Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing of Proposed Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc., the Chicago Board Options Exchange, Incorporated, and C2 Options Exchange, Incorporated, 22709-22715 [2014-09208]

Download as PDF Federal Register / Vol. 79, No. 78 / Wednesday, April 23, 2014 / Notices The Commission appoints Pamela A. Thompson to serve as Public Representative in this docket. publishing this notice to solicit comments on the 17d–2 Plan from interested persons. III. Ordering Paragraphs It is ordered: 1. The Commission establishes Docket No. CP2014–46 for consideration of the matters raised by the Postal Service’s Notice. 2. Comments are due no later than April 25, 2014. 3. Pursuant to 39 U.S.C. 505, Pamela A. Thompson is appointed to serve as an officer of the Commission to represent the interests of the general public in this proceeding (Public Representative). 4. The Secretary shall arrange for publication of this order in the Federal Register. 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 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 By the Commission. Ruth Ann Abrams, Acting Secretary. [FR Doc. 2014–09252 Filed 4–22–14; 8:45 am] BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71964; File No. 4–536] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d– 2; Notice of Filing of Proposed Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc., the Chicago Board Options Exchange, Incorporated, and C2 Options Exchange, Incorporated wreier-aviles on DSK5TPTVN1PROD with NOTICES April 17, 2014. Pursuant to Section 17(d) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 17d–2 thereunder,2 notice is hereby given that on March 24, 2014, the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), and C2 Options Exchange, Incorporated (‘‘C2’’) (collectively, the ‘‘Parties’’) filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) a plan for the allocation of regulatory responsibilities, dated March 21, 2014 (‘‘17d–2 Plan’’ or the ‘‘Plan’’). This Agreement amends and restates the agreement entered into between NASD (n/k/a FINRA) and CBOE on April 4, 2007, entitled ‘‘Agreement between NASD and CBOE Pursuant to Rule 17d– 2 under the Securities Exchange Act of 1934,’’ and any subsequent amendments thereafter. The Commission is 1 15 2 17 U.S.C. 78q(d). CFR 240.17d–2. VerDate Mar<15>2010 15:37 Apr 22, 2014 Jkt 232001 3 15 U.S.C. 78s(g)(1). 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). 4 15 PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 22709 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 May 14, 2007, the Commission declared effective the Plan entered into between NASD (n/k/a FINRA) and CBOE for allocating regulatory responsibility pursuant to Rule 17d– 2 10. The Plan is intended to reduce regulatory duplication for firms that are common members of both CBOE and FINRA. The plan reduces regulatory duplication for firms that are members of CBOE and FINRA by allocating regulatory responsibility with respect to certain applicable laws, rules, and regulations, including responsibility for CBOE rules applicable to the CBOE Stock Exchange, LLC (‘‘CBSX’’), an equity exchange facility operated by CBOE. Included in the Plan is an exhibit that lists every CBOE rule for which FINRA bears responsibility under the Plan for overseeing and enforcing with respect to CBOE members that are also members of FINRA and the associated persons therewith. III. Proposed Amendment to Plan On March 24, 2014, the parties submitted a proposed amendment to the 9 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). 10 See Securities Exchange Act Release No. 55755 (May 14, 2007), 72 FR 28087 (May 18, 2007). E:\FR\FM\23APN1.SGM 23APN1 wreier-aviles on DSK5TPTVN1PROD with NOTICES 22710 Federal Register / Vol. 79, No. 78 / Wednesday, April 23, 2014 / Notices Plan. The primary purpose of the amendment is to add C2 as a Participant to the Plan. The text of the proposed amended 17d–2 plan is as follows (additions are italicized; deletions are [bracketed]): AGREEMENT [BETWEEN NASD AND] AMONG FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED, AND C2 OPTIONS EXCHANGE, INCORPORATED PURSUANT TO RULE 17d–2 UNDER THE SECURITIES EXCHANGE ACT OF 1934 This Agreement, by and [between the National Association of Securities Dealers]among Financial Industry Regulatory Authority, Inc. [(‘‘NASD’’) and] (‘‘FINRA’’), the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), and C2 Options Exchange, Incorporated (‘‘C2’’) is made this 21st [4th] day of [April, 2007] March, 2014 (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. [NASD]FINRA, [and] CBOE and C2 may be referred to individually as a ‘‘party’’ and together as the ‘‘parties.’’ This Agreement amends and restates the agreement entered into between NASD (n/k/a FINRA) and CBOE on April 4, 2007, entitled ‘‘Agreement between NASD and CBOE Pursuant to Rule 17d–2 under the Securities Exchange Act of 1934,’’ and any subsequent amendments thereafter. WHEREAS, [NASD and CBOE] the parties desire to reduce duplication in the examination of their [Dual]Common Members (as defined herein) and in the filing and processing of certain registration and membership records as it relates to the CBOE options exchange, C2 options exchange and the CBOE equity exchange facility operated by CBOE Stock Exchange, LLC[;] (‘‘CBSX’’); and WHEREAS, [NASD and CBOE]the parties 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, [NASD and CBOE]the parties hereby agree as follows: 1. Definitions. Unless otherwise defined in this Agreement or the context otherwise requires, the terms used in VerDate Mar<15>2010 15:37 Apr 22, 2014 Jkt 232001 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) [‘‘CBOE Rules’’ or ‘‘NASD Rules’’ shall mean the rules of the CBOE or NASD, respectively, as the rules]‘‘Rule’’ of an ‘‘exchange’’ or an ‘‘association’’ shall have the meaning [are] defined in Exchange Act Section 3(a)(27). (b) ‘‘Common Rules’’ shall mean the CBOE Rules and C2 Rules that are substantially similar to the applicable [NASD] FINRA Rules in that examination for compliance with such [rules] Rules would not require [NASD] FINRA to develop one or more new examination standards, modules, procedures, or criteria in order to analyze the application of the rule, or a [Dual] Common Member’s activity, conduct, or output in relation to such rule; provided, however, Common Rules shall not include the application of SEC, CBOE, C2 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 BATS Exchange, Inc., BATS– Y Exchange, Inc., CBOE, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., FINRA, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Amex LLC, and NYSE Arca Inc., effective December 16, 2011, as may be amended from time to time. (c) [‘‘Dual Members’’]‘‘Common Members’’ shall mean [those CBOE] members [that are also members of NASD and the associated persons therewith]of FINRA and at least one of CBOE or C2. (d) ‘‘Effective Date’’ shall [have the meaning set forth in paragraph 14]be the date this Agreement is approved by the Commission. (e) ‘‘Enforcement Responsibilities’’ shall mean the conduct of appropriate proceedings, in accordance with [the NASD]FINRA’s Code of Procedure (the Rule 9000 Series) and other applicable [NASD]FINRA procedural [rules]Rules, to determine whether violations of pertinent laws, rules or regulations have occurred, and if such violations are deemed to have occurred, the imposition of appropriate sanctions as specified under [the NASD’s]FINRA’s Code of Procedure and sanctions guidelines. (f) ‘‘Regulatory Responsibilities’’ shall mean the examination responsibilities and Enforcement Responsibilities relating to compliance by the PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 [Dual]Common 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. [NASD]FINRA shall assume Regulatory Responsibilities and Enforcement Responsibilities for [Dual]Common Members. Attached as Exhibit 1 to this Agreement and made part hereof, CBOE and C2 furnished [NASD]FINRA with a current list of Common Rules and certified to [NASD]FINRA that such [rules]Rules are substantially similar to the corresponding [NASD rule]FINRA Rule (the ‘‘Certification’’). [NASD]FINRA hereby agrees that the [rules]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] the Rulesof the parties, CBOE [or NASD, CBOE]and C2 shall submit an updated list of Common Rules to [NASD]FINRA for review which shall add CBOE [rules] or C2 Rulesnot included in the current list of Common Rules that qualify as Common Rules as defined in this Agreement; delete CBOE [rules]or C2 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]Rules on the current list of Common Rules continue to be CBOE [rules]or C2 Rules that qualify as Common Rules as defined in this Agreement. Within 30 days of receipt of such updated list, [NASD]FINRA shall confirm in writing whether the [rules]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 CBOE and C2 shall retain full responsibility for (unless otherwise addressed by separate agreement or rule) the following, (collectively, the ‘‘Retained Responsibilities’’): (a) Surveillance and enforcement with respect to trading activities or practices involving CBOE’s or C2’s own marketplace, including without limitation CBOE’s [rules]or C2’s Rules relating to the rights and obligations of market makers; (b) registration pursuant to [its]their applicable [rules]Rules of associated persons (i.e., registration rules that are not Common Rules); (c) discharge of [its]their duties and obligations as a Designated Examining E:\FR\FM\23APN1.SGM 23APN1 wreier-aviles on DSK5TPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 78 / Wednesday, April 23, 2014 / Notices Authority pursuant to Rule 17d–1 under the Exchange Act; and (d) any CBOE Rules and C2 Rules that are not Common Rules. 3. [Dual]Common Members. Prior to the Effective Date, CBOE and C2 shall furnish [NASD]FINRA with a current list of [Dual]Common Members, which shall be updated no less frequently than once [each quarter]every six months. 