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. and BOX Options Exchange LLC, 14560-14563 [2017-05506]

Download as PDF 14560 Federal Register / Vol. 82, No. 53 / Tuesday, March 21, 2017 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80240; File No. 4–709] 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. and BOX Options Exchange LLC March 14, 2017. 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 January 12, 2017, BOX Options Exchange LLC (‘‘BOX’’) and the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) (together, the ‘‘Parties’’) filed with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) a plan for the allocation of regulatory responsibilities, dated March 2, 2017 (‘‘17d–2 Plan’’ or the ‘‘Plan’’). The Commission is publishing this notice to solicit comments on the 17d–2 Plan from interested persons. mstockstill on DSK3G9T082PROD with NOTICES 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) 1 15 U.S.C. 78q(d). CFR 240.17d–2. 3 15 U.S.C. 78s(g)(1). 4 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively. 5 15 U.S.C. 78q(d)(1). 6 See Securities Act Amendments of 1975, Report of the Senate Committee on Banking, Housing, and Urban Affairs to Accompany S. 249, S. Rep. No. 94– 75, 94th Cong., 1st Session 32 (1975). 2 17 VerDate Sep<11>2014 16:47 Mar 20, 2017 Jkt 241001 authorizes the Commission, by rule or order, to relieve an SRO of the responsibility to receive regulatory reports, to examine for and enforce compliance with applicable statutes, rules, and regulations, or to perform other specified regulatory functions. To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d–1 and Rule 17d–2 under the Act.7 Rule 17d–1 authorizes the Commission to name a single SRO as the designated examining authority (‘‘DEA’’) to examine common members for compliance with the financial responsibility requirements imposed by the Act, or by Commission or SRO rules.8 When an SRO has been named as a common member’s DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d–1 deals only with an SRO’s obligations to enforce member compliance with financial responsibility requirements. Rule 17d–1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including sales practices and trading activities and practices. To address regulatory duplication in these and other areas, the Commission adopted Rule 17d–2 under the Act.9 Rule 17d–2 permits SROs to propose joint plans for the allocation of regulatory responsibilities with respect to their common members. Under paragraph (c) of Rule 17d–2, the Commission may declare such a plan effective if, after providing for appropriate notice and comment, it determines that the plan is necessary or appropriate in the public interest and for the protection of investors; to foster cooperation and coordination among the SROs; to remove impediments to, and foster the development of, a national market system and a national clearance and settlement system; and is in conformity with the factors set forth in Section 17(d) of the Act. Commission approval of a plan filed pursuant to Rule 17d–2 relieves an SRO of those regulatory responsibilities allocated by the plan to another SRO. 7 17 CFR 240.17d–1 and 17 CFR 240.17d–2, respectively. 8 See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). 9 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 II. The Plan The proposed 17d–2 Plan is intended to reduce regulatory duplication for firms that are common members of both BOX 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 ‘‘BOX Options Exchange LLC Rules Certification for 17d–2 Agreement with FINRA,’’ referred to herein as the ‘‘Certification’’) that lists every BOX rule for which FINRA would bear responsibility under the Plan for overseeing and enforcing with respect to BOX 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 BOX that are substantially similar to the applicable rules of FINRA 11 delineated in the Certification (‘‘Common Rules’’). In the event that a Dual Member is the subject of an investigation relating to a transaction on BOX, the plan acknowledges that BOX may, in its discretion, exercise concurrent jurisdiction and responsibility for such matter.12 Under the Plan, BOX would retain full responsibility for surveillance, examination, investigation, and enforcement with respect to trading activities or practices involving BOX’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 BOX rules that are not Common Rules.13 The text of the proposed 17d–2 Plan is as follows: 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 BOX 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 BOX 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. 13 See paragraph 2 of the proposed 17d–2 Plan. E:\FR\FM\21MRN1.SGM 21MRN1 mstockstill on DSK3G9T082PROD with NOTICES Federal Register / Vol. 82, No. 53 / Tuesday, March 21, 2017 / Notices AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND BOX OPTIONS EXCHANGE LLC PURSUANT TO RULE 17d–2 UNDER THE SECURITIES EXCHANGE ACT OF 1934 This Agreement, by and between the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) and BOX Options Exchange LLC (‘‘BOX’’), is made this 2nd day of March, 2017 (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 BOX may be referred to individually as a ‘‘party’’ and together as the ‘‘parties.’’ Whereas, FINRA and BOX 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 BOX 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 BOX 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) ‘‘BOX Rules’’ or ‘‘FINRA Rules’’ shall mean: (i) the rules of BOX, or (ii) the rules of FINRA, respectively, as the rules of an exchange or association are defined in Exchange Act Section 3(a)(27). (b) ‘‘Common Rules’’ shall mean BOX Rules that are substantially similar to the applicable FINRA Rules and certain provisions of the Exchange Act and SEC rules set forth on Exhibit 1 in that examination for compliance with such provisions and rules would not require FINRA to develop one or more new examination standards, modules, procedures, or criteria in order to analyze the application of the provision or rule, or a Dual Member’s activity, conduct, or output in relation to such provision or rule. Common Rules shall not include any provisions regarding (i) notice, reporting or any other filings made directly to or from BOX, (ii) compliance with other referenced BOX Rules that are not Common Rules, (iii) exercise of discretion including, but not limited to exercise of exemptive authority, by BOX, (iv) prior written approval of BOX and (v) payment of fees or fines to BOX. (c) ‘‘Dual Members’’ shall mean those BOX members that are also members of FINRA and the associated persons therewith. (d) ‘‘Effective Date’’ shall be the date this Agreement is approved by the Commission. (e) ‘‘Enforcement Responsibilities’’ shall mean the conduct of appropriate proceedings, in accordance with FINRA’s Code of Procedure (the Rule 9000 Series) and VerDate Sep<11>2014 16:47 Mar 20, 2017 Jkt 241001 other applicable FINRA procedural rules, to determine whether violations of Common Rules have occurred, and if such violations are deemed to have occurred, the imposition of appropriate sanctions as specified under FINRA’s Code of Procedure and sanctions guidelines. (f) ‘‘Regulatory Responsibilities’’ shall mean the examination responsibilities and Enforcement Responsibilities relating to compliance by the Dual Members with the Common Rules and the provisions of the Exchange Act and the rules and regulations thereunder, and other applicable laws, rules and regulations, each as set forth on Exhibit 1 attached hereto. 2. Regulatory and Enforcement Responsibilities. FINRA shall assume Regulatory Responsibilities and Enforcement Responsibilities for Dual Members. Attached as Exhibit 1 to this Agreement and made part hereof, BOX furnished FINRA with a current list of Common Rules and certified to FINRA that such rules that are BOX Rules are substantially similar to the corresponding FINRA Rules (the ‘‘Certification’’). FINRA hereby agrees that the rules listed in the Certification are Common Rules as defined in this Agreement. Each year following the Effective Date of this Agreement, or more frequently if required by changes in either the rules of BOX or FINRA, BOX shall submit an updated list of Common Rules to FINRA for review which shall add BOX Rules not included in the current list of Common Rules that qualify as Common Rules as defined in this Agreement; delete BOX 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 BOX 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 BOX shall retain full responsibility for (unless otherwise addressed by separate agreement or rule) (collectively, the ‘‘Retained Responsibilities’’) the following: (a) surveillance, examination, investigation and enforcement with respect to trading activities or practices involving BOX’s own marketplace; (b) registration pursuant to its applicable rules of associated persons (i.e., registration rules that are not Common Rules); (c) discharge of its duties and obligations as a Designated Examining Authority pursuant to Rule 17d–1 under the Exchange Act; and (d) any BOX Rules that are not Common Rules as provided in paragraph 6. 3. Dual Members. Prior to the Effective Date, BOX 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 BOX by FINRA for performing the Regulatory Responsibilities and Enforcement PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 14561 Responsibilities under this Agreement except as hereinafter provided. FINRA shall provide BOX with ninety (90) days advance written notice in the event FINRA decides to impose any charges to BOX for performing the Regulatory Responsibilities under this Agreement. If FINRA determines to impose a charge, BOX shall have the right at the time of the imposition of such charge to terminate this Agreement; provided, however, that FINRA’s Regulatory Responsibilities under this Agreement shall continue until the Commission approves the termination of this Agreement. 5. Applicability of Certain Laws, Rules, Regulations or Orders. Notwithstanding any provision hereof, this Agreement shall be subject to any statute, or any rule or order of the SEC. To the extent such statute, rule or order is inconsistent with one or more provisions of this Agreement, the statute, rule or order shall supersede the provision(s) hereof to the extent necessary to be properly effectuated and the provision(s) hereof in that respect shall be null and void. 6. Notification of Violations. In the event that FINRA becomes aware of apparent violations of any BOX Rules, which are not listed as Common Rules, discovered pursuant to the performance of the Regulatory Responsibilities assumed hereunder, FINRA shall notify BOX of those apparent violations for such response as BOX deems appropriate. In the event that BOX becomes aware of apparent violations of any Common Rules, discovered pursuant to the performance of the Retained Responsibilities, BOX 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 FINRA as provided hereinbefore; provided, however, that in the event a Dual Member is the subject of an investigation relating to a transaction on BOX, BOX 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. (a) FINRA shall make available to BOX all information obtained by FINRA in the performance by it of the Regulatory Responsibilities hereunder with respect to the Dual Members subject to this Agreement. In particular, and not in limitation of the foregoing, FINRA shall furnish BOX any information it obtains about Dual Members which reflects adversely on their financial condition. BOX shall make available to FINRA any information coming to its