Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing of an Amended 17d-2 Plan Between the Financial Industry Regulatory Authority, Inc. and the Chicago Stock Exchange, Inc., 49005-49010 [2010-19852]
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Federal Register / Vol. 75, No. 155 / Thursday, August 12, 2010 / Notices
Federal and State income tax returns
and a report of the investment activities
of the Partnership during that fiscal
year.
6. If a Partnership makes purchases or
sales from or to an entity affiliated with
the Partnership by reason of an officer,
director or employee of Blackstone (a)
serving as an officer, director, general
partner or investment adviser of the
entity, or (b) having a 5% or more
investment in the entity, such
individual will not participate in the
Partnership’s determination of whether
or not to effect the purchase or sale.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–19854 Filed 8–11–10; 8:45 am]
BILLING CODE 8010–01–P
International, Inc. (n/k/a PBHG, Inc.)
because it has not filed any periodic
reports since the period ended
December 31, 1997.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Women
First Healthcare, Inc. because it has not
filed any periodic reports since the
period ended December 31, 2003.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted companies is suspended for the
period from 9:30 a.m. EDT on August
10, 2010, through 11:59 p.m. EDT on
August 23, 2010.
SECURITIES AND EXCHANGE
COMMISSION
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[File No. 500–1]
[FR Doc. 2010–20002 Filed 8–10–10; 4:15 pm]
BILLING CODE 8010–01–P
In the Matter of Appiant Technologies,
Inc., Cobalis Corp., FutureLink Corp.,
STM Wireless, Inc., Supermail
International, Inc. (n/k/a PBHG, Inc.),
and Women First Healthcare, Inc.;
Order of Suspension of Trading
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August 10, 2010.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Appiant
Technologies, Inc. because it has not
filed any periodic reports since the
period ended September 30, 2002.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Cobalis
Corp. because it has not filed any
periodic reports since the period ended
December 31, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of FutureLink
Corp. because it has not filed any
periodic reports since the period ended
March 31, 2001.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of STM
Wireless, Inc. because it has not filed
any periodic reports since the period
ended September 30, 2002.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Supermail
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SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
In the Matter of Geotec, Inc., InnoPet
Brands Corp., Marbledge Group, Inc.
(n/k/a AR Growth Finance Corp.), Phlo
Corp., Pliant Systems, Inc., Southeast
Banking Corp., TNX Television
Holdings, Inc., and WestPoint Stevens,
Inc.; Order of Suspension of Trading
August 10, 2010.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Geotec, Inc.
because it has not filed any periodic
reports since the period ended March
31, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of InnoPet
Brands Corp. because it has not filed
any periodic reports since the period
ended March 31, 1998.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Marbledge
Group, Inc. (n/k/a AR Growth Finance
Corp.) because it has not filed any
periodic reports since the period ended
November 30, 1996.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
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49005
concerning the securities of Phlo Corp.
because it has not filed any periodic
reports since the period ended
December 31, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Pliant
Systems, Inc. because it has not filed
any periodic reports since the period
ended June 30, 2001.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Southeast
Banking Corp. because it has not filed
any periodic reports since the period
ended June 30, 1991.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of TNX
Television Holdings, Inc. because it has
not filed any periodic reports since the
period ended September 30, 2004.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of WestPoint
Stevens, Inc. because it has not filed any
periodic reports since the period ended
September 30, 2004.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted companies is suspended for the
period from 9:30 a.m. EDT on August
10, 2010, through 11:59 p.m. EDT on
August 23, 2010.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2010–20001 Filed 8–10–10; 4:15 pm]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62657; File No. 4–274]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Notice of Filing of an Amended 17d–
2 Plan Between the Financial Industry
Regulatory Authority, Inc. and the
Chicago Stock Exchange, Inc.
August 5, 2010.
Pursuant to Section 17(d) of the
Securities Exchange Act of 1934
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(‘‘Act’’),1 and Rule 17d–2 thereunder,2
notice is hereby given that on July 21,
2010, the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and the
Chicago Stock Exchange, Inc. (‘‘CHX’’)
(together with FINRA, the ‘‘Parties’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
an amendment to their September 16,
1977 Agreement Between the National
Association of Securities Dealers, Inc.
(n/k/a FINRA) and the Midwest Stock
Exchange Incorporated (n/k/a CHX)
(‘‘17d–2 Plan’’ or the ‘‘Plan’’) for the
allocation of regulatory responsibilities.
The Commission is publishing this
notice to solicit comments on the
amendment to the 17d–2 Plan from
interested persons.
I. Introduction
Section 19(g)(1) of the Act,3 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or national securities
association to examine for, and enforce
compliance by, its members and persons
associated with its members with the
Act, the rules and regulations
thereunder, and the SRO’s own rules,
unless the SRO is relieved of this
responsibility pursuant to Section 17(d)
or Section 19(g)(2) of the Act.4 Without
this relief, the statutory obligation of
each individual SRO could result in a
pattern of multiple examinations of
broker-dealers that maintain
memberships in more than one SRO
(‘‘common members’’). Such regulatory
duplication would add unnecessary
expenses for common members and
their SROs.
Section 17(d)(1) of the Act 5 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.6 With respect to
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
1 15
U.S.C. 78q(d).
CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
4 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2),
respectively.
5 15 U.S.C. 78q(d)(1).
6 See Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
7 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
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Rule 17d–1 authorizes the Commission
to name a single SRO as the designated
examining authority (‘‘DEA’’) to examine
common members for compliance with
the financial responsibility
requirements imposed by the Act, or by
Commission or SRO rules.8 When an
SRO has been named as a common
member’s DEA, all other SROs to which
the common member belongs are
relieved of the responsibility to examine
the firm for compliance with the
applicable financial responsibility rules.
On its face, Rule 17d–1 deals only with
an SRO’s obligations to enforce member
compliance with financial responsibility
requirements. Rule 17d–1 does not
relieve an SRO from its obligation to
examine a common member for
compliance with its own rules and
provisions of the federal securities laws
governing matters other than financial
responsibility, including sales practices
and trading activities and practices.
To address regulatory duplication in
these and other areas, the Commission
adopted Rule 17d–2 under the Act.9
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities with respect
to their common members. Under
paragraph (c) of Rule 17d–2, the
Commission may declare such a plan
effective if, after providing for
appropriate notice and comment, it
determines that the plan is necessary or
appropriate in the public interest and
for the protection of investors; to foster
cooperation and coordination among the
SROs; to remove impediments to, and
foster the development of, a national
market system and a national clearance
and settlement system; and is in
conformity with the factors set forth in
Section 17(d) of the Act. Commission
approval of a plan filed pursuant to Rule
17d–2 relieves an SRO of those
regulatory responsibilities allocated by
the plan to another SRO.
II. The Plan
On September 26, 1978, the
Commission approved the Plan
allocating regulatory responsibilities
pursuant to Rule 17d–2 on a provisional
basis.10 Under the Plan, FINRA was
responsible, in part, for conducting onsite examination of each dual member
for which it was the DEA. On February
20, 1980, the Commission noticed for
comment an amendment to the Plan,
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).