4. No Charge. There shall be no charge to CBOE and C2 by [NASD]FINRA for performing the Regulatory Responsibilities and Enforcement Responsibilities under this Agreement except as hereinafter provided. [NASD]FINRA shall provide CBOE and C2 with ninety (90) days advance written notice in the event [NASD]FINRA decides to impose any charges to CBOE and C2 for performing the Regulatory Responsibilities under this Agreement. If [NASD]FINRA determines to impose a charge, CBOE and C2 shall have the right at the time of the imposition of such charge to terminate this Agreement; provided, however, that [NASD’s]FINRA’s Regulatory Responsibilities under this Agreement shall continue until the Commission approves the termination of this Agreement. 5. Reassignment of Regulatory Responsibilities. Notwithstanding any provision hereof, this Agreement shall be subject to any statute, or any rule or order of the Commission, or industry agreement, restructuring the regulatory framework of the securities industry or reassigning Regulatory Responsibilities between self-regulatory organizations. To the extent such action is inconsistent with this Agreement, such action shall supersede the provisions hereof to the extent necessary for them to be properly effectuated and the provisions hereof in that respect shall be null and void. 6. Notification of Violations. In the event that [NASD]FINRA becomes aware of apparent violations of any CBOE or C2 Rules, which are not listed as Common Rules, discovered pursuant to the performance of the Regulatory Responsibilities assumed hereunder, [NASD]FINRA shall notify CBOE and C2 of those apparent violations for such response as CBOE and C2 deems appropriate. [Apparent violations of all other applicable rules, including]In the event, CBOE or C2 becomes aware of apparent violations of [the]any Common Rules[, various securities acts, and rules and regulations thereunder,] discovered pursuant to the Retained Responsibilities, CBOE and C2 shall notify FINRA of those apparent violations and such matters shall be handled by FINRA as provided in this Agreement. Apparent violations of VerDate Mar<15>2010 15:37 Apr 22, 2014 Jkt 232001 Common Rules shall be processed by, and enforcement proceedings in respect thereto shall be conducted by [NASD]FINRA as provided hereinbefore; provided, however, that in the event a [Dual]Common Member is the subject of an investigation relating to a transaction on the CBOE or C2 options exchanges or the CBSX, CBOE and C2 may in [its]their discretion assume concurrent jurisdiction and responsibility. Each party agrees to make available promptly all files, records and witnesses necessary to assist the other in its investigation or proceedings. 7. Continued Assistance. [NASD]FINRA shall make available to CBOE and C2 all information obtained by [NASD]FINRA in the performance by it of the Regulatory Responsibilities hereunder in respect to the [Dual]Common Members subject to this Agreement. In particular, and not in limitation of the foregoing, [NASD]FINRA shall furnish CBOE and C2 any information it obtains about [Dual]Common Members which reflects adversely on their financial condition. It is understood that such information is of an extremely sensitive nature and, accordingly, CBOE [acknowledges and agrees]and C2 acknowledge and agree to take all reasonable steps to maintain its confidentiality. CBOE and C2 shall make available to [NASD]FINRA any information coming to [its]their attention that reflects adversely on the financial condition of [Dual]Common Members or indicates possible violations of applicable laws, rules or regulations by such firms. 8. [Dual]Common Member Applications. (a) [Dual]Common Members subject to this Agreement shall be required to submit, and [NASD]FINRA shall be responsible for processing and acting upon all applications submitted on behalf of allied persons, partners, officers, registered personnel and any other person required to be approved by the [rules of both CBOE and NASD]Rules of the parties or associated with [Dual]Common Members thereof. Upon request, [NASD]FINRA shall advise CBOE and C2 of any changes of allied members, partners, officers, registered personnel and other persons required to be approved by the [rules of both CBOE and NASD]Rules of the parties. (b) [Dual]Common Members shall be required to send to [NASD]FINRA all letters, termination notices or other material respecting the individuals listed in paragraph 8(a). (c) When as a result of processing such submissions [NASD]FINRA PO 00000 Frm 00094 Fmt 4703 Sfmt 4703 22711 becomes aware of a statutory disqualification as defined in the Exchange Act with respect to a [Dual]Common Member, [NASD]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 CBOE and C2 advised of its actions in this regard for such subsequent proceedings as CBOE and C2 may initiate. (d) Notwithstanding the foregoing, [NASD]FINRA shall not review the membership application, reports, filings, fingerprint cards, notices, or other writings filed to determine if such documentation submitted by a broker or dealer, or a person associated therewith or other persons required to register or qualify by examination meets the CBOE or C2 requirements for general membership or for specified categories of membership or participation in the CBOE or C2. [NASD]FINRA shall not review applications or other documentation filed to request a change in the rights or status described in this paragraph 8(d), including termination or limitation on activities, of a member or a participant of the CBOE or C2, or a person associated with, or requesting association with, a member or participant of the CBOE or C2. 9. Branch Office Information. [NASD]FINRA shall also be responsible for processing and, if required, acting upon all requests for the opening, address changes, and terminations of branch offices by [Dual]Common Members and any other applications required of [Dual]Common Members with respect to the Common Rules as they may be amended from time to time. Upon request, [NASD]FINRA shall advise CBOE and C2 of the opening, address change and termination of branch and main offices of [Dual]Common Members and the names of such branch office managers. 10. Customer Complaints. CBOE and C2 shall forward to [NASD]FINRA copies of all customer complaints involving [Dual]Common Members received by CBOE and C2 relating to [NASD’s]FINRA’s Regulatory Responsibilities under this Agreement. It shall be [NASD’s]FINRA’s responsibility to review and take appropriate action in respect to such complaints. 11. Advertising. [NASD]FINRA shall assume responsibility to review the advertising of [Dual]Common Members subject to the Agreement, provided that such material is filed with [NASD]FINRA in accordance with [NASD’s]FINRA’s filing procedures and E:\FR\FM\23APN1.SGM 23APN1 22712 Federal Register / Vol. 79, No. 78 / Wednesday, April 23, 2014 / Notices is accompanied with any applicable filing fees set forth in [NASD]FINRA Rules. Such review shall be made in accordance with then applicable [NASD rules]FINRA Rules and interpretations. The advertising of [Dual]Common Members shall be subject only to compliance with appropriate [NASD rules]FINRA Rules and interpretations. 12. No Restrictions on Regulatory Action. Nothing contained in this Agreement shall restrict or in any way encumber the right of [either]any party to conduct its own independent or concurrent investigation, examination or enforcement proceeding of or against [Dual]Common Members, as [either]any party, in its sole discretion, shall deem appropriate or necessary. 13. Termination. This Agreement may be terminated by [CBOE or NASD]any party at any time upon the approval of the Commission after one (1) year’s written notice (or such shorter time as may be agreed by the parties) to the other [party]parties, except as provided in paragraph 4. 14. Effective Date. This Agreement shall be effective upon approval of the Commission. 15. Arbitration. In the event of a dispute [between]among the parties as to the operation of this Agreement, [CBOE and NASD]the parties hereby agree that any such dispute shall be settled by arbitration in Washington, DC in accordance with the rules of the American Arbitration Association then in effect, or such other procedures as the parties may mutually agree upon. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. 16. Separate Agreement. This Agreement is wholly separate from the following agreement: (1) The multiparty Agreement made pursuant to Rule 17d– 2 of the Exchange Act [between the American Stock Exchange LLC, the Boston Stock]among BATS Exchange, Inc., [the Chicago Board]BOX Options Exchange, [Incorporated]LLC, CBOE, C2, the International Securities Exchange LLC, [the National Association of Securities Dealers, Inc.,]FINRA, the New York Stock Exchange, LLC, NYSE Amex LLC, the NYSE Arca, Inc., [and the Philadelphia Stock Exchange, Inc.]and The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., and NASDAQ OMX PHLX LLC involving the allocation of regulatory responsibilities with respect to common members for compliance with common rules relating to the conduct by broker-dealers of accounts for listed options or index warrants entered into on [December 1, 2006] April 25, 2012, and as may be amended from time to time; and (2) the multiparty Agreement made pursuant to Rule 17d–2 of the Exchange Act among NYSE Amex LLC, BATS Exchange, Inc., C2, CBOE, International Securities Exchange LLC, FINRA, NYSE Arca, Inc., The NASDAQ Stock Market LLC, the BOX Options Exchange, LLC, NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX LLC involving the allocation of regulatory responsibilities with respect to SRO market surveillance of common members activities with regard to certain common rules relating to listed options entered into on April 25, 2012, and as may be amended from time to time. 17. Notification of Members. [CBOE and NASD]The parties shall notify [Dual]Common Members of this Agreement after the Effective Date by means of a uniform joint notice. 18. 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. 