attention that reflects adversely on the financial condition of Dual Members or indicates possible violations of applicable laws, rules or regulations by such firms. (b) The parties agree that documents or information shared shall be held in confidence, and used only for the purposes of carrying out their respective regulatory obligations. Neither party shall assert regulatory or other privileges as against the other with respect to documents or information that is required to be shared pursuant to this Agreement. E:\FR\FM\21MRN1.SGM 21MRN1 14562 Federal Register / Vol. 82, No. 53 / Tuesday, March 21, 2017 / Notices mstockstill on DSK3G9T082PROD with NOTICES (c) The sharing of documents or information between the parties pursuant to this Agreement shall not be deemed a waiver as against third parties of regulatory or other privileges relating to the discovery of documents or information. 8. Statutory Disqualifications. When FINRA becomes aware of a statutory disqualification as defined in the Exchange Act with respect to a Dual Member, FINRA shall determine pursuant to Sections 15A(g) and/or Section 6(c) of the Exchange Act the acceptability or continued applicability of the person to whom such disqualification applies and keep BOX advised of its actions in this regard for such subsequent proceedings as BOX may initiate. 9. Customer Complaints. BOX shall forward to FINRA copies of all customer complaints involving Dual Members received by BOX relating to FINRA’s Regulatory Responsibilities under this Agreement. It shall be FINRA’s responsibility to review and take appropriate action in respect to such complaints. 10. Advertising. FINRA shall assume Regulatory Responsibility, to the extent applicable, to review the advertising of Dual Members subject to the Agreement, provided that such material is filed with FINRA in accordance with FINRA’s filing procedures and is accompanied with any applicable filing fees set forth in FINRA Rules. 11. No Restrictions on Regulatory Action. Nothing contained in this Agreement shall restrict or in any way encumber the right of either party to conduct its own independent or concurrent investigation, examination or enforcement proceeding of or against Dual Members, as either party, in its sole discretion, shall deem appropriate or necessary. 12. Termination. This Agreement may be terminated by BOX 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 agreed by the parties), except as provided in paragraph 4. 13. Arbitration. In the event of a dispute between the parties as to the operation of this Agreement, BOX and FINRA hereby agree that any such dispute shall be settled by arbitration in Washington, DC in accordance with the rules of the American Arbitration Association then in effect, or such other procedures as the parties may mutually agree upon. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. Each party acknowledges that the timely and complete performance of its obligations pursuant to this Agreement is critical to the business and operations of the other party. In the event of a dispute between the parties, the parties shall continue to perform their respective obligations under this Agreement in good faith during the resolution of such dispute unless and until this Agreement is terminated in accordance with its provisions. Nothing in this Section 13 shall interfere with a party’s right to terminate this Agreement as set forth herein. 14. 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 among BATS Exchange, Inc., BOX Options Exchange, LLC, Chicago Board Options Exchange, Incorporated, C2 Options Exchange, Incorporated, the International Securities Exchange, LLC, FINRA, Miami International Securities Exchange, LLC, NYSE MKT LLC, the NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, ISE Gemini, LLC, EDGX Exchange, Inc., ISE Mercury, LLC and MIAX PEARL, 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 as approved by the SEC on February 2, 2017, 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 MKT LLC, BATS Exchange, Inc., EDGX Exchange, Inc., BOX Options Exchange LLC, NASDAQ OMX BX, Inc., C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, International Securities Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, FINRA, NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX PHLX, Inc., Miami International Securities Exchange, LLC and MIAX PEARL, 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 approved by the SEC on February 2, 2017, and as may be amended from time to time. 15. Notification of Members. BOX and FINRA shall notify Dual Members of this Agreement after the Effective Date by means of a uniform joint notice. 16. Amendment. This Agreement may be amended in writing provided that the changes are approved by both parties. All such amendments must be filed with and approved by the Commission before they become effective. 17. Limitation of Liability. Neither FINRA nor BOX 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 BOX 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 BOX with respect to any of the responsibilities to be performed by each of them hereunder. 18. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d–2 thereunder, FINRA and BOX join in requesting the Commission, upon its approval of this Agreement or any part thereof, to relieve BOX 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. 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 affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. 20. 