10 See Securities Exchange Act Release No. 15191
(September 26, 1978), 43 FR 46093 (October 5,
1978).
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which provided, in part, for the
handling of customer complaints, the
review of dual members’ advertising,
and the arbitration of disputes under the
Plan.11 On May 30, 1980, the
Commission approved the Plan, as
amended.12
III. Proposed Amendment to the Plan
On July 21, 2010, the Parties
submitted a proposed amendment to the
Plan. The amended agreement would
replace the previous Plan in its entirety.
Accordingly, the proposed 17d–2 Plan
is intended to reduce the duplication in
the examination of common members 13
and in the filing and processing of
certain registration and membership
records. Pursuant to the proposed 17d–
2 Plan, FINRA would assume certain
examination and enforcement
responsibilities for common members
with respect to certain applicable laws,
rules, and regulations.
The text of the Plan delineates the
proposed regulatory responsibilities
with respect to the Parties. Included in
the proposed Plan is an exhibit (the
‘‘CHX Certification of Common Rules’’
referred to herein as the ‘‘Certification’’)
that lists every CHX rule, and select
federal securities laws, rules, and
regulations, for which FINRA would
bear responsibility under the Plan for
examine and enforcing with respect to
CHX members that are also members of
FINRA and the associated persons
therewith (‘‘Dual Members’’).
Specifically, under the 17d–2 Plan,
FINRA would assume examination and
enforcement responsibility relating to
compliance by Dual Members with the
rules of CHX that are substantially
similar to the applicable rules of FINRA,
as well as certain provisions of the
federal securities laws and the rules and
regulations thereunder delineated in the
Certification (‘‘Common Rules’’).14
Common Rules would not include the
application of any CHX rule or FINRA
rule, or any rule or regulation under the
Act, to the extent that it pertains to
11 See Securities Exchange Act Release No. 16591
(February 20, 1980), 45 FR 12573 (February 26,
1980).
12 See Securities Exchange Act Release No. 16858
(May 30, 1980), 45 FR 37927 (June 5, 1980).
13 The proposed 17d–2 Plan refers to these
members as ‘‘Dual Members.’’ See Paragraph 1(c) of
the proposed 17d–2 Plan.
14 See paragraph 1(b) of the proposed 17d–2 Plan
(defining Common Rules). See also paragraph 1(f)
of the proposed 17d–2 Plan (defining Regulatory
Responsibilities). Paragraph 2 of the Plan provides
that annually, or more frequently as required by
changes in either CHX rules or FINRA rules, the
parties shall review and update, if necessary, the
list of Common Rules. Further, paragraph 3 of the
Plan provides that CHX shall furnish FINRA with
a list of Dual Members, and shall update the list no
less frequently than once each quarter.
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violations of insider trading activities,
because such matters are covered by a
separate multiparty agreement under
Rule 17d–2.15 In the event that a Dual
Member is the subject of an
investigation relating to a transaction on
CHX, the plan acknowledges that CHX
may, in its discretion, exercise
concurrent jurisdiction and
responsibility for such matter.16
Under the Plan, CHX would retain
full responsibility for surveillance,
examination, investigation, and
enforcement with respect to trading
activities or practices involving CHX’s
own marketplace; registration pursuant
to its applicable rules of associated
persons (i.e., registration rules that are
not Common Rules); its duties and
obligations as a DEA pursuant to Rule
17d–1 under the Act; and any CHX rules
that are not Common Rules.17
The text of the proposed 17d–2 Plan
is as follows:
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AGREEMENT BETWEEN FINANCIAL
INDUSTRY REGULATORY
AUTHORITY, INC. AND CHICAGO
STOCK EXCHANGE, INC. PURSUANT
TO RULE 17d–2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
This Agreement, by and between the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and the
Chicago Stock Exchange, Inc. (‘‘CHX’’),
is made this 9th day of July, 2010 (the
‘‘Agreement’’), pursuant to Section 17(d)
of the Securities Exchange Act of 1934
(the ‘‘Exchange Act’’) and Rule 17d–2
thereunder which permits agreements
between self-regulatory organizations to
allocate regulatory responsibility to
eliminate regulatory duplication. FINRA
and CHX may be referred to
individually as a ‘‘party’’ and together as
the ‘‘parties.’’
This Agreement amends and restates
the agreement entered into between the
parties on September 16, 1977, entitled
‘‘Agreement Between the National
Association of Securities Dealers, Inc.
and the Midwest Stock Exchange
Incorporated Pursuant to SEC Rule 17d–
2 Under the Securities Exchange Act of
1934,’’ and any subsequent amendments
thereafter.
WHEREAS, FINRA and CHX desire to
reduce duplication in the examination
of their Dual Members (as defined
herein) and in the filing and processing
of certain registration and membership
records; and
15 See Securities Exchange Act Release No. 61919
(April 15, 2010), 75 FR 21051 (April 22, 2010) (File
No. 4–566) (notice of filing and order approving and
declaring effective the plan).
16 See paragraph 6 of the proposed 17d–2 Plan.
17 See paragraph 2 of the proposed 17d–2 Plan.
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WHEREAS, FINRA and CHX desire to
execute an agreement covering such
subjects pursuant to the provisions of
Rule 17d–2 under the Exchange Act and
to file such agreement with the
Securities and Exchange Commission
(the ‘‘SEC’’ or ‘‘Commission’’) for its
approval.
NOW, THEREFORE, in consideration
of the mutual covenants contained
hereinafter, FINRA and CHX hereby
agree as follows:
1. Definitions. Unless otherwise
defined in this Agreement or the context
otherwise requires, the terms used in
this Agreement shall have the same
meaning as they have under the
Exchange Act and the rules and
regulations thereunder. As used in this
Agreement, the following terms shall
have the following meanings:
(a) ‘‘CHX Rules’’ or ‘‘FINRA Rules’’
shall mean: (i) the rules of the CHX, or
(ii) the rules of FINRA, respectively, as
the rules of an exchange or association
are defined in Exchange Act Section
3(a)(27).
(b) ‘‘Common Rules’’ shall mean the
CHX Rules that are substantially similar
to the applicable FINRA Rules and
certain provisions of the Exchange Act
and SEC rules set forth on Exhibit 1 in
that examination for compliance with
such rules would not require FINRA to
develop one or more new examination
standards, modules, procedures, or
criteria in order to analyze the
application of such provisions or rule,
or a Dual Member’s activity, conduct, or
output in relation to such rule;
provided, however, Common Rules
shall not include the application of SEC,
CHX or FINRA rules as they pertain to
violations of insider trading activities,
which is covered by a separate 17d–2
Agreement by and among the American
Stock Exchange LLC, BATS Exchange,
Inc., Chicago Board Options Exchange,
Inc., Chicago Stock Exchange, Inc.,
EDGA Exchange, Inc., EDGX Exchange,
Inc., Financial Industry Regulatory
Authority, Inc., International Securities
Exchange, LLC, The NASDAQ Stock
Market LLC, National Stock Exchange,
Inc., New York Stock Exchange, LLC,
NYSE Arca Inc., NYSE Regulation, Inc.,
NASDAQ OMX BX, Inc. and NASDAQ
OMX PHLX, Inc. effective April 15,
2010, as may be amended from time to
time.