19. Limitation of Liability. [Neither NASD nor CBOE]None of the parties nor any of their respective directors, governors, officers or employees shall be liable to [the]any other party to this Agreement for any liability, loss or damage resulting from or claimed to have resulted from any delays, inaccuracies, errors or omissions with respect to the provision of Regulatory Responsibilities as provided hereby or for the failure to provide any such responsibility, except with respect to such liability, loss or damages as shall have been suffered by [one or the other of NASD or CBOE]any party and caused by the willful misconduct [of the other]another party or their respective directors, governors, officers or employees. No warranties, express or implied, are made by [NASD or CBOE]any party hereto with respect to any of the responsibilities to be performed by [each of] them hereunder. 20. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d– 2 thereunder, [NASD]FINRA, C2 and CBOE join in requesting the Commission, upon its approval of this Agreement [or any part thereof], to relieve CBOE and C2 of any and all responsibilities with respect to matters allocated to [NASD]FINRA pursuant to this Agreement; provided, however, that this Agreement shall not be effective until the Effective Date. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and such counterparts together shall constitute one and the same instrument. IN WITNESS WHEREOF, each party has executed or caused this Agreement to be executed on its behalf by a duly authorized officer as of the date first written above. [NATIONAL ASSOCIATION OF SECURITIES DEALERS]FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. By lllllllllllllllll Name: Title: CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED By lllllllllllllllll Name: Title: C2 OPTIONS EXCHANGE, INCORPORATED By lllllllllllllllll Name: Title: Exhibit 1 * CBOE AND C2 CERTIFICATION OF COMMON RULES CBOE and C2 hereby [certifies] certify that the requirements contained in the [CBOE] Rules listed below are identical to, or substantially similar to, the NASD/FINRA or SEC Rules identified.[1] wreier-aviles on DSK5TPTVN1PROD with NOTICES C2 Rule(s) CBOE Rule(s) CBSX 1 NASD/FINRA or SEC Rule(s) 2 Chapter 4 Business Conduct CBOE Rule 4.18 is incorporated by reference. Chapter 4 Business Conduct CBOE Rule 4.20 is incorporated by reference. 4.18 Prevention of the Misuse of Material, Nonpublic Information. Appendix A—CBOE Rule 4.18 is incorporated by reference. 4.20 Anti-Money Laundering Compliance Program. Appendix A—CBOE Rule 4.20 is incorporated by reference. Section 15(f) of the Securities Exchange Act of 1934 (Exchange Act) [3] FINRA Rule 3310 [3011] AntiMoney Laundering Compliance Program 3 VerDate Mar<15>2010 15:37 Apr 22, 2014 Jkt 232001 PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 E:\FR\FM\23APN1.SGM 23APN1 Federal Register / Vol. 79, No. 78 / Wednesday, April 23, 2014 / Notices 22713 C2 Rule(s) CBOE Rule(s) CBSX 1 NASD/FINRA or SEC Rule(s) 2 Chapter 9 Doing Business with the Public—CBOE Rule 9.3 incorporated by reference **. 9.3 Registration and Termination of Representatives **. 53.6(i) Applicability of Chapter IX—CBOE Rule 9.3 is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.3A is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.4(a) is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.12 incorporated by reference **. Chapter 9 Doing Business with the Public—CBOE Rule 9.13 is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.16 is incorporated by reference. 9.3A Continuing Education For Registered Persons. 53.6(i) Applicability of Chapter IX—CBOE Rule 9.3A is incorporated by reference. 53.6(i) Applicability of Chapter IX—CBOE Rule 9.4(a) is incorporated by reference. 53.6(i) Applicability of Chapter IX—CBOE Rule 9.12 is incorporated by reference 6. 53.6(i) Applicability of Chapter IX—CBOE Rule 9.13 is incorporated by reference. 53.6(i) Applicability of Chapter IX—CBOE Rule 9.16 is incorporated by reference. NASD Rule 1031(a), (b) Registration Requirements, [1140(a), (d)] FINRA Rule 1010(a) and (e) Electronic Filing [Rules] Requirements for Uniform Forms, and [NASD] FINRA By-Laws, Art. V, Sections 2 and 3 Registered Representatives and Associated Persons FINRA Rule 1250 [1120] Continuing Education Requirements 4 FINRA Rule 3270 [3030] Outside Business Activities of [an Associated] Registered Persons 5 NASD Rule 2340 Customer Account Statements Chapter 9 Doing Business with the Public—CBOE Rule 9.18 incorporated by reference **. 9.18 Guarantees and Profit Sharing **. 53.6(i) Applicability of Chapter 9— CBOE Rule 9.18 is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.20 is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.23 incorporated by reference **. Chapter 9 Doing Business with the Public—CBOE Rule 9.24 is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.25 is incorporated by reference. Chapter 9 Doing Business with the Public—CBOE Rule 9.7 incorporated by reference **. 9.20 Transfer of Accounts ............ 53.6(i) Applicability of Chapter 9— CBOE Rule 9.20 is incorporated by reference. 53.7 Record of Written Complaints 9. 9.4(a) Other Affiliations of Registered Associated Persons. 9.12 Statements of Accounts to Customers[4] **. 9.13 Statement of Financial Condition to Customers. 9.16 Restrictions on Pledge and Lending of Customers’ Securities. 9.23 Customer Complaints[6] ** .... Appendix A—CBOE Rule 9.24 is incorporated by reference. 9.25 Borrowing From or Lending to Customers. ....................................................... 9.7 Opening of Accounts ** [53.6(c) Duty to Know and Approve Customers]. 53.6(c) Duty to Know and Approve Customers. Chapter 9 Doing Business with the Public—CBOE Rule 9.6 incorporated by reference **. wreier-aviles on DSK5TPTVN1PROD with NOTICES 9.24 Telephone Solicitation .......... 9.6 Branch Offices of TPH Organizations ** [53.6(d) Branch Offices of Member Organizations]. 53.6(d) Branch Offices of TPH Organizations. Chapter 9 Doing Business with the Public—CBOE Rule 9.10 incorporated by reference **. Chapter 9 Doing Business with the Public—CBOE Rule 9.11 incorporated by reference **. 9.10 Discretionary Accounts ** 53.6(e) Discretionary Accounts .... [53.6(e) Discretionary Accounts]. VerDate Mar<15>2010 18:05 Apr 22, 2014 9.11 Confirmation to Customers ** [53.6(f) Confirmation to Customers]. [53.6(g) Communications to Customers. Jkt 232001 PO 00000 Frm 00096 Fmt 4703 53.6(f) Confirmation to Customers ....................................................... Sfmt 4703 E:\FR\FM\23APN1.SGM Exchange Act Rule 17a–5 7 FINRA Rule 2150(a) Improper Use of Customers’ Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts, and NASD Rule 2330[(a)](b)–(d) Customers’ Securities or Funds FINRA Rule 2150(b) and (c) Improper Use of Customers’ Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts 8 [2330(e) & (f) Customers’ Securities or Funds 5] FINRA Rule 11870 Customer Account Transfer Contracts FINRA Rule 4513 Records of Written Customer Complaints [3110(d) Books and Records] FINRA Rule 3230 Telemarketing [2212 Telemarketing and 3110(g) Books and Records] FINRA Rule 3240 [2370] Borrowing From or Lending to Customers FINRA Rule 2090 Know Your Customer 10 and FINRA Rule 4512 Customer Account Information [2310 Recommendations to Customers (Suitability) and 3110(c) Books and Records] NASD Rule 1021(a) Registration Requirements and NASD IM– 1000–4 Branch Offices and Offices of Supervisory Jurisdiction NASD Rule 2510 Discretionary Accounts, Exchange Act Rule 17a–3(a)(6)(i) 11 FINRA Rule 2232 Customer [2230] Confirmations and Exchange Act Rule 10b–10[7] 12 [2210(b) and (d) Communications with the Public and IM–2210– 1(6) Guidelines to Ensure that Communications With The Public Are Not Misleading] 23APN1 22714 Federal Register / Vol. 79, No. 78 / Wednesday, April 23, 2014 / Notices C2 Rule(s) CBOE Rule(s) CBSX 1 NASD/FINRA or SEC Rule(s) 2 Chapter 9 Doing Business with the Public—CBOE Rule 9.8 incorporated by reference **. 9.8 Supervision of Accounts ** [53.6(h) Supervision of Accounts]. 53.6(h) Supervision of Accounts .. NASD Rule 3010(a), (b) Supervision [and 3110(c) Books and Records]* * The Commission notes that although CBSX was covered by the original Plan, the Parties have determined to explicitly list CBSX rules in the exhibit as part of the proposed amended 17d–2 Plan, to provide additional clarity. See Email from Kathryn Moore, Associate General Counsel, FINRA, to Sonia Trocchio, Special Counsel, Division of Trading and Markets, Commission (April 10, 2014). 1 [To the extent that any CBOE Rule listed herein makes reference to options, such rule] The rules applicable to CBSX are Chapters 50 through 54 and Appendix A of the CBOE rules. Any reference to options shall be read to equity securities [as provided in] (See e.g., CBOE Rule 53.6). 2 CBOE and C2, as applicable, will be responsible for any significant differences between its rules and the comparable NASD/FINRA rule identified. [3 NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement to have Form X–17A–5 filed with CBOE; responsibility for such requirement remains with CBOE.] 3 FINRA shall not have any Regulatory Responsibilities regarding the requirement to conduct independent testing during the first calendar year of a broker-dealer becoming a Trading Permit Holder or TPH organization; responsibility for such requirement remains with CBOE and C2, as applicable. 4 FINRA shall only have Regulatory Responsibilities to the extent that the allowance for additional time is consistently granted. 5 FINRA shall not have any Regulatory Responsibilities regarding the requirement that the Trading Permit Holder provide prior written consent to the TPH organization; responsibility for such requirement remains with CBOE and C2, as applicable. [4]6 FINRA [NASD] shall not have any Regulatory Responsibilities regarding the CBOE requirement that the statement have a legend requesting the customer to advise the member of any material change in the customer’s investment objectives or financial situation; responsibility for such requirement remains with CBOE. 7 FINRA shall not have any Regulatory Responsibilities regarding the CBOE and C2 requirement to have Form X–17A–5 filed with CBOE and C2, as applicable; responsibility for such requirement remains with CBOE and C2, as applicable. 