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. BOX OPTIONS EXCHANGE LLC. By lllllllllllllllllll Name Title FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. By lllllllllllllllllll Name Title EXHIBIT 1 BOX Options Exchange LLC Rules Certification for 17d–2 Agreement With FINRA BOX Options Exchange LLC (‘‘BOX’’) hereby certifies that the requirements contained in the rules listed below are identical to, or substantially similar to, the comparable FINRA (NASD) Rule, Exchange Act provision or SEC rule identified (‘‘Common Rules’’). BOX RULES FINRA (NASD) RULES, EXCHANGE ACT PROVISION OR SEC RULE BOX Rule 3210 (a) and (b) ...................................................................... FINRA Rule 2251 Processing and Forwarding of Proxy and Other Issuer-Related Materials. VerDate Sep<11>2014 16:47 Mar 20, 2017 Jkt 241001 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 E:\FR\FM\21MRN1.SGM 21MRN1 Federal Register / Vol. 82, No. 53 / Tuesday, March 21, 2017 / Notices 14563 FINRA (NASD) RULES, EXCHANGE ACT PROVISION OR SEC RULE BOX RULES BOX Rule 10070 Anti-Money Laundering Compliance Program # ........... FINRA Rule 3310 Anti-Money Laundering Compliance Program. * FINRA shall not have 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 BATS BZX Exchange, Inc., BATS BYX Y-Exchange, Inc., Chicago Stock Exchange, Inc., BATS EDGA Exchange, Inc., BATS EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ PHLX LLC, the NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca Inc., effective August 3, 2016, as may be amended from time to time. # FINRA shall not have any Regulatory Responsibilities regarding (i) notice, reporting or any other filings made directly to or from BOX, (ii) compliance with other referenced BOX Rules that are not Common Rules, (iii) exercise of discretion including, but not limited to exercise of exemptive authority, by BOX, (iv) prior written approval of BOX and (v) payment of fees or fines to BOX. IV. Solicitation of Comments In order to assist the Commission in determining whether to approve the proposed 17d–2 Plan and to relieve BOX 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: mstockstill on DSK3G9T082PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/other.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number 4–709 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 4–709. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (http://www.sec.gov/rules/ other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed 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 plan also will be available for inspection and copying at the principal offices of BOX and FINRA. All comments received will be posted without change; the Commission does not edit personal VerDate Sep<11>2014 16:47 Mar 20, 2017 Jkt 241001 identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number 4–709 and should be submitted on or before April 5, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–05506 Filed 3–20–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80255; File No. SR–FINRA– 2017–003] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Adopt the FINRA Rule 6800 Series (Consolidated Audit Trail Compliance Rule) March 15, 2017. I. Introduction On January 31, 2017, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt the FINRA Rule 6800 Series, to implement the compliance rules regarding the National Market System Plan Governing the Consolidated Audit Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’).3 The proposed rule change was published for comment in the Federal Register on February 9, 14 17 CFR 200.30–3(a)(34). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 FINRA originally filed this proposed rule change on January 17, 2017 under File No. SR– FINRA–2017–002; FINRA subsequently withdrew that filing on January 30, 2017 and filed this proposed rule change. 1 15 PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 2017.4 The Commission received 3 comments in response to the proposed rule change.5 On March 15, the Participants 6 submitted a response to the comment letters.7 This order approves the proposed rule change.8 II. Background On September 30, 2014, Bats BYX Exchange, Inc.; Bats BZX Exchange, Inc.; Bats EDGA Exchange, Inc.; Bats EDGX Exchange, Inc.; BOX Options Exchange LLC; C2 Options Exchange, Incorporated; Chicago Board Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; FINRA; International Securities Exchange, LLC; Investors’ Exchange LLC; ISE Gemini, LLC; ISE Mercury, LLC; Miami International Securities Exchange LLC; MIAX PEARL, LLC; NASDAQ BX, Inc.; NASDAQ PHLX LLC; The NASDAQ Stock Market LLC; National Stock Exchange, Inc.; New York Stock Exchange LLC; NYSE MKT LLC; and NYSE Arca, Inc. (collectively, the ‘‘Participants’’) filed with the Commission, pursuant to Section 11A of the Exchange Act 9 and Rule 608 of Regulation NMS thereunder,10 the CAT NMS Plan.11 The 4 Securities Exchange Act Release No. 79961 (February 3, 2017), 82 FR 10073 (‘‘Notice’’). 5 See letter from William H. Herbert, Managing Director, Financial Information Forum, dated March 1, 2017 (‘‘FIF Letter’’); letter from Bonnie Wachtel, Wachtel & Co Inc., dated March 2, 2017 (‘‘Wachtel Letter’’); and letter from Manisha Kimmel, Chief Regulatory Officer, Wealth Management, Thomson Reuters, dated March 2, 2017 (‘‘Thomson Reuters Letter’’). 6 See infra Section II. 7 See Letter from Participants to Brent J. Fields, Secretary, Commission, dated March 15, 2017 (‘‘Participants’ Response Letter’’). The Participants note that because all the Participants filed rules similar to FINRA’s proposed 6800 Series, the Participants’ Response Letter is submitted on behalf of all Participants and applicable to all the Participants’ proposed rules implementing the CAT NMS Plan (‘‘Participant Proposed Compliance Rules’’). Participants’ Response Letter at 1. 8 The Commission notes that for purposes of this Order, unless otherwise specified, capitalized terms used are defined as set forth in the Notice or in the CAT NMS Plan. 9 15 U.S.C. 78k–1. 10 17 CFR 242.608. 11 See Letter from the Participants to Brent J. Fields, Secretary, Commission, dated September 30, E:\FR\FM\21MRN1.SGM Continued 21MRN1

