Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and ISE Mercury, LLC, 8566-8571 [2016-03300]
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Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Notices
corresponding increase in order flow
from other market participants.
Moreover, unlike others market
participants each BX Options Market
Maker commits to various obligations.
These obligations include, for example,
transactions of a BX Market Maker must
constitute a course of dealings
reasonably calculated to contribute to
the maintenance of a fair and orderly
market, and Market Makers should not
make bids or offers or enter into
transactions that are inconsistent with
such course of dealings.38
In this instance, the proposed changes
to the fees and rebates for Penny Pilot
Options and for Non-Penny Pilot
Options to add a new Firm column, and
establishing a SPY Options Tiers
Schedule, do not impose a burden on
competition because the Exchange’s
execution and routing services are
completely voluntary and subject to
extensive competition both from other
exchanges and from off-exchange
venues. If the changes proposed herein
are unattractive to market participants,
it is likely that the Exchange will lose
market share as a result. Accordingly,
the Exchange does not believe that the
proposed changes will impair the ability
of members or competing order
execution venues to maintain their
competitive standing in the financial
markets. Additionally, the changes
proposed herein are pro-competitive to
the extent that they continue to allow
the Exchange to promote and maintain
order executions.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) of
the Act,39 the Exchange has designated
this proposal as establishing or changing
a due, fee, or other charge imposed by
the self-regulatory organization on any
person, whether or not the person is a
member of the self-regulatory
organization, which renders the
proposed rule change effective upon
filing.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
38 See Chapter VII, Section 5, entitled
‘‘Obligations of Market Makers’’.
39 15 U.S.C. 78s(b)(3)(A)(ii).
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action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2016–010 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2016–010. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BX–
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.40
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–03392 Filed 2–18–16; 8:45 am]
BILLING CODE 8011–01–P
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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2016–010 and should be submitted on
or before March 11, 2016.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77122; File No. 4–697]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Notice of Filing of Proposed Plan for
the Allocation of Regulatory
Responsibilities Between the Financial
Industry Regulatory Authority, Inc. and
ISE Mercury, LLC
February 11, 2016.
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 February
9, 2016, ISE Mercury, LLC (‘‘ISE
Mercury’’) and the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’)
(together with ISE Mercury, the
‘‘Parties’’) filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) a plan for the allocation of
regulatory responsibilities, dated
February 8, 2016 (‘‘17d–2 Plan’’ or the
‘‘Plan’’). The Commission is publishing
this notice to solicit comments on the
17d–2 Plan from interested persons.
I. Introduction
Section 19(g)(1) of the Act,3 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or national securities
association to examine for, and enforce
compliance by, its members and persons
associated with its members with the
Act, the rules and regulations
thereunder, and the SRO’s own rules,
unless the SRO is relieved of this
responsibility pursuant to Section 17(d)
or Section 19(g)(2) of the Act.4 Without
this relief, the statutory obligation of
each individual SRO could result in a
pattern of multiple examinations of
broker-dealers that maintain
memberships in more than one SRO
(‘‘common members’’) for compliance
with certain rules that are substantially
40 17
CFR 200.30–3(a)(12).
U.S.C. 78q(d).
2 17 CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
4 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2),
respectively.
1 15
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identical across multiple SROs. Such
regulatory duplication would add
unnecessary expenses for common
members and their SROs.
Section 17(d)(1) of the Act 5 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.6 With respect to
a common member, Section 17(d)(1)
authorizes the Commission, by rule or
order, to relieve an SRO of the
responsibility to receive regulatory
reports, to examine for and enforce
compliance with applicable statutes,
rules, and regulations, or to perform
other specified regulatory functions.
To implement Section 17(d)(1), the
Commission adopted two rules: Rule
17d–1 and Rule 17d–2 under the Act.7
Rule 17d–1 authorizes the Commission
to name a single SRO as the designated
examining authority (‘‘DEA’’) to
examine common members for
compliance with the financial
responsibility requirements imposed by
the Act, or by Commission or SRO
rules.8 When an SRO has been named as
a common member’s DEA, all other
SROs to which the common member
belongs are relieved of the responsibility
to examine the firm for compliance with
the applicable financial responsibility
rules. On its face, Rule 17d–1 deals only
with an SRO’s obligations to enforce
member compliance with financial
responsibility requirements. Rule 17d–1
does not relieve an SRO from its
obligation to examine a common
member for compliance with its own
rules and provisions of the federal
securities laws governing matters other
than financial responsibility, including
sales practices and trading activities and
practices.
To address regulatory duplication in
these and other areas, the Commission
adopted Rule 17d–2 under the Act.9
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities with respect
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
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5 15
U.S.C. 78q(d)(1).
Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
7 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
8 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
9 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
6 See
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cooperation and coordination among the
SROs; to remove impediments to, and
foster the development of, a national
market system and a national clearance
and settlement system; and is in
conformity with the factors set forth in
Section 17(d) of the Act. Commission
approval of a plan filed pursuant to Rule
17d–2 relieves an SRO of those
regulatory responsibilities allocated by
the plan to another SRO.
II. Proposed Plan
The proposed 17d–2 Plan is intended
to reduce regulatory duplication for
firms that are common members of both
ISE Mercury and FINRA.10 Pursuant to
the proposed 17d–2 Plan, FINRA would
assume certain examination and
enforcement responsibilities for
common members with respect to
certain applicable laws, rules, and
regulations.
The text of the Plan delineates the
proposed regulatory responsibilities
with respect to the Parties. Included in
the proposed Plan is an exhibit (the
‘‘ISE Mercury Certification of Common
Rules,’’ referred to herein as the
‘‘Certification’’) that lists every ISE
Mercury rule, and select federal
securities laws, rules, and regulations,
for which FINRA would bear
responsibility under the Plan for
overseeing and enforcing with respect to
ISE Mercury members that are also
members of FINRA and the associated
persons therewith (‘‘Dual Members’’).