8 [5 The NASD Rule] FINRA Rule 2150 requires, among other things, prior written approval of the member employing the associated person in order for such associated person to share in accounts of a customer, whereas the CBOE rule requires consent of the member carrying the account. To the extent that the employing member and carrying member are different firms, the [NASD’s and CBOE’s rule] FINRA and CBOE rules differ, and [NASD’s] FINRA’s Regulatory [Responsibility] Responsibilities will not cover the CBOE[’s] rule; responsibility for such requirement remains with CBOE. 9 FINRA shall only have Regulatory Responsibilities to the extent records must be kept for four years. [6 NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement of what must be contained in the complaint file or the timing during which the compliant must be send to the central file by the branch office; responsibility for such requirement remains with CBOE.] 10 FINRA shall only have regulatory Responsibilities with regard to the first sentence of CBSX Rule 53.6(c); responsibility for the remainder of the rule remains with CBOE. 11 NASD Rule 2510 requires review of transactions in discretionary accounts by ‘‘the member or person duly designated.’’ However, CBSX Rule 53.6(e)(3) requires approval of discretionary accounts by ‘‘a person other than a person using the discretionary authority.’’ To the extent this requirement of approval by a person other than a person using the discretionary authority applies, FINRA’s Regulatory Responsibilities will not cover CBSX’s rule; responsibility for such requirement remains with CBOE. [7 NASD] 12 FINRA shall not have any Regulatory Responsibilities regarding the [CBOE] CBSX requirements to disclose on a confirmation; 1) the settlement date of a transaction to the extent it is not required by FINRA Rule 2232(b)(1); or 2) whether a transaction was executed on the [CBOE]CBSX; reasonability for such requirements remains with CBOE. *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 BATS Exchange, Inc., BATS–Y Exchange, Inc., CBOE, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., FINRA, NASDAQ OMX BX, Inc., NADAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Exchange, LLC, NYSE Amex LLC, and NYSE Arca Inc., effective December 16, 2011, as may be amended from time to time. **FINRA shall not have an Regulatory Responsibilities for these Rules as they pertain to violations of sales practice activities, which is covered by a separate 17d–2 Agreement by and among NYSE MKT LLC, BATS Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, the Chicago Board Options Exchange, Incorporated, the International Securities Exchange LLC, FINRA, NYSE Arca Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., the NASDAQ OMX PHLX, Inc., Miami International Securities Exchange, LLC, and Topaz Exchange, LLC, effective July 26, 2013, as may be mended from time to time. wreier-aviles on DSK5TPTVN1PROD with NOTICES The following provisions are covered: • Rule 200 of Regulation SHO— Definition of Short Sales and Marking Requirements • Rule 203 of Regulation SHO— Borrowing and Delivery Requirements • Rule 204 of Regulation SHO—CloseOut Requirement • Rule 105 of Regulation M—Short Selling in Connection with a Public Offering • Section 14(e) of the Exchange Act • Rule 14e–4 of the Exchange Act— Prohibited Transactions in Connection with Partial Tender Offers • Regulation ATS • Regulation S–P IV. Date of Effectiveness of the Proposed Plan and Timing for Commission Action transactions and in conformity with the factors set forth in Section 17(d) of the Act. Pursuant to Section 17(d)(1) of the Act 11 and Rule 17d–2 thereunder,12 after May 8, 2014, the Commission may, by written notice, declare the plan submitted by CBOE, C2, and FINRA, File No. 4–536, 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 V. Solicitation of Comments In order to assist the Commission in determining whether to approve the proposed 17d–2 Plan and to relieve CBOE and C2 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: 11 15 12 17 VerDate Mar<15>2010 15:37 Apr 22, 2014 Jkt 232001 PO 00000 U.S.C. 78q(d)(1). CFR 240.17d–2. Frm 00097 Fmt 4703 Sfmt 4703 Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/other.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number 4– 536 on the subject line. E:\FR\FM\23APN1.SGM 23APN1 Federal Register / Vol. 79, No. 78 / Wednesday, April 23, 2014 / Notices Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, Station Place, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number 4–536. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/rules/ other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed plan that are filed with the Commission, and all written communications relating to the proposed plan between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the plan also will be available for inspection and copying at the principal offices of CBOE, C2, 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 4–536 and should be submitted on or before May 8, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–09208 Filed 4–22–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 31020; 812–14058] Matthews A Share Selections Fund, LLC, et al.; Notice of Application wreier-aviles on DSK5TPTVN1PROD with NOTICES April 17, 2014. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of application for an order pursuant to section 6(c) of the Investment Company Act of 1940 (‘‘Act’’) granting exemptions from section 8(b)(1)(E) and section 22(e) of AGENCY: 13 17 CFR 200.30–3(a)(34). VerDate Mar<15>2010 15:37 Apr 22, 2014 Jkt 232001 the Act, and rule 22c–1 under the Act, and pursuant to section 12(d)(1)(J) of the Act granting exemptions from sections 12(d)(1)(A) and (B) of the Act, and pursuant to sections 6(c) and 17(b) of the Act, granting an exemption from section 17(a) of the Act. Applicants: Matthews A Share Selections Fund, LLC (the ‘‘Fund’’), on behalf of its series (the ‘‘Series’’), Matthews International Funds (d/b/a Matthews Asia Funds), on behalf of its series (the ‘‘Matthews Funds’’), Matthews Asia Funds SICAV, on behalf of its series (the ‘‘UCITS Funds’’), Matthews Asian Selections Funds Plc (the ‘‘Irish Fund’’), and Matthews International Capital Management, LLC (the ‘‘Adviser’’). Summary of Application: Applicants request an order to permit the Fund to operate as an extended payment fund established to invest in China A shares, to exempt the Fund from the requirement that funds must disclose a concentration policy regarding investments in any industry or group of industries, and to permit the Fund and its Series to sell their limited liability company interests (‘‘Interests’’) to, and redeem their Interests from, certain pooled investment vehicles that are managed or subadvised by the Adviser, including the UCITS Funds, the Irish Fund and other entities that may be organized outside the United States (the UCITS Funds, the Irish Fund and such other entities are, collectively, the ‘‘Other Funds’’). DATES: Filing Dates: The Application was filed on July 17, 2012, and amended on December 28, 2012, and August 28, 2013. Hearing or Notification of Hearing: An order granting the Application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission’s Secretary and serving Applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on May 12, 2014, and should be accompanied by proof of service on Applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer’s interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Applicants: the Fund, the Matthews Funds, and the Adviser, Four Embarcadero Center, Suite 550, San SUMMARY: PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 22715 Francisco, CA 94111; the UCITS Funds, 6, route de Treves, L–2633 Senningerberg, Grand Duchy of Luxembourg; and the Irish Fund, Brooklawn House, Crampton Avenue/ Shelbourne Road, Ballsbridge, Dublin 4, Ireland. FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Senior Counsel, at (202) 551–6826, or Janet M. Grossnickle, Assistant Director, at (202) 551–6821 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: The following is a summary of the Application. The complete Application may be obtained via the Commission’s Web site by searching for the file number, or an Applicant using the Company name box, at http:// www.sec.gov/search/search.htm or by calling (202) 551–8090. Applicants’ Representations 1. The Fund, a Delaware limited liability company registered as an openend management investment company under Act, is organized as a series investment company, and will be operated as an extended payment fund, as discussed below. The Fund is designed to be a viable and economical means to permit the Matthews Funds, Other Funds and separate accounts managed by the Adviser to invest in China A Shares. Each investing Matthews Fund, Other Fund, or separate account will own all of the Interests offered by a particular Series, and investors in the Fund’s Series will be exclusively entities advised or managed by the Adviser. Interests will not be registered under the Securities Act of 1933 (the ‘‘Securities Act’’); they will be offered only in private placement transactions to ‘‘accredited investors,’’ as defined in Regulation D under the Securities Act, that are also ‘‘qualified purchasers,’’ as defined in section 2(a)(51) of the Act and the rules thereunder (‘‘Qualified Purchasers’’).1 The Fund, through its Series, will be the entity that invests in and holds China A Shares.2 1 The Fund will adopt a policy to permit the transfer of Interests only to other Qualified Purchasers. 2 Each entity that currently intends to rely on the requested order has been named as an Applicant. Applicants request that the relief from section 8(b)(1)(E), section 22(e), and rule 22c–1 of the Act apply also to any existing or future Series of the Fund, and that the relief from sections 12(d)(1)(A) and (B) of the Act, and from section 17(a) of the Act, apply to any existing or future Series of the Fund, and any investment company, or series thereof, advised by the Adviser or any entity controlling, controlled by or under common control with the Adviser that wishes to invest in the Fund or a Series E:\FR\FM\23APN1.SGM Continued 23APN1