Agencies

[Federal Register Volume 82, Number 53 (Tuesday, March 21, 2017)]
[Notices]
[Pages 14560-14563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05506]



[[Page 14560]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80240; File No. 4-709]


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. and BOX Options Exchange LLC

March 14, 2017.
    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 January 12, 2017, BOX Options Exchange LLC (``BOX'') and the 
Financial Industry Regulatory Authority, Inc. (``FINRA'') (together, 
the ``Parties'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') a plan for the allocation of regulatory 
responsibilities, dated March 2, 2017 (``17d-2 Plan'' or the ``Plan''). 
The Commission is publishing this notice to solicit comments on the 
17d-2 Plan from interested persons.
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    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or national securities association to examine for, 
and enforce compliance by, its members and persons associated with its 
members with the Act, the rules and regulations thereunder, and the 
SRO's own rules, unless the SRO is relieved of this responsibility 
pursuant to Section 17(d) or Section 19(g)(2) of the Act.\4\ Without 
this relief, the statutory obligation of each individual SRO could 
result in a pattern of multiple examinations of broker-dealers that 
maintain memberships in more than one SRO (``common members''). Such 
regulatory duplication would add unnecessary expenses for common 
members and their SROs.
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    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
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    Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\6\ With 
respect to a common member, Section 17(d)(1) authorizes the Commission, 
by rule or order, to relieve an SRO of the responsibility to receive 
regulatory reports, to examine for and enforce compliance with 
applicable statutes, rules, and regulations, or to perform other 
specified regulatory functions.
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    \5\ 15 U.S.C. 78q(d)(1).
    \6\ See Securities Act Amendments of 1975, Report of the Senate 
Committee on Banking, Housing, and Urban Affairs to Accompany S. 
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
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    To implement Section 17(d)(1), the Commission adopted two rules: 
Rule 17d-1 and Rule 17d-2 under the Act.\7\ Rule 17d-1 authorizes the 
Commission to name a single SRO as the designated examining authority 
(``DEA'') to examine common members for compliance with the financial 
responsibility requirements imposed by the Act, or by Commission or SRO 
rules.\8\ When an SRO has been named as a common member's DEA, all 
other SROs to which the common member belongs are relieved of the 
responsibility to examine the firm for compliance with the applicable 
financial responsibility rules. On its face, Rule 17d-1 deals only with 
an SRO's obligations to enforce member compliance with financial 
responsibility requirements. Rule 17d-1 does not relieve an SRO from 
its obligation to examine a common member for compliance with its own 
rules and provisions of the federal securities laws governing matters 
other than financial responsibility, including sales practices and 
trading activities and practices.
---------------------------------------------------------------------------

