Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Order Approving and Declaring Effective a Proposed Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and BOX Options Exchange LLC, 17712-17714 [2017-07311]
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17712
Federal Register / Vol. 82, No. 69 / Wednesday, April 12, 2017 / Notices
31, 2017.12 The Exchange now proposes
to delay the implementation date to no
later than May 31, 2017. Waiver of the
30-day operative delay would allow the
Exchange to immediately extend the
implementation date and provide
additional time for systems testing. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest. Therefore, the
Commission hereby waives the 30-day
operative delay and designates the
proposal operative upon filing.13
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
action is necessary or appropriate in the
public interest, for the protection of
investors, or 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
change should be approved or
disapproved.
IV. Solicitation of Comments
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:
mstockstill on DSK30JT082PROD with NOTICES
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–2017–018 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–2017–018. 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
12 See
supra note 6.
purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
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–
2017–018 and should be submitted on
or before May 3, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–07309 Filed 4–11–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80388; File No. 4–709]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Order Approving and Declaring
Effective a Proposed Plan for the
Allocation of Regulatory
Responsibilities Between the Financial
Industry Regulatory Authority, Inc. and
BOX Options Exchange LLC
April 6, 2017.
On March 3, 2017, BOX Options
Exchange LLC (‘‘BOX’’) and the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (collectively,
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 Plan was published for
comment on March 21, 2017.1 The
Commission received no comments on
the Plan. This order approves and
declares effective the Plan.
13 For
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14 17
CFR 200.30–3(a)(12).
Securities Exchange Act Release No. 80240
(March 14, 2017), 82 FR 14560.
1 See
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I. Introduction
Section 19(g)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’),2 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.3 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 4 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.5 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.6
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.7 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
2 15
U.S.C. 78s(g)(1).
U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2),
respectively.
4 15 U.S.C. 78q(d)(1).
5 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).
6 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
7 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
3 15
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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.8
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities with respect
to their common members. Under
paragraph (c) of Rule 17d–2, the
Commission may declare such a plan
effective if, after providing for
appropriate notice and comment, it
determines that the plan is necessary or
appropriate in the public interest and
for the protection of investors; to foster
cooperation and coordination among the
SROs; to remove impediments to, and
foster the development of, a national
market system and a national clearance
and settlement system; and is in
conformity with the factors set forth in
Section 17(d) of the Act. Commission
approval of a plan filed pursuant to Rule
17d–2 relieves an SRO of those
regulatory responsibilities allocated by
the plan to another SRO.
II. Proposed Plan
The proposed 17d–2 Plan is intended
to reduce regulatory duplication for
firms that are common members of both
BOX and FINRA.9 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
8 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
9 The proposed 17d–2 Plan refers to these
common members as ‘‘Dual Members.’’ See
Paragraph 1(c) of the proposed 17d–2 Plan.
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similar to the applicable rules of
FINRA 10 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.11
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.12
III. Discussion
The Commission finds that the
proposed Plan is consistent with the
factors set forth in Section 17(d) of the
Act 13 and Rule 17d–2(c) thereunder 14
in that the proposed Plan is necessary
or appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the proposed
Plan should reduce unnecessary
regulatory duplication by allocating to
FINRA certain examination and
enforcement responsibilities for Dual
Members that would otherwise be
performed by BOX and FINRA.
Accordingly, the proposed Plan
promotes efficiency by reducing costs to
Dual Members. Furthermore, because
BOX and FINRA will coordinate their
regulatory functions in accordance with
the Plan, the Plan should promote
investor protection.
The Commission notes that, under the
Plan, BOX and FINRA have allocated
regulatory responsibility for those BOX
rules, set forth in the Certification, that
are substantially similar to the
applicable FINRA rules in that
10 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.
11 See paragraph 6 of the proposed 17d–2 Plan.
12 See paragraph 2 of the proposed 17d–2 Plan.
13 15 U.S.C. 78q(d).
14 17 CFR 240.17d–2(c).
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17713
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 rule, or a
Dual Member’s activity, conduct, or
output in relation to such rule. The
Common Rules covered by the Plan are
specifically listed in the Certification, as
may be amended by the Parties from
time to time.
According to the Plan, BOX will
review the Certification, at least
annually, or more frequently if required
by changes in either the rules of BOX or
FINRA, and, if necessary, submit to
FINRA an updated list of Common
Rules to add BOX rules not included on
the then-current list of Common Rules
that are substantially similar to FINRA
rules; delete BOX rules included in the
then-current list of Common Rules that
are no longer substantially similar to
FINRA rules; and confirm that the
remaining rules on the list of Common
Rules continue to be BOX rules that are
substantially similar to FINRA rules.15
FINRA will then confirm in writing
whether the rules listed in any updated
list are Common Rules as defined in the
Plan. Under the Plan, BOX will also
provide FINRA with a current list of
Dual Members and shall update the list
no less frequently than once each
quarter.16 The Commission believes that
these provisions are designed to provide
for continuing communication between
the Parties to ensure the continued
accuracy of the scope of the proposed
allocation of regulatory responsibility.