(c) ‘‘Dual Members’’ shall mean those
CHX members that are also members of
FINRA and the associated persons
therewith.
(d) ‘‘Effective Date’’ shall be the date
this Agreement is approved by the
Commission.
(e) ‘‘Enforcement Responsibilities’’
shall mean the conduct of appropriate
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proceedings, in accordance with the
FINRA Code of Procedure (the Rule
9000 Series) and other applicable
FINRA procedural rules, to determine
whether violations of Common Rules
have occurred, and if such violations are
deemed to have occurred, the
imposition of appropriate sanctions as
specified under the FINRA Code of
Procedure and sanctions guidelines.
(f) ‘‘Regulatory Responsibilities’’ shall
mean the examination responsibilities
and Enforcement Responsibilities
relating to compliance by the Dual
Members with the Common Rules and
the provisions of the Exchange Act and
the rules and regulations thereunder,
and other applicable laws, rules and
regulations, each as set forth on Exhibit
1 attached hereto.
2. Regulatory and Enforcement
Responsibilities. FINRA shall assume
Regulatory Responsibilities and
Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this
Agreement and made part hereof, CHX
furnished FINRA with a current list of
Common Rules and certified to FINRA
that such rules are substantially similar
to the corresponding FINRA Rule (the
‘‘Certification’’). FINRA hereby agrees
that the rules listed in the Certification
are Common Rules as defined in this
Agreement. Each year following the
Effective Date of this Agreement, or
more frequently if required by changes
in either the rules of CHX or FINRA,
CHX shall submit an updated list of
Common Rules to FINRA for review
which shall add CHX Rules not
included in the current list of Common
Rules that qualify as Common Rules as
defined in this Agreement; delete CHX
Rules included in the current list of
Common Rules that no longer qualify as
Common Rules as defined in this
Agreement; and confirm that the
remaining rules on the current list of
Common Rules continue to be CHX
Rules that qualify as Common Rules as
defined in this Agreement. Within 30
days of receipt of such updated list,
FINRA shall confirm in writing whether
the rules listed in any updated list are
Common Rules as defined in this
Agreement. Notwithstanding anything
herein to the contrary, it is explicitly
understood that the term ‘‘Regulatory
Responsibilities’’ does not include, and
CHX shall retain full responsibility for
(unless otherwise addressed by separate
agreement or rule) the following
(collectively, the ‘‘Retained
Responsibilities’’):
(a) surveillance, examination,
investigation and enforcement with
respect to trading activities or practices
involving CHX’s own marketplace;
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(b) registration pursuant to its
applicable rules of associated persons
(i.e., registration rules that are not
Common Rules);
(c) discharge of its duties and
obligations as a Designated Examining
Authority pursuant to Rule 17d–1 under
the Exchange Act, if applicable; and
(d) any CHX Rules that are not
Common Rules.
3. Dual Members. Prior to the
Effective Date, CHX shall furnish FINRA
with a current list of Dual Members,
which shall be updated no less
frequently than once each quarter.
4. No Charge. There shall be no charge
to CHX by FINRA for performing the
Regulatory Responsibilities and
Enforcement Responsibilities under this
Agreement except as hereinafter
provided. FINRA shall provide CHX
with ninety (90) days advance written
notice in the event FINRA decides to
impose any charges to CHX for
performing the Regulatory
Responsibilities under this Agreement.
If FINRA determines to impose a charge,
CHX shall have the right at the time of
the imposition of such charge to
terminate this Agreement; provided,
however, that FINRA’s Regulatory
Responsibilities under this Agreement
shall continue until the Commission
approves the termination of this
Agreement.
5. Applicability of Certain Laws,
Rules, Regulations or Orders.
Notwithstanding any provision hereof,
this Agreement shall be subject to any
statute, or any rule or order of the
Commission. To the extent such statute,
rule or order is inconsistent with one or
more provisions of this Agreement, the
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.
6. Notification of Violations.
(a) In the event that FINRA becomes
aware of apparent violations of any CHX
Rules, which are not listed as Common
Rules, discovered pursuant to the
performance of the Regulatory
Responsibilities assumed hereunder,
FINRA shall notify CHX of those
apparent violations for such response as
CHX deems appropriate.
(b) In the event that CHX becomes
aware of apparent violations of any
Common Rules, discovered pursuant to
the performance of the Retained
Responsibilities, CHX shall notify
FINRA of those apparent violations and
such matters shall be handled by FINRA
as provided in this Agreement.
(c) Apparent violations of Common
Rules shall be processed by, and
enforcement proceedings in respect
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thereto shall be conducted by FINRA as
provided hereinbefore; provided,
however, that in the event a Dual
Member is the subject of an
investigation relating to a transaction on
the CHX, CHX may in its discretion
assume concurrent jurisdiction and
responsibility.
(d) Each party agrees to make
available promptly all files, records and
witnesses necessary to assist the other
in its investigation or proceedings.
7. Continued Assistance.
(a) FINRA shall make available to
CHX all information obtained by FINRA
in the performance by it of the
Regulatory Responsibilities hereunder
with respect to the Dual Members
subject to this Agreement. In particular,
and not in limitation of the foregoing,
FINRA shall furnish CHX any
information it obtains about Dual
Members which reflects adversely on
their financial condition. CHX shall
make available to FINRA any
information coming to its attention that
reflects adversely on the financial
condition of Dual Members or indicates
possible violations of applicable laws,
rules or regulations by such firms.
(b) The parties agree that documents
or information shared shall be held in
confidence, and used only for the
purposes of carrying out their respective
regulatory obligations. Neither party
shall assert regulatory or other
privileges as against the other with
respect to documents or information
that is required to be shared pursuant to
this Agreement.
(c) The sharing of documents or
information between the parties
pursuant to this Agreement shall not be
deemed a waiver as against third parties
of regulatory or other privileges relating
to the discovery of documents or
information.
8. Statutory Disqualifications. When
FINRA becomes aware of a statutory
disqualification as defined in the
Exchange Act with respect to a Dual
Member, FINRA shall determine
pursuant to Sections 15A(g) and/or
Section 6(c) of the Exchange Act the
acceptability or continued applicability
of the person to whom such
disqualification applies and keep CHX
advised of its actions in this regard for
such subsequent proceedings as CHX
may initiate.
9. Customer Complaints. CHX shall
forward to FINRA copies of all customer
complaints involving Dual Members
received by CHX relating to FINRA’s
Regulatory Responsibilities under this
Agreement. It shall be FINRA’s
responsibility to review and take
appropriate action in respect to such
complaints.
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10. Advertising. FINRA shall assume
responsibility to review the advertising
of Dual Members subject to the
Agreement, provided that such material
is filed with FINRA in accordance with
FINRA’s filing procedures and is
accompanied with any applicable filing
fees set forth in FINRA Rules.
11. No Restrictions on Regulatory
Action. Nothing contained in this
Agreement shall restrict or in any way
encumber the right of either party to
conduct its own independent or
concurrent investigation, examination
or enforcement proceeding of or against
Dual Members, as either party, in its
sole discretion, shall deem appropriate
or necessary.