    \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

    The proposed 17d-2 Plan is intended to reduce regulatory 
duplication for firms that are common members of both BOX 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 ``BOX Options Exchange LLC Rules Certification 
for 17d-2 Agreement with FINRA,'' referred to herein as the 
``Certification'') that lists every BOX rule for which FINRA would bear 
responsibility under the Plan for overseeing and enforcing with respect 
to BOX 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 BOX that are substantially similar to the applicable 
rules of FINRA \11\ delineated in the Certification (``Common Rules''). 
In the event that a Dual Member is the subject of an investigation 
relating to a transaction on BOX, the plan acknowledges that BOX 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 BOX 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 BOX 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, BOX would retain full responsibility for 
surveillance, examination, investigation, and enforcement with respect 
to trading activities or practices involving BOX'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 BOX 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:

[[Page 14561]]

AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND BOX 
OPTIONS EXCHANGE LLC PURSUANT TO RULE 17d-2 UNDER THE SECURITIES 
EXCHANGE ACT OF 1934

    This Agreement, by and between the Financial Industry Regulatory 
Authority, Inc. (``FINRA'') and BOX Options Exchange LLC (``BOX''), 
is made this 2nd day of March, 2017 (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 BOX may be referred 
to individually as a ``party'' and together as the ``parties.''
    Whereas, FINRA and BOX 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 BOX 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 BOX 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) ``BOX Rules'' or ``FINRA Rules'' shall mean: (i) the rules 
of BOX, or (ii) the rules of FINRA, respectively, as the rules of an 
exchange or association are defined in Exchange Act Section 
3(a)(27).
    (b) ``Common Rules'' shall mean BOX Rules that are substantially 
similar to the applicable FINRA Rules and certain provisions of the 
Exchange Act and SEC rules set forth on Exhibit 1 in that 
examination for compliance with such provisions and rules would not 
require FINRA to develop one or more new examination standards, 
modules, procedures, or criteria in order to analyze the application 
of the provision or rule, or a Dual Member's activity, conduct, or 
output in relation to such provision or rule. Common Rules shall not 
include any provisions regarding (i) notice, reporting or any other 
filings made directly to or from BOX, (ii) compliance with other 
referenced BOX Rules that are not Common Rules, (iii) exercise of 
discretion including, but not limited to exercise of exemptive 
authority, by BOX, (iv) prior written approval of BOX and (v) 
payment of fees or fines to BOX.
    (c) ``Dual Members'' shall mean those BOX members that are also 
members of FINRA and the associated persons therewith.
    (d) ``Effective Date'' shall be the date this Agreement is 
approved by the Commission.
    (e) ``Enforcement Responsibilities'' shall mean the conduct of 
appropriate proceedings, in accordance with FINRA's 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 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, BOX furnished FINRA with a current list of Common Rules 
and certified to FINRA that such rules that are BOX Rules are 
substantially similar to the corresponding FINRA Rules (the 
``Certification''). FINRA hereby agrees that the rules listed in the 
Certification are Common Rules as defined in this Agreement. Each 
year following the Effective Date of this Agreement, or more 
frequently if required by changes in either the rules of BOX or 
FINRA, BOX shall submit an updated list of Common Rules to FINRA for 
review which shall add BOX Rules not included in the current list of 
Common Rules that qualify as Common Rules as defined in this 
Agreement; delete BOX 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 BOX 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 BOX shall retain full responsibility for 
(unless otherwise addressed by separate agreement or rule) 
(collectively, the ``Retained Responsibilities'') the following:
    (a) surveillance, examination, investigation and enforcement 
with respect to trading activities or practices involving BOX's own 
marketplace;
    (b) registration pursuant to its applicable rules of associated 
persons (i.e., registration rules that are not Common Rules);
    (c) discharge of its duties and obligations as a Designated 
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; 
and
    (d) any BOX Rules that are not Common Rules as provided in 
paragraph 6.
    3. Dual Members. Prior to the Effective Date, BOX 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 BOX by FINRA for 
performing the Regulatory Responsibilities and Enforcement 
Responsibilities under this Agreement except as hereinafter 
provided. FINRA shall provide BOX with ninety (90) days advance 
written notice in the event FINRA decides to impose any charges to 
BOX for performing the Regulatory Responsibilities under this 
Agreement. If FINRA determines to impose a charge, BOX shall have 
the right at the time of the imposition of such charge to terminate 
this Agreement; provided, however, that FINRA's Regulatory 
Responsibilities under this Agreement shall continue until the 
Commission approves the termination of this Agreement.
    5. Applicability of Certain Laws, Rules, Regulations or Orders. 
Notwithstanding any provision hereof, this Agreement shall be 
subject to any statute, or any rule or order of the SEC. To the 
extent such statute, rule or order is inconsistent with one or more 
provisions of this Agreement, the statute, rule or order shall 
supersede the provision(s) hereof to the extent necessary to be 
properly effectuated and the provision(s) hereof in that respect 
shall be null and void.
    6. Notification of Violations. In the event that FINRA becomes 
aware of apparent violations of any BOX Rules, which are not listed 
as Common Rules, discovered pursuant to the performance of the 
Regulatory Responsibilities assumed hereunder, FINRA shall notify 
BOX of those apparent violations for such response as BOX deems 
appropriate. In the event that BOX becomes aware of apparent 
violations of any Common Rules, discovered pursuant to the 
performance of the Retained Responsibilities, BOX 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 FINRA as provided hereinbefore; 
provided, however, that in the event a Dual Member is the subject of 
an investigation relating to a transaction on BOX, BOX 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.
    (a) FINRA shall make available to BOX all information obtained 
by FINRA in the performance by it of the Regulatory Responsibilities 
hereunder with respect to the Dual Members subject to this 
Agreement. In particular, and not in limitation of the foregoing, 
FINRA shall furnish BOX any information it obtains about Dual 
Members which reflects adversely on their financial condition. BOX 
shall make available to FINRA any information coming to its 
attention that reflects adversely on the financial condition of Dual 
Members or indicates possible violations of applicable laws, rules 
or regulations by such firms.
    (b) The parties agree that documents or information shared shall 
be held in confidence, and used only for the purposes of carrying 
out their respective regulatory obligations. Neither party shall 
assert regulatory or other privileges as against the other with 
respect to documents or information that is required to be shared 
pursuant to this Agreement.

