchange Act among the American
Stock Exchange LLC, the Boston Stock
Exchange, Inc., the Chicago Board
Options Exchange, Incorporated, the
International Securities Exchange LLC,
the National Association of Securities
Dealers, Inc., the New York Stock
Exchange, LLC, the NYSE Arca, Inc.,
and the Philadelphia Stock Exchange,
PO 00000
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Fmt 4703
Sfmt 4703
Inc. involving the allocation of
regulatory responsibilities with respect
to common members for compliance
with common rules relating to the
conduct by broker-dealers of accounts
for listed options or index warrants
entered into on June 5, 2008, and as may
be amended from time to time; (b) the
multiparty Agreement made pursuant to
Rule 17d–2 of the Exchange Act among
the American Stock Exchange LLC, the
BATS Exchange, Inc. the Boston Stock
Exchange, Inc., the CBOE Stock
Exchange, LLC, the Chicago Stock
Exchange, Inc., Financial Industry
Regulatory Authority, Inc., the
International Securities Exchange, LLC,
the NASDAQ Stock Market LLC, the
National Stock Exchange, Inc., the New
York Stock Exchange, LLC, NYSE Arca
Inc., NYSE Regulation, Inc., and the
Philadelphia Stock Exchange, Inc.,
approved by the Commission on
October 17, 2008, as may be amended
from time to time, involving the
allocation of regulatory responsibilities
with respect to common members for
compliance with the surveillance,
investigation, and enforcement of
common insider trading rules; and (c)
the multiparty Agreement made
pursuant to Rule 17d–2 of the Exchange
Act among American Stock Exchange
LLC, Boston Stock Exchange, Inc.,
Chicago Board Options Exchange,
Incorporated, the International
Securities Exchange LLC, Financial
Industry Regulatory Authority, Inc.,
NYSE Arca, Inc., The NASDAQ Stock
Market LLC, and the Philadelphia Stock
Exchange, Inc. involving the allocation
of regulatory responsibilities with
respect to common members for
compliance with common rules relating
to certain options-related market
surveillance matters entered into on
March 31, 2008, as amended October 1,
2008, and as may be amended from time
to time.
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
but one and the same instrument.
In witness whereof, the Participants
hereto have caused this Agreement to be
executed by their respective officers
thereunto duly authorized, as of the date
first written above.
Financial Industry Regulatory Authority
By: lllllllllllllllllll
Name: lllllllllllllllll
Title: llllllllllllllllll
New York Stock Exchange, LLC
By: lllllllllllllllllll
Name: lllllllllllllllll
Title: llllllllllllllllll
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Nyse Regulation, Inc.
By: lllllllllllllllllll
Name: lllllllllllllllll
Title: llllllllllllllllll
NYSE AMEX LLC
By: lllllllllllllllllll
Name: lllllllllllllllll
39359
Title: llllllllllllllllll ‘‘*’’ are Non-Exclusive Common Rules,
Exhibit 1
List of Common Rules
As referenced in paragraph 2(d)(v) of
the Agreement, rules designated with a
and NYSE and NYSE Amex shall retain
regulatory responsibility for these rules
insofar as necessary to discharge their
respective Retained Responsibilities.
NYSE Amex Equities Rule
FINRA Rule
*Rule 1 ‘‘The Exchange’’ ....................................
*Rule 2 ‘‘Member,’’ ‘‘Membership,’’ ‘‘Member
Firm,’’ etc.
*Rule 2A ‘‘Jurisdiction’’ .......................................
*Rule 2B No Affiliation between Exchange and
any Member Organization.
*Rule 3 ‘‘Security’’ ..............................................
*Rule 4 ‘‘Stock’’ ..................................................
*Rule 5 ‘‘Bond’’ ...................................................
*Rule 6 ‘‘Floor’’ ...................................................
*Rule 8 ‘‘Delivery’’ ..............................................
*Rule 9 ‘‘Branch Office Manager’’ ......................
*Rule 10 ‘‘Registered Representative’’ ...............
*Rule 11 Effect of Definitions .............................
*Rule 12 ‘‘Business Day’’ ...................................
*Rule 134 Differences and Omissions—Cleared
Transactions.
Rule 176 Delivery Time ......................................
Rule 177 Delivery Time—‘‘Cash’’ Contracts ......
*Rule 1 ‘‘The Exchange’’ .................................
*Rule 2 ‘‘Member,’’ ‘‘Membership,’’ ‘‘Member
Firm,’’ etc.
*Rule 2A ‘‘Jurisdiction’’ ....................................
*Rule 2B No Affiliation between Exchange
and any Member Organization.
*Rule 3 ‘‘Security’’ ............................................
*Rule 4 ‘‘Stock’’ ................................................
*Rule 5 ‘‘Bond’’ ................................................
*Rule 6 ‘‘Floor’’ .................................................
*Rule 8 ‘‘Delivery’’ ............................................
*Rule 9 ‘‘Branch Office Manager’’ ...................
*Rule 10 ‘‘Registered Representative’’ ............
*Rule 11 Effect of Definitions ...........................
*Rule 12 ‘‘Business Day’’ .................................
*Rule 134 Differences and Omissions — ........
Rule 180 Failure to Deliver ................................
Rule 282 Buy-in Procedures ..............................
Rule 291 Failure to Fulfill Closing Contract .......
Rule 180 Failure to Deliver ..............................
Rule 282 Buy-in Procedures ............................
Rule 291 Failure to Fulfill Closing Contract .....
Rule 292 Restrictions on Members’ Participation in Transaction to Close Defaulted Contracts.
Rule 293 Closing Contracts in Suspended Securities.
Rule 294 Default in Loan of Money ...................
Rule 296 Liquidation of Securities Loans and
Borrowings.
Rule 311 Formation and Approval of Member
Organizations.
Rule 312 Changes Within Member Organizations.
Rule 313 Submission of Partnership Articles—
Submission of Corporate Documents.
Rule 292 Restrictions on Members’ Participation in Transaction to Close Defaulted Contracts.
Rule 293 Closing Contracts in Suspended Securities.
Rule 294 Default in Loan of Money .................
Rule 296 Liquidation of Securities Loans and
Borrowings.
Rule 311 Formation and Approval of Member
Organizations.
Rule 312 Changes Within Member Organizations.
Rule 313 Submission of Partnership Articles—
Submission of Corporate Documents.
Rule 319 Fidelity Bonds .....................................
Rule 321 Formation of Acquisition of Subsidiaries.
Rule 322 Guarantees by, or Flow Through Benefits for Members or Member Organizations.
*Rule 325 Capital Requirements Members Organizations.
Rule 326(a) Growth Capital Requirement ..........
jlentini on DSKJ8SOYB1PROD with NOTICES
NYSE Rule
Rule 319 Fidelity Bonds ...................................
Rule 321 Formation of Acquisition of Subsidiaries.
Rule 322 Guarantees by, or Flow Through
Benefits for Members or Member Organizations.
*Rule 325 Capital Requirements Members Organizations.
Rule 326(a) Growth Capital Requirement .......
Rule 326(b) Business Reduction Capital Requirement.
Rule 326(c) Business Reduction Capital Requirement.
Rule 326(d) Reduction of Elimination of Loans
and Advances.
Rule 328 Sale-and-Leasebacks, Factoring, Financing and Similar Arrangements.
*Rule 342 Offices—Approval, Supervision and
Control.
Rule 343 Offices—Sole Tenancy, Hours, Display of Membership Certificates.
Rule 344 Research Analysts and Supervisory
Analysts.
Rule 326(b) Business Reduction Capital Requirement.
Rule 326(c) Business Reduction Capital Requirement.
Rule 326(d) Reduction of Elimination of Loans
and Advances.
Rule 328 Sale-and-Leasebacks, Factoring, Financing and Similar Arrangements.
*Rule 342 Offices—Approval, Supervision and
Control.
Rule 343 Offices—Sole Tenancy, Hours, Display of Membership Certificates.
Rule 344 Research Analysts and Supervisory
Analysts.
NYSE Rule 1 ‘‘The Exchange’’.
NYSE Rule 2 ‘‘Member,’’ ‘‘Membership,’’
‘‘Member Firm,’’ etc.
NYSE Rule 2A ‘‘Jurisdiction’’.
NYSE Rule 2B No Affiliation between Exchange and any Member Organization.
NYSE Rule 3 ‘‘Security’’.
NYSE Rule 4 ‘‘Stock’’.
NYSE Rule 5 ‘‘Bond’’.
NYSE Rule 6 ‘‘Floor’’.
NYSE Rule 8 ‘‘Delivery’’.
NYSE Rule 9 ‘‘Branch Office Manager’’.
NYSE Rule 10 ‘‘Registered Representative’’.
NYSE Rule 11 Effect of Definitions.
NYSE Rule 12 ‘‘Business Day’’.
NYSE Rule 134 Differences and Omissions—
Cleared Transactions.
NYSE Rule 176 Delivery Time.
NYSE Rule 177 Delivery Time—‘‘Cash’’ Contracts.
NYSE Rule 180 Failure to Deliver.
NYSE Rule 282 Buy-in Procedures.
NYSE Rule 291 Failure to Fulfill Closing Contract.
NYSE Rule 292 Restrictions on Members’
Participation in Transaction to Close Defaulted Contracts.
NYSE Rule 293 Closing Contracts in Suspended Securities.
NYSE Rule 294 Default in Loan of Money.
NYSE Rule 296 Liquidation of Securities
Loans and Borrowings.
NYSE Rule 311 Formation and Approval of
Member Organizations.
NYSE Rule 312 Changes Within Member Organizations.
NYSE Rule 313 Submission of Partnership
Articles—Submission of Corporate Documents.
NYSE Rule 319 Fidelity Bonds.
NYSE Rule 321 Formation of Acquisition of
Subsidiaries.