The Commission is hereby declaring
effective a Plan that, among other
things, allocates regulatory
responsibility to FINRA for the
oversight and enforcement of all BOX
rules that are substantially similar to the
rules of FINRA for Dual Members of
BOX and FINRA. Therefore,
modifications to the Certification need
not be filed with the Commission as an
amendment to the Plan, provided that
the Parties are only adding to, deleting
from, or confirming changes to BOX
rules in the Certification in conformance
with the definition of Common Rules
provided in the Plan. However, should
the Parties decide to add a BOX rule to
the Certification that is not substantially
similar to a FINRA rule; delete a BOX
rule from the Certification that is
substantially similar to a FINRA rule; or
leave on the Certification a BOX rule
that is no longer substantially similar to
a FINRA rule, then such a change would
constitute an amendment to the Plan,
15 See
16 See
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paragraph 2 of the Plan.
paragraph 3 of the Plan.
12APN1
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Federal Register / Vol. 82, No. 69 / Wednesday, April 12, 2017 / Notices
which must be filed with the
Commission pursuant to Rule 17d–2
under the Act.17
IV. Conclusion
This Order gives effect to the Plan
filed with the Commission in File No.
4–709. The Parties shall notify all
members affected by the Plan of their
rights and obligations under the Plan.
It is therefore ordered, pursuant to
Section 17(d) of the Act, that the Plan
in File No. 4–709, between FINRA and
BOX, filed pursuant to Rule 17d–2
under the Act, is approved and declared
effective.
It is further ordered, that BOX is
relieved of those responsibilities
allocated to FINRA under the Plan in
File No. 4–709.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–07311 Filed 4–11–17; 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
mstockstill on DSK30JT082PROD with NOTICES
Extension:
Rule 425, [OMB Control No. 3235–0521,
SEC File No. 270–462]
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.
Rule 425 (17 CFR 230.425) under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.) requires the filing of certain
prospectuses and communications
under Rule 135 (17 CFR 230.135) and
Rule 165 (17 CFR 230.165) in
connection with business combination
transactions. The purpose of the rule is
to permit more oral and written
communications with shareholders
about tender offers, mergers and other
business combination transactions on a
more timely basis, so long as the written
communications are filed on the date of
first use. Approximately 7,160 issuers
file communications under Rule 425 at
an estimated 0.25 hours per response for
a total of 1,790 annual burden hours
(0.25 hours per response × 7,160
responses).
Written comments are invited on: (a)
Whether the 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 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: April 6, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–07301 Filed 4–11–17; 8:45 am]
BILLING CODE 8011–01–P
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[Release No. 34–80391; File No. SR–
NASDAQ–2017–034]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Extend the
Implementation Date of Its
Functionality Relating to Midpoint Peg
Post-Only Orders and Orders With
Midpoint Pegging
April 6, 2017.
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 March 31,
2017, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
implementation date of its functionality
relating to Midpoint Peg Post-Only
Orders and Orders with Midpoint
Pegging.
There is no rule text for this proposed
rule change.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Nasdaq is filing this proposal to
extend the implementation date of its
functionality relating to Midpoint Peg
17 The Commission also notes that the addition to
or deletion from the Certification of any federal
securities laws, rules, and regulations for which
FINRA would bear responsibility under the Plan for
examining, and enforcing compliance by, Dual
Members, also would constitute an amendment to
the Plan.
18 17 CFR 200.30–3(a)(34).
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1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
12APN1
]]>Agencies
[Federal Register Volume 82, Number 69 (Wednesday, April 12, 2017)]
[Notices]
[Pages 17712-17714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07311]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80388; File No. 4-709]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Order Approving and Declaring Effective a Proposed Plan for
the Allocation of Regulatory Responsibilities Between the Financial
Industry Regulatory Authority, Inc. and BOX Options Exchange LLC
April 6, 2017.
On March 3, 2017, BOX Options Exchange LLC (``BOX'') and the
Financial Industry Regulatory Authority, Inc. (``FINRA'')
(collectively, 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 Plan was published for comment on March 21, 2017.\1\ The
Commission received no comments on the Plan. This order approves and
declares effective the Plan.
---------------------------------------------------------------------------
\1\ See Securities Exchange Act Release No. 80240 (March 14,
2017), 82 FR 14560.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Securities Exchange Act of 1934
(``Act''),\2\ 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.\3\ 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.