[[Page 14562]]

    (c) The sharing of documents or information between the parties 
pursuant to this Agreement shall not be deemed a waiver as against 
third parties of regulatory or other privileges relating to the 
discovery of documents or information.
    8. Statutory Disqualifications. When FINRA becomes aware of a 
statutory disqualification as defined in the Exchange Act with 
respect to a Dual Member, FINRA shall determine pursuant to Sections 
15A(g) and/or Section 6(c) of the Exchange Act the acceptability or 
continued applicability of the person to whom such disqualification 
applies and keep BOX advised of its actions in this regard for such 
subsequent proceedings as BOX may initiate.
    9. Customer Complaints. BOX shall forward to FINRA copies of all 
customer complaints involving Dual Members received by BOX relating 
to FINRA's Regulatory Responsibilities under this Agreement. It 
shall be FINRA's responsibility to review and take appropriate 
action in respect to such complaints.
    10. Advertising. FINRA shall assume Regulatory Responsibility, 
to the extent applicable, to review the advertising of Dual Members 
subject to the Agreement, provided that such material is filed with 
FINRA in accordance with FINRA's filing procedures and is 
accompanied with any applicable filing fees set forth in FINRA 
Rules.
    11. No Restrictions on Regulatory Action. Nothing contained in 
this Agreement shall restrict or in any way encumber the right of 
either party to conduct its own independent or concurrent 
investigation, examination or enforcement proceeding of or against 
Dual Members, as either party, in its sole discretion, shall deem 
appropriate or necessary.
    12. Termination. This Agreement may be terminated by BOX 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 
agreed by the parties), except as provided in paragraph 4.
    13. Arbitration. In the event of a dispute between the parties 
as to the operation of this Agreement, BOX and FINRA hereby agree 
that any such dispute shall be settled by arbitration in Washington, 
DC in accordance with the rules of the American Arbitration 
Association then in effect, or such other procedures as the parties 
may mutually agree upon. Judgment on the award rendered by the 
arbitrator(s) may be entered in any court having jurisdiction. Each 
party acknowledges that the timely and complete performance of its 
obligations pursuant to this Agreement is critical to the business 
and operations of the other party. In the event of a dispute between 
the parties, the parties shall continue to perform their respective 
obligations under this Agreement in good faith during the resolution 
of such dispute unless and until this Agreement is terminated in 
accordance with its provisions. Nothing in this Section 13 shall 
interfere with a party's right to terminate this Agreement as set 
forth herein.
    14. 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 among BATS Exchange, Inc., BOX 
Options Exchange, LLC, Chicago Board Options Exchange, Incorporated, 
C2 Options Exchange, Incorporated, the International Securities 
Exchange, LLC, FINRA, Miami International Securities Exchange, LLC, 
NYSE MKT LLC, the NYSE Arca, Inc., The NASDAQ Stock Market LLC, 
NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, ISE Gemini, LLC, EDGX 
Exchange, Inc., ISE Mercury, LLC and MIAX PEARL, 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 as approved by the SEC on February 2, 2017, 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 MKT LLC, BATS 
Exchange, Inc., EDGX Exchange, Inc., BOX Options Exchange LLC, 
NASDAQ OMX BX, Inc., C2 Options Exchange, Incorporated, Chicago 
Board Options Exchange, Incorporated, International Securities 
Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, FINRA, NYSE Arca, 
Inc., The NASDAQ Stock Market LLC, NASDAQ OMX PHLX, Inc., Miami 
International Securities Exchange, LLC and MIAX PEARL, 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 approved by the SEC 
on February 2, 2017, and as may be amended from time to time.
    15. Notification of Members. BOX and FINRA shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.
    16. Amendment. This Agreement may be amended in writing provided 
that the changes are approved by both parties. All such amendments 
must be filed with and approved by the Commission before they become 
effective.
    17. Limitation of Liability. Neither FINRA nor BOX 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 BOX 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 BOX with respect to any of the responsibilities 
to be performed by each of them hereunder.
    18. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) 
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and 
BOX join in requesting the Commission, upon its approval of this 
Agreement or any part thereof, to relieve BOX 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.
    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 affecting the 
validity or enforceability of any of the terms or provisions of this 
Agreement in any other jurisdiction.
    20. 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.