NYSE Rule 322 Guarantees by, or Flow
Through Benefits for Members or Member
Organizations.
NYSE Rule 325 Capital Requirements Members Organizations.
NYSE Rule 326(a) Growth Capital Requirement.
NYSE Rule 326(b) Business Reduction Capital Requirement.
NYSE Rule 326(c) Business Reduction Capital Requirement.
NYSE Rule 326(d) Reduction of Elimination of
Loans and Advances.
NYSE Rule 328 Sale-and-Leasebacks, Factoring, Financing and Similar Arrangements.
NYSE Rule 342 Offices—Approval, Supervision and Control.
NYSE Rule 343 Offices—Sole Tenancy,
Hours, Display of Membership Certificates.
NYSE Rule 344 Research Analysts and Supervisory Analysts.
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17:04 Aug 05, 2009
Jkt 217001
Rule 176 Delivery Time ...................................
Rule 177 Delivery Time—‘‘Cash’’ Contracts ...
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NYSE Rule
NYSE Amex Equities Rule
FINRA Rule
Rule 345 Employees—Registration, Approval,
Records.
Rule 345A Continuing Education for Registered
Persons.
Rule 346 Limitations—Employment and Association with Members and Member Organizations.
Rule 351 Reporting Requirements .....................
Rule 352 Guarantees, Sharing in Accounts, and
Loan Arrangements.
Rule 353 Rebates and Compensation ...............
Rule 354 Reports to Control Persons ................
*Rule 375 Missing the Market ............................
Rule 382 Carrying Agreements ..........................
Rule 387 COD Orders ........................................
Rule 401A Customer Complaints .......................
Rule 402 Customer Protection—Reserves and
Custody of Securities.
Rule 404 Individual Members Not To Carry Accounts.
Rule 405 Diligence as to Accounts ....................
Rule 406 Designation of Accounts .....................
*Rule 407 Transactions—Employees of Members, Member Organizations and the Exchange.
*Rule 407A Disclosure of All Member Accounts
NYSE Rule 345 Employees—Registration,
Approval, Records.
NYSE Rule 345A Continuing Education for
Registered Persons.
NYSE Rule 346 Limitations—Employment and
Association with Members and Member Organizations.
NYSE Rule 351 Reporting Requirements.
NYSE Rule 352 Guarantees, Sharing in Accounts, and Loan Arrangements.
NYSE Rule 353 Rebates and Compensation.
NYSE Rule 354 Reports to Control Persons.
NYSE Rule 375 Missing the Market.
NYSE Rule 382 Carrying Agreements.
NYSE Rule 387 COD Orders.
NYSE Rule 401A Customer Complaints.
NYSE Rule 402 Customer Protection—Reserves and Custody of Securities.
NASD Rule 1014.
Rule 413 Uniform Forms ....................................
*Rule 416 Questionnaires and Reports .............
*Rule 416A Member and Member Organization
Profile Information Updates and Quarterly
Certifications Via The Electronic Filing Platform.
Rule 418 Audit ....................................................
Rule 420 Reports of Borrowings and Subordinate Loans for Capital Purposes.
Rule 421 Periodic Reports .................................
Rule 430 Partial Delivery of Securities to Customers on C.O.D. Purchases.
Rule 431 Margin Requirements .........................
Rule 432 Daily Record of Required Margin .......
Rule 345 Employees—Registration, Approval,
Records.
Rule 345A Continuing Education for Registered Persons.
Rule 346 Limitations—Employment and Association with Members and Member Organizations.
Rule 351 Reporting Requirements ..................
Rule 352 Guarantees, Sharing in Accounts,
and Loan Arrangements.
Rule 353 Rebates and Compensation ............
Rule 354 Reports to Control Persons .............
*Rule 375 Missing the Market .........................
Rule 382 Carrying Agreements .......................
Rule 387 COD Orders .....................................
Rule 401A Customer Complaints ....................
Rule 402 Customer Protection—Reserves and
Custody of Securities.
Rule 404 Individual Members Not To Carry
Accounts.
Rule 405 Diligence as to Accounts .................
Rule 406 Designation of Accounts ..................
*Rule 407 Transactions—Employees of Members, Member Organizations and the Exchange.
*Rule 407A Disclosure of All Member Accounts.
Rule 408 Discretionary Power in Customers’
Accounts.
Rule 409 Statements of Accounts to Customers.
Rule 409A SIPC Disclosures ...........................
*Rule 410 Records of Orders ..........................
*Rule 411 Erroneous Reports ..........................
Rule 412 Customer Account Transfer Contracts.
Rule 413 Uniform Forms .................................
*Rule 416 Questionnaires and Reports ...........
*Rule 416A Member and Member Organization Profile Information Updates and Quarterly Certifications Via The Electronic Filing
Platform.
Rule 418 Audit .................................................
Rule 420 Reports of Borrowings and Subordinate Loans for Capital Purposes.
Rule 421 Periodic Reports ...............................
Rule 430 Partial Delivery of Securities to Customers on C.O.D. Purchases.
Rule 431 Margin Requirements .......................
Rule 432 Daily Record of Required Margin ....
Rule 434 Required Submission of Requests for
Extensions of Time for Customers.
Rule 434 Required Submission of Requests
for Extensions of Time for Customers.
*Rule 435 Miscellaneous Prohibitions (Excessive Trading by Members).
*Rule 440 Books and Records ...........................
Rule 440A Telephone Solicitation ......................
Rule 440I Records of Compensation Arrangements—Floor Brokerage.
Rule 445 Anti-Money Laundering Compliance
Program.
Rule 446 Business Continuity and Contingency
Plans.
*Rule 435 Miscellaneous Prohibitions (Excessive Trading by Members).
*Rule 440 Books and Records ........................
Rule 440A Telephone Solicitation ...................
Rule 440I Records of Compensation Arrangements—Floor Brokerage.
Rule 445 Anti-Money Laundering Compliance
Program.
Rule 446 Business Continuity and Contingency Plans.
Rule 472 Communications with the Public ........
Rule 472 Communications with the Public ......
*Rule 3130 (Annual Certification of Compliance
and Supervisory Processes).
Rule 3220 (Influencing or Rewarding Employees of Others).
Rule 4560 (Short-Interest Reporting) .................
*Rule 3130 (Annual Certification of Compliance and Supervisory Processes).
Rule 3220 (Influencing or Rewarding Employees of Others).
Rule 4560 (Short-Interest Reporting) ..............
Rule 408 Discretionary Power in Customers’
Accounts.
Rule 409 Statements of Accounts to Customers
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Rule 409A SIPC Disclosures .............................
*Rule 410 Records of Orders .............................
*Rule 411 Erroneous Reports ............................
Rule 412 Customer Account Transfer Contracts
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NYSE Rule 405 Diligence as to Accounts.
NYSE Rule 406 Designation of Accounts.
NYSE Rule 407 Transactions—Employees of
Members, Member Organizations and the
Exchange. 20
NYSE Rule 407A Disclosure of All Member
Accounts.
NYSE Rule 408 Discretionary Power in Customers’ Accounts.
NYSE Rule 409 Statements of Accounts to
Customers.
NYSE Rule 409A SIPC Disclosures.
NYSE Rule 410 Records of Orders.
NYSE Rule 411 Erroneous Reports.
NASD Rule 11870.
NYSE Rule 413 Uniform Forms.
NYSE Rule 416 Questionnaires and Reports.
NYSE Rule 416A Member and Member Organization Profile Information Updates and
Quarterly Certifications Via the Electronic
Filing Platform.
NYSE Rule 418 Audit.
NYSE Rule 420 Reports of Borrowings and
Subordinate Loans for Capital Purposes.
NYSE Rule 421 Periodic Reports.
NYSE Rule 430 Partial Delivery of Securities
to Customers on C.O.D. Purchases.
NYSE Rule 431 Margin Requirements.
NYSE Rule 432 Daily Record of Required
Margin.
NYSE Rule 434 Required Submission of Requests for Extensions of Time for Customers.
NYSE Rule 435 Miscellaneous Prohibitions
(Excessive Trading by Members).
NYSE Rule 440 Books and Records.
NYSE Rule 440A Telephone Solicitation.
NYSE Rule 440I Records of Compensation
Arrangements—Floor Brokerage.
NYSE Rule 445 Anti-Money Laundering Compliance Program.
NASD Rule 3510 Business Continuity Plans
and NASD Rule 3520 Emergency Contact
Information.
NYSE Rule 472 Communications with the
Public.
*Rule 3130 (Annual Certification of Compliance and Supervisory Processes). 21
Rule 3220 (Influencing or Rewarding Employees of Others).
Rule 4560 (Short-Interest Reporting).
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Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices
39361
NYSE Rule
NYSE Amex Equities Rule
FINRA Rule
*Rule 5190 (Notification Requirements for Offering Participants).
*Rule 6140 (Other Trading Practices) ................
*Rule 5190 (Notification Requirements for Offering Participants).
*Rule 6140 (Other Trading Practices) .............
*Rule 5190 (Notification Requirements for Offering Participants).22
*Rule 6140 (Other Trading Practices).
Exhibit 2
For purposes of this Agreement, the
Regulatory Services Managers required
under paragraph 6 shall be:
For NYSE Regulation (on behalf of
both NYSE and NYSE Amex): Clare F.
Saperstein, Managing Director, NYSE
Regulation, Inc., 20 Broad Street, 24th
Floor, New York, NY 10005 (212) 656–
2355 (phone). (212) 656–2333 (fax).
For FINRA: James F. Price, Jr., Senior
Vice President, Business and Exchange
Solutions, FINRA, 9509 Key West
Avenue, Rockville, MD 20850–33329.
(240) 386–4608 (phone). (240) 386–5139
(fax).