---------------------------------------------------------------------------
\2\ 15 U.S.C. 78s(g)(1).
\3\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \4\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\5\ 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.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78q(d)(1).
\5\ 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.\6\ 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.\7\ 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
[[Page 17713]]
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.
---------------------------------------------------------------------------
\6\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\7\ 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.\8\ 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.
---------------------------------------------------------------------------
\8\ 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 BOX and FINRA.\9\
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.
---------------------------------------------------------------------------
\9\ 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 \10\ 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.\11\
---------------------------------------------------------------------------
\10\ 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.
\11\ 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.\12\
---------------------------------------------------------------------------
\12\ See paragraph 2 of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
III. Discussion
The Commission finds that the proposed Plan is consistent with the
factors set forth in Section 17(d) of the Act \13\ and Rule 17d-2(c)
thereunder \14\ in that the proposed Plan is necessary or appropriate
in the public interest and for the protection of investors, fosters
cooperation and coordination among SROs, and removes impediments to and
fosters the development of the national market system. In particular,
the Commission believes that the proposed Plan should reduce
unnecessary regulatory duplication by allocating to FINRA certain
examination and enforcement responsibilities for Dual Members that
would otherwise be performed by BOX and FINRA. Accordingly, the
proposed Plan promotes efficiency by reducing costs to Dual Members.
Furthermore, because BOX and FINRA will coordinate their regulatory
functions in accordance with the Plan, the Plan should promote investor
protection.
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\13\ 15 U.S.C. 78q(d).
\14\ 17 CFR 240.17d-2(c).
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The Commission notes that, under the Plan, BOX and FINRA have
allocated regulatory responsibility for those BOX rules, set forth in
the Certification, that are substantially similar to the applicable
FINRA rules 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 rule, or a Dual Member's activity, conduct, or
output in relation to such rule. The Common Rules covered by the Plan
are specifically listed in the Certification, as may be amended by the
Parties from time to time.
According to the Plan, BOX will review the Certification, at least
annually, or more frequently if required by changes in either the rules
of BOX or FINRA, and, if necessary, submit to FINRA an updated list of
Common Rules to add BOX rules not included on the then-current list of
Common Rules that are substantially similar to FINRA rules; delete BOX
rules included in the then-current list of Common Rules that are no
longer substantially similar to FINRA rules; and confirm that the
remaining rules on the list of Common Rules continue to be BOX rules
that are substantially similar to FINRA rules.\15\ FINRA will then
confirm in writing whether the rules listed in any updated list are
Common Rules as defined in the Plan. Under the Plan, BOX will also
provide FINRA with a current list of Dual Members and shall update the
list no less frequently than once each quarter.\16\ The Commission
believes that these provisions are designed to provide for continuing
communication between the Parties to ensure the continued accuracy of
the scope of the proposed allocation of regulatory responsibility.
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\15\ See paragraph 2 of the Plan.
\16\ See paragraph 3 of the Plan.
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The Commission is hereby declaring effective a Plan that, among
other things, allocates regulatory responsibility to FINRA for the
oversight and enforcement of all BOX rules that are substantially
similar to the rules of FINRA for Dual Members of BOX and FINRA.
Therefore, modifications to the Certification need not be filed with
the Commission as an amendment to the Plan, provided that the Parties
are only adding to, deleting from, or confirming changes to BOX rules
in the Certification in conformance with the definition of Common Rules
provided in the Plan. However, should the Parties decide to add a BOX
rule to the Certification that is not substantially similar to a FINRA
rule; delete a BOX rule from the Certification that is substantially
similar to a FINRA rule; or leave on the Certification a BOX rule that
is no longer substantially similar to a FINRA rule, then such a change
would constitute an amendment to the Plan,
[[Page 17714]]
which must be filed with the Commission pursuant to Rule 17d-2 under
the Act.\17\
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\17\ The Commission also notes that the addition to or deletion
from the Certification of any federal securities laws, rules, and
regulations for which FINRA would bear responsibility under the Plan
for examining, and enforcing compliance by, Dual Members, also would
constitute an amendment to the Plan.
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IV. Conclusion
This Order gives effect to the Plan filed with the Commission in
File No. 4-709. The Parties shall notify all members affected by the
Plan of their rights and obligations under the Plan.
It is therefore ordered, pursuant to Section 17(d) of the Act, that
the Plan in File No. 4-709, between FINRA and BOX, filed pursuant to
Rule 17d-2 under the Act, is approved and declared effective.
It is further ordered, that BOX is relieved of those
responsibilities allocated to FINRA under the Plan in File No. 4-709.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(34).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07311 Filed 4-11-17; 8:45 am]
BILLING CODE 8011-01-P