Agencies

[Federal Register Volume 79, Number 78 (Wednesday, April 23, 2014)]
[Notices]
[Pages 22709-22715]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09208]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71964; File No. 4-536]


Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing of Proposed Amended Plan for the 
Allocation of Regulatory Responsibilities Between the Financial 
Industry Regulatory Authority, Inc., the Chicago Board Options 
Exchange, Incorporated, and C2 Options Exchange, Incorporated

April 17, 2014.
    Pursuant to Section 17(d) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that 
on March 24, 2014, the Financial Industry Regulatory Authority, Inc. 
(``FINRA''), the Chicago Board Options Exchange, Incorporated 
(``CBOE''), and C2 Options Exchange, Incorporated (``C2'') 
(collectively, the ``Parties'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') a plan for the allocation of 
regulatory responsibilities, dated March 21, 2014 (``17d-2 Plan'' or 
the ``Plan''). This Agreement amends and restates the agreement entered 
into between NASD (n/k/a FINRA) and CBOE on April 4, 2007, entitled 
``Agreement between NASD and CBOE Pursuant to Rule 17d-2 under the 
Securities Exchange Act of 1934,'' and any subsequent amendments 
thereafter. The Commission is publishing this notice to solicit 
comments on the 17d-2 Plan from interested persons.
---------------------------------------------------------------------------

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

I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or national securities association to examine for, 
and enforce compliance by, its members and persons associated with its 
members with the Act, the rules and regulations thereunder, and the 
SRO's own rules, unless the SRO is relieved of this responsibility 
pursuant to Section 17(d) 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 May 14, 2007, the Commission declared effective the Plan entered 
into between NASD (n/k/a FINRA) and CBOE for allocating regulatory 
responsibility pursuant to Rule 17d-2 \10\. The Plan is intended to 
reduce regulatory duplication for firms that are common members of both 
CBOE and FINRA. The plan reduces regulatory duplication for firms that 
are members of CBOE and FINRA by allocating regulatory responsibility 
with respect to certain applicable laws, rules, and regulations, 
including responsibility for CBOE rules applicable to the CBOE Stock 
Exchange, LLC (``CBSX''), an equity exchange facility operated by CBOE. 
Included in the Plan is an exhibit that lists every CBOE rule for which 
FINRA bears responsibility under the Plan for overseeing and enforcing 
with respect to CBOE members that are also members of FINRA and the 
associated persons therewith.
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 55755 (May 14, 
2007), 72 FR 28087 (May 18, 2007).
---------------------------------------------------------------------------

III. Proposed Amendment to Plan

    On March 24, 2014, the parties submitted a proposed amendment to 
the

[[Page 22710]]

Plan. The primary purpose of the amendment is to add C2 as a 
Participant to the Plan. The text of the proposed amended 17d-2 plan is 
as follows (additions are italicized; deletions are [bracketed]):
    AGREEMENT [BETWEEN NASD AND] AMONG FINANCIAL INDUSTRY REGULATORY 
AUTHORITY, INC., CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED, AND C2 
OPTIONS EXCHANGE, INCORPORATED PURSUANT TO RULE 17d-2 UNDER THE 
SECURITIES EXCHANGE ACT OF 1934
    This Agreement, by and [between the National Association of 
Securities Dealers]among Financial Industry Regulatory Authority, Inc. 
[(``NASD'') and] (``FINRA''), the Chicago Board Options Exchange, 
Incorporated (``CBOE''), and C2 Options Exchange, Incorporated (``C2'') 
is made this 21st [4th] day of [April, 2007] March, 2014 (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. 
[NASD]FINRA, [and] CBOE and C2 may be referred to individually as a 
``party'' and together as the ``parties.''
    This Agreement amends and restates the agreement entered into 
between NASD (n/k/a FINRA) and CBOE on April 4, 2007, entitled 
``Agreement between NASD and CBOE Pursuant to Rule 17d-2 under the 
Securities Exchange Act of 1934,'' and any subsequent amendments 
thereafter.
    WHEREAS, [NASD and CBOE] the parties desire to reduce duplication 
in the examination of their [Dual]Common Members (as defined herein) 
and in the filing and processing of certain registration and membership 
records as it relates to the CBOE options exchange, C2 options exchange 
and the CBOE equity exchange facility operated by CBOE Stock Exchange, 
LLC[;] (``CBSX''); and
    WHEREAS, [NASD and CBOE]the parties 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, [NASD and CBOE]the parties 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) [``CBOE Rules'' or ``NASD Rules'' shall mean the rules of the 
CBOE or NASD, respectively, as the rules]``Rule'' of an ``exchange'' or 
an ``association'' shall have the meaning [are] defined in Exchange Act 
Section 3(a)(27).
    (b) ``Common Rules'' shall mean the CBOE Rules and C2 Rules that 
are substantially similar to the applicable [NASD] FINRA Rules in that 
examination for compliance with such [rules] Rules would not require 
[NASD] FINRA to develop one or more new examination standards, modules, 
procedures, or criteria in order to analyze the application of the 
rule, or a [Dual] Common Member's activity, conduct, or output in 
relation to such rule; provided, however, Common Rules shall not 
include the application of SEC, CBOE, C2 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 BATS Exchange, Inc., BATS-Y 
Exchange, Inc., CBOE, Chicago Stock Exchange, Inc., EDGA Exchange, 
Inc., EDGX Exchange, Inc., FINRA, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX 
LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New 
York Stock Exchange, LLC, NYSE Amex LLC, and NYSE Arca Inc., effective 
December 16, 2011, as may be amended from time to time.
    (c) [``Dual Members'']``Common Members'' shall mean [those CBOE] 
members [that are also members of NASD and the associated persons 
therewith]of FINRA and at least one of CBOE or C2.
    (d) ``Effective Date'' shall [have the meaning set forth in 
paragraph 14]be the date this Agreement is approved by the Commission.
    (e) ``Enforcement Responsibilities'' shall mean the conduct of 
appropriate proceedings, in accordance with [the NASD]FINRA's Code of 
Procedure (the Rule 9000 Series) and other applicable [NASD]FINRA 
procedural [rules]Rules, to determine whether violations of pertinent 
laws, rules or regulations have occurred, and if such violations are 
deemed to have occurred, the imposition of appropriate sanctions as 
specified under [the NASD's]FINRA's Code of Procedure and sanctions 
guidelines.
    (f) ``Regulatory Responsibilities'' shall mean the examination 
responsibilities and Enforcement Responsibilities relating to 
compliance by the [Dual]Common 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. [NASD]FINRA shall 
assume Regulatory Responsibilities and Enforcement Responsibilities for 
[Dual]Common Members. Attached as Exhibit 1 to this Agreement and made 
part hereof, CBOE and C2 furnished [NASD]FINRA with a current list of 
Common Rules and certified to [NASD]FINRA that such [rules]Rules are 
substantially similar to the corresponding [NASD rule]FINRA Rule (the 
``Certification''). [NASD]FINRA hereby agrees that the [rules]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] the 
Rulesof the parties, CBOE [or NASD, CBOE]and C2 shall submit an updated 
list of Common Rules to [NASD]FINRA for review which shall add CBOE 
[rules] or C2 Rulesnot included in the current list of Common Rules 
that qualify as Common Rules as defined in this Agreement; delete CBOE 
[rules]or C2 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]Rules on the current list of Common 
Rules continue to be CBOE [rules]or C2 Rules that qualify as Common 
Rules as defined in this Agreement. Within 30 days of receipt of such 
updated list, [NASD]FINRA shall confirm in writing whether the 
[rules]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 CBOE and C2 shall retain full responsibility for 
(unless otherwise addressed by separate agreement or rule) the 
following, (collectively, the ``Retained Responsibilities''):
    (a) Surveillance and enforcement with respect to trading activities 
or practices involving CBOE's or C2's own marketplace, including 
without limitation CBOE's [rules]or C2's Rules relating to the rights 
and obligations of market makers;
    (b) registration pursuant to [its]their applicable [rules]Rules of 
associated persons (i.e., registration rules that are not Common 
Rules);
    (c) discharge of [its]their duties and obligations as a Designated 
Examining