12. Termination. This Agreement may
be terminated by CHX or FINRA at any
time upon the approval of the
Commission after one (1) year’s written
notice to the other party, except as
provided in paragraph 4.
13. Arbitration. In the event of a
dispute between the parties as to the
operation of this Agreement, CHX and
FINRA hereby agree that any such
dispute shall be settled by arbitration in
Washington, D.C. in accordance with
the rules of the American Arbitration
Association then in effect, or such other
procedures as the parties may mutually
agree upon. Judgment on the award
rendered by the arbitrator(s) may be
entered in any court having jurisdiction.
Each party acknowledges that the timely
and complete performance of its
obligations pursuant to this Agreement
is critical to the business and operations
of the other party. In the event of a
dispute between the parties, the parties
shall continue to perform their
respective obligations under this
Agreement in good faith during the
resolution of such dispute unless and
until this Agreement is terminated in
accordance with its provisions. Nothing
in this Section 13 shall interfere with a
party’s right to terminate this Agreement
as set forth herein.
14. Notification of Members. CHX and
FINRA shall notify Dual Members of
this Agreement after the Effective Date
by means of a uniform joint notice.
15. Amendment. This Agreement may
be amended in writing duly approved
by each party. All such amendments
must be filed with and approved by the
Commission before they become
effective.
16. Limitation of Liability. Neither
FINRA nor CHX nor any of their
respective directors, governors, officers
or employees shall be liable to the other
party to this Agreement for any liability,
loss or damage resulting from or
claimed to have resulted from any
delays, inaccuracies, errors or omissions
E:\FR\FM\12AUN1.SGM
12AUN1
Federal Register / Vol. 75, No. 155 / Thursday, August 12, 2010 / Notices
with respect to the provision of
Regulatory Responsibilities as provided
hereby or for the failure to provide any
such responsibility, except with respect
to such liability, loss or damages as
shall have been suffered by one or the
other of FINRA or CHX and caused by
the willful misconduct of the other
party or their respective directors,
governors, officers or employees. No
warranties, express or implied, are made
by FINRA or CHX with respect to any
of the responsibilities to be performed
by each of them hereunder.
17. Relief from Responsibility.
Pursuant to Sections 17(d)(1)(A) and
19(g) of the Exchange Act and Rule 17d–
2 thereunder, FINRA and CHX join in
requesting the Commission, upon its
approval of this Agreement or any part
thereof, to relieve CHX of any and all
responsibilities with respect to matters
allocated to FINRA pursuant to this
Agreement; provided, however, that this
Agreement shall not be effective until
the Effective Date.
18. Severability. Any term or
provision of this Agreement that is
invalid or unenforceable in any
jurisdiction shall, as to such
jurisdiction, be ineffective to the extent
of such invalidity or unenforceability
without rendering invalid or
unenforceable the remaining terms and
provisions of this Agreement or
affecting the validity or enforceability of
any of the terms or provisions of this
Agreement in any other jurisdiction.
19. Counterparts. This Agreement
may be executed in one or more
counterparts, each of which shall be
CHX rule
Article 6, Rule 3 Training and Examination of Registrants 19 ..................
Article 6, Rule 5(a) Supervision of Registered Persons and Branch and
Resident Offices.
Article 6, Rule 5(b) Supervision of Registered Persons and Branch and
Resident Offices.
Article 6, Rule 5(c) Supervision of Registered Persons and Branch and
Resident Offices.
Article 6, Rule 10(a) Fingerprinting ..........................................................
Article 6, Rule 11 Continuing Education for Registered Persons 20 ........
Article 6, Rule 12 Anti-Money Laundering Compliance Program 21 ........
Article 8, Rule 3 Fraudulent Acts .............................................................
Article 8, Rule 10 Customer Dealings—Account Transfers .....................
Article 8, Rule 11 Customer Dealings—Suitability ...................................
12 Interest in Customer Accounts 22 ................................
13(a) Advertising and Promotion ......................................
13(b) Advertising and Promotion ......................................
2 Just and Equitable Trade Principles .............................
Article
Article
Article
Article
8,
8,
8,
9,
Article
Article
Article
Article
Article
Article
Article
jlentini on DSKJ8SOYB1PROD with NOTICES
deemed an original, and such
counterparts together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, each party has
executed or caused this Agreement to be
executed on its behalf by a duly
authorized officer as of the date first
written above.
EXHIBIT 1
CHX CERTIFICATION OF COMMON
RULES
CHX hereby certifies that the
requirements contained in the rules
listed below for CHX are identical to, or
substantially similar to, the comparable
FINRA (NASD) Rules, Exchange Act
provision or SEC rule identified
(‘‘Common Rules’’).
FINRA (NASD) rule, Exchange Act provision, SEC rule
Article 6, Rule 2 Registration and Approval of Participant Personnel 18
Rule
Rule
Rule
Rule
49009
9, Rule 10 Prearranged Trades ....................................................
9, Rule 11 Price Manipulation .......................................................
9, Rule 12 Manipulative Operations ..............................................
9, Rule 21 Discretion of Employees Prohibited 23 ........................
9, Rule 23(a) Short Sales .............................................................
11, Rule 2 Maintenance of Books and Records 24 .......................
21, Rule 2 Book-Entry Settlement Requirements .........................
NASD Rule 1021(a) and (b) Registration Requirements; NASD Rule
1031(a) and (b) Registration Requirements; NASD Rule 1060(a)(1)
and (2) Persons Exempt from Registration; and NASD Rule 3070 (a)
Reporting Requirements.
NASD Rules 1031(a) and (b) Registration Requirements and 1032 Categories of Representative Registration.
NASD Rule 3010(a)(2) and (b)(3) Supervision.*
NASD Rule 3010(a)(2), (b)(1), (b)(4), and (d) Supervision.*
NASD Rule 3010(a)(7) Supervision.*
Exchange Act Rule 17f–2.
NASD Rule 1120(a)(1)–(5), 1120(b) Continuing Education Requirements.
FINRA Rule 3310 Anti-Money Laundering Compliance Program.
FINRA Rules 2010 Standards of Commercial Honor and Principles of
Trade, 2020 Use of Manipulative, Deceptive or Other Fraudulent Devices and NASD IM 2310–2(b)(4) Fair Dealing with Customers.
NASD Rule 11870(a)(1) Customer Account Transfer Contracts.
NASD Rule 2310 Recommendations to Customers (Suitability) and IM–
2310–2(b) Fair Dealing with Customers.
FINRA Rule 2150(b) Customers’ Securities or Funds.
NASD Rule 2210(d)(1)(B) Communications with the Public.
NASD Rule 2210(a) Communications with the Public.
FINRA Rule 2010 Standards of Commercial Honor and Principles of
Trade.
Exchange Act Sections 9(a); 10(b) and Rule 10b–5 thereunder.*
Exchange Act Sections 9(a); 10(b) and Rule 10b–5 thereunder.*
Exchange Act Sections 9(a); 10(b) and Rule 10b–5 thereunder.*
NASD Rule 2510(b), (c) and (d)(1) Discretionary Accounts.