Specifically, under the 17d–2 Plan,
FINRA would assume examination and
enforcement responsibility relating to
compliance by Dual Members with the
rules of ISE Mercury that are
substantially similar to the applicable
rules of FINRA,11 as well as any
provisions of the federal securities laws
and the rules and regulations
thereunder delineated in the
Certification (‘‘Common Rules’’). In the
event that a Dual Member is the subject
of an investigation relating to a
transaction on ISE Mercury, the plan
acknowledges that ISE Mercury may, in
its discretion, exercise concurrent
10 The proposed 17d–2 Plan refers to these
common members as ‘‘Dual Members.’’ See
Paragraph 1(c) of the proposed 17d–2 Plan.
11 See paragraph 1(b) of the proposed 17d–2 Plan
(defining Common Rules). See also paragraph 1(f)
of the proposed 17d–2 Plan (defining Regulatory
Responsibilities). Paragraph 2 of the Plan provides
that annually, or more frequently as required by
changes in either ISE MERCURY rules or FINRA
rules, the parties shall review and update, if
necessary, the list of Common Rules. Further,
paragraph 3 of the Plan provides that ISE
MERCURY shall furnish FINRA with a list of Dual
Members, and shall update the list no less
frequently than once each calendar quarter.
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jurisdiction and responsibility for such
matter.12
Under the Plan, ISE Mercury would
retain full responsibility for surveillance
and enforcement with respect to trading
activities or practices involving ISE
Mercury’s own marketplace, including,
without limitation, registration pursuant
to its applicable rules of associated
persons (i.e., registration rules that are
not Common Rules); its duties as a DEA
pursuant to Rule 17d–1 under the Act;
and any ISE Mercury rules that are not
Common Rules.13
The text of the proposed 17d–2 Plan
is as follows:
AGREEMENT BETWEEN FINANCIAL
INDUSTRY REGULATORY
AUTHORITY, INC. AND ISE
MERCURY, LLC PURSUANT TO RULE
17d–2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
This Agreement, by and between
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and ISE
Mercury, LLC (‘‘ISE Mercury’’), is made
this 8th day of February, 2016 (the
‘‘Agreement’’), pursuant to Section 17(d)
of the Securities Exchange Act of 1934
(the ‘‘Exchange Act’’) and Rule 17d–2
thereunder which permits agreements
between self-regulatory organizations to
allocate regulatory responsibility to
eliminate regulatory duplication. FINRA
and ISE Mercury may be referred to
individually as a ‘‘party’’ and together
as the ‘‘parties.’’
WHEREAS, FINRA and ISE Mercury
desire to reduce duplication in the
examination of their Dual Members (as
defined herein) and in the filing and
processing of certain registration and
membership records; and
WHEREAS, FINRA and ISE Mercury
desire to execute an agreement covering
such subjects pursuant to the provisions
of Rule 17d–2 under the Exchange Act
and to file such agreement with the
Securities and Exchange Commission
(the ‘‘SEC’’ or ‘‘Commission’’) for its
approval.
NOW, THEREFORE, in consideration
of the mutual covenants contained
hereinafter, FINRA and ISE Mercury
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:
12 See
13 See
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paragraph 6 of the proposed 17d–2 Plan.
paragraph 2 of the proposed 17d–2 Plan.
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(a) ‘‘ISE Mercury Rules’’ or ‘‘FINRA
Rules’’ shall mean the rules of ISE
Mercury or FINRA, respectively, as the
rules of an exchange or association are
defined in Exchange Act Section
3(a)(27).
(b) ‘‘Common Rules’’ shall mean the
ISE Mercury Rules that are substantially
similar to the applicable FINRA Rules
set forth in Exhibit 1 in that examination
for compliance with such rules would
not require FINRA to develop one or
more new examination standards,
modules, procedures, or criteria in order
to analyze the application of the rule, or
a Dual Member’s activity, conduct, or
output in relation to such rule.
(c) ‘‘Dual Members’’ shall mean those
ISE Mercury members that are also
members of FINRA and the associated
persons therewith.
(d) ‘‘Effective Date’’ shall have the
meaning set forth in paragraph 13.
(e) ‘‘Enforcement Responsibilities’’
shall mean the conduct of appropriate
proceedings, in accordance with the
FINRA Code of Procedure (the Rule
9000 Series) and other applicable
FINRA procedural rules, to determine
whether violations of Common Rules
have occurred, and if such violations are
deemed to have occurred, the
imposition of appropriate sanctions as
specified under the FINRA’s Code of
Procedure and sanctions guidelines.
(f) ‘‘Regulatory Responsibilities’’ shall
mean the examination responsibilities
and Enforcement Responsibilities
relating to compliance by the Dual
Members with the Common Rules and
the provisions of the Exchange Act and
the rules and regulations thereunder,
and other applicable laws, rules and
regulations, each as set forth on Exhibit
1 attached hereto.
2. Regulatory and Enforcement
Responsibilities. FINRA shall assume
Regulatory Responsibilities and
Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this
Agreement and made part hereof, ISE
Mercury furnished FINRA with a
current list of Common Rules and
certified to FINRA that such rules are
substantially similar to the
corresponding FINRA Rule (the
‘‘Certification’’). FINRA hereby agrees
that the rules listed in the Certification
are Common Rules as defined in this
Agreement. Each year following the
Effective Date of this Agreement, or
more frequently if required by changes
in either the ISE Mercury Rules or
FINRA Rules, ISE Mercury shall submit
an updated list of Common Rules to
FINRA for review which shall add ISE
Mercury Rules not included in the
current list of Common Rules that
qualify as Common Rules as defined in
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this Agreement; delete ISE Mercury
Rules included in the current list of
Common Rules that no longer qualify as
Common Rules as defined in this
Agreement; and confirm that the
remaining rules on the current list of
Common Rules continue to be ISE
Mercury Rules that qualify as Common
Rules as defined in this Agreement.
Within 30 days of receipt of such
updated list, FINRA shall confirm in
writing whether the rules listed in any
updated list are Common Rules as
defined in this Agreement.