[[Page 22711]]

Authority pursuant to Rule 17d-1 under the Exchange Act; and
    (d) any CBOE Rules and C2 Rules that are not Common Rules.
    3. [Dual]Common Members. Prior to the Effective Date, CBOE and C2 
shall furnish [NASD]FINRA with a current list of [Dual]Common Members, 
which shall be updated no less frequently than once [each quarter]every 
six months.
    4. No Charge. There shall be no charge to CBOE and C2 by 
[NASD]FINRA for performing the Regulatory Responsibilities and 
Enforcement Responsibilities under this Agreement except as hereinafter 
provided. [NASD]FINRA shall provide CBOE and C2 with ninety (90) days 
advance written notice in the event [NASD]FINRA decides to impose any 
charges to CBOE and C2 for performing the Regulatory Responsibilities 
under this Agreement. If [NASD]FINRA determines to impose a charge, 
CBOE and C2 shall have the right at the time of the imposition of such 
charge to terminate this Agreement; provided, however, that 
[NASD's]FINRA's Regulatory Responsibilities under this Agreement shall 
continue until the Commission approves the termination of this 
Agreement.
    5. Reassignment of Regulatory Responsibilities. Notwithstanding any 
provision hereof, this Agreement shall be subject to any statute, or 
any rule or order of the Commission, or industry agreement, 
restructuring the regulatory framework of the securities industry or 
reassigning Regulatory Responsibilities between self-regulatory 
organizations. To the extent such action is inconsistent with this 
Agreement, such action shall supersede the provisions hereof to the 
extent necessary for them to be properly effectuated and the provisions 
hereof in that respect shall be null and void.
    6. Notification of Violations. In the event that [NASD]FINRA 
becomes aware of apparent violations of any CBOE or C2 Rules, which are 
not listed as Common Rules, discovered pursuant to the performance of 
the Regulatory Responsibilities assumed hereunder, [NASD]FINRA shall 
notify CBOE and C2 of those apparent violations for such response as 
CBOE and C2 deems appropriate. [Apparent violations of all other 
applicable rules, including]In the event, CBOE or C2 becomes aware of 
apparent violations of [the]any Common Rules[, various securities acts, 
and rules and regulations thereunder,] discovered pursuant to the 
Retained Responsibilities, CBOE and C2 shall notify FINRA of those 
apparent violations and such matters shall be handled by FINRA as 
provided in this Agreement. Apparent violations of Common Rules shall 
be processed by, and enforcement proceedings in respect thereto shall 
be conducted by [NASD]FINRA as provided hereinbefore; provided, 
however, that in the event a [Dual]Common Member is the subject of an 
investigation relating to a transaction on the CBOE or C2 options 
exchanges or the CBSX, CBOE and C2 may in [its]their discretion assume 
concurrent jurisdiction and responsibility. Each party agrees to make 
available promptly all files, records and witnesses necessary to assist 
the other in its investigation or proceedings.
    7. Continued Assistance. [NASD]FINRA shall make available to CBOE 
and C2 all information obtained by [NASD]FINRA in the performance by it 
of the Regulatory Responsibilities hereunder in respect to the 
[Dual]Common Members subject to this Agreement. In particular, and not 
in limitation of the foregoing, [NASD]FINRA shall furnish CBOE and C2 
any information it obtains about [Dual]Common Members which reflects 
adversely on their financial condition. It is understood that such 
information is of an extremely sensitive nature and, accordingly, CBOE 
[acknowledges and agrees]and C2 acknowledge and agree to take all 
reasonable steps to maintain its confidentiality. CBOE and C2 shall 
make available to [NASD]FINRA any information coming to [its]their 
attention that reflects adversely on the financial condition of 
[Dual]Common Members or indicates possible violations of applicable 
laws, rules or regulations by such firms.
    8. [Dual]Common Member Applications.
    (a) [Dual]Common Members subject to this Agreement shall be 
required to submit, and [NASD]FINRA shall be responsible for processing 
and acting upon all applications submitted on behalf of allied persons, 
partners, officers, registered personnel and any other person required 
to be approved by the [rules of both CBOE and NASD]Rules of the parties 
or associated with [Dual]Common Members thereof. Upon request, 
[NASD]FINRA shall advise CBOE and C2 of any changes of allied members, 
partners, officers, registered personnel and other persons required to 
be approved by the [rules of both CBOE and NASD]Rules of the parties.
    (b) [Dual]Common Members shall be required to send to [NASD]FINRA 
all letters, termination notices or other material respecting the 
individuals listed in paragraph 8(a).
    (c) When as a result of processing such submissions [NASD]FINRA 
becomes aware of a statutory disqualification as defined in the 
Exchange Act with respect to a [Dual]Common Member, [NASD]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 CBOE and C2 advised of 
its actions in this regard for such subsequent proceedings as CBOE and 
C2 may initiate.
    (d) Notwithstanding the foregoing, [NASD]FINRA shall not review the 
membership application, reports, filings, fingerprint cards, notices, 
or other writings filed to determine if such documentation submitted by 
a broker or dealer, or a person associated therewith or other persons 
required to register or qualify by examination meets the CBOE or C2 
requirements for general membership or for specified categories of 
membership or participation in the CBOE or C2. [NASD]FINRA shall not 
review applications or other documentation filed to request a change in 
the rights or status described in this paragraph 8(d), including 
termination or limitation on activities, of a member or a participant 
of the CBOE or C2, or a person associated with, or requesting 
association with, a member or participant of the CBOE or C2.
    9. Branch Office Information. [NASD]FINRA shall also be responsible 
for processing and, if required, acting upon all requests for the 
opening, address changes, and terminations of branch offices by 
[Dual]Common Members and any other applications required of 
[Dual]Common Members with respect to the Common Rules as they may be 
amended from time to time. Upon request, [NASD]FINRA shall advise CBOE 
and C2 of the opening, address change and termination of branch and 
main offices of [Dual]Common Members and the names of such branch 
office managers.
    10. Customer Complaints. CBOE and C2 shall forward to [NASD]FINRA 
copies of all customer complaints involving [Dual]Common Members 
received by CBOE and C2 relating to [NASD's]FINRA's Regulatory 
Responsibilities under this Agreement. It shall be [NASD's]FINRA's 
responsibility to review and take appropriate action in respect to such 
complaints.
    11. Advertising. [NASD]FINRA shall assume responsibility to review 
the advertising of [Dual]Common Members subject to the Agreement, 
provided that such material is filed with [NASD]FINRA in accordance 
with [NASD's]FINRA's filing procedures and

[[Page 22712]]