Regulation SHO.
NASD Rule 3110(a) Books and Records.*
NASD Rule 11310 Book-Entry Settlement.
* FINRA shall not have any Regulatory Responsibilities for these rules as they pertain to violations of insider trading activities, which is covered
by a separate 17d–2 Agreement by and among the American Stock Exchange LLC, BATS Exchange, Inc., Chicago Board Options Exchange,
Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca Inc.,
NYSE Regulation, Inc., NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX, Inc. effective April 15, 2010, as may be amended from time to time.
18 FINRA shall not have any Regulatory Responsibilities for CHX Article 6 Rule 2 (a), (b)(7), (b)(10), (f), interpretation .01 or interpretation .03
and such sections shall not be considered Common Rules for purposes of this Agreement; responsibility for such requirements remain with CHX.
19 FINRA shall not have any Regulatory Responsibilities for CHX Article 6 Rule 3 requirement regarding completion of a training course and interpretation .01 and such provisions shall not be considered Common Rules for purposes of this Agreement; responsibility for such requirements
remain with CHX.
20 FINRA shall not have any Regulatory Responsibilities for exercise of exemptive or other discretionary authority by CHX to the extent it
makes the rule inconsistent with the corresponding FINRA rule.
21 FINRA shall not have any Regulatory Responsibilities regarding the CHX rule to the extent it does not contain an exception to independent
testing and requires notice to CHX.
22 FINRA shall only have Regulatory Responsibilities for the first phrase of CHX Article 8 Rule 12 regarding guaranteeing customers against
loss in their account and only the first phrase shall be considered a Common Rule for purposes of this Agreement; responsibility for the remainder of the CHX rule remains with CHX.
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49010
Federal Register / Vol. 75, No. 155 / Thursday, August 12, 2010 / Notices
23 FINRA shall not have any Regulatory Responsibilities regarding the CHX rule to the extent it does not contain an exception for time and
price discretion.
24 FINRA shall not have any Regulatory Responsibilities regarding maintaining books and records in conformity with CHX rules.
IV. Date of Effectiveness of the
Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the
Act 25 and Rule 17d–2 thereunder,26
after September 2, 2010, the
Commission may, by written notice,
declare the plan submitted by FINRA
and CHX, File No. 4–274, to be effective
if the Commission finds that the plan is
necessary or appropriate in the public
interest and for the protection of
investors, to foster cooperation and
coordination among self-regulatory
organizations, or to remove
impediments to and foster the
development of the national market
system and a national system for the
clearance and settlement of securities
transactions and in conformity with the
factors set forth in Section 17(d) of the
Act.
V. Solicitation of Comments
In order to assist the Commission in
determining whether to approve the
proposed 17d–2 Plan and to relieve
CHX of the responsibilities which
would be assigned to FINRA, interested
persons are invited to submit written
data, views, and arguments concerning
the foregoing. Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/other.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number 4–274 on the subject line.
jlentini on DSKJ8SOYB1PROD with NOTICES
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 4–274. 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 Web site viewing and
printing 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 CHX and FINRA.
All comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number 4–274 and should be submitted
on or before September 2, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.27
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–19852 Filed 8–11–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62658; File No. SR–CBOE–
2009–075]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Proposed Rule
Change, as Modified by Amendment
Nos. 1 and 2, To Establish a Pilot
Program to List P.M.-Settled End of
Week and End of Month Expirations for
Options on Broad-Based Indexes
August 5, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
14, 2009, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. On May 3, 2010, the
Exchange filed Amendment 1 to the
CFR 200.30–3(a)(34).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
proposed rule change, and on July 30,
2010, the Exchange filed Amendment 2
to the proposed rule change.3 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as modified by Amendment
Nos. 1 and 2, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE requests approval to establish a
pilot program that would permit P.M.settled options on broad-based indexes
that expire on: (a) Any Friday of the
month, other than the third Friday-ofthe-month (‘‘End of Week Expirations’’),
and (b) the last trading day of the month
(‘‘End of Month Expirations’’). The text
of the rule proposal is available on the
Exchange’s Web site (https://
www.cboe.org/legal), at the Exchange’s
Office of the Secretary, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Amendment 2 replaces Amendment 1
and the original filing in their entireties.
The purpose of Amendment 2 is to
broaden the definition of End of Week
Expirations to include any Friday of the
month, other than the third Friday-ofthe-month.
The purpose of this filing is to
establish a pilot program that would
permit P.M.-settled options on broadbased indexes to expire on (a) any
Friday of the month, other than the
third Friday-of-the-month (‘‘End of
Week Expirations’’ or ‘‘EOWs’’), and (b)
the last trading day of the month (‘‘End
27 17
25 15
U.S.C. 78q(d)(1).
26 17 CFR 240.17d–2.
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3 Amendment 2 replaces Amendment 1 and the
original filing in their entireties.
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]]>Agencies
[Federal Register Volume 75, Number 155 (Thursday, August 12, 2010)]
[Notices]
[Pages 49005-49010]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19852]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62657; File No. 4-274]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of an Amended 17d-2 Plan Between the
Financial Industry Regulatory Authority, Inc. and the Chicago Stock
Exchange, Inc.
August 5, 2010.
Pursuant to Section 17(d) of the Securities Exchange Act of 1934
[[Page 49006]]
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that
on July 21, 2010, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') and the Chicago Stock Exchange, Inc. (``CHX'') (together
with FINRA, the ``Parties'') filed with the Securities and Exchange
Commission (``Commission'' or ``SEC'') an amendment to their September
16, 1977 Agreement Between the National Association of Securities
Dealers, Inc. (n/k/a FINRA) and the Midwest Stock Exchange Incorporated
(n/k/a CHX) (``17d-2 Plan'' or the ``Plan'') for the allocation of
regulatory responsibilities. The Commission is publishing this notice
to solicit comments on the amendment to the 17d-2 Plan from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to Section 17(d) 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. The Plan
On September 26, 1978, the Commission approved the Plan allocating
regulatory responsibilities pursuant to Rule 17d-2 on a provisional
basis.\10\ Under the Plan, FINRA was responsible, in part, for
conducting on-site examination of each dual member for which it was the
DEA. On February 20, 1980, the Commission noticed for comment an
amendment to the Plan, which provided, in part, for the handling of
customer complaints, the review of dual members' advertising, and the
arbitration of disputes under the Plan.\11\ On May 30, 1980, the
Commission approved the Plan, as amended.\12\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 15191 (September
26, 1978), 43 FR 46093 (October 5, 1978).
\11\ See Securities Exchange Act Release No. 16591 (February 20,
1980), 45 FR 12573 (February 26, 1980).
\12\ See Securities Exchange Act Release No. 16858 (May 30,
1980), 45 FR 37927 (June 5, 1980).
---------------------------------------------------------------------------
III. Proposed Amendment to the Plan
On July 21, 2010, the Parties submitted a proposed amendment to the
Plan. The amended agreement would replace the previous Plan in its
entirety. Accordingly, the proposed 17d-2 Plan is intended to reduce
the duplication in the examination of common members \13\ and in the
filing and processing of certain registration and membership records.