For purposes of this Agreement, the
Senior Officers required under
paragraph 6 shall be: For NYSE
Regulation (on behalf of both NYSE and
NYSE Amex): James F. Duffy, Interim
Chief Executive Officer, NYSE
Regulation, Inc., 11 Wall Street, New
York, NY 10005. (212) 656–2789
(phone). (212) 656–5809 (fax).
For FINRA: Stephen I. Luparello,
Senior Executive Vice President,
FINRA, 1735 K Street, NW.,
Washington, DC 20006. (202) 728–6947
(phone). (202) 728–8075 (fax).
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing.
Comments may be submitted by any of
the following methods:
Electronic Comments
jlentini on DSKJ8SOYB1PROD with NOTICES
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/other.shtml); or
20 Those portions of the NYSE and NYSE Amex
Equities Rules 407(a) and 407.10 that concern
Exchange employees, which differ from the FINRA
Incorporated NYSE Rule 407, are not Common
Rules and FINRA will not be allocated regulatory
responsibility for compliance with those portions of
the rules.
21 Those portions of NYSE and NYSE Amex
Equities Rule 3130(c)(1), 3130.03, and 3130.10 that
relate to compliance with Exchange Rules are not
Common Rules and FINRA will not be allocated
regulatory responsibility for compliance with those
portions of the rules.
22 Those portions of NYSE and NYSE Amex
Equities Rules 5190(c)(1) requiring notice to the
Exchange and 5190(e) that relate to placing or
transmitting a stabilizing bid or filing are not
Common Rules and FINRA will not be allocated
regulatory responsibility for compliance with those
portions of the rules.
VerDate Nov<24>2008
17:04 Aug 05, 2009
Jkt 217001
• Send an e-mail to rulecomments@sec.gov. Please include File
Number 4–587 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number 4–587. This file number should
be included on the subject line if e-mail
is used. To help the Commission
process and review your comments
more efficiently, please use only one
method. The Commission will post all
comments on the Commission’s Internet
Web site (https://www.sec.gov/rules/
other.shtml). Copies of the submission,
all subsequent amendments, all written
statements with respect to the proposed
plan that are filed with the Commission,
and all written communications relating
to the proposed plan between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, on official business days between
the hours of 10 a.m. and 3 p.m. Copies
of the plan also will be available for
inspection and copying at the principal
offices of FINRA, NYSE, and NYSE
Amex. 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 4–587 and should be submitted
on or before August 27, 2009.
IV. Discussion
Pursuant to paragraph (c) of Rule
17d–2,23 the Commission may, after
appropriate notice and comment,
declare a plan 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
23 17
PO 00000
CFR 240.17d–2.
Frm 00079
Fmt 4703
Sfmt 4703
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.
In this instance, the Commission
believes that appropriate notice and
comment can take place after the
proposed Plan is effective. The purpose
of this Plan is to add NYSE Amex as a
party to the existing 17d-2 plan between
NYSE, NYSE Regulation, and FINRA.
As NYSE Amex has adopted many of
the NYSE rules covered by the existing
plan,24 the proposed Plan does not
change the scope of that existing plan.
Consequently, the Commission does not
believe that the Plan raises any new
regulatory issues that the Commission
has not previously considered in the
context of the existing plan between
NYSE, NYSE Regulation, and FINRA.
By declaring the Plan effective today,
the Commission can reduce regulatory
duplication for common members of
FINRA and NYSE Amex, the latter of
which has adopted many of the NYSE
rules crossed by the Plan, as it has done
for common members of FINRA and
NYSE, and the new Plan can be
implemented without delay.
The Commission finds that the
proposed Plan is consistent with the
factors set forth in Section 17(d) of the
Act 25 and Rule 17d–2(c) thereunder 26
in that the Plan is necessary or
appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the Plan will
reduce unnecessary regulatory
duplication by fostering cooperation
and coordination between NYSE, NYSE
Amex, and FINRA, and will thereby
remove impediments to the
development of the national market
system. In particular, the Plan will
allocate to FINRA certain
responsibilities for Common Members
that would otherwise be performed by
24 See Securities Exchange Act Release No. 58705
(October 1, 2008), 73 FR 58995 (October 8, 2008)
(SR–Amex–2008–63).
25 15 U.S.C. 78q(d).
26 17 CFR 240.17d–2(c).
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jlentini on DSKJ8SOYB1PROD with NOTICES
39362
Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices
both NYSE and FINRA or NYSE Amex
and FINRA. Accordingly, the Plan
promotes efficiency by reducing costs to
Common Members. Furthermore,
because FINRA, NYSE, and NYSE Amex
will coordinate their regulatory
functions in accordance with the Plan,
the Plan should promote investor
protection and the public interest.
In particular, the Commission notes
that, under the proposed Plan, FINRA,
NYSE, and NYSE Amex have allocated
regulatory responsibility for Common
Rules to the extent that such
responsibilities involve member firm
regulation. The Plan also sets forth those
areas for which NYSE and NYSE Amex
will retain regulatory responsibility,
including: examinations of conduct or
actions by a Common Member covered
by NYSE-only or NYSE Amex-only rules
and/or by related Federal laws or
regulations; surveillance, investigation,
and enforcement with respect to
conduct or action relating to trading on
or through the systems and facilities of
NYSE or NYSE Amex and conduct
otherwise covered by NYSE-only or
NYSE Amex-only rules, as well as
whether such conduct may constitute a
violation of Federal laws or regulations;
processing of applications for trading
licenses or other membership in NYSE
or NYSE Amex; and qualification and
registration of member firm personnel to
effect transactions or work on the floor
of NYSE or NYSE Amex pursuant to
such SRO’s rules.27
In addition, the proposed Plan
provides that NYSE and NYSE Amex
will retain regulatory responsibility for
the application of any Common Rule as
it pertains to matters other than member
firm regulation, including matters
relating to such SRO’s retained
responsibilities as set forth in the Plan
(the ‘‘Non-Exclusive Common Rules’’).
The Non-Exclusive Common Rules are
specifically annotated in the List of
Common Rules and include those rules
for which FINRA, NYSE, and NYSE
Amex will each bear their respective
regulatory responsibilities, consistent
with the scope of the 17d–2 Plan. Such
rules are ‘‘non-exclusive’’ in the sense
that they may relate to member firm
regulation (for which FINRA would
assume regulatory responsibility) as
well as matters other than member firm
regulation (for which NYSE or NYSE
Amex would retain regulatory
responsibility). Accordingly, NYSE and
NYSE Amex will each bear
responsibility for the application of
their Non-Exclusive Common Rules
27 See paragraphs 2(d)(i)–(iv) and (e)(i)–(iv) of the
proposed 17d–2 Plan.
VerDate Nov<24>2008
17:04 Aug 05, 2009
Jkt 217001
concerning their particular regulatory
responsibilities.
According to the Plan, whenever any
Party seeks to make a change to any of
its rules that are Common Rules, before
filing a proposed rule change with the
Commission, it will inform the other
Parties of the intended change to
determine whether the other Parties will
propose a conforming change to its
version of the Common Rule. If the
Parties do not agree to propose
conforming changes, the Parties agree to
file with the Commission an
amendment to the 17d–2 Plan to delete
such rule from the list of Common
Rules.28 Finally, the proposed Plan
requires the Parties annually (or more
frequently if required by changes in the
rules of a Party) to confirm in writing
the accuracy of the list of Common
Rules.29 This provision ensures that the
Parties keep the Common Rules up-to`
date vis-a-vis the other Parties and
should facilitate the ability of the Parties
to accurately administer their
responsibilities under the proposed Plan
consistent with the scope of the Plan
declared effective by the Commission
herein.
The proposed Plan also requires the
Parties to share information on a
number of matters, including, for
example, financial and operational
matters of Common Members, thirdparty complaints, and disciplinary
actions.30 The Commission believes that
the information-sharing provisions
contained in the proposed Plan fosters
cooperation and coordination among the
Parties, thereby promoting investor
protection and removing impediments
to the development of a national market
system.
Finally, the Plan permits any Party to
terminate the Plan at any time, subject
to 180 days written notice to the other
Parties and subject to Commission
approval.31
V. Conclusion
This Order gives effect to the Plan
filed with the Commission in File No.
4–587. The Parties shall notify all
members affected by the Plan of their
rights and obligations under the Plan.
It is therefore ordered, pursuant to
Section 17(d) of the Act,32 that the Plan,
made by and among NYSE, NYSE
Regulation, NYSE Amex, and FINRA,
that is contained in File No. 4–587 and
28 See
paragraph 2(a) of the proposed 17d–2 Plan.
paragraph 2(c) of the proposed 17d–2 Plan.
30 See paragraph 5 of the proposed 17d–2 Plan.
31 See paragraph 14 of the proposed 17d–2 Plan.
The Commission notes that, as reflected in
paragraph 14, Commission approval is required for
any Party to terminate its participation in the Plan.
32 15 U.S.C. 78q(d).
29 See
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
filed pursuant to Rule 17d–2, is hereby
approved and declared effective.
It is therefore ordered that NYSE and
NYSE Amex are relieved of those
responsibilities allocated to FINRA
under the Plan in File No. 4–587.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–18762 Filed 8–5–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60405; File No. 4–546]
Joint Industry Plan; Order Approving
the National Market System Plan
Relating to Options Order Protection
and Locked/Crossed Markets
Submitted by the Chicago Board
Options Exchange, Incorporated,
International Securities Exchange,
LLC, The NASDAQ Stock Market LLC,
NASDAQ OMX BX, Inc., NASDAQ OMX
PHLX, Inc., NYSE Amex LLC, and
NYSE Arca, Inc.
July 30, 2009.
I. Introduction
The proposed Options Order
Protection and Locked/Crossed Market
Plan (‘‘Proposed Plan’’) was filed
jointly, pursuant to Rule 608 of
Regulation NMS under the Securities
Exchange Act of 1934 (‘‘Act’’)
(‘‘Regulation NMS’’) (‘‘Rule 608’’),1 by
the International Securities Exchange,
LLC (‘‘ISE’’) and NYSE Arca, Inc.