is accompanied with any applicable filing fees set forth in [NASD]FINRA 
Rules. Such review shall be made in accordance with then applicable 
[NASD rules]FINRA Rules and interpretations. The advertising of 
[Dual]Common Members shall be subject only to compliance with 
appropriate [NASD rules]FINRA Rules and interpretations.
    12. No Restrictions on Regulatory Action. Nothing contained in this 
Agreement shall restrict or in any way encumber the right of 
[either]any party to conduct its own independent or concurrent 
investigation, examination or enforcement proceeding of or against 
[Dual]Common Members, as [either]any party, in its sole discretion, 
shall deem appropriate or necessary.
    13. Termination. This Agreement may be terminated by [CBOE or 
NASD]any party at any time upon the approval of the Commission after 
one (1) year's written notice (or such shorter time as may be agreed by 
the parties) to the other [party]parties, except as provided in 
paragraph 4.
    14. Effective Date. This Agreement shall be effective upon approval 
of the Commission.
    15. Arbitration. In the event of a dispute [between]among the 
parties as to the operation of this Agreement, [CBOE and NASD]the 
parties hereby agree that any such dispute shall be settled by 
arbitration in Washington, DC in accordance with the rules of the 
American Arbitration Association then in effect, or such other 
procedures as the parties may mutually agree upon. Judgment on the 
award rendered by the arbitrator(s) may be entered in any court having 
jurisdiction.
    16. Separate Agreement. This Agreement is wholly separate from the 
following agreement: (1) The multiparty Agreement made pursuant to Rule 
17d-2 of the Exchange Act [between the American Stock Exchange LLC, the 
Boston Stock]among BATS Exchange, Inc., [the Chicago Board]BOX Options 
Exchange, [Incorporated]LLC, CBOE, C2, the International Securities 
Exchange LLC, [the National Association of Securities Dealers, 
Inc.,]FINRA, the New York Stock Exchange, LLC, NYSE Amex LLC, the NYSE 
Arca, Inc., [and the Philadelphia Stock Exchange, Inc.]and The NASDAQ 
Stock Market LLC, NASDAQ OMX BX, Inc., and NASDAQ OMX PHLX LLC 
involving the allocation of regulatory responsibilities with respect to 
common members for compliance with common rules relating to the conduct 
by broker-dealers of accounts for listed options or index warrants 
entered into on [December 1, 2006] April 25, 2012, and as may be 
amended from time to time; and (2) the multiparty Agreement made 
pursuant to Rule 17d-2 of the Exchange Act among NYSE Amex LLC, BATS 
Exchange, Inc., C2, CBOE, International Securities Exchange LLC, FINRA, 
NYSE Arca, Inc., The NASDAQ Stock Market LLC, the BOX Options Exchange, 
LLC, NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX LLC involving the 
allocation of regulatory responsibilities with respect to SRO market 
surveillance of common members activities with regard to certain common 
rules relating to listed options entered into on April 25, 2012, and as 
may be amended from time to time.
    17. Notification of Members. [CBOE and NASD]The parties shall 
notify [Dual]Common Members of this Agreement after the Effective Date 
by means of a uniform joint notice.
    18. 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.
    19. Limitation of Liability. [Neither NASD nor CBOE]None of the 
parties nor any of their respective directors, governors, officers or 
employees shall be liable to [the]any other party to this Agreement for 
any liability, loss or damage resulting from or claimed to have 
resulted from any delays, inaccuracies, errors or omissions with 
respect to the provision of Regulatory Responsibilities as provided 
hereby or for the failure to provide any such responsibility, except 
with respect to such liability, loss or damages as shall have been 
suffered by [one or the other of NASD or CBOE]any party and caused by 
the willful misconduct [of the other]another party or their respective 
directors, governors, officers or employees. No warranties, express or 
implied, are made by [NASD or CBOE]any party hereto with respect to any 
of the responsibilities to be performed by [each of] them hereunder.
    20. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, [NASD]FINRA, 
C2 and CBOE join in requesting the Commission, upon its approval of 
this Agreement [or any part thereof], to relieve CBOE and C2 of any and 
all responsibilities with respect to matters allocated to [NASD]FINRA 
pursuant to this Agreement; provided, however, that this Agreement 
shall not be effective until the Effective Date.
    21. Counterparts. This Agreement may be executed in one or more 
counterparts, each of which shall be deemed an original, and such 
counterparts together shall constitute one and the same instrument.
    IN WITNESS WHEREOF, each party has executed or caused this 
Agreement to be executed on its behalf by a duly authorized officer as 
of the date first written above.
[NATIONAL ASSOCIATION OF SECURITIES DEALERS]FINANCIAL INDUSTRY 
REGULATORY AUTHORITY, INC.
By---------------------------------------------------------------------
Name:
Title:
CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED
By---------------------------------------------------------------------
Name:
Title:

C2 OPTIONS EXCHANGE, INCORPORATED

By---------------------------------------------------------------------
Name:
Title:
Exhibit 1 *
CBOE AND C2 CERTIFICATION OF COMMON RULES
    CBOE and C2 hereby [certifies] certify that the requirements 
contained in the [CBOE] Rules listed below are identical to, or 
substantially similar to, the NASD/FINRA or SEC Rules identified.\[1]\

----------------------------------------------------------------------------------------------------------------
                                                                                            NASD/FINRA or SEC
              C2 Rule(s)                     CBOE Rule(s)               CBSX \1\               Rule(s) \2\
----------------------------------------------------------------------------------------------------------------
Chapter 4 Business Conduct CBOE Rule   4.18 Prevention of the   Appendix A--CBOE Rule    Section 15(f) of the
 4.18 is incorporated by reference.     Misuse of Material,      4.18 is incorporated     Securities Exchange
                                        Nonpublic Information.   by reference.            Act of 1934 (Exchange
                                                                                          Act) [\3\]
Chapter 4 Business Conduct CBOE Rule   4.20 Anti-Money          Appendix A--CBOE Rule    FINRA Rule 3310 [3011]
 4.20 is incorporated by reference.     Laundering Compliance    4.20 is incorporated     Anti-Money Laundering
                                        Program.                 by reference.            Compliance Program \3\

[[Page 22713]]

 
Chapter 9 Doing Business with the      9.3 Registration and     53.6(i) Applicability    NASD Rule 1031(a), (b)
 Public--CBOE Rule 9.3 incorporated     Termination of           of Chapter IX--CBOE      Registration
 by reference **.                       Representatives **.      Rule 9.3 is              Requirements,
                                                                 incorporated by          [1140(a), (d)] FINRA
                                                                 reference.               Rule 1010(a) and (e)
                                                                                          Electronic Filing
                                                                                          [Rules] Requirements
                                                                                          for Uniform Forms, and
                                                                                          [NASD] FINRA By-Laws,
                                                                                          Art. V, Sections 2 and
                                                                                          3 Registered
                                                                                          Representatives and
                                                                                          Associated Persons
Chapter 9 Doing Business with the      9.3A Continuing          53.6(i) Applicability    FINRA Rule 1250 [1120]
 Public--CBOE Rule 9.3A is              Education For            of Chapter IX--CBOE      Continuing Education
 incorporated by reference.             Registered Persons.      Rule 9.3A is             Requirements \4\
                                                                 incorporated by
                                                                 reference.
Chapter 9 Doing Business with the      9.4(a) Other             53.6(i) Applicability    FINRA Rule 3270 [3030]
 Public--CBOE Rule 9.4(a) is            Affiliations of          of Chapter IX--CBOE      Outside Business
 incorporated by reference.             Registered Associated    Rule 9.4(a) is           Activities of [an
                                        Persons.                 incorporated by          Associated] Registered
                                                                 reference.               Persons \5\
Chapter 9 Doing Business with the      9.12 Statements of       53.6(i) Applicability    NASD Rule 2340 Customer
 Public--CBOE Rule 9.12 incorporated    Accounts to              of Chapter IX--CBOE      Account Statements
 by reference **.                       Customers[\4\] **.       Rule 9.12 is
                                                                 incorporated by
                                                                 reference \6\.
Chapter 9 Doing Business with the      9.13 Statement of        53.6(i) Applicability    Exchange Act Rule 17a-5
 Public--CBOE Rule 9.13 is              Financial Condition to   of Chapter IX--CBOE      \7\
 incorporated by reference.             Customers.               Rule 9.13 is
                                                                 incorporated by
                                                                 reference.
Chapter 9 Doing Business with the      9.16 Restrictions on     53.6(i) Applicability    FINRA Rule 2150(a)
 Public--CBOE Rule 9.16 is              Pledge and Lending of    of Chapter IX--CBOE      Improper Use of
 incorporated by reference.             Customers' Securities.   Rule 9.16 is             Customers' Securities
                                                                 incorporated by          or Funds; Prohibition
                                                                 reference.               Against Guarantees and
                                                                                          Sharing in Accounts,
                                                                                          and NASD Rule
                                                                                          2330[(a)](b)-(d)
                                                                                          Customers' Securities
                                                                                          or Funds
Chapter 9 Doing Business with the      9.18 Guarantees and      53.6(i) Applicability    FINRA Rule 2150(b) and
 Public--CBOE Rule 9.18 incorporated    Profit Sharing **.       of Chapter 9--CBOE       (c) Improper Use of
 by reference **.                                                Rule 9.18 is             Customers' Securities
                                                                 incorporated by          or Funds; Prohibition
                                                                 reference.               Against Guarantees and
                                                                                          Sharing in Accounts
                                                                                          \8\ [2330(e) & (f)
                                                                                          Customers' Securities
                                                                                          or Funds \5\]
Chapter 9 Doing Business with the      9.20 Transfer of         53.6(i) Applicability    FINRA Rule 11870
 Public--CBOE Rule 9.20 is              Accounts.                of Chapter 9--CBOE       Customer Account
 incorporated by reference.                                      Rule 9.20 is             Transfer Contracts
                                                                 incorporated by
                                                                 reference.
Chapter 9 Doing Business with the      9.23 Customer            53.7 Record of Written   FINRA Rule 4513 Records
 Public--CBOE Rule 9.23 incorporated    Complaints[\6\] **.      Complaints \9\.          of Written Customer
 by reference **.                                                                         Complaints [3110(d)
                                                                                          Books and Records]
Chapter 9 Doing Business with the      9.24 Telephone           Appendix A--CBOE Rule    FINRA Rule 3230
 Public--CBOE Rule 9.24 is              Solicitation.            9.24 is incorporated     Telemarketing [2212
 incorporated by reference.                                      by reference.            Telemarketing and
                                                                                          3110(g) Books and
                                                                                          Records]
Chapter 9 Doing Business with the      9.25 Borrowing From or   .......................  FINRA Rule 3240 [2370]
 Public--CBOE Rule 9.25 is              Lending to Customers.                             Borrowing From or
 incorporated by reference.                                                               Lending to Customers
Chapter 9 Doing Business with the      9.7 Opening of Accounts  53.6(c) Duty to Know     FINRA Rule 2090 Know
 Public--CBOE Rule 9.7 incorporated     ** [53.6(c) Duty to      and Approve Customers.   Your Customer \10\ and
 by reference **.                       Know and Approve                                  FINRA Rule 4512
                                        Customers].                                       Customer Account
                                                                                          Information [2310
                                                                                          Recommendations to
                                                                                          Customers
                                                                                          (Suitability) and
                                                                                          3110(c) Books and
                                                                                          Records]
Chapter 9 Doing Business with the      9.6 Branch Offices of    53.6(d) Branch Offices   NASD Rule 1021(a)
 Public--CBOE Rule 9.6 incorporated     TPH Organizations **     of TPH Organizations.    Registration
 by reference **.                       [53.6(d) Branch                                   Requirements and NASD
                                        Offices of Member                                 IM-1000-4 Branch
                                        Organizations].                                   Offices and Offices of
                                                                                          Supervisory
                                                                                          Jurisdiction
Chapter 9 Doing Business with the      9.10 Discretionary       53.6(e) Discretionary    NASD Rule 2510
 Public--CBOE Rule 9.10 incorporated    Accounts ** [53.6(e)     Accounts.                Discretionary
 by reference **.                       Discretionary                                     Accounts, Exchange Act
                                        Accounts].                                        Rule 17a-3(a)(6)(i)
                                                                                          \11\
Chapter 9 Doing Business with the      9.11 Confirmation to     53.6(f) Confirmation to  FINRA Rule 2232
 Public--CBOE Rule 9.11 incorporated    Customers ** [53.6(f)    Customers.               Customer [2230]
 by reference **.                       Confirmation to                                   Confirmations and
                                        Customers].                                       Exchange Act Rule 10b-
                                                                                          10[\7\] \12\
                                       [53.6(g) Communications  .......................  [2210(b) and (d)
                                        to Customers.                                     Communications with
                                                                                          the Public and IM-2210-
                                                                                          1(6) Guidelines to
                                                                                          Ensure that
                                                                                          Communications With
                                                                                          The Public Are Not
                                                                                          Misleading]