Pursuant to the proposed 17d-2 Plan, FINRA would assume certain
examination and enforcement responsibilities for common members with
respect to certain applicable laws, rules, and regulations.
---------------------------------------------------------------------------
\13\ The proposed 17d-2 Plan refers to these members as ``Dual
Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
The text of the Plan delineates the proposed regulatory
responsibilities with respect to the Parties. Included in the proposed
Plan is an exhibit (the ``CHX Certification of Common Rules'' referred
to herein as the ``Certification'') that lists every CHX rule, and
select federal securities laws, rules, and regulations, for which FINRA
would bear responsibility under the Plan for examine and enforcing with
respect to CHX members that are also members of FINRA and the
associated persons therewith (``Dual Members'').
Specifically, under the 17d-2 Plan, FINRA would assume examination
and enforcement responsibility relating to compliance by Dual Members
with the rules of CHX that are substantially similar to the applicable
rules of FINRA, as well as certain provisions of the federal securities
laws and the rules and regulations thereunder delineated in the
Certification (``Common Rules'').\14\ Common Rules would not include
the application of any CHX rule or FINRA rule, or any rule or
regulation under the Act, to the extent that it pertains to
[[Page 49007]]
violations of insider trading activities, because such matters are
covered by a separate multiparty agreement under Rule 17d-2.\15\ In the
event that a Dual Member is the subject of an investigation relating to
a transaction on CHX, the plan acknowledges that CHX may, in its
discretion, exercise concurrent jurisdiction and responsibility for
such matter.\16\
---------------------------------------------------------------------------
\14\ See paragraph 1(b) of the proposed 17d-2 Plan (defining
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan
(defining Regulatory Responsibilities). Paragraph 2 of the Plan
provides that annually, or more frequently as required by changes in
either CHX rules or FINRA rules, the parties shall review and
update, if necessary, the list of Common Rules. Further, paragraph 3
of the Plan provides that CHX shall furnish FINRA with a list of
Dual Members, and shall update the list no less frequently than once
each quarter.
\15\ See Securities Exchange Act Release No. 61919 (April 15,
2010), 75 FR 21051 (April 22, 2010) (File No. 4-566) (notice of
filing and order approving and declaring effective the plan).
\16\ See paragraph 6 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
Under the Plan, CHX would retain full responsibility for
surveillance, examination, investigation, and enforcement with respect
to trading activities or practices involving CHX's own marketplace;
registration pursuant to its applicable rules of associated persons
(i.e., registration rules that are not Common Rules); its duties and
obligations as a DEA pursuant to Rule 17d-1 under the Act; and any CHX
rules that are not Common Rules.\17\
---------------------------------------------------------------------------
\17\ See paragraph 2 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
The text of the proposed 17d-2 Plan is as follows:
AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND
CHICAGO STOCK EXCHANGE, INC. PURSUANT TO RULE 17d-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
This Agreement, by and between the Financial Industry Regulatory
Authority, Inc. (``FINRA'') and the Chicago Stock Exchange, Inc.
(``CHX''), is made this 9th day of July, 2010 (the ``Agreement''),
pursuant to Section 17(d) of the Securities Exchange Act of 1934 (the
``Exchange Act'') and Rule 17d-2 thereunder which permits agreements
between self-regulatory organizations to allocate regulatory
responsibility to eliminate regulatory duplication. FINRA and CHX may
be referred to individually as a ``party'' and together as the
``parties.''
This Agreement amends and restates the agreement entered into
between the parties on September 16, 1977, entitled ``Agreement Between
the National Association of Securities Dealers, Inc. and the Midwest
Stock Exchange Incorporated Pursuant to SEC Rule 17d-2 Under the
Securities Exchange Act of 1934,'' and any subsequent amendments
thereafter.
WHEREAS, FINRA and CHX desire to reduce duplication in the
examination of their Dual Members (as defined herein) and in the filing
and processing of certain registration and membership records; and
WHEREAS, FINRA and CHX desire to execute an agreement covering such
subjects pursuant to the provisions of Rule 17d-2 under the Exchange
Act and to file such agreement with the Securities and Exchange
Commission (the ``SEC'' or ``Commission'') for its approval.
NOW, THEREFORE, in consideration of the mutual covenants contained
hereinafter, FINRA and CHX hereby agree as follows:
1. Definitions. Unless otherwise defined in this Agreement or the
context otherwise requires, the terms used in this Agreement shall have
the same meaning as they have under the Exchange Act and the rules and
regulations thereunder. As used in this Agreement, the following terms
shall have the following meanings:
(a) ``CHX Rules'' or ``FINRA Rules'' shall mean: (i) the rules of
the CHX, or (ii) the rules of FINRA, respectively, as the rules of an
exchange or association are defined in Exchange Act Section 3(a)(27).
(b) ``Common Rules'' shall mean the CHX Rules that are
substantially similar to the applicable FINRA Rules and certain
provisions of the Exchange Act and SEC rules set forth on Exhibit 1 in
that examination for compliance with such rules would not require FINRA
to develop one or more new examination standards, modules, procedures,
or criteria in order to analyze the application of such provisions or
rule, or a Dual Member's activity, conduct, or output in relation to
such rule; provided, however, Common Rules shall not include the
application of SEC, CHX or FINRA rules as they pertain to violations of
insider trading activities, which is covered by a separate 17d-2
Agreement by and among the American Stock Exchange LLC, BATS Exchange,
Inc., Chicago Board Options Exchange, Inc., Chicago Stock Exchange,
Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry
Regulatory Authority, Inc., International Securities Exchange, LLC, The
NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock
Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., NASDAQ OMX BX,
Inc. and NASDAQ OMX PHLX, Inc. effective April 15, 2010, as may be
amended from time to time.
(c) ``Dual Members'' shall mean those CHX members that are also
members of FINRA and the associated persons therewith.
(d) ``Effective Date'' shall be the date this Agreement is approved
by the Commission.
(e) ``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with the FINRA Code of Procedure
(the Rule 9000 Series) and other applicable FINRA procedural rules, to
determine whether violations of Common Rules have occurred, and if such
violations are deemed to have occurred, the imposition of appropriate
sanctions as specified under the FINRA Code of Procedure and sanctions
guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities and Enforcement Responsibilities relating to
compliance by the Dual Members with the Common Rules and the provisions
of the Exchange Act and the rules and regulations thereunder, and other
applicable laws, rules and regulations, each as set forth on Exhibit 1
attached hereto.