Notwithstanding anything herein to the
contrary, it is explicitly understood that
the term ‘‘Regulatory Responsibilities’’
does not include, and ISE Mercury 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 ISE Mercury’s own
marketplaces, including without
limitation ISE Mercury’s Rules relating
to the rights and obligations of market
makers;
(b) registration pursuant to its
applicable rules of associated persons
(i.e., registration rules that are not
Common Rules);
(c) discharge of its duties and
obligations as a Designated Examining
Authority pursuant to Rule 17d–1 under
the Exchange Act; and
(d) any ISE Mercury Rules that are not
Common Rules.
3. Dual Members. Prior to the
Effective Date, ISE Mercury shall
furnish FINRA with a current list of
Dual Members, which shall be updated
no less frequently than once each
quarter.
4. No Charge. There shall be no
charge to ISE Mercury by FINRA for
performing the Regulatory
Responsibilities and Enforcement
Responsibilities under this Agreement
except as hereinafter provided. FINRA
shall provide ISE Mercury with ninety
(90) days advance written notice in the
event FINRA decides to impose any
charges to ISE Mercury for performing
the Regulatory Responsibilities under
this Agreement. If FINRA determines to
impose a charge, ISE Mercury shall have
the right at the time of the imposition
of such charge to terminate this
Agreement; provided, however, that
FINRA’s Regulatory Responsibilities
under this Agreement shall continue
until the Commission approves the
termination of this Agreement.
5. Reassignment of Regulatory
Responsibilities. Notwithstanding any
provision hereof, this Agreement shall
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be subject to any statute, or any rule or
order of the Commission. To the extent
such action is inconsistent with this
Agreement, such action shall supersede
the provisions hereof to the extent
necessary for them to be properly
effectuated and the provisions hereof in
that respect shall be null and void.
6. Notification of Violations. In the
event that FINRA becomes aware of
apparent violations of any ISE Mercury
Rules, which are not listed as Common
Rules, discovered pursuant to the
performance of the Regulatory
Responsibilities assumed hereunder,
FINRA shall notify ISE Mercury of those
apparent violations for such response as
ISE Mercury deems appropriate. In the
event ISE Mercury becomes aware of
apparent violations of the Common
Rules, discovered pursuant to the
performance of the Retained
Responsibilities, ISE Mercury shall
notify FINRA of those apparent
violations and such matters shall be
handled by FINRA as provided in this
Agreement. Apparent violations of all
the Common Rules shall be processed
by, and enforcement proceedings in
respect thereto shall be conducted by
FINRA as provided hereinbefore;
provided, however, that in the event a
Dual Member is the subject of an
investigation relating to a transaction on
ISE Mercury, ISE Mercury may in its
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. FINRA shall
make available to ISE Mercury all
information obtained by FINRA in the
performance by it of the Regulatory
Responsibilities hereunder in respect to
the Dual Members subject to this
Agreement. In particular, and not in
limitation of the foregoing, FINRA shall
furnish ISE Mercury any information it
obtains about Dual Members which
reflects adversely on their financial
condition. It is understood that such
information is of an extremely sensitive
nature and, accordingly, ISE Mercury
acknowledges and agrees to take all
reasonable steps to maintain its
confidentiality. ISE Mercury shall make
available to FINRA any information
coming to its attention that reflects
adversely on the financial condition of
Dual Members or indicates possible
violations of applicable laws, rules or
regulations by such firms.
8. Dual Member Applications.
(a) Dual Members subject to this
Agreement shall be required to submit,
and FINRA shall be responsible for
processing and acting upon all
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applications submitted on behalf of
allied persons, partners, officers,
registered personnel and any other
person required to be approved by the
ISE Mercury Rules and FINRA Rules or
associated with Dual Members thereof.
Upon request, FINRA shall advise ISE
Mercury of any changes of allied
members, partners, officers, registered
personnel and other persons required to
be approved by the ISE Mercury Rules
and FINRA Rules.
(b) Dual Members shall be required to
send to FINRA all letters, termination
notices or other material respecting the
individuals listed in paragraph 8(a).
(c) When as a result of processing
such submissions FINRA becomes
aware of a statutory disqualification as
defined in the Exchange Act with
respect to a Dual Member, FINRA shall
determine pursuant to Sections 15A(g)
and/or Section 6(c) of the Exchange Act
the acceptability or continued
applicability of the person to whom
such disqualification applies and keep
ISE Mercury advised of its actions in
this regard for such subsequent
proceedings as ISE Mercury may
initiate.
(d) Notwithstanding the foregoing,
FINRA shall not review the membership
application, reports, filings, fingerprint
cards, notices, or other writings filed to
determine if such documentation
submitted by a broker or dealer, or a
person associated therewith or other
persons required to register or qualify by
examination: (i) meets the ISE Mercury
requirements for general membership or
for specified categories of membership
or participation in ISE Mercury, such as
(A) Primary Market Maker Membership
(‘‘PMM’’); (B) Competitive Market
Maker Membership (‘‘CMM’’); (C)
Electronic Access Membership (‘‘EAM’’)
(or any similar type of ISE Mercury
membership or participation that is
created after this Agreement is
executed); or (ii) meets the ISE Mercury
requirements to be associated with, or
employed by, a ISE Mercury member or
participant in any capacity, such a
Designated Trading Representative
(‘‘DTR’’) (or any similar type of
participation, employment category or
title, or associate-person category or
class that is created after this Agreement
is executed). FINRA shall not review
applications or other documentation
filed to request a change in the rights or
status described in this paragraph 8(d),
including termination or limitation on
activities, of a member or a participant
of ISE Mercury, or a person associated
with, or requesting association with, a
member or participant of ISE Mercury.
9. Branch Office Information. FINRA
shall also be responsible for processing
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and, if required, acting upon all requests
for the opening, address changes, and
terminations of branch offices by Dual
Members and any other applications
required of Dual Members with respect
to the Common Rules as they may be
amended from time to time. Upon
request, FINRA shall advise ISE
Mercury of the opening, address change
and termination of branch and main
offices of Dual Members and the names
of such branch office managers.
10. Customer Complaints. ISE
Mercury shall forward to FINRA copies
of all customer complaints involving
Dual Members received by ISE Mercury
relating to FINRA’s Regulatory
Responsibilities under this Agreement.
It shall be FINRA’s responsibility to
review and take appropriate action in
respect to such complaints.
