Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and BOX Options Exchange LLC, 29850-29855 [2018-13594]

Download as PDF 29850 Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018–13615 Filed 6–25–18; 8:45 am] BILLING CODE 8011–01–P Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE, Washington, DC 20549 or send an email to: PRA_Mailbox@ sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: June 21, 2018. Eduardo A. Aleman, Assistant Secretary. SECURITIES AND EXCHANGE COMMISSION [FR Doc. 2018–13686 Filed 6–25–18; 8:45 am] BILLING CODE 8011–01–P Submission for OMB Review; Comment Request Upon Written Request Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 sradovich on DSK3GMQ082PROD with NOTICES Extension: Form F–X, SEC File No. 270–336, OMB Control No. 3235–0379 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’’) has submitted to the Office of Management and Budget this request for extension of the previously approved collection of information discussed below. Form F–X (17 CFR 239.42) is used to appoint an agent for service of process by Canadian issuers registering securities on Forms F–7, F–8, F–9 or F– 10 under the Securities Act of 1933 (15 U.S.C. 77a et seq.), or filing periodic reports on Form 40–F under the Exchange Act of 1934 (15 U.S.C. 78a et seq.). The information collected must be filed with the Commission and is publicly available. We estimate it takes approximately 2 hours per response to prepare Form F–X and the information is filed by approximately 114 respondents for a total annual reporting burden of 228 hours (2 hours per response × 114 responses). 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. The public may view the background documentation for this information collection at the following website, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_ Ahmed@omb.eop.gov; and (ii) Pamela Dyson, Director/Chief Information SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83477; File No. 4–709] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d– 2; Notice of Filing and Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and BOX Options Exchange LLC June 20, 2018. Notice is hereby given that the Securities and Exchange Commission (‘‘Commission’’) has issued an Order, pursuant to Section 17(d) of the Securities Exchange Act of 1934 (‘‘Act’’),1 approving and declaring effective an amendment to the plan for allocating regulatory responsibility (‘‘Plan’’) filed on June 13, 2018, pursuant to Rule 17d–2 of the Act,2 by the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) and BOX Options Exchange LLC (‘‘BOX’’) (collectively, ‘‘Participating Organizations’’ or ‘‘parties’’). This agreement amends and restates the agreement entered into between FINRA and BOX on March 2, 2017, entitled ‘‘Agreement Between Financial Industry Regulatory Authority, Inc. and BOX Options Exchange LLC Pursuant to Rule 17d–2 under the Securities Exchange Act of 1934,’’ and any subsequent amendments thereafter. 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, 1 15 U.S.C. 78q(d). CFR 240.17d–2. 3 15 U.S.C. 78s(g)(1). 2 17 13 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:24 Jun 25, 2018 Jkt 244001 PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 unless the SRO is relieved of this responsibility pursuant to Section 17(d) 4 or Section 19(g)(2) 5 of the Act. 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 6 was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.7 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.8 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.9 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.10 Rule 17d–2 permits SROs to propose 4 15 U.S.C. 78q(d). U.S.C. 78s(g)(2). 6 15 U.S.C. 78q(d)(1). 7 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). 8 17 CFR 240.17d–1 and 17 CFR 240.17d–2, respectively. 9 See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). 10 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). 5 15 E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices 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 opportunity for comment, it determines that the plan is necessary or appropriate in the public interest and for the protection of investors, to foster cooperation and coordination among the SROs, to remove impediments to, and foster the development of, a national market system and a national clearance and settlement system, and is in conformity with the factors set forth in Section 17(d) of the Act. Commission approval of a plan filed pursuant to Rule 17d–2 relieves an SRO of those regulatory responsibilities allocated by the plan to another SRO. II. The Plan On April 6, 2017, the Commission declared effective the Plan entered into between FINRA and BOX for allocating regulatory responsibility pursuant to Rule 17d–2.11 The Plan is intended to reduce regulatory duplication for firms that are common members of FINRA and BOX by allocating regulatory responsibility with respect to certain applicable laws, rules, and regulations that are common among them. Included in the Plan is an exhibit that lists every BOX rule for which FINRA bears responsibility under the Plan for overseeing and enforcing with respect to BOX members that are also members of FINRA and the associated persons therewith (‘‘Certification’’). sradovich on DSK3GMQ082PROD with NOTICES III. Proposed Amendment to the Plan On June 13, 2018, the parties submitted a proposed amendment to the Plan (‘‘Amended Plan’’). The primary purpose of the Amended Plan is to allocate surveillance, investigation, and enforcement responsibilities for Rule 14e–4 under the Act, as well as certain provisions of Regulation SHO. The text of the proposed Amended Plan is as follows (additions are italicized; deletions are [bracketed]): * * * * * 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 11 See Securities Exchange Act Release No. 80388 (April 6, 2017), 82 FR 17712 (April 12, 2017). VerDate Sep<11>2014 17:24 Jun 25, 2018 Jkt 244001 made this [2nd day of March, 2017] 13th day of June, 2018 (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.’’ This Agreement amends and restates this agreement entered into between FINRA and BOX on March 2, 2017, entitled ‘‘Agreement between Financial Industry Regulatory Authority, Inc. and BOX Options Exchange LLC Pursuant to Rule 17d–2 under the Securities Exchange Act of 1934,’’ and any subsequent amendments thereafter. 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) PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 29851 notice, reporting or any other filings made directly to or from BOX, (ii) [compliance with other referenced]incorporation by reference of BOX Rules that are not Common Rules, (iii) exercise of discretion in a manner that differs from FINRA’s 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. The term ‘‘Regulatory Responsibilities’’ shall also include the surveillance, investigation and Enforcement Responsibilities relating to compliance by Common Members with Rule 14e–4 of the Securities Exchange Act (‘‘Rule 14e–4’’), with a focus on the standardized call option provision of Rule 14e–4(a)(1)(ii)(D). 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 E:\FR\FM\26JNN1.SGM 26JNN1 sradovich on DSK3GMQ082PROD with NOTICES 29852 Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices 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. VerDate Sep<11>2014 17:24 Jun 25, 2018 Jkt 244001 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. PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 (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 E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices 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 brokerdealers 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 29853 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. * * * * * 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’’). # Common Rules shall not including any provisions regarding (i) notice, reporting or any other filings made directly to or from BOX, (ii) incorporation by reference of BOX Rules that are not Common Rules, (iii) exercise of discretion in a manner that differs from FINRA’s 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. 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. FINRA Rule 3310 Anti-Money Laundering Compliance Program. BOX Rule 10070 Anti-Money Laundering Compliance Program # ........... sradovich on DSK3GMQ082PROD with NOTICES In addition, the following provisions shall be part of this 17d–2 Agreement: SEA Rule 200 of Regulation SHO— Definition of ‘‘Short Sale’’ and Marking Requirements and SEA Rule 201 of Regulation SHO— Circuit Breaker SEA Rule 203 of Regulation SHO— Borrowing and Delivery Requirements VerDate Sep<11>2014 18:54 Jun 25, 2018 Jkt 244001 SEA Rule 204 of Regulation SHO— Close-Out Requirement SEA Rule 14e–4—Prohibited Transactions in Connection with Partial Tender Offers ∧ ∧ FINRA shall perform surveillance, investigation, and Enforcement Responsibilities for SEA Rule 14e– 4(a)1)(ii)(D). PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 [* 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., E:\FR\FM\26JNN1.SGM 26JNN1 29854 Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices 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 Interested persons are invited to submit written data, views, and arguments concerning the foregoing. Comments may be submitted by any of the following methods: sradovich on DSK3GMQ082PROD 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 4– 709 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 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 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 website (https://www.sec.gov/rules/ sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed plan that are filed with the Commission, and all written communications relating to the proposed plan between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website 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 FINRA and BOX. All comments VerDate Sep<11>2014 18:54 Jun 25, 2018 Jkt 244001 received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment 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 July 17, 2018. V. Discussion The Commission finds that the proposed Amended Plan is consistent with the factors set forth in Section 17(d) of the Act 12 and Rule 17d–2(c) thereunder 13 in that the proposed Amended 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 Amended Plan should reduce unnecessary regulatory duplication by allocating to FINRA certain examination and enforcement responsibilities for Common Members that would otherwise be performed by both FINRA and BOX. Accordingly, the proposed Amended Plan promotes efficiency by reducing costs to Common Members. Furthermore, because BOX and FINRA will coordinate their regulatory functions in accordance with the Amended Plan, the Amended Plan should promote investor protection. The Commission notes that, under the Amended 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 Common Member’s activity, conduct, or output in relation to such rule. In addition, under the Amended Plan, FINRA would assume regulatory responsibility for certain provisions of the federal securities laws and the rules and regulations thereunder that are set forth in the Certification. The Common Rules covered by the Amended Plan are specifically listed in the Certification, as may be amended by the Parties from time to time. According to the Amended Plan, BOX will review the Certification at least annually, or more frequently if required 12 15 13 17 PO 00000 U.S.C. 78q(d). CFR 240.17d–2(c). Frm 00114 Fmt 4703 Sfmt 4703 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 no longer qualify as common rules; and confirm that the remaining rules on the list of Common Rules continue to be BOX rules that qualify as common rules.14 FINRA will then confirm in writing whether the rules listed in any updated list are Common Rules as defined in the Amended Plan. Under the Amended Plan, BOX also will provide FINRA with a current list of Common Members and shall update the list no less frequently than once each quarter.15 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 an Amended 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 Common Members of BOX and FINRA. Therefore, modifications to the Certification