2. Regulatory and Enforcement Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
CHX furnished FINRA with a current list of Common Rules and certified
to FINRA that such rules are substantially similar to the corresponding
FINRA Rule (the ``Certification''). FINRA hereby agrees that the rules
listed in the Certification are Common Rules as defined in this
Agreement. Each year following the Effective Date of this Agreement, or
more frequently if required by changes in either the rules of CHX or
FINRA, CHX shall submit an updated list of Common Rules to FINRA for
review which shall add CHX Rules not included in the current list of
Common Rules that qualify as Common Rules as defined in this Agreement;
delete CHX Rules included in the current list of Common Rules that no
longer qualify as Common Rules as defined in this Agreement; and
confirm that the remaining rules on the current list of Common Rules
continue to be CHX Rules that qualify as Common Rules as defined in
this Agreement. Within 30 days of receipt of such updated list, FINRA
shall confirm in writing whether the rules listed in any updated list
are Common Rules as defined in this Agreement. Notwithstanding anything
herein to the contrary, it is explicitly understood that the term
``Regulatory Responsibilities'' does not include, and CHX shall retain
full responsibility for (unless otherwise addressed by separate
agreement or rule) the following (collectively, the ``Retained
Responsibilities''):
(a) surveillance, examination, investigation and enforcement with
respect to trading activities or practices involving CHX's own
marketplace;
[[Page 49008]]
(b) registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of its duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act, if
applicable; and
(d) any CHX Rules that are not Common Rules.
3. Dual Members. Prior to the Effective Date, CHX shall furnish
FINRA with a current list of Dual Members, which shall be updated no
less frequently than once each quarter.
4. No Charge. There shall be no charge to CHX by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter provided.
FINRA shall provide CHX with ninety (90) days advance written notice in
the event FINRA decides to impose any charges to CHX for performing the
Regulatory Responsibilities under this Agreement. If FINRA determines
to impose a charge, CHX shall have the right at the time of the
imposition of such charge to terminate this Agreement; provided,
however, that FINRA's Regulatory Responsibilities under this Agreement
shall continue until the Commission approves the termination of this
Agreement.
5. Applicability of Certain Laws, Rules, Regulations or Orders.
Notwithstanding any provision hereof, this Agreement shall be subject
to any statute, or any rule or order of the Commission. To the extent
such statute, rule or order is inconsistent with one or more provisions
of this Agreement, the 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.
6. Notification of Violations.
(a) In the event that FINRA becomes aware of apparent violations of
any CHX Rules, which are not listed as Common Rules, discovered
pursuant to the performance of the Regulatory Responsibilities assumed
hereunder, FINRA shall notify CHX of those apparent violations for such
response as CHX deems appropriate.
(b) In the event that CHX becomes aware of apparent violations of
any Common Rules, discovered pursuant to the performance of the
Retained Responsibilities, CHX shall notify FINRA of those apparent
violations and such matters shall be handled by FINRA as provided in
this Agreement.
(c) Apparent violations of Common Rules shall be processed by, and
enforcement proceedings in respect thereto shall be conducted by FINRA
as provided hereinbefore; provided, however, that in the event a Dual
Member is the subject of an investigation relating to a transaction on
the CHX, CHX may in its discretion assume concurrent jurisdiction and
responsibility.
(d) Each party agrees to make available promptly all files, records
and witnesses necessary to assist the other in its investigation or
proceedings.
7. Continued Assistance.
(a) FINRA shall make available to CHX all information obtained by
FINRA in the performance by it of the Regulatory Responsibilities
hereunder with respect to the Dual Members subject to this Agreement.
In particular, and not in limitation of the foregoing, FINRA shall
furnish CHX any information it obtains about Dual Members which
reflects adversely on their financial condition. CHX shall make
available to FINRA any information coming to its attention that
reflects adversely on the financial condition of Dual Members or
indicates possible violations of applicable laws, rules or regulations
by such firms.
(b) The parties agree that documents or information shared shall be
held in confidence, and used only for the purposes of carrying out
their respective regulatory obligations. Neither party shall assert
regulatory or other privileges as against the other with respect to
documents or information that is required to be shared pursuant to this
Agreement.
(c) The sharing of documents or information between the parties
pursuant to this Agreement shall not be deemed a waiver as against
third parties of regulatory or other privileges relating to the
discovery of documents or information.
8. Statutory Disqualifications. When FINRA becomes aware of a
statutory disqualification as defined in the Exchange Act with respect
to a Dual Member, FINRA shall determine pursuant to Sections 15A(g)
and/or Section 6(c) of the Exchange Act the acceptability or continued
applicability of the person to whom such disqualification applies and
keep CHX advised of its actions in this regard for such subsequent
proceedings as CHX may initiate.
9. Customer Complaints. CHX shall forward to FINRA copies of all
customer complaints involving Dual Members received by CHX relating to
FINRA's Regulatory Responsibilities under this Agreement. It shall be
FINRA's responsibility to review and take appropriate action in respect
to such complaints.
10. Advertising. FINRA shall assume responsibility to review the
advertising of Dual Members subject to the Agreement, provided that
such material is filed with FINRA in accordance with FINRA's filing
procedures and is accompanied with any applicable filing fees set forth
in FINRA Rules.
11. No Restrictions on Regulatory Action. Nothing contained in this
Agreement shall restrict or in any way encumber the right of either
party to conduct its own independent or concurrent investigation,
examination or enforcement proceeding of or against Dual Members, as
either party, in its sole discretion, shall deem appropriate or
necessary.
12. Termination. This Agreement may be terminated by CHX or FINRA
at any time upon the approval of the Commission after one (1) year's
written notice to the other party, except as provided in paragraph 4.
13. Arbitration. In the event of a dispute between the parties as
to the operation of this Agreement, CHX and FINRA hereby agree that any
such dispute shall be settled by arbitration in Washington, D.C. in
accordance with the rules of the American Arbitration Association then
in effect, or such other procedures as the parties may mutually agree
upon. Judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Each party acknowledges that
the timely and complete performance of its obligations pursuant to this
Agreement is critical to the business and operations of the other
party. In the event of a dispute between the parties, the parties shall
continue to perform their respective obligations under this Agreement
in good faith during the resolution of such dispute unless and until
this Agreement is terminated in accordance with its provisions. Nothing
in this Section 13 shall interfere with a party's right to terminate
this Agreement as set forth herein.
14. Notification of Members. CHX and FINRA shall notify Dual
Members of this Agreement after the Effective Date by means of a
uniform joint notice.
15. Amendment. This Agreement may be amended in writing duly
approved by each party. All such amendments must be filed with and
approved by the Commission before they become effective.
16. Limitation of Liability. Neither FINRA nor CHX nor any of their
respective directors, governors, officers or employees shall be liable
to the other party to this Agreement for any liability, loss or damage
resulting from or claimed to have resulted from any delays,
inaccuracies, errors or omissions
[[Page 49009]]
with respect to the provision of Regulatory Responsibilities as
provided hereby or for the failure to provide any such responsibility,
except with respect to such liability, loss or damages as shall have
been suffered by one or the other of FINRA or CHX and caused by the
willful misconduct of the other party or their respective directors,
governors, officers or employees. No warranties, express or implied,
are made by FINRA or CHX with respect to any of the responsibilities to
be performed by each of them hereunder.
17. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and CHX
join in requesting the Commission, upon its approval of this Agreement
or any part thereof, to relieve CHX of any and all responsibilities
with respect to matters allocated to FINRA pursuant to this Agreement;
provided, however, that this Agreement shall not be effective until the
Effective Date.
18. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and such
counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each party has executed or caused this Agreement to
be executed on its behalf by a duly authorized officer as of the date
first written above.