11. No Restrictions on Regulatory
Action. Nothing contained in this
Agreement shall restrict or in any way
encumber the right of either party to
conduct its own independent or
concurrent investigation, examination
or enforcement proceeding of or against
Dual Members, as either party, in its
sole discretion, shall deem appropriate
or necessary.
12. Termination. This Agreement may
be terminated by ISE Mercury or FINRA
at any time upon the approval of the
Commission after one (1) year’s written
notice to the other party (or such shorter
time as may be agreed by the parties),
except as provided in paragraph 4.
13. Effective Date. This Agreement
shall be effective upon approval of the
Commission.
14. Arbitration. In the event of a
dispute between the parties as to the
operation of this Agreement, ISE
Mercury and FINRA hereby agree that
any such dispute shall be settled by
arbitration in Washington, DC in
accordance with the rules of the
American Arbitration Association then
in effect, or such other procedures as the
parties may mutually agree upon.
Judgment on the award rendered by the
arbitrator(s) may be entered in any court
having jurisdiction.
15. Separate Agreement. This
Agreement is wholly separate from (1)
the multiparty Agreement made
pursuant to Rule 17d–2 of the Exchange
Act among BATS Exchange, Inc., BOX
Options Exchange, LLC, the Chicago
Board Options Exchange, Incorporated,
C2 Options Exchange, Incorporated, the
International Securities Exchange, LLC,
Financial Industry Regulatory
Authority, Inc., Miami International
Securities Exchange, LLC, the New York
Stock Exchange, LLC, the NYSE MKT
LLC, the NYSE Arca Inc., The NASDAQ
Stock Market LLC, NASDAQ OMX BX,
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8569
Inc., and the NASDAQ OMX PHLX, LLC
approved by the Commission on
December 5, 2012 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 or (2) the multiparty
Agreement made pursuant to Rule 17d–
2 of the Exchange Act among NYSE
MKT LLC, BATS Exchange, Inc., BOX
Options Exchange, LLC, C2 Options
Exchange, Incorporated, Chicago Board
Options Exchange, Incorporated,
International Securities Exchange LLC,
Financial Industry Regulatory
Authority, Inc., NYSE Arca, Inc., The
NASDAQ Stock Market LLC, NASDAQ
OMX BX, Inc., NASDAQ OMX PHLX,
Inc. and Miami International Securities
Exchange, LLC, approved by the
Commission on December 5, 2012
involving options-related market
surveillance matters and such
agreements as may be amended from
time to time.
16. Notification of Members. ISE
Mercury and FINRA shall notify Dual
Members of this Agreement after the
Effective Date by means of a uniform
joint notice.
17. Amendment. This Agreement may
be amended in writing duly approved
by each party. All such amendments
must be filed with and approved by the
Commission before they become
effective.
18. Limitation of Liability. Neither
FINRA nor ISE Mercury nor any of their
respective directors, governors, officers
or employees shall be liable to the other
party to this Agreement for any liability,
loss or damage resulting from or
claimed to have resulted from any
delays, inaccuracies, errors or omissions
with respect to the provision of
Regulatory Responsibilities as provided
hereby or for the failure to provide any
such responsibility, except with respect
to such liability, loss or damages as
shall have been suffered by one or the
other of FINRA or ISE Mercury and
caused by the willful misconduct of the
other party or their respective directors,
governors, officers or employees. No
warranties, express or implied, are made
by FINRA or ISE Mercury with respect
to any of the responsibilities to be
performed by each of them hereunder.
19. Severability. Any term or
provision of this Agreement that is
invalid or unenforceable in any
jurisdiction shall, as to such
jurisdiction, be ineffective to the extent
of such invalidity or unenforceability
without rendering invalid or
unenforceable the remaining terms and
provisions of this Agreement or
E:\FR\FM\19FEN1.SGM
19FEN1
8570
Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Notices
affecting the validity or enforceability of
any of the terms or provisions of this
Agreement in any other jurisdiction.
20. Relief from Responsibility.
Pursuant to Sections 17(d)(1)(A) and
19(g) of the Exchange Act and Rule 17d–
2 thereunder, FINRA and ISE Mercury
join in requesting the Commission,
upon its approval of this Agreement or
any part thereof, to relieve ISE Mercury
of any and all responsibilities with
respect to matters allocated to FINRA
pursuant to this Agreement; provided,
however, that this Agreement shall not
be effective until the Effective Date.
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.
FINANCIAL INDUSTRY REGULATORY
AUTHORITY, INC.
By lllllllllllllllll
Name:
Title:
ISE MERCURY, LLC
By lllllllllllllllll
Name:
Title:
EXHIBIT 1
ISE MERCURY CERTIFICATION OF
COMMON RULES
ISE Mercury hereby certifies that the
requirements contained in the rules
listed below for ISE Mercury are
identical to, or substantially similar to,
the comparable FINRA Rules or SEC
Rules identified.
ISE Mercury rule
FINRA or SEC rule 1
400 Just and Equitable Principles of Trade .............................................
FINRA Rule 2010 Standards of Commercial Honor and Just and Equitable Principles of Trade; FINRA Rule 0140(a) Applicability.
Section 15(f) of the Securities Exchange Act of 1934.
FINRA Rule 4530(a)(1)(A) and (2) Reporting Requirements.
FINRA Rule 3310 Anti-Money Laundering Compliance Program.
FINRA By-Laws, Article V, Section 3.
FINRA Rule 1250 Continuing Education Requirements.
Rule 17a–5 of the Securities Exchange Act of 1934.
FINRA rule 11870 Customer Account Transfer Contracts.
FINRA Rule 3230 Telemarketing.
FINRA Rule 4511(a) Books and Records—Requirements.
408(a)(1) Prevention of the Misuse of Material, Nonpublic Information ..
409 Disciplinary Action # ..........................................................................
420 Anti-Money Laundering Compliance Program # ...............................
603 Termination of Registered Persons ..................................................
604 Continuing Education for Registered Persons 2 # ............................
614 Statements of Financial Condition to Customers .............................
622 Transfer of Accounts .........................................................................
626 Telephone Solicitation .......................................................................
1400(a) Maintenance, Retention, and Furnishing of Books, Records
and Other Information 3.