(‘‘NYSE Arca’’) on September 13, 2007
and September 18, 2007, respectively,
with the Securities and Exchange
Commission (‘‘Commission’’).2 On
December 11, 2007, ISE and NYSE Arca
separately filed Amendment No. 1 to the
Proposed Plan.3 On April 24, 2008, and
April 17, 2008, ISE and NYSE Arca,
respectively, filed Amendment No. 2 to
the Proposed Plan.4 On November 10,
33 17
CFR 200.30–3(a)(34).
CFR 242.608.
2 See letter from Michael J. Simon, General
Counsel, ISE, to Nancy M. Morris, Secretary,
Commission, dated September 12, 2007 (‘‘ISE Letter
1’’); and letter from Peter G. Armstrong, Managing
Director, Options, NYSE Arca, to Nancy M. Morris,
Secretary, Commission, dated September 14, 2007
(‘‘NYSE Arca Letter 1’’).
3 See letter from Michael J. Simon, General
Counsel, ISE, to Nancy M. Morris, Secretary,
Commission, dated December 10, 2007; and letter
from Peter G. Armstrong, Managing Director,
Options, NYSE Arca, to Nancy M. Morris, Secretary,
Commission, dated December 10, 2007.
4 Amendment No. 2 superseded Amendment No.
1 and replaced it in its entirety. See letter from
1 17
E:\FR\FM\06AUN1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 150 (Thursday, August 6, 2009)]
[Notices]
[Pages 39353-39362]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18762]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60409; File No. 4-587]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing and Order Declaring Effective a Proposed
Plan for the Allocation of Regulatory Responsibilities Among the
Financial Industry Regulatory Authority, Inc., New York Stock Exchange
LLC, NYSE Regulation, Inc. and NYSE Amex LLC
July 30, 2009.
Notice is hereby given that the Securities and Exchange Commission
(``Commission'' or ``SEC'') has issued an Order pursuant to Section
17(d) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule
17d-2 thereunder \2\ approving and declaring effective a plan dated
December 15, 2008 for the allocation of regulatory responsibilities
(``17d-2 Plan'' or the ``Plan'') filed with the Commission on July 29,
2009 pursuant to Rule 17d-2 of the Act, by the New York Stock Exchange
LLC (``NYSE''), NYSE Regulation, Inc. (``NYSE Regulation''), NYSE Amex
LLC (``NYSE Amex''), and the Financial Industry Regulatory Authority,
Inc. (``FINRA'') (each individually, a ``Party'' and collectively, the
``Parties'').
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to Section 17(d) 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.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. Proposed Plan
On January 17, 2008, NYSE Euronext, Inc. and The Amex Membership
Corporation, a New York not-for-profit company and parent of the
American Stock Exchange LLC (``Amex'') entered into an Agreement and
Plan of Merger, whereby NYSE Euronext would acquire Amex and as a
result, Amex would become a wholly-owned subsidiary of NYSE Group, Inc.
and would be renamed ``NYSE Amex.'' \10\ In connection with the merger,
the Commission approved proposed rule changes to permit the merger and
related transactions, including the adoption of an operating agreement
for NYSE Amex.\11\ The Commission also approved an NYSE Amex rule
proposal to adopt new rules governing member organizations, member firm
conduct, and equity trading.\12\ NYSE Amex's new membership and member
conduct rules are closely modeled on, and largely identical to,
existing NYSE membership and firm conduct rules,\13\ many of which are
``common rules'' under the existing 17d-2 plan between NYSE and
FINRA.\14\
---------------------------------------------------------------------------
\10\ On March 13, 2009, the exchange then known as NYSE
Alternext U.S. LLC filed for immediate effectiveness a proposal to
change its name to NYSE Amex LLC. See Securities Exchange Act
Release No. 59575 (March 13, 2009), 74 FR 11803 (March 19, 2009)
(SR-NYSEALTR-2009-24).
\11\ See Securities Exchange Act Release No. 58673 (September
29, 2008), 73 FR 57707 (October 3, 2008) (SR-Amex-2008-62 and SR-
NYSE-2008-60).
\12\ See Securities Exchange Act Release No. 58705 (October 1,
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63).
\13\ See id. at 58995.
\14\ See id.; See also Securities Exchange Act Release No. 56148
(July 26, 2007), 72 FR 42146 (August 1, 2007) (order declaring
effective the plan between NYSE and FINRA).
---------------------------------------------------------------------------
The purpose of the Plan is to add NYSE Amex as a party to the
existing 17d-2 plan by and among National Association of Securities
Dealers, Inc.
[[Page 39354]]
(``NASD'') (n/k/a FINRA), NYSE, and NYSE Regulation without altering
the scope of that plan. Accordingly, the proposed 17d-2 Plan is
intended to reduce regulatory duplication for firms that are common
members of either NYSE and FINRA or NYSE Amex and FINRA. Pursuant to
the proposed 17d-2 Plan, FINRA would assume certain examination,
enforcement, and surveillance responsibilities for members of either
NYSE and FINRA or NYSE Amex and FINRA as well as the associated persons
therewith (``Common Members'') with respect to certain rules.
The text of the Plan delineates the proposed regulatory
responsibilities with respect to the Parties. Included in the proposed
Plan is Exhibit 1 (the ``List of Common Rules'') that lists every NYSE
rule, and NYSE Amex Equities rule, for which FINRA would bear
responsibility under the Plan for overseeing and enforcing with respect
to Common Members.
Specifically, under the 17d-2 Plan, FINRA would assume examination
and enforcement responsibility relating to compliance by Common Members
with the rules of NYSE and NYSE Amex that are substantially similar to
the applicable rules of FINRA (``Common Rules'').\15\ The 17d-2 Plan
would not include the application of any Common Rule to the extent that
it pertains to matters covered by a separate agreement under Rule 17d-
2.\16\ In the event that a Common Member is the subject of an
investigation, examination, or enforcement proceeding, the 17d-2 Plan
acknowledges that any Party may, in its discretion, exercise concurrent
jurisdiction.\17\
---------------------------------------------------------------------------
\15\ See paragraph 1(a) of the proposed 17d-2 Plan.
\16\ See, e.g., the Multiparty Agreement made pursuant to Rule
17d-2 of the Exchange Act among the American Stock Exchange LLC, the
BATS Exchange, Inc., the Boston Stock Exchange, Inc., the CBOE Stock
Exchange, LLC, the Chicago Stock Exchange, Inc., Financial Industry
Regulatory Authority, Inc., the International Securities Exchange,
LLC, the NASDAQ Stock Market LLC, the National Stock Exchange, Inc.,
the New York Stock Exchange, LLC, NYSE Arca Inc., NYSE Regulation,
Inc., and the Philadelphia Stock Exchange, Inc., approved by the
Commission on October 17, 2008, as may be amended from time to time,
involving the allocation of regulatory responsibilities with respect
to common members for compliance with the surveillance,
investigation, and enforcement of common insider trading rules. See
Securities Exchange Act Release No. 58806 (October 17, 2008), 73 FR
63216 (October 23, 2008); see also paragraph 20 of the proposed 17d-
2 Plan.
\17\ See paragraph 7 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
While NYSE Amex has adopted a number of NYSE member firm conduct
rules, NYSE Amex equities rules do not include all NYSE rules.\18\
Accordingly, certain Common Rules between NYSE and FINRA that have not
been adopted by NYSE Amex (e.g., NYSE Rule 414 and the NYSE Series 700
Rules) will not be Common Rules among NYSE, NYSE Amex, and FINRA. In
addition, certain other NYSE Amex equities trading rules that qualify
as Common Rules have been modified to reflect the difference in
products trading at NYSE Amex (e.g., NYSE Amex Equities Rules 345
(Employees--Registration, Approval, Records) and 408 (Discretionary
Power in Customers' Accounts)).
---------------------------------------------------------------------------
\18\ For example, NYSE Amex has not adopted rules based on the
following NYSE products: Cabinet Securities (NYSE Rule 85), Options
(NYSE Series 700 Rules), Index and Currency Warrants (NYSE Rule
414), and Basket Trades (NYSE Series 800 Rules).
---------------------------------------------------------------------------
Under the Plan, each of NYSE and NYSE Amex would retain full
responsibility for surveillance and enforcement with respect to trading
activities or practices involving the systems and facilities of the
respective exchange. Each of NYSE and NYSE Amex also would retain
regulatory responsibility for examinations of conduct or action of a
Common Member that is not covered under the Common Rules and/or by
related Federal regulations or laws; processing of applications for
membership in the respective exchange; qualification and registration
of member firm personnel to effect transactions on the floor of the
exchange; and regulatory responsibility for the application of any
Common Rule as it pertains to matters other than member firm
regulation.\19\
---------------------------------------------------------------------------
\19\ See paragraphs 2(d) and 2(e) of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
The text of the proposed 17d-2 Plan is as follows:
* * * * *
Agreement by and Among Financial Industry Regulatory Authority, Inc.,
New York Stock Exchange LLC, NYSE Regulation, Inc., and NYSE Amex LLC
Pursuant to SEC Rule 17d-2 Promulgated by the Securities and Exchange
Commission Under the Securities Exchange Act of 1934
This Agreement, (``Agreement'') by and among Financial Industry
Regulatory Authority, Inc., a Delaware non-stock, not-for-profit
membership corporation (``FINRA''), New York Stock Exchange LLC, a New
York limited liability company (``NYSE LLC''), NYSE Regulation, Inc., a
New York not-for-profit corporation and an indirectly wholly-owned
subsidiary of NYSE Group, Inc. (``NYSE Regulation''), and NYSE Amex LLC
(``NYSE Amex''), a Delaware limited liability company and wholly-owned
subsidiary of NYSE Group, Inc. (herein collectively referred to as the
``Participants''), dated as of December 15, 2008, pursuant to the
provisions of Rule 17d-2 promulgated by the Securities and Exchange
Commission (the ``Commission'') under the Securities Exchange Act of
1934, as amended (the ``Act''), which authorizes agreements between
self-regulatory organizations for plans to reduce or eliminate
regulatory duplication.