need not be filed with the Commission as an amendment to the Amended 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 Amended 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 Amended Plan, which must be filed with the Commission pursuant to Rule 17d–2 under the Act.16 Under paragraph (c) of Rule 17d–2, the Commission may, after appropriate notice and comment, declare a plan, or any part of a plan, effective. In this instance, the Commission believes that 14 See paragraph 2 of the Amended Plan. paragraph 3 of the Amended Plan. 16 The addition to or deletion from the Certification of any federal securities laws, rules, and regulations for which FINRA would bear responsibility under the Amended Plan for examining, and enforcing compliance by, Common Members, also would constitute an amendment to the Amended Plan. 15 See E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 83, No. 123 / Tuesday, June 26, 2018 / Notices appropriate notice and comment can take place after the proposed amendment is effective. The primary purpose of the amendment is to allocate surveillance, investigation, and enforcement responsibilities for Rule 14e–4 under the Act, as well as certain provisions of Regulation SHO. By declaring it effective today, the Amended Plan can become effective and be implemented without undue delay. The Commission notes that the prior version of this plan immediately prior to this proposed amendment was published for comment and the Commission did not receive any comments thereon.17 Furthermore, the Commission does not believe that the amendment to the plan raises any new regulatory issues that the Commission has not previously considered. VI. Conclusion This order gives effect to the Amended Plan filed with the Commission in File No. 4–709. The Parties shall notify all members affected by the Amended Plan of their rights and obligations under the Amended Plan. It is therefore ordered, pursuant to Section 17(d) of the Act, that the Amended Plan in File No. 4–709, between the FINRA and BOX, filed pursuant to Rule 17d–2 under the Act, hereby is approved and declared effective. It is further ordered that BOX is relieved of those responsibilities allocated to FINRA under the Amended 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. 2018–13594 Filed 6–25–18; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–83483; File No. SR–MSRB– 2018–04] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To, Among Other Things, Amend MSRB Rule G–3 To Restructure the MSRB’s Current Municipal Securities Representative Qualification Examination and Harmonize Certain MSRB Qualification Requirements With FINRA Rules June 20, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 8, 2018 the Municipal Securities Rulemaking Board (the ‘‘MSRB’’ or ‘‘Board’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the MSRB. 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 MSRB filed with the Commission a proposed rule change to amend MSRB Rule G–3, on professional qualification requirements, to (i) restructure the MSRB’s current Municipal Securities Representative Qualification Examination (‘‘Series 52’’); (ii) harmonize certain MSRB qualification requirements with the Financial Industry Regulatory Authority’s (‘‘FINRA’’) rule change to make modifications to its representative-level qualification program, consolidate NASD and Incorporated NYSE registration and qualification rules, and amend its continuing education (‘‘CE’’) requirements (hereinafter ‘‘FINRA’s consolidated rule change’’); 3 and (iii) make technical changes to Rule G–3 (collectively the ‘‘proposed rule change’’). The MSRB has filed the proposed rule change for immediate sradovich on DSK3GMQ082PROD with NOTICES 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 On July 7, 2017, the SEC approved FINRA’s consolidated rule change to: (1) restructure FINRA’s representative-level qualification examination program; (2) adopt amendments to consolidate NASD and Incorporated NYSE rules as FINRA’s consolidated qualification and registration rules; and (3) amend FINRA’s CE requirements. See Exchange Act Release No. 81098 (July 7, 2017), 82 FR 32419 (July 13, 2017) (SR–FINRA–2017–007). 2 17 17 See supra note 12 (citing to Securities Exchange Act Release No. 72137). 18 17 CFR 200.30–3(a)(34). VerDate Sep<11>2014 17:24 Jun 25, 2018 Jkt 244001 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 29855 effectiveness pursuant to Section 19(b)(3)(A) of the Act 4 and Rule 19b– 4(f)(6) 5 thereunder. The MSRB proposes an operative date of October 1, 2018, to coincide with the effective date of FINRA’s consolidated rule change. The text of the proposed rule change is available on the MSRB’s website at www.msrb.org/Rules-andInterpretations/SEC-Filings/2018Filings.aspx, at the MSRB’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the MSRB 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 MSRB 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 MSRB The MSRB is charged with setting professional qualification standards for brokers, dealers, and municipal securities dealers (‘‘dealers’’), and municipal advisors. Specifically, Section 15B(b)(2)(A) of the Act authorizes the MSRB to prescribe ‘‘standards of training, experience, competence, and such other qualifications as the Board finds necessary or appropriate in the public interest or for the protection of investors and municipal entities or obligated persons.’’ 6 Section 15B(b)(2)(A)(iii) of the Act also provides that the Board may appropriately classify associated persons of dealers and municipal advisors and require persons in any such class to pass tests prescribed by the Board.7 Accordingly, over the years, the MSRB has adopted professional qualification standards to ensure that associated persons of dealers and municipal advisors attain and maintain specified levels of competence and knowledge for each classification category. The purpose of the proposed rule change is to generally harmonize Rule G–3 with approved amendments to 4 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). 6 See 15 U.S.C. 78o–4(b)(2)(A). 7 See 15 U.S.C. 78o–4(b)(2)(A)(iii). 5 17 E:\FR\FM\26JNN1.SGM 26JNN1