# INRA shall not have Regulatory Responsibilities regarding notification or reporting to ISE Mercury. In addition, FINRA shall only have Regulatory Responsibilities to the extent the exercise of discretion by ISE Mercury is the same as FINRA.
1 ISE Mercury will be responsible for any significant differences between its rules and the comparable FINRA rule identified, until such time
amendments to such rule(s) become operative.
2 FINRA shall not have Regulatory Responsibilities with regard to the application of the rule to the Series 56 registration.
3 FINRA shall not have Regulatory Responsibilities regarding the requirement to ‘‘keep current and preserve such books and records as the
Exchange may prescribe;’’ responsibility for such requirement remains with ISE Mercury.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the
Act 14 and Rule 17d–2 thereunder,15
after March 7, 2016, the Commission
may, by written notice, declare the plan
submitted by ISE Mercury and FINRA,
File No. 4–697, 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.
IV. Solicitation of Comments
In order to assist the Commission in
determining whether to approve the
proposed 17d–2 Plan and to relieve ISE
14 15
15 17
U.S.C. 78q(d)(1).
CFR 240.17d–2.
VerDate Sep<11>2014
17:59 Feb 18, 2016
Jkt 238001
Mercury of the responsibilities which
would be assigned to FINRA, interested
persons are invited to submit written
data, views, and arguments concerning
the foregoing. Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/other.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number 4–
697 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, Station Place, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number 4–697. 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 (https://www.sec.gov/rules/
other.shtml). Copies of the submission,
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
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 ISE
Mercury 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 4–697 and
should be submitted on or before March
7, 2016.
16 17
E:\FR\FM\19FEN1.SGM
CFR 200.30–3(a)(34).
19FEN1
Federal Register / Vol. 81, No. 33 / Friday, February 19, 2016 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–03300 Filed 2–18–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Extension:
Schedule 14D–9F, SEC File No. 270–339,
OMB Control No. 3235–0382.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Schedule 14D–9F (17 CFR 240.14d–
103) under the Securities Exchange Act
of 1934 (15 U.S.C. 78 et seq.) is used by
any foreign private issuer incorporated
or organized under the laws of Canada
or by any director or officer of such
issuer, where the issuer is the subject of
a cash tender or exchange offer for a
class of securities filed on Schedule
14D–1F. The information required to be
filed with the Commission is intended
to permit verification of compliance
with the securities law requirements
and assures the public availability of
such information. We estimate that
Schedule 14D–9F takes approximately 2
hours per response to prepare and is
filed by approximately 6 respondents
annually for a total reporting burden of
12 hours (2 hours per response x 6
responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
VerDate Sep<11>2014
17:59 Feb 18, 2016
Jkt 238001
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: February 12, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–03403 Filed 2–18–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE., Washington, DC
20549–2736.
Extension: Rule 14f–1, SEC File No. 270–127,
OMB Control No. 3235–0108.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Under Exchange Act Rule 14f–1 (17
CFR 240.14f–1), if a person or persons
have acquired securities of an issuer in
a transaction subject to Sections 13(d) or
14(d) of the Exchange Act, and changes
a majority of the directors of the issuer
otherwise than at a meeting of security
holders, then the issuer must file with
the Commission and transmit to security
holders information related to the
change in directors within 10 days prior
to the date the new majority takes office
as directors. The information filed
under Rule 14f–1 must be filed with the
Commission and is publicly available.
We estimate that it takes approximately
18 burden hours to provide the
information required under Rule 14f–1
and that the information is filed by
approximately 64 respondents for a total
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
8571
annual reporting burden of 1,152 hours
(18 hours per response x 64 responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Please direct your written comment to
Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: February 12, 2016.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–03400 Filed 2–18–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–77125; File No. SR–Phlx–
2016–14]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Rule
1066
February 12, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
4, 2016, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
1 15
2 17
E:\FR\FM\19FEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
19FEN1
]]>Agencies
[Federal Register Volume 81, Number 33 (Friday, February 19, 2016)]
[Notices]
[Pages 8566-8571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03300]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77122; File No. 4-697]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of Proposed Plan for the Allocation of
Regulatory Responsibilities Between the Financial Industry Regulatory
Authority, Inc. and ISE Mercury, LLC
February 11, 2016.
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 February 9, 2016, ISE Mercury, LLC (``ISE Mercury'') and the
Financial Industry Regulatory Authority, Inc. (``FINRA'') (together
with ISE Mercury, the ``Parties'') filed with the Securities and
Exchange Commission (``Commission'' or ``SEC'') a plan for the
allocation of regulatory responsibilities, dated February 8, 2016
(``17d-2 Plan'' or the ``Plan''). 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'') for
compliance with certain rules that are substantially
[[Page 8567]]
identical across multiple SROs. Such regulatory duplication would add
unnecessary expenses for common members and their SROs.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\6\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q(d)(1).
\6\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------
To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\7\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\8\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
---------------------------------------------------------------------------
\7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\8\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\9\ Rule 17d-2 permits SROs
to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for appropriate notice and comment, it determines that
the plan is necessary or appropriate in the public interest and for the
protection of investors; to foster cooperation and coordination among
the SROs; to remove impediments to, and foster the development of, a
national market system and a national clearance and settlement system;
and is in conformity with the factors set forth in Section 17(d) of the
Act. Commission approval of a plan filed pursuant to Rule 17d-2
relieves an SRO of those regulatory responsibilities allocated by the
plan to another SRO.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. Proposed Plan
The proposed 17d-2 Plan is intended to reduce regulatory
duplication for firms that are common members of both ISE Mercury and
FINRA.\10\ Pursuant to the proposed 17d-2 Plan, FINRA would assume
certain examination and enforcement responsibilities for common members
with respect to certain applicable laws, rules, and regulations.