This Agreement amends and restates the agreement entered into among
National Association of Securities Dealers, Inc. (``NASD'' n/k/a
FINRA), NYSE LLC, and NYSE Regulation on July 30, 2007, entitled
``Agreement between National Association of Securities Dealers, Inc.,
New York Stock Exchange LLC, and NYSE Regulation, Inc., pursuant to SEC
Rule 17d-2 promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934'' (the ``July 30, 2007
Agreement'').
Whereas, NYSE Euronext, a Delaware corporation and the parent
entity of NYSE Group (as hereinafter defined), and The Amex Membership
Corporation, a New York not-for-profit corporation and parent company
of the American Stock Exchange LLC (``Amex''), entered into an
Agreement and Plan of Merger, dated January 17, 2008 (``Merger
Agreement''), whereby, through a series of mergers, on October 1, 2008,
NYSE Euronext acquired Amex (``Merger Transaction'') and as a result of
these mergers, Amex became a wholly-owned subsidiary of NYSE Group and
was renamed NYSE Amex; and
Whereas, the Participants are desirous of reducing duplication in
the regulation of broker-dealer firms and associated persons therewith
that are members of NYSE, NYSE Amex, and FINRA (``Common Members'') and
allocating regulatory responsibilities with respect to such Common
Members and for which they are subject to Common Rules (as hereinafter
defined); and
Whereas, the Participants intend that FINRA will perform various
functions formerly performed by NYSE Regulation; and
Whereas, the Participants intend this Agreement to describe the
functions to be performed by FINRA pursuant to Section 17(d) of the Act
and Rule 17d-2 promulgated thereunder, and intend to file such with the
Commission for its approval.
Now, therefore, in consideration of the foregoing, the mutual
covenants contained hereinafter, and other good and valuable
consideration, the Participants hereby agree as follows:
[[Page 39355]]
1. Assumption of Regulatory Responsibilities
(a) On the effective date, which shall be the date that the
Commission has declared effective this Agreement, FINRA will assume
regulatory responsibilities for all Common Members for the list of
rules attached as Exhibit 1 (``Common Rules'') to this Agreement and
made part hereof including examination, enforcement and surveillance
responsibilities for such Common Rules to the extent that such
responsibilities involve member firm regulation (the ``Regulatory
Responsibilities''). The Participants agree that the NYSE and NYSE Amex
rules listed on Exhibit 1 are identical or substantially similar to the
corresponding FINRA rule.
(b) FINRA shall not charge NYSE or NYSE Amex for performing the
Regulatory Responsibilities except for the reasonable notification
expenses and travel and out-of-pocket expenses, as provided in
paragraphs 4(c) and 5.
2. Scope of Regulatory Responsibilities
(a) Whenever a Participant proposes to make a change to the
substance of any of the Common Rules, before filing such proposal with
the SEC, it shall inform the other Participants to determine whether
the other Participants will agree to promptly propose a conforming
change to its version of the Common Rule. In the event the Participants
do not agree to propose conforming changes, the Participants agree that
they will file with the SEC for approval an amendment to this Agreement
deleting such rule from the list of Common Rules, such amendment to be
effective no earlier than the date of SEC approval of the change to the
Common Rule proposed by the NYSE, NYSE Amex, or FINRA, as the case may
be.
(b) Common Rulebook. FINRA intends to create a single set of Rules
to replace the FINRA NASD Rules and the NYSE Rules incorporated by
FINRA. There is a substantial likelihood that each FINRA rule that
would replace an existing NYSE Rule incorporated by FINRA and
applicable to Common Members would be substantially different from the
then-existing NYSE Rule or NYSE Amex Rule. In such case, pursuant to
paragraph 2(a) above, NYSE and NYSE Amex would need to file with the
Commission a proposal to amend their respective corresponding Rules to
conform to the new FINRA Rule. As provided in Section 13, the
Participants may make certain amendments to the list of Common Rules in
Exhibit 1 without constituting an amendment to this Agreement.
(c) Each year within 30 days of the anniversary date of Commission
approval of this Agreement, or more frequently if required by changes
in the rules of a Participant, NYSE and NYSE Amex will submit to FINRA
an updated list of Common Rules for review. This updated list may add
to Exhibit 1 rules that qualify as Common Rules, shall delete from
Exhibit 1 rules of that Participant that are no longer identical or
substantially similar to the Common Rules, and shall confirm that the
remaining rules of the Participant included on Exhibit 1 continue to
qualify as Common Rules. Within 30 days from the date that FINRA has
received revisions to Exhibit 1, FINRA shall confirm in writing to NYSE
and NYSE Amex whether the rules listed in Exhibit 1 are Common Rules.
(d) Notwithstanding anything contained in this Agreement to the
contrary, NYSE shall retain regulatory responsibility for the following
(collectively, the ``NYSE Retained Responsibilities''):
(i) Examinations of conduct or action by a Common Member that is
otherwise covered by NYSE rules that are not Common Rules (the ``NYSE-
only Rules'') and/or by related Federal laws or regulations;
(ii) Surveillance of, and investigation and enforcement with
respect to, conduct or action undertaken in connection with trading on
or through the systems and facilities of the NYSE, or conduct or
actions by a Common Member that are otherwise covered by NYSE-only
Rules, additionally, in all such cases, surveillance, investigation and
enforcement with respect to how such conduct may constitute a violation
of applicable Federal laws or regulations;
(iii) Processing of applications for trading licenses or other
indicia of membership in the NYSE, including without limitation
applying NYSE's rules relating to the rights and obligations of Common
Members that hold a trading license to effect transactions on the floor
of the NYSE or through any systems or facilities of the NYSE;
(iv) Qualification and registration of member firm personnel to
effect transactions or work as Floor employees on the Floor of the
NYSE, pursuant to the NYSE's applicable rules regarding qualifications
and registration; and
(v) The application of any Common Rule as it pertains to matters
other than member firm regulation, including matters relating to NYSE's
exclusive responsibility for (ii)-(iv) above (the ``Non-Exclusive
Common Rules''). The Participants have identified the Non-Exclusive
Common Rules, which are specifically designated on Exhibit 1, as those
rules for which both NYSE and FINRA will bear responsibility when
performing their respective regulatory responsibilities.
(e) Notwithstanding anything contained in this Agreement to the
contrary, NYSE Amex shall retain regulatory responsibility for the
following (collectively, the ``NYSE Amex Retained Responsibilities''):
(i) Examinations of conduct or action by a Common Member that is
otherwise covered by NYSE Amex rules that are not Common Rules (the
``NYSE Amex-only Rules'') and/or by related Federal laws or
regulations;
(ii) Surveillance of, and investigation and enforcement with
respect to, conduct or action undertaken in connection with trading on
or through the systems and facilities of the NYSE Amex, or conduct or
actions by a Common Member that are otherwise covered by NYSE Amex-only
Rules, additionally, in all such cases, surveillance, investigation and
enforcement with respect to how such conduct may constitute a violation
of applicable Federal laws or regulations;
(iii) Processing of applications for trading licenses or other
indicia of membership in the NYSE Amex, including without limitation
applying NYSE Amex rules relating to the rights and obligations of
Common Members that hold a trading license to effect transactions on
the floor of the NYSE Amex or through any systems or facilities of the
NYSE Amex;
(iv) Qualification and registration of member firm personnel to
effect transactions or work as Floor employees on the Floor of the NYSE
Amex, pursuant to the NYSE Amex's applicable rules regarding
qualifications and registration; and
(v) The application of any Common Rule as it pertains to matters
other than member firm regulation, including matters relating to NYSE
Amex's exclusive responsibility for (ii)-(iv) above (the ``Non-
Exclusive Common Rules''). The Participants have identified the Non-
Exclusive Common Rules, which are specifically designated on Exhibit 1,
as those rules for which both NYSE Amex and FINRA will bear
responsibility when performing their respective regulatory
responsibilities.
3. Violations
(a) Should FINRA become aware of potential violations of another
Participant's rules that are not within the scope of the Regulatory
Responsibilities, FINRA will promptly notify the other Participant of
those
[[Page 39356]]
potential violations, and such matters will be handled by the
Participant responsible for those regulatory responsibilities.
(b) Should a Participant other than FINRA become aware of potential
violations of Common Rules, the Participant will promptly notify FINRA
of those potential violations, and such matters will be handled by
FINRA as provided in this Agreement.
4. Applications for, Qualification for, and Termination of, Membership
(a)(i) Common Members subject to this Agreement will be required to
submit to FINRA, and FINRA will be responsible for processing, and
acting upon, all applications (each an ``Application'') submitted on
behalf of the Common Member and any individual associated with such
Common Member required to be approved by the rules of NYSE, NYSE Amex,
and FINRA (collectively, an ``Applicant'').
(ii) Promptly upon receipt of any complete Application, but in any
event no later than seven (7) business days thereafter, FINRA shall
advise NYSE and NYSE Amex of the qualifications and registration status
of the Applicant required to be approved pursuant to the rules of NYSE,
NYSE Amex, and FINRA. The NYSE and NYSE Amex each reserve the right to
require additional qualifications or registrations prior to approving
an Applicant as a member of the NYSE and NYSE Amex, pursuant to the
process described in NYSE and NYSE Amex rules.
(b) FINRA shall promptly advise NYSE and NYSE Amex of information
regarding changes in status of any person required to be approved
pursuant to the rules of NYSE, NYSE Amex, and FINRA that relates to a
statutory disqualification, involuntary termination from employment or
any other submission made to FINRA pursuant to Incorporated NYSE Rule
351(a)-(c). The NYSE and NYSE Amex each reserve the right to disqualify
a member pursuant to the process described in their respective rules.