Agencies

[Federal Register Volume 83, Number 123 (Tuesday, June 26, 2018)]
[Notices]
[Pages 29850-29855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13594]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83477; File No. 4-709]


Program for Allocation of Regulatory Responsibilities Pursuant to 
Rule 17d-2; Notice of Filing and Order Approving and Declaring 
Effective an Amended Plan for the Allocation of Regulatory 
Responsibilities Between the Financial Industry Regulatory Authority, 
Inc. and BOX Options Exchange LLC

June 20, 2018.
    Notice is hereby given that the Securities and Exchange Commission 
(``Commission'') has issued an Order, pursuant to Section 17(d) of the 
Securities Exchange Act of 1934 (``Act''),\1\ approving and declaring 
effective an amendment to the plan for allocating regulatory 
responsibility (``Plan'') filed on June 13, 2018, pursuant to Rule 17d-
2 of the Act,\2\ by the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') and BOX Options Exchange LLC (``BOX'') (collectively, 
``Participating Organizations'' or ``parties''). This agreement amends 
and restates the agreement entered into between FINRA and BOX on March 
2, 2017, entitled ``Agreement Between Financial Industry Regulatory 
Authority, Inc. and BOX Options Exchange LLC Pursuant to Rule 17d-2 
under the Securities Exchange Act of 1934,'' and any subsequent 
amendments thereafter.
---------------------------------------------------------------------------

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

I. Introduction

    Section 19(g)(1) of the Act,\3\ among other things, requires every 
self-regulatory organization (``SRO'') registered as either a national 
securities exchange or national securities association to examine for, 
and enforce compliance by, its members and persons associated with its 
members with the Act, the rules and regulations thereunder, and the 
SRO's own rules, unless the SRO is relieved of this responsibility 
pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act. 
Without this relief, the statutory obligation of each individual SRO 
could result in a pattern of multiple examinations of broker-dealers 
that maintain memberships in more than one SRO (``common members''). 
Such regulatory duplication would add unnecessary expenses for common 
members and their SROs.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78s(g)(1).
    \4\ 15 U.S.C. 78q(d).
    \5\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------

    Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate 
unnecessary multiple examinations and regulatory duplication.\7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78q(d)(1).
    \7\ 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.\8\ 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.\9\ 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.
---------------------------------------------------------------------------

    \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
    \9\ 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.\10\ Rule 17d-2 permits 
SROs to propose

[[Page 29851]]

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 opportunity for 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.
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------

II. The Plan

    On April 6, 2017, the Commission declared effective the Plan 
entered into between FINRA and BOX for allocating regulatory 
responsibility pursuant to Rule 17d-2.\11\ The Plan is intended to 
reduce regulatory duplication for firms that are common members of 
FINRA and BOX by allocating regulatory responsibility with respect to 
certain applicable laws, rules, and regulations that are common among 
them. Included in the Plan is an exhibit that lists every BOX rule for 
which FINRA bears responsibility under the Plan for overseeing and 
enforcing with respect to BOX members that are also members of FINRA 
and the associated persons therewith (``Certification'').
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 80388 (April 6, 
2017), 82 FR 17712 (April 12, 2017).
---------------------------------------------------------------------------

III. Proposed Amendment to the Plan

    On June 13, 2018, the parties submitted a proposed amendment to the 
Plan (``Amended Plan''). The primary purpose of the Amended Plan is to 
allocate surveillance, investigation, and enforcement responsibilities 
for Rule 14e-4 under the Act, as well as certain provisions of 
Regulation SHO. The text of the proposed Amended Plan is as follows 
(additions are italicized; deletions are [bracketed]):
* * * * *

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] 13th day of June, 2018 (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.''
    This Agreement amends and restates this agreement entered into 
between FINRA and BOX on March 2, 2017, entitled ``Agreement between 
Financial Industry Regulatory Authority, Inc. and BOX Options Exchange 
LLC Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' 
and any subsequent amendments thereafter.
    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]incorporation by 
reference of BOX Rules that are not Common Rules, (iii) exercise of 
discretion in a manner that differs from FINRA's 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. The term ``Regulatory Responsibilities'' shall also 
include the surveillance, investigation and Enforcement 
Responsibilities relating to compliance by Common Members with Rule 
14e-4 of the Securities Exchange Act (``Rule 14e-4''), with a focus on 
the standardized call option provision of Rule 14e-4(a)(1)(ii)(D).
    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

[[Page 29852]]

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.
    (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

[[Page 29853]]

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.
* * * * *

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'').
    # Common Rules shall not including any provisions regarding (i) 
notice, reporting or any other filings made directly to or from BOX, 
(ii) incorporation by reference of BOX Rules that are not Common Rules, 
(iii) exercise of discretion in a manner that differs from FINRA's 
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.

------------------------------------------------------------------------
                                           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.
BOX Rule 10070 Anti-Money Laundering     FINRA Rule 3310 Anti-Money
 Compliance Program .                    Laundering Compliance Program.
------------------------------------------------------------------------

    In addition, the following provisions shall be part of this 17d-2 
Agreement:

SEA Rule 200 of Regulation SHO--Definition of ``Short Sale'' and 
Marking Requirements and
SEA Rule 201 of Regulation SHO--Circuit Breaker
SEA Rule 203 of Regulation SHO--Borrowing and Delivery Requirements
SEA Rule 204 of Regulation SHO--Close-Out Requirement
SEA Rule 14e-4--Prohibited Transactions in Connection with Partial 
Tender Offers [supcaret]

[supcaret] FINRA shall perform surveillance, investigation, and 
Enforcement Responsibilities for SEA Rule 14e-4(a)1)(ii)(D).

    [* 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.,

[[Page 29854]]

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

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number 4-709 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 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 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 website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan that are filed with the 
Commission, and all written communications relating to the proposed 
plan between the Commission and any person, other than those that may 
be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for website 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 FINRA and BOX. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment 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 
July 17, 2018.

V. Discussion

    The Commission finds that the proposed Amended Plan is consistent 
with the factors set forth in Section 17(d) of the Act \12\ and Rule 
17d-2(c) thereunder \13\ in that the proposed Amended 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 
Amended Plan should reduce unnecessary regulatory duplication by 
allocating to FINRA certain examination and enforcement 
responsibilities for Common Members that would otherwise be performed 
by both FINRA and BOX. Accordingly, the proposed