---------------------------------------------------------------------------
\10\ The proposed 17d-2 Plan refers to these common members as
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
The text of the Plan delineates the proposed regulatory
responsibilities with respect to the Parties. Included in the proposed
Plan is an exhibit (the ``ISE Mercury Certification of Common Rules,''
referred to herein as the ``Certification'') that lists every ISE
Mercury rule, and select federal securities laws, rules, and
regulations, for which FINRA would bear responsibility under the Plan
for overseeing and enforcing with respect to ISE Mercury members that
are also members of FINRA and the associated persons therewith (``Dual
Members'').
Specifically, under the 17d-2 Plan, FINRA would assume examination
and enforcement responsibility relating to compliance by Dual Members
with the rules of ISE Mercury that are substantially similar to the
applicable rules of FINRA,\11\ as well as any provisions of the federal
securities laws and the rules and regulations thereunder delineated in
the Certification (``Common Rules''). In the event that a Dual Member
is the subject of an investigation relating to a transaction on ISE
Mercury, the plan acknowledges that ISE Mercury may, in its discretion,
exercise concurrent jurisdiction and responsibility for such
matter.\12\
---------------------------------------------------------------------------
\11\ See paragraph 1(b) of the proposed 17d-2 Plan (defining
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan
(defining Regulatory Responsibilities). Paragraph 2 of the Plan
provides that annually, or more frequently as required by changes in
either ISE MERCURY rules or FINRA rules, the parties shall review
and update, if necessary, the list of Common Rules. Further,
paragraph 3 of the Plan provides that ISE MERCURY shall furnish
FINRA with a list of Dual Members, and shall update the list no less
frequently than once each calendar quarter.
\12\ See paragraph 6 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
Under the Plan, ISE Mercury would retain full responsibility for
surveillance and enforcement with respect to trading activities or
practices involving ISE Mercury's own marketplace, including, without
limitation, registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules); its
duties as a DEA pursuant to Rule 17d-1 under the Act; and any ISE
Mercury rules that are not Common Rules.\13\
---------------------------------------------------------------------------
\13\ See paragraph 2 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
The text of the proposed 17d-2 Plan is as follows:
AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND ISE
MERCURY, LLC PURSUANT TO RULE 17d-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934
This Agreement, by and between Financial Industry Regulatory
Authority, Inc. (``FINRA'') and ISE Mercury, LLC (``ISE Mercury''), is
made this 8th day of February, 2016 (the ``Agreement''), pursuant to
Section 17(d) of the Securities Exchange Act of 1934 (the ``Exchange
Act'') and Rule 17d-2 thereunder which permits agreements between self-
regulatory organizations to allocate regulatory responsibility to
eliminate regulatory duplication. FINRA and ISE Mercury may be referred
to individually as a ``party'' and together as the ``parties.''
WHEREAS, FINRA and ISE Mercury desire to reduce duplication in the
examination of their Dual Members (as defined herein) and in the filing
and processing of certain registration and membership records; and
WHEREAS, FINRA and ISE Mercury desire to execute an agreement
covering such subjects pursuant to the provisions of Rule 17d-2 under
the Exchange Act and to file such agreement with the Securities and
Exchange Commission (the ``SEC'' or ``Commission'') for its approval.
NOW, THEREFORE, in consideration of the mutual covenants contained
hereinafter, FINRA and ISE Mercury 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:
[[Page 8568]]
(a) ``ISE Mercury Rules'' or ``FINRA Rules'' shall mean the rules
of ISE Mercury or FINRA, respectively, as the rules of an exchange or
association are defined in Exchange Act Section 3(a)(27).
(b) ``Common Rules'' shall mean the ISE Mercury Rules that are
substantially similar to the applicable FINRA Rules set forth in
Exhibit 1 in that examination for compliance with such rules would not
require FINRA to develop one or more new examination standards,
modules, procedures, or criteria in order to analyze the application of
the rule, or a Dual Member's activity, conduct, or output in relation
to such rule.
(c) ``Dual Members'' shall mean those ISE Mercury members that are
also members of FINRA and the associated persons therewith.
(d) ``Effective Date'' shall have the meaning set forth in
paragraph 13.
(e) ``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with the FINRA Code of Procedure
(the Rule 9000 Series) and other applicable FINRA procedural rules, to
determine whether violations of Common Rules have occurred, and if such
violations are deemed to have occurred, the imposition of appropriate
sanctions as specified under the FINRA's Code of Procedure and
sanctions guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities and Enforcement Responsibilities relating to
compliance by the Dual Members with the Common Rules and the provisions
of the Exchange Act and the rules and regulations thereunder, and other
applicable laws, rules and regulations, each as set forth on Exhibit 1
attached hereto.
2. Regulatory and Enforcement Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
ISE Mercury furnished FINRA with a current list of Common Rules and
certified to FINRA that such rules are substantially similar to the
corresponding FINRA Rule (the ``Certification''). FINRA hereby agrees
that the rules listed in the Certification are Common Rules as defined
in this Agreement. Each year following the Effective Date of this
Agreement, or more frequently if required by changes in either the ISE
Mercury Rules or FINRA Rules, ISE Mercury shall submit an updated list
of Common Rules to FINRA for review which shall add ISE Mercury Rules
not included in the current list of Common Rules that qualify as Common
Rules as defined in this Agreement; delete ISE Mercury Rules included
in the current list of Common Rules that no longer qualify as Common
Rules as defined in this Agreement; and confirm that the remaining
rules on the current list of Common Rules continue to be ISE Mercury
Rules that qualify as Common Rules as defined in this Agreement. Within
30 days of receipt of such updated list, FINRA shall confirm in writing
whether the rules listed in any updated list are Common Rules as
defined in this Agreement. Notwithstanding anything herein to the
contrary, it is explicitly understood that the term ``Regulatory
Responsibilities'' does not include, and ISE Mercury 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 ISE Mercury's own marketplaces, including
without limitation ISE Mercury's Rules relating to the rights and
obligations of market makers;
(b) registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of its duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
(d) any ISE Mercury Rules that are not Common Rules.
3. Dual Members. Prior to the Effective Date, ISE Mercury shall
furnish FINRA with a current list of Dual Members, which shall be
updated no less frequently than once each quarter.
4. No Charge. There shall be no charge to ISE Mercury by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter provided.