[[Page 22714]]

 
Chapter 9 Doing Business with the      9.8 Supervision of       53.6(h) Supervision of   NASD Rule 3010(a), (b)
 Public--CBOE Rule 9.8 incorporated     Accounts ** [53.6(h)     Accounts.                Supervision [and
 by reference **.                       Supervision of                                    3110(c) Books and
                                        Accounts].                                        Records]*
----------------------------------------------------------------------------------------------------------------
* The Commission notes that although CBSX was covered by the original Plan, the Parties have determined to
  explicitly list CBSX rules in the exhibit as part of the proposed amended 17d-2 Plan, to provide additional
  clarity. See Email from Kathryn Moore, Associate General Counsel, FINRA, to Sonia Trocchio, Special Counsel,
  Division of Trading and Markets, Commission (April 10, 2014).
\1\ [To the extent that any CBOE Rule listed herein makes reference to options, such rule] The rules applicable
  to CBSX are Chapters 50 through 54 and Appendix A of the CBOE rules. Any reference to options shall be read to
  equity securities [as provided in] (See e.g., CBOE Rule 53.6).
\2\ CBOE and C2, as applicable, will be responsible for any significant differences between its rules and the
  comparable NASD/FINRA rule identified.
[\3\ NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement to have Form X-17A-5
  filed with CBOE; responsibility for such requirement remains with CBOE.]
\3\  FINRA shall not have any Regulatory Responsibilities regarding the requirement to conduct independent
  testing during the first calendar year of a broker-dealer becoming a Trading Permit Holder or TPH
  organization; responsibility for such requirement remains with CBOE and C2, as applicable.
\4\  FINRA shall only have Regulatory Responsibilities to the extent that the allowance for additional time is
  consistently granted.
\5\  FINRA shall not have any Regulatory Responsibilities regarding the requirement that the Trading Permit
  Holder provide prior written consent to the TPH organization; responsibility for such requirement remains with
  CBOE and C2, as applicable.
[\4\]\6\ FINRA [NASD] shall not have any Regulatory Responsibilities regarding the CBOE requirement that the
  statement have a legend requesting the customer to advise the member of any material change in the customer's
  investment objectives or financial situation; responsibility for such requirement remains with CBOE.
\7\  FINRA shall not have any Regulatory Responsibilities regarding the CBOE and C2 requirement to have Form X-
  17A-5 filed with CBOE and C2, as applicable; responsibility for such requirement remains with CBOE and C2, as
  applicable.
\8\ [\5\ The NASD Rule] FINRA Rule 2150 requires, among other things, prior written approval of the member
  employing the associated person in order for such associated person to share in accounts of a customer,
  whereas the CBOE rule requires consent of the member carrying the account. To the extent that the employing
  member and carrying member are different firms, the [NASD's and CBOE's rule] FINRA and CBOE rules differ, and
  [NASD's] FINRA's Regulatory [Responsibility] Responsibilities will not cover the CBOE['s] rule; responsibility
  for such requirement remains with CBOE.
\9\  FINRA shall only have Regulatory Responsibilities to the extent records must be kept for four years. [\6\
  NASD shall not have any Regulatory Responsibilities regarding the CBOE requirement of what must be contained
  in the complaint file or the timing during which the compliant must be send to the central file by the branch
  office; responsibility for such requirement remains with CBOE.]
\10\  FINRA shall only have regulatory Responsibilities with regard to the first sentence of CBSX Rule 53.6(c);
  responsibility for the remainder of the rule remains with CBOE.
\11\  NASD Rule 2510 requires review of transactions in discretionary accounts by ``the member or person duly
  designated.'' However, CBSX Rule 53.6(e)(3) requires approval of discretionary accounts by ``a person other
  than a person using the discretionary authority.'' To the extent this requirement of approval by a person
  other than a person using the discretionary authority applies, FINRA's Regulatory Responsibilities will not
  cover CBSX's rule; responsibility for such requirement remains with CBOE.
[\7\ NASD] \12\ FINRA shall not have any Regulatory Responsibilities regarding the [CBOE] CBSX requirements to
  disclose on a confirmation; 1) the settlement date of a transaction to the extent it is not required by FINRA
  Rule 2232(b)(1); or 2) whether a transaction was executed on the [CBOE]CBSX; reasonability for such
  requirements remains with CBOE.
*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 BATS Exchange, Inc., BATS-
  Y Exchange, Inc., CBOE, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., FINRA, NASDAQ
  OMX BX, Inc., NADAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York
  Exchange, LLC, NYSE Amex LLC, and NYSE Arca Inc., effective December 16, 2011, as may be amended from time to
  time.
**FINRA shall not have an Regulatory Responsibilities for these Rules as they pertain to violations of sales
  practice activities, which is covered by a separate 17d-2 Agreement by and among NYSE MKT LLC, BATS Exchange,
  Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, the Chicago Board Options Exchange,
  Incorporated, the International Securities Exchange LLC, FINRA, NYSE Arca Inc., The NASDAQ Stock Market LLC,
  NASDAQ OMX BX, Inc., the NASDAQ OMX PHLX, Inc., Miami International Securities Exchange, LLC, and Topaz
  Exchange, LLC, effective July 26, 2013, as may be mended from time to time.

    The following provisions are covered:

 Rule 200 of Regulation SHO--Definition of Short Sales and 
Marking Requirements
 Rule 203 of Regulation SHO--Borrowing and Delivery 
Requirements
 Rule 204 of Regulation SHO--Close-Out Requirement
 Rule 105 of Regulation M--Short Selling in Connection with a 
Public Offering
 Section 14(e) of the Exchange Act
 Rule 14e-4 of the Exchange Act--Prohibited Transactions in 
Connection with Partial Tender Offers
 Regulation ATS
 Regulation S-P

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

    Pursuant to Section 17(d)(1) of the Act \11\ and Rule 17d-2 
thereunder,\12\ after May 8, 2014, the Commission may, by written 
notice, declare the plan submitted by CBOE, C2, and FINRA, File No. 4-
536, 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78q(d)(1).
    \12\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------

V. Solicitation of Comments

    In order to assist the Commission in determining whether to approve 
the proposed 17d-2 Plan and to relieve CBOE and C2 of the 
responsibilities which would be assigned to FINRA, interested persons 
are invited to submit written data, views, and arguments concerning the 
foregoing. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number 4-536 on the subject line.

[[Page 22715]]

Paper Comments

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

All submissions should refer to File Number 4-536. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/other.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan between the Commission and any person, other than those that may 
be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for Web site viewing and printing in the 
Commission's Public Reference Room, on official business days between 
the hours of 10:00 a.m. and 3:00 p.m. Copies of the plan also will be 
available for inspection and copying at the principal offices of CBOE, 
C2, 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 4-536 
and should be submitted on or before May 8, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09208 Filed 4-22-14; 8:45 am]
BILLING CODE 8011-01-P