EXHIBIT 1
CHX CERTIFICATION OF COMMON RULES
CHX hereby certifies that the requirements contained in the rules
listed below for CHX are identical to, or substantially similar to, the
comparable FINRA (NASD) Rules, Exchange Act provision or SEC rule
identified (``Common Rules'').
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FINRA (NASD) rule, Exchange Act
CHX rule provision, SEC rule
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Article 6, Rule 2 Registration and NASD Rule 1021(a) and (b)
Approval of Participant Personnel \18\. Registration Requirements;
NASD Rule 1031(a) and (b)
Registration Requirements;
NASD Rule 1060(a)(1) and (2)
Persons Exempt from
Registration; and NASD Rule
3070 (a) Reporting
Requirements.
Article 6, Rule 3 Training and NASD Rules 1031(a) and (b)
Examination of Registrants \19\. Registration Requirements and
1032 Categories of
Representative Registration.
Article 6, Rule 5(a) Supervision of NASD Rule 3010(a)(2) and (b)(3)
Registered Persons and Branch and Supervision.*
Resident Offices.
Article 6, Rule 5(b) Supervision of NASD Rule 3010(a)(2), (b)(1),
Registered Persons and Branch and (b)(4), and (d) Supervision.*
Resident Offices.
Article 6, Rule 5(c) Supervision of NASD Rule 3010(a)(7)
Registered Persons and Branch and Supervision.*
Resident Offices.
Article 6, Rule 10(a) Fingerprinting... Exchange Act Rule 17f-2.
Article 6, Rule 11 Continuing Education NASD Rule 1120(a)(1)-(5),
for Registered Persons \20\. 1120(b) Continuing Education
Requirements.
Article 6, Rule 12 Anti-Money FINRA Rule 3310 Anti-Money
Laundering Compliance Program \21\. Laundering Compliance Program.
Article 8, Rule 3 Fraudulent Acts...... FINRA Rules 2010 Standards of
Commercial Honor and
Principles of Trade, 2020 Use
of Manipulative, Deceptive or
Other Fraudulent Devices and
NASD IM 2310-2(b)(4) Fair
Dealing with Customers.
Article 8, Rule 10 Customer Dealings-- NASD Rule 11870(a)(1) Customer
Account Transfers. Account Transfer Contracts.
Article 8, Rule 11 Customer Dealings-- NASD Rule 2310 Recommendations
Suitability. to Customers (Suitability) and
IM-2310-2(b) Fair Dealing with
Customers.
Article 8, Rule 12 Interest in Customer FINRA Rule 2150(b) Customers'
Accounts \22\. Securities or Funds.
Article 8, Rule 13(a) Advertising and NASD Rule 2210(d)(1)(B)
Promotion. Communications with the
Public.
Article 8, Rule 13(b) Advertising and NASD Rule 2210(a)
Promotion. Communications with the
Public.
Article 9, Rule 2 Just and Equitable FINRA Rule 2010 Standards of
Trade Principles. Commercial Honor and
Principles of Trade.
Article 9, Rule 10 Prearranged Trades.. Exchange Act Sections 9(a);
10(b) and Rule 10b-5
thereunder.*
Article 9, Rule 11 Price Manipulation.. Exchange Act Sections 9(a);
10(b) and Rule 10b-5
thereunder.*
Article 9, Rule 12 Manipulative Exchange Act Sections 9(a);
Operations. 10(b) and Rule 10b-5
thereunder.*
Article 9, Rule 21 Discretion of NASD Rule 2510(b), (c) and
Employees Prohibited \23\. (d)(1) Discretionary Accounts.
Article 9, Rule 23(a) Short Sales...... Regulation SHO.
Article 11, Rule 2 Maintenance of Books NASD Rule 3110(a) Books and
and Records \24\. Records.*
Article 21, Rule 2 Book-Entry NASD Rule 11310 Book-Entry
Settlement Requirements. Settlement.
------------------------------------------------------------------------
* FINRA shall not have any Regulatory Responsibilities for these rules
as they pertain to violations of insider trading activities, which is
covered by a separate 17d-2 Agreement by and among the American Stock
Exchange LLC, BATS Exchange, Inc., Chicago Board Options Exchange,
Inc., Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX
Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
International Securities Exchange, LLC, The NASDAQ Stock Market LLC,
National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca
Inc., NYSE Regulation, Inc., NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX,
Inc. effective April 15, 2010, as may be amended from time to time.
\18\ FINRA shall not have any Regulatory Responsibilities for CHX
Article 6 Rule 2 (a), (b)(7), (b)(10), (f), interpretation .01 or
interpretation .03 and such sections shall not be considered Common
Rules for purposes of this Agreement; responsibility for such
requirements remain with CHX.
\19\ FINRA shall not have any Regulatory Responsibilities for CHX
Article 6 Rule 3 requirement regarding completion of a training course
and interpretation .01 and such provisions shall not be considered
Common Rules for purposes of this Agreement; responsibility for such
requirements remain with CHX.
\20\ FINRA shall not have any Regulatory Responsibilities for exercise
of exemptive or other discretionary authority by CHX to the extent it
makes the rule inconsistent with the corresponding FINRA rule.
\21\ FINRA shall not have any Regulatory Responsibilities regarding the
CHX rule to the extent it does not contain an exception to independent
testing and requires notice to CHX.
\22\ FINRA shall only have Regulatory Responsibilities for the first
phrase of CHX Article 8 Rule 12 regarding guaranteeing customers
against loss in their account and only the first phrase shall be
considered a Common Rule for purposes of this Agreement;
responsibility for the remainder of the CHX rule remains with CHX.
[[Page 49010]]
\23\ FINRA shall not have any Regulatory Responsibilities regarding the
CHX rule to the extent it does not contain an exception for time and
price discretion.
\24\ FINRA shall not have any Regulatory Responsibilities regarding
maintaining books and records in conformity with CHX rules.
IV. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the Act \25\ and Rule 17d-2
thereunder,\26\ after September 2, 2010, the Commission may, by written
notice, declare the plan submitted by FINRA and CHX, File No. 4-274, to
be effective if the Commission finds that the plan is necessary or
appropriate in the public interest and for the protection of investors,
to foster cooperation and coordination among self-regulatory
organizations, or to remove impediments to and foster the development
of the national market system and a national system for the clearance
and settlement of securities transactions and in conformity with the
factors set forth in Section 17(d) of the Act.
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\25\ 15 U.S.C. 78q(d)(1).
\26\ 17 CFR 240.17d-2.
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V. Solicitation of Comments
In order to assist the Commission in determining whether to approve
the proposed 17d-2 Plan and to relieve CHX of the responsibilities
which would be assigned to FINRA, interested persons are invited to
submit written data, views, and arguments concerning the foregoing.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/other.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number 4-274 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 4-274. 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 Web site viewing and printing 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 CHX
and FINRA. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number 4-274
and should be submitted on or before September 2, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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\27\ 17 CFR 200.30-3(a)(34).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19852 Filed 8-11-10; 8:45 am]
BILLING CODE 8010-01-P