FINRA shall provide ISE Mercury with ninety (90) days advance written
notice in the event FINRA decides to impose any charges to ISE Mercury
for performing the Regulatory Responsibilities under this Agreement. If
FINRA determines to impose a charge, ISE Mercury shall have the right
at the time of the imposition of such charge to terminate this
Agreement; provided, however, that FINRA's Regulatory Responsibilities
under this Agreement shall continue until the Commission approves the
termination of this Agreement.
5. Reassignment of Regulatory Responsibilities. Notwithstanding any
provision hereof, this Agreement shall be subject to any statute, or
any rule or order of the Commission. To the extent such action is
inconsistent with this Agreement, such action shall supersede the
provisions hereof to the extent necessary for them to be properly
effectuated and the provisions hereof in that respect shall be null and
void.
6. Notification of Violations. In the event that FINRA becomes
aware of apparent violations of any ISE Mercury Rules, which are not
listed as Common Rules, discovered pursuant to the performance of the
Regulatory Responsibilities assumed hereunder, FINRA shall notify ISE
Mercury of those apparent violations for such response as ISE Mercury
deems appropriate. In the event ISE Mercury becomes aware of apparent
violations of the Common Rules, discovered pursuant to the performance
of the Retained Responsibilities, ISE Mercury shall notify FINRA of
those apparent violations and such matters shall be handled by FINRA as
provided in this Agreement. Apparent violations of all the Common Rules
shall be processed by, and enforcement proceedings in respect thereto
shall be conducted by FINRA as provided hereinbefore; provided,
however, that in the event a Dual Member is the subject of an
investigation relating to a transaction on ISE Mercury, ISE Mercury may
in its 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. FINRA shall make available to ISE Mercury
all information obtained by FINRA in the performance by it of the
Regulatory Responsibilities hereunder in respect to the Dual Members
subject to this Agreement. In particular, and not in limitation of the
foregoing, FINRA shall furnish ISE Mercury any information it obtains
about Dual Members which reflects adversely on their financial
condition. It is understood that such information is of an extremely
sensitive nature and, accordingly, ISE Mercury acknowledges and agrees
to take all reasonable steps to maintain its confidentiality. ISE
Mercury shall make available to FINRA any information coming to its
attention that reflects adversely on the financial condition of Dual
Members or indicates possible violations of applicable laws, rules or
regulations by such firms.
8. Dual Member Applications.
(a) Dual Members subject to this Agreement shall be required to
submit, and FINRA shall be responsible for processing and acting upon
all
[[Page 8569]]
applications submitted on behalf of allied persons, partners, officers,
registered personnel and any other person required to be approved by
the ISE Mercury Rules and FINRA Rules or associated with Dual Members
thereof. Upon request, FINRA shall advise ISE Mercury of any changes of
allied members, partners, officers, registered personnel and other
persons required to be approved by the ISE Mercury Rules and FINRA
Rules.
(b) Dual Members shall be required to send to FINRA all letters,
termination notices or other material respecting the individuals listed
in paragraph 8(a).
(c) When as a result of processing such submissions FINRA becomes
aware of a statutory disqualification as defined in the Exchange Act
with respect to a Dual Member, FINRA shall determine pursuant to
Sections 15A(g) and/or Section 6(c) of the Exchange Act the
acceptability or continued applicability of the person to whom such
disqualification applies and keep ISE Mercury advised of its actions in
this regard for such subsequent proceedings as ISE Mercury may
initiate.
(d) Notwithstanding the foregoing, FINRA shall not review the
membership application, reports, filings, fingerprint cards, notices,
or other writings filed to determine if such documentation submitted by
a broker or dealer, or a person associated therewith or other persons
required to register or qualify by examination: (i) meets the ISE
Mercury requirements for general membership or for specified categories
of membership or participation in ISE Mercury, such as (A) Primary
Market Maker Membership (``PMM''); (B) Competitive Market Maker
Membership (``CMM''); (C) Electronic Access Membership (``EAM'') (or
any similar type of ISE Mercury membership or participation that is
created after this Agreement is executed); or (ii) meets the ISE
Mercury requirements to be associated with, or employed by, a ISE
Mercury member or participant in any capacity, such a Designated
Trading Representative (``DTR'') (or any similar type of participation,
employment category or title, or associate-person category or class
that is created after this Agreement is executed). FINRA shall not
review applications or other documentation filed to request a change in
the rights or status described in this paragraph 8(d), including
termination or limitation on activities, of a member or a participant
of ISE Mercury, or a person associated with, or requesting association
with, a member or participant of ISE Mercury.
9. Branch Office Information. FINRA shall also be responsible for
processing and, if required, acting upon all requests for the opening,
address changes, and terminations of branch offices by Dual Members and
any other applications required of Dual Members with respect to the
Common Rules as they may be amended from time to time. Upon request,
FINRA shall advise ISE Mercury of the opening, address change and
termination of branch and main offices of Dual Members and the names of
such branch office managers.
10. Customer Complaints. ISE Mercury shall forward to FINRA copies
of all customer complaints involving Dual Members received by ISE
Mercury relating to FINRA's Regulatory Responsibilities under this
Agreement. It shall be FINRA's responsibility to review and take
appropriate action in respect to such complaints.
11. No Restrictions on Regulatory Action. Nothing contained in this
Agreement shall restrict or in any way encumber the right of either
party to conduct its own independent or concurrent investigation,
examination or enforcement proceeding of or against Dual Members, as
either party, in its sole discretion, shall deem appropriate or
necessary.
12. Termination. This Agreement may be terminated by ISE Mercury or
FINRA at any time upon the approval of the Commission after one (1)
year's written notice to the other party (or such shorter time as may
be agreed by the parties), except as provided in paragraph 4.
13. Effective Date. This Agreement shall be effective upon approval
of the Commission.
14. Arbitration. In the event of a dispute between the parties as
to the operation of this Agreement, ISE Mercury and FINRA hereby agree
that any such dispute shall be settled by arbitration in Washington, DC
in accordance with the rules of the American Arbitration Association
then in effect, or such other procedures as the parties may mutually
agree upon. Judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction.