BOX OPTIONS EXCHANGE LLC.

By---------------------------------------------------------------------
Name
Title

FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.

By---------------------------------------------------------------------
Name
Title

EXHIBIT 1

BOX Options Exchange LLC Rules Certification for 17d-2 Agreement With 
FINRA

    BOX Options Exchange LLC (``BOX'') hereby certifies that the 
requirements contained in the rules listed below are identical to, 
or substantially similar to, the comparable FINRA (NASD) Rule, 
Exchange Act provision or SEC rule identified (``Common Rules'').

------------------------------------------------------------------------
                                           FINRA (NASD) RULES, EXCHANGE
               BOX RULES                    ACT PROVISION OR SEC RULE
------------------------------------------------------------------------
BOX Rule 3210 (a) and (b)..............  FINRA Rule 2251 Processing and
                                          Forwarding of Proxy and Other
                                          Issuer-Related Materials.

[[Page 14563]]

 
BOX Rule 10070 Anti-Money Laundering     FINRA Rule 3310 Anti-Money
 Compliance Program .                    Laundering Compliance Program.
------------------------------------------------------------------------
* FINRA shall not have 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 BATS BZX Exchange,
  Inc., BATS BYX Y-Exchange, Inc., Chicago Stock Exchange, Inc., BATS
  EDGA Exchange, Inc., BATS EDGX Exchange, Inc., Financial Industry
  Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ PHLX LLC, the
  NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock
  Exchange LLC, NYSE MKT LLC, and NYSE Arca Inc., effective August 3,
  2016, as may be amended from time to time.
# FINRA shall not have any Regulatory Responsibilities regarding (i)
  notice, reporting or any other filings made directly to or from BOX,
  (ii) compliance with other referenced BOX Rules that are not Common
  Rules, (iii) exercise of discretion including, but not limited to
  exercise of exemptive authority, by BOX, (iv) prior written approval
  of BOX and (v) payment of fees or fines to BOX.


IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number 4-709 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 4-709. This file number 
should be included on the subject line if e-mail is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's Internet Web site (http://www.sec.gov/rules/other.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed 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 plan also will be available for inspection and 
copying at the principal offices of BOX 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 4-709 and should be submitted 
on or before April 5, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-05506 Filed 3-20-17; 8:45 am]
 BILLING CODE 8011-01-P