(c) Common Members will be required to send to FINRA all letters,
termination notices or other material respecting persons required to be
approved pursuant to the rules of NYSE, NYSE Amex, and FINRA. When as a
result of processing said submissions FINRA becomes aware of a
statutory disqualification as defined in the Act with respect to a
Common Member or person associated with a Common Member, FINRA will
determine pursuant to Section 15A(g) or 6(c) of the Act the
acceptability or continued acceptability of the person to whom such
disqualification applies but will not make a determination regarding
NYSE or NYSE Amex membership or participation, or association of a
person with an NYSE or NYSE Amex member. FINRA shall advise the other
Participants in writing of its actions in this regard. The other
Participants shall, within 30 days of receiving such information from
FINRA, determine whether to permit a Common Member that has been
determined to be statutorily disqualified by FINRA from becoming or
remaining an NYSE or NYSE Amex member or a participant, or a person
associated with a member. The other Participant will advise FINRA of
its decision.
The other Participant will reimburse FINRA for reasonable expenses
incurred in notifying a Participant of FINRA's decision regarding a
statutory disqualification under Section 15A(g) or Section 6(c) of the
Act.
FINRA will also be responsible for processing and, if required,
acting upon all requests for the opening, address changes, and
terminations of branch offices by Common Members and any other
applications required of Common Members under the Common Rules.
5. Information Sharing
The Participants agree to share information as follows:
(a) General.
A Participant shall promptly furnish to the other Participants any
information that it determines indicates possible financial or
operational problems that may affect the continued ability of any
Common Member to conduct business.
(b) Reports and Other Documents.
A Participant shall upon request promptly make available to the
other Participants at no cost any existing financial, operational, or
related report filed with that Participant by a Common Member, as well
as any existing files, information on customer complaints, termination
notices, copies of an examination report, examination workpapers,
investigative material, enforcement referrals or other documents
involving compliance with the Federal securities laws and regulations
and the rules of the Participants by the Common Member, or other
documents in the possession of the Participant relating to the Common
Member as necessary to assist the other Participants in fulfilling
their Retained Responsibilities.
(c) Third-party Complaints.
If a Participant receives a copy of a complaint from any third
party, including but not limited to a report from a Common Member
pursuant to FINRA Incorporated NYSE Rule 351 or NYSE Amex Equities Rule
351, relating to possible violations by a Common Member or persons
associated with a Common Member that is not within the scope of that
Participant's regulatory responsibilities and is within the scope of
another Participant's regulatory responsibilities, that Participant
shall promptly forward to the other Participant copies of such
complaints. The Participant with the regulatory responsibilities vis-
[agrave]-vis such complaint shall have responsibility to review and
take any appropriate action with respect to such complaint.
(d) Information on Formal and Informal Discipline.
A Participant shall promptly make available to the other
Participants information on (1) formal disciplinary actions taken by
that Participant involving a Common Member or persons associated with a
Common Member; and (2) informal disciplinary actions taken by that
Participant involving a Common Member. For purposes of this paragraph
(d), informal disciplinary actions shall mean Cautionary Actions and
MRVP (if FINRA) and Letters of Education, Letters of Admonition, and
Summary Fines (if NYSE or NYSE Amex).
(e) Participants to Make Personnel Available as Witnesses.
A Participant shall make its personnel available to the other
Participants to serve as testimonial or non-testimonial witnesses as
necessary to assist the respective Participant in fulfilling the self-
regulatory responsibilities retained by it under this Agreement. The
Participant requiring the services of such witnesses shall pay all
reasonable travel and other out-of-pocket expenses incurred by the
other Participant's employees to the extent that the requesting
Participant requires such employees to serve as a witness, and provide
information or other assistance pursuant to this Agreement.
(f) Confidentiality. The Participants agree that documents or
information shared shall be held in confidence, and be used only for
the purposes of carrying out their respective regulatory obligations.
No Participant shall assert regulatory or other privileges as against
the others with respect to documents or information that is required to
be shared pursuant to this Agreement.
(g) No Waiver of Privilege. The sharing of documents or information
among the Participants 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.
[[Page 39357]]
(h) Periodic Meetings. The Participants agree that they shall
conduct regular joint meetings among them for the purposes of reporting
on the conduct of the Regulatory Responsibilities and current
investigations involving significant rule violations by a Common
Member, and identifying issues or concerns with respect to the
regulation of Common Members.
6. Arbitration of Disputes Under This Agreement
(a) Regulatory Services Manager. The Participants hereby each
appoint the employee identified on Exhibit 2 hereto as its respective
Regulatory Services Manager (the ``Regulatory Services Manager'') to,
among other things, resolve disputes pursuant to Section 6(b) of this
Agreement and oversee day-to-day management of the services and
activities contemplated by this Agreement. On reasonable prior written
notice to the other, the Participants shall each have the right to
replace its respective Regulatory Services Manager with an employee or
officer with comparable knowledge, expertise and decision-making
authority.
(b) Dispute Resolution. Except as otherwise expressly set forth in
this Agreement, any dispute arising out of or relating to this
Agreement shall be submitted for resolution to the Regulatory Services
Managers. In the event the Regulatory Services Managers fail to resolve
a dispute pursuant to this Section 6(b) within a reasonable time of
receiving notice of such dispute from a Participant, then the
Participants shall refer the dispute to the employee identified on
Exhibit 2 as its respective Senior Officer (the ``Senior Officer'') and
such Senior Officers shall attempt in good faith to conclusively
resolve any such dispute. On reasonable prior written notice to the
other, the Participants shall each have the right to replace its
respective Senior Officer with an officer with comparable rank,
knowledge, expertise and decision-making authority. If the Senior
Officers are unable to resolve the dispute amicably within 30 days, the
dispute will be resolved by binding arbitration between or among the
Participants as provided herein. Arbitration shall be conducted by a
single arbitrator agreed upon by the Participants in accordance with
the arbitration rules of the American Arbitration Association (the
``AAA''); provided, that, if the Participants cannot agree on the
identity of the arbitrator, then the arbitrator shall be chosen by the
AAA in accordance with its rules. All arbitration hearings shall be
conducted in New York, New York. Each Participant shall pay its own
costs for the arbitration, with the cost of the arbitrator to be
equally divided between or among the Participants; provided, that the
arbitrator may, in his or her discretion, award reasonable attorneys'
fees and expenses to the prevailing Participant. The arbitrator will
have no authority to award punitive damages or any other damages not
measured by the prevailing Participant's actual damages, and may not,
in any event, make any ruling, finding or award that does not conform
to the terms and conditions of this Agreement. A judgment upon an award
may be entered in any court having jurisdiction. No Participant or the
arbitrator may disclose the existence, content, or results of any
arbitration hereunder without the prior written consent of the other
Participants, other than to the Commission. Except as otherwise
expressly set forth in this Agreement, the procedures set forth in this
Section 6(b) must be satisfied as a condition precedent to a
Participant commencing any arbitration in connection with any dispute
arising hereunder. A Participant's failure to comply with the preceding
sentence shall constitute cause for the dismissal without prejudice of
any such arbitration.
(c) Continuity of Services. Each Participant acknowledges that the
timely and complete performance of its obligations pursuant to this
Agreement is critical to the business and operations of the other
Participants. In the event of a dispute between or among the
Participant, the Participants will 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 6(c) will
interfere with a Participant's right to terminate this Agreement as set
forth in this Agreement.
7. No Restrictions on Regulatory Action
Nothing contained in this Agreement shall restrict or in any way
encumber the right of a Participant to conduct its own independent or
concurrent investigation, examination or enforcement proceeding of or
against Common Members, as a Participant, in its sole discretion, shall
deem appropriate or necessary.
8. Limitation of Liability
None of the Participants nor any of their respective directors,
governors, officers, employees, affiliates or agents shall be liable to
any other Participants or such Participant's directors, governors,
officers, employees, affiliates or agents for any liability, loss or
damage resulting from any delays, inaccuracies, errors or omissions
with respect to its performing or failing to perform its obligations
under this Agreement, except as otherwise provided for under the Act or
for any liability, loss or damage resulting from the gross negligence,
willful misconduct, reckless disregard or breach of confidentiality by
a Participant or its directors, governors, officers, employees,
affiliates or agents. The Participants understand and agree with each
other that the Regulatory Responsibilities are being performed on a
good faith and best effort basis and no warranties, express or implied,
are made by any Participant to any other Participant with respect to
any of the obligations to be performed by the Participants hereunder.
9. Commission Approval
(a) The Participants agree to file promptly this Agreement with the
Commission for its review and approval. This Agreement shall be
effective upon approval of the Commission.
(b) If approved by the Commission, FINRA will notify Common Members
of the general terms of the Agreement and its impact on such members.
The notice will be sent on behalf of all Participants and, prior to
being sent, NYSE and NYSE Amex will review and approve the notice.
10. Applicability of Certain Laws
Notwithstanding any provision hereof, this Agreement shall be
subject to any applicable Federal or State statute, or any rule or
order of the Commission reassigning regulatory responsibilities between
self-regulatory organizations. To the extent such statute, rule, or
order is inconsistent with one or more provisions of this Agreement,
such statute, rule, or order shall supersede the provision(s) hereof to
the extent necessary to be properly effectuated and the provision(s)
hereof in that respect shall be null and void.
11. Definitions
Unless otherwise defined in this Agreement, or unless the context
otherwise requires, the terms used in this Agreement shall have the
same meaning as they have under the Act and the rules and regulations
promulgated by the Commission thereunder.
12. 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
[[Page 39358]]
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.
13. Amendment
This Agreement may be amended in writing duly approved by each
Participant. All such amendments, other than modifications to the list
of Common Rules in Exhibit 1 pursuant to (i) a Commission order or
other effective proposed rule change to FINRA approving the deletion of
an NYSE Rule incorporated by FINRA or the creation of a FINRA rule to
replace an NYSE Rule incorporated by FINRA, and (ii) a Commission order
or other effective proposed rule change to NYSE or NYSE Amex approving
the deletion of an NYSE or NYSE Amex Equities Rule or an amendment to
an NYSE or NYSE Amex rule that makes such NYSE or NYSE Amex rule
substantially identical to a FINRA rule, must be filed with and
approved by the Commission before they become effective.
14. Termination
This Agreement may be terminated by a Participant at any time upon
the approval of the Commission after 180 days written notice to the
other Participants.
15. General
The Participants agree to perform all acts and execute all
supplementary instruments or documents that may be reasonably necessary
or desirable to carry out the provisions of this Agreement.
16. Liaison and Notices
All questions regarding the implementation of this Agreement shall
be directed to the persons identified in subsections (a), (b) and (c),
as applicable, below. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given upon (i) actual receipt by the
notified Participant or (ii) constructive receipt (as of the date
marked on the return receipt) if sent by certified or registered mail,
return receipt requested, to the following addresses:
(a) If to NYSE Regulation: NYSE Regulation, Inc., 11 Wall Street,
New York, New York 10005. Telephone: (212) 656-3000. Facsimile: (212)
656-8101. Attention: General Counsel, Regulatory Services Manager.
(b) If to New York Stock Exchange LLC: New York Stock Exchange LLC,
11 Wall Street, New York, NY 10005. Telephone: (212) 656-3000.
Facsimile: (212) 656-8101. Attention: General Counsel.
(c) If to FINRA: Financial Industry Regulatory Authority, Inc.,
1735 K Street, NW., Washington, DC 20006-1500. Telephone: (202) 728-
8071. Facsimile: (202) 728-8075. Attention: General Counsel, Regulatory
Services Manager.
(d) If to NYSE Amex LLC: NYSE Amex LLC, 11 Wall Street, New York,
NY 10005. Telephone: (212) 656-3000. Facsimile: (212) 656-8101.
Attention: General Counsel, Regulatory Services Manager.
17. Relief From Regulatory Responsibility
Pursuant to Section 17(d)(1)(A) of the Act, and Rule 17d-2
thereunder, the Participants jointly request the SEC, upon its approval
of this Agreement, to relieve the NYSE and NYSE Amex of any and all
responsibilities with respect to the matters allocated to FINRA
pursuant to this Agreement for purposes of Sections 17(d) and 19(g) of
the Act.
18. Governing Law
This Agreement shall be deemed to have been made in the State of
New York, and shall be construed and enforced in accordance with the
law of the State of New York, without reference to principles of
conflicts of laws thereof. Each of the Participants hereby consents to
submit to the jurisdiction of the courts by or for the State of New
York or the United States District Court for the Southern District of
New York in connection with any action or proceeding relating to this
Agreement.
19. Survival of Provisions
Provisions intended by their terms or context to survive and
continue notwithstanding delivery of the regulatory services by FINRA,
the payment of the price by the NYSE or NYSE Amex, and any termination
of this Agreement shall survive and continue.
20. Prior Agreements
This Agreement is wholly separate from: (a) The multiparty
Agreement made pursuant to Rule 17d-2 of the Exchange Act among the
American Stock Exchange LLC, the Boston Stock Exchange, Inc., the
Chicago Board Options Exchange, Incorporated, the International
Securities Exchange LLC, the National Association of Securities
Dealers, Inc., the New York Stock Exchange, LLC, the NYSE Arca, Inc.,
and the Philadelphia Stock Exchange, Inc. involving the allocation of
regulatory responsibilities with respect to common members for
compliance with common rules relating to the conduct by broker-dealers
of accounts for listed options or index warrants entered into on June
5, 2008, and as may be amended from time to time; (b) the multiparty
Agreement made pursuant to Rule 17d-2 of the Exchange Act among the
American Stock Exchange LLC, the BATS Exchange, Inc. the Boston Stock
Exchange, Inc., the CBOE Stock Exchange, LLC, the Chicago Stock
Exchange, Inc., Financial Industry Regulatory Authority, Inc., the
International Securities Exchange, LLC, the NASDAQ Stock Market LLC,
the National Stock Exchange, Inc., the New York Stock Exchange, LLC,
NYSE Arca Inc., NYSE Regulation, Inc., and the Philadelphia Stock
Exchange, Inc., approved by the Commission on October 17, 2008, as may
be amended from time to time, involving the allocation of regulatory
responsibilities with respect to common members for compliance with the
surveillance, investigation, and enforcement of common insider trading
rules; and (c) the multiparty Agreement made pursuant to Rule 17d-2 of
the Exchange Act among American Stock Exchange LLC, Boston Stock
Exchange, Inc., Chicago Board Options Exchange, Incorporated, the
International Securities Exchange LLC, Financial Industry Regulatory
Authority, Inc., NYSE Arca, Inc., The NASDAQ Stock Market LLC, and the
Philadelphia Stock Exchange, Inc. involving the allocation of
regulatory responsibilities with respect to common members for
compliance with common rules relating to certain options-related market
surveillance matters entered into on March 31, 2008, as amended October
1, 2008, and as may be amended from time to time.
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 but one and the same instrument.
In witness whereof, the Participants hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
Financial Industry Regulatory Authority
By:--------------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
New York Stock Exchange, LLC
By:--------------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
[[Page 39359]]
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Nyse Regulation, Inc.
By:--------------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
NYSE AMEX LLC
By:--------------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------
Exhibit 1
List of Common Rules
As referenced in paragraph 2(d)(v) of the Agreement, rules
designated with a ``*'' are Non-Exclusive Common Rules, and NYSE and
NYSE Amex shall retain regulatory responsibility for these rules
insofar as necessary to discharge their respective Retained
Responsibilities.
------------------------------------------------------------------------
NYSE Amex Equities
NYSE Rule Rule FINRA Rule
------------------------------------------------------------------------
*Rule 1 ``The Exchange''.... *Rule 1 ``The NYSE Rule 1 ``The
Exchange''. Exchange''.
*Rule 2 ``Member,'' *Rule 2 ``Member,'' NYSE Rule 2
``Membership,'' ``Member ``Membership,'' ``Member,''
Firm,'' etc. ``Member Firm,'' ``Membership,''
etc. ``Member Firm,''
etc.
*Rule 2A ``Jurisdiction''... *Rule 2A NYSE Rule 2A
``Jurisdiction''. ``Jurisdiction''.
*Rule 2B No Affiliation *Rule 2B No NYSE Rule 2B No
between Exchange and any Affiliation between Affiliation between
Member Organization. Exchange and any Exchange and any
Member Organization. Member
Organization.
*Rule 3 ``Security''........ *Rule 3 ``Security'' NYSE Rule 3
``Security''.
*Rule 4 ``Stock''........... *Rule 4 ``Stock''... NYSE Rule 4
``Stock''.
*Rule 5 ``Bond''............ *Rule 5 ``Bond''.... NYSE Rule 5
``Bond''.
*Rule 6 ``Floor''........... *Rule 6 ``Floor''... NYSE Rule 6
``Floor''.
*Rule 8 ``Delivery''........ *Rule 8 ``Delivery'' NYSE Rule 8
``Delivery''.
*Rule 9 ``Branch Office *Rule 9 ``Branch NYSE Rule 9 ``Branch
Manager''. Office Manager''. Office Manager''.
*Rule 10 ``Registered *Rule 10 NYSE Rule 10
Representative''. ``Registered ``Registered
Representative''. Representative''.
*Rule 11 Effect of *Rule 11 Effect of NYSE Rule 11 Effect
Definitions. Definitions. of Definitions.
*Rule 12 ``Business Day''... *Rule 12 ``Business NYSE Rule 12
Day''. ``Business Day''.
*Rule 134 Differences and *Rule 134 NYSE Rule 134
Omissions--Cleared Differences and Differences and
Transactions. Omissions --. Omissions--Cleared
Transactions.
Rule 176 Delivery Time...... Rule 176 Delivery NYSE Rule 176
Time. Delivery Time.
Rule 177 Delivery Time-- Rule 177 Delivery NYSE Rule 177
``Cash'' Contracts. Time--``Cash'' Delivery Time--
Contracts. ``Cash'' Contracts.
Rule 180 Failure to Deliver. Rule 180 Failure to NYSE Rule 180
Deliver. Failure to Deliver.
Rule 282 Buy-in Procedures.. Rule 282 Buy-in NYSE Rule 282 Buy-in
Procedures. Procedures.
Rule 291 Failure to Fulfill Rule 291 Failure to NYSE Rule 291
Closing Contract. Fulfill Closing Failure to Fulfill
Contract. Closing Contract.
Rule 292 Restrictions on Rule 292 NYSE Rule 292
Members' Participation in Restrictions on Restrictions on
Transaction to Close Members' Members'
Defaulted Contracts. Participation in Participation in
Transaction to Transaction to
Close Defaulted Close Defaulted
Contracts. Contracts.
Rule 293 Closing Contracts Rule 293 Closing NYSE Rule 293
in Suspended Securities. Contracts in Closing Contracts
Suspended in Suspended
Securities. Securities.
Rule 294 Default in Loan of Rule 294 Default in NYSE Rule 294
Money. Loan of Money. Default in Loan of
Money.
Rule 296 Liquidation of Rule 296 Liquidation NYSE Rule 296
Securities Loans and of Securities Loans Liquidation of
Borrowings. and Borrowings. Securities Loans
and Borrowings.
Rule 311 Formation and Rule 311 Formation NYSE Rule 311
Approval of Member and Approval of Formation and
Organizations. Member Approval of Member
Organizations. Organizations.
Rule 312 Changes Within Rule 312 Changes NYSE Rule 312
Member Organizations. Within Member Changes Within
Organizations. Member
Organizations.
Rule 313 Submission of Rule 313 Submission NYSE Rule 313
Partnership Articles-- of Partnership Submission of
Submission of Corporate Articles--Submissio Partnership
Documents. n of Corporate Articles--Submissio
Documents. n of Corporate
Documents.
Rule 319 Fidelity Bonds..... Rule 319 Fidelity NYSE Rule 319
Bonds. Fidelity Bonds.
Rule 321 Formation of Rule 321 Formation NYSE Rule 321
Acquisition of Subsidiaries. of Acquisition of Formation of
Subsidiaries. Acquisition of
Subsidiaries.
Rule 322 Guarantees by, or Rule 322 Guarantees NYSE Rule 322
Flow Through Benefits for by, or Flow Through Guarantees by, or
Members or Member Benefits for Flow Through
Organizations. Members or Member Benefits for
Organizations. Members or Member
Organizations.
*Rule 325 Capital *Rule 325 Capital NYSE Rule 325
Requirements Members Requirements Capital
Organizations. Members Requirements
Organizations. Members
Organizations.
Rule 326(a) Growth Capital Rule 326(a) Growth NYSE Rule 326(a)
Requirement. Capital Requirement. Growth Capital
Requirement.
Rule 326(b) Business Rule 326(b) Business NYSE Rule 326(b)
Reduction Capital Reduction Capital Business Reduction
Requirement. Requirement. Capital
Requirement.
Rule 326(c) Business Rule 326(c) Business NYSE Rule 326(c)
Reduction Capital Reduction Capital Business Reduction
Requirement. Requirement. Capital
Requirement.
Rule 326(d) Reduction of Rule 326(d) NYSE Rule 326(d)
Elimination of Loans and Reduction of Reduction of
Advances. Elimination of Elimination of
Loans and Advances. Loans and Advances.
Rule 328 Sale-and- Rule 328 Sale-and- NYSE Rule 328 Sale-
Leasebacks, Factoring, Leasebacks, and-Leasebacks,
Financing and Similar Factoring, Factoring,
Arrangements. Financing and Financing and
Similar Similar
Arrangements. Arrangements.
*Rule 342 Offices--Approval, *Rule 342 Offices-- NYSE Rule 342
Supervision and Control. Approval, Offices--Approval,
Supervision and Supervision and
Control. Control.
Rule 343 Offices--Sole Rule 343 Offices-- NYSE Rule 343
Tenancy, Hours, Display of Sole Tenancy, Offices--Sole
Membership Certificates. Hours, Display of Tenancy, Hours,
Membership Display of
Certificates. Membership
Certificates.
Rule 344 Research Analysts Rule 344 Research NYSE Rule 344
and Supervisory Analysts. Analysts and Research Analysts
Supervisory and Supervisory
Analysts. Analysts.
[[Page 39360]]
Rule 345 Employees-- Rule 345 Employees-- NYSE Rule 345
Registration, Approval, Registration, Employees--Registra
Records. Approval, Records. tion, Approval,
Records.
Rule 345A Continuing Rule 345A Continuing NYSE Rule 345A
Education for Registered Education for Continuing
Persons. Registered Persons. Education for
Registered Persons.
Rule 346 Limitations-- Rule 346 NYSE Rule 346
Employment and Association Limitations--Employ Limitations--Employ
with Members and Member ment and ment and
Organizations. Association with Association with
Members and Member Members and Member
Organizations. Organizations.
Rule 351 Reporting Rule 351 Reporting NYSE Rule 351
Requirements. Requirements. Reporting
Requirements.
Rule 352 Guarantees, Sharing Rule 352 Guarantees, NYSE Rule 352
in Accounts, and Loan Sharing in Guarantees, Sharing
Arrangements. Accounts, and Loan in Accounts, and
Arrangements. Loan Arrangements.
Rule 353 Rebates and Rule 353 Rebates and NYSE Rule 353
Compensation. Compensation. Rebates and
Compensation.
Rule 354 Reports to Control Rule 354 Reports to NYSE Rule 354
Persons. Control Persons. Reports to Control
Persons.
*Rule 375 Missing the Market *Rule 375 Missing NYSE Rule 375
the Market. Missing the Market.
Rule 382 Carrying Agreements Rule 382 Carrying NYSE Rule 382
Agreements. Carrying
Agreements.
Rule 387 COD Orders......... Rule 387 COD Orders. NYSE Rule 387 COD
Orders.
Rule 401A Customer Rule 401A Customer NYSE Rule 401A
Complaints. Complaints. Customer
Complaints.
Rule 402 Customer Rule 402 Customer NYSE Rule 402
Protection--Reserves and Protection--Reserve Customer
Custody of Securities. s and Custody of Protection--Reserve
Securities. s and Custody of
Securities.
Rule 404 Individual Members Rule 404 Individual NASD Rule 1014.
Not To Carry Accounts. Members Not To
Carry Accounts.
Rule 405 Diligence as to Rule 405 Diligence NYSE Rule 405
Accounts. as to Accounts. Diligence as to
Accounts.
Rule 406 Designation of Rule 406 Designation NYSE Rule 406
Accounts. of Accounts. Designation of
Accounts.
*Rule 407 Transactions-- *Rule 407 NYSE Rule 407
Employees of Members, Transactions--Emplo Transactions--Emplo
Member Organizations and yees of Members, yees of Members,
the Exchange. Member Member
Organizations and Organizations and
the Exchange. the Exchange. \20\
*Rule 407A Disclosure of All *Rule 407A NYSE Rule 407A
Member Accounts. Disclosure of All Disclosure of All
Member Accounts. Member Accounts.
Rule 408 Discretionary Power Rule 408 NYSE Rule 408
in Customers' Accounts. Discretionary Power Discretionary Power
in Customers' in Customers'
Accounts. Accounts.
Rule 409 Statements of Rule 409 Statements NYSE Rule 409
Accounts to Customers. of Accounts to Statements of
Customers. Accounts to
Customers.
Rule 409A SIPC Disclosures.. Rule 409A SIPC NYSE Rule 409A SIPC
Disclosures. Disclosures.
*Rule 410 Records of Orders. *Rule 410 Records of NYSE Rule 410
Orders. Records of Orders.
*Rule 411 Erroneous Reports. *Rule 411 Erroneous NYSE Rule 411
Reports. Erroneous Reports.
Rule 412 Customer Account Rule 412 Customer NASD Rule 11870.
Transfer Contracts. Account Transfer
Contracts.
Rule 413 Uniform Forms...... Rule 413 Uniform NYSE Rule 413
Forms. Uniform Forms.
*Rule 416 Questionnaires and *Rule 416 NYSE Rule 416
Reports. Questionnaires and Questionnaires and
Reports. Reports.
*Rule 416A Member and Member *Rule 416A Member NYSE Rule 416A
Organization Profile and Member Member and Member
Information Updates and Organization Organization
Quarterly Certifications Profile Information Profile Information
Via The Electronic Filing Updates and Updates and
Platform. Quarterly Quarterly
Certifications Via Certifications Via
The Electronic the Electronic
Filing Platform. Filing Platform.
Rule 418 Audit.............. Rule 418 Audit...... NYSE Rule 418 Audit.
Rule 420 Reports of Rule 420 Reports of NYSE Rule 420
Borrowings and Subordinate Borrowings and Reports of
Loans for Capital Purposes. Subordinate Loans Borrowings and
for Capital Subordinate Loans
Purposes. for Capital
Purposes.
Rule 421 Periodic Reports... Rule 421 Periodic NYSE Rule 421
Reports. Periodic Reports.
Rule 430 Partial Delivery of Rule 430 Partial NYSE Rule 430
Securities to Customers on Delivery of Partial Delivery of
C.O.D. Purchases. Securities to Securities to
Customers on C.O.D. Customers on C.O.D.
Purchases. Purchases.
Rule 431 Margin Requirements Rule 431 Margin NYSE Rule 431 Margin
Requirements. Requirements.
Rule 432 Daily Record of Rule 432 Daily NYSE Rule 432 Daily
Required Margin. Record of Required Record of Required
Margin. Margin.
Rule 434 Required Submission Rule 434 Required NYSE Rule 434
of Requests for Extensions Submission of Required Submission
of Time for Customers. Requests for of Requests for
Extensions of Time Extensions of Time
for Customers. for Customers.
*Rule 435 Miscellaneous *Rule 435 NYSE Rule 435
Prohibitions (Excessive Miscellaneous Miscellaneous
Trading by Members). Prohibitions Prohibitions
(Excessive Trading (Excessive Trading
by Members). by Members).
*Rule 440 Books and Records. *Rule 440 Books and NYSE Rule 440 Books
Records. and Records.
Rule 440A Telephone Rule 440A Telephone NYSE Rule 440A
Solicitation. Solicitation. Telephone
Solicitation.
Rule 440I Records of Rule 440I Records of NYSE Rule 440I
Compensation Arrangements-- Compensation Records of
Floor Brokerage. Arrangements--Floor Compensation
Brokerage. Arrangements--Floor
Brokerage.
Rule 445 Anti-Money Rule 445 Anti-Money NYSE Rule 445 Anti-
Laundering Compliance Laundering Money Laundering
Program. Compliance Program. Compliance Program.
Rule 446 Business Continuity Rule 446 Business NASD Rule 3510
and Contingency Plans. Continuity and Business Continuity
Contingency Plans. Plans and NASD Rule
3520 Emergency
Contact
Information.
Rule 472 Communications with Rule 472 NYSE Rule 472
the Public. Communications with Communications with
the Public. the Public.
*Rule 3130 (Annual *Rule 3130 (Annual *Rule 3130 (Annual
Certification of Compliance Certification of Certification of
and Supervisory Processes). Compliance and Compliance and
Supervisory Supervisory
Processes). Processes). \21\
Rule 3220 (Influencing or Rule 3220