15. Separate Agreement. This Agreement is wholly separate from (1)
the multiparty Agreement made pursuant to Rule 17d-2 of the Exchange
Act among BATS Exchange, Inc., BOX Options Exchange, LLC, the Chicago
Board Options Exchange, Incorporated, C2 Options Exchange,
Incorporated, the International Securities Exchange, LLC, Financial
Industry Regulatory Authority, Inc., Miami International Securities
Exchange, LLC, the New York Stock Exchange, LLC, the NYSE MKT LLC, the
NYSE Arca Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., and
the NASDAQ OMX PHLX, LLC approved by the Commission on December 5, 2012
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 or
(2) the multiparty Agreement made pursuant to Rule 17d-2 of the
Exchange Act among NYSE MKT LLC, BATS Exchange, Inc., BOX Options
Exchange, LLC, C2 Options Exchange, Incorporated, Chicago Board Options
Exchange, Incorporated, International Securities Exchange LLC,
Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., The
NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, Inc. and
Miami International Securities Exchange, LLC, approved by the
Commission on December 5, 2012 involving options-related market
surveillance matters and such agreements as may be amended from time to
time.
16. Notification of Members. ISE Mercury and FINRA shall notify
Dual Members of this Agreement after the Effective Date by means of a
uniform joint notice.
17. Amendment. This Agreement may be amended in writing duly
approved by each party. All such amendments must be filed with and
approved by the Commission before they become effective.
18. Limitation of Liability. Neither FINRA nor ISE Mercury nor any
of their respective directors, governors, officers or employees shall
be liable to the other party to this Agreement for any liability, loss
or damage resulting from or claimed to have resulted from any delays,
inaccuracies, errors or omissions with respect to the provision of
Regulatory Responsibilities as provided hereby or for the failure to
provide any such responsibility, except with respect to such liability,
loss or damages as shall have been suffered by one or the other of
FINRA or ISE Mercury and caused by the willful misconduct of the other
party or their respective directors, governors, officers or employees.
No warranties, express or implied, are made by FINRA or ISE Mercury
with respect to any of the responsibilities to be performed by each of
them hereunder.
19. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or
[[Page 8570]]
affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
20. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and ISE
Mercury join in requesting the Commission, upon its approval of this
Agreement or any part thereof, to relieve ISE Mercury of any and all
responsibilities with respect to matters allocated to FINRA pursuant to
this Agreement; provided, however, that this Agreement shall not be
effective until the Effective Date.
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.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
By---------------------------------------------------------------------
Name:
Title:
ISE MERCURY, LLC
By---------------------------------------------------------------------
Name:
Title:
EXHIBIT 1
ISE MERCURY CERTIFICATION OF COMMON RULES
ISE Mercury hereby certifies that the requirements contained in the
rules listed below for ISE Mercury are identical to, or substantially
similar to, the comparable FINRA Rules or SEC Rules identified.
------------------------------------------------------------------------
ISE Mercury rule FINRA or SEC rule 1
------------------------------------------------------------------------
400 Just and Equitable Principles of FINRA Rule 2010 Standards of
Trade. Commercial Honor and Just and
Equitable Principles of Trade;
FINRA Rule 0140(a)
Applicability.
408(a)(1) Prevention of the Misuse of Section 15(f) of the Securities
Material, Nonpublic Information. Exchange Act of 1934.
409 Disciplinary Action .............. FINRA Rule 4530(a)(1)(A) and
(2) Reporting Requirements.
420 Anti-Money Laundering Compliance FINRA Rule 3310 Anti-Money
Program . Laundering Compliance Program.
603 Termination of Registered Persons.. FINRA By-Laws, Article V,
Section 3.
604 Continuing Education for Registered FINRA Rule 1250 Continuing
Persons 2 . Education Requirements.
614 Statements of Financial Condition Rule 17a-5 of the Securities
to Customers. Exchange Act of 1934.
622 Transfer of Accounts............... FINRA rule 11870 Customer
Account Transfer Contracts.
626 Telephone Solicitation............. FINRA Rule 3230 Telemarketing.
1400(a) Maintenance, Retention, and FINRA Rule 4511(a) Books and
Furnishing of Books, Records and Other Records--Requirements.
Information 3.
------------------------------------------------------------------------
INRA shall not have Regulatory Responsibilities regarding notification
or reporting to ISE Mercury. In addition, FINRA shall only have
Regulatory Responsibilities to the extent the exercise of discretion
by ISE Mercury is the same as FINRA.
1 ISE Mercury will be responsible for any significant differences
between its rules and the comparable FINRA rule identified, until such
time amendments to such rule(s) become operative.
2 FINRA shall not have Regulatory Responsibilities with regard to the
application of the rule to the Series 56 registration.
3 FINRA shall not have Regulatory Responsibilities regarding the
requirement to ``keep current and preserve such books and records as
the Exchange may prescribe;'' responsibility for such requirement
remains with ISE Mercury.
III. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the Act \14\ and Rule 17d-2
thereunder,\15\ after March 7, 2016, the Commission may, by written
notice, declare the plan submitted by ISE Mercury and FINRA, File No.
4-697, 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.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78q(d)(1).
\15\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
IV. Solicitation of Comments
In order to assist the Commission in determining whether to approve
the proposed 17d-2 Plan and to relieve ISE Mercury of the
responsibilities which would be assigned to FINRA, interested persons
are invited to submit written data, views, and arguments concerning the
foregoing. Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/other.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number 4-697 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street NE., Washington,
DC 20549-1090.
All submissions should refer to File Number 4-697. 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 (https://www.sec.gov/rules/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed plan that are filed with the
Commission, and all written communications relating to the proposed
plan between the Commission and any person, other than those that may
be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for Web site viewing and printing in the
Commission's Public Reference Room, on official business days between
the hours of 10:00 a.m. and 3:00 p.m. Copies of the plan also will be
available for inspection and copying at the principal offices of ISE
Mercury 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 4-697
and should be submitted on or before March 7, 2016.
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(34).
[[Page 8571]]
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For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03300 Filed 2-18-16; 8:45 am]
BILLING CODE 8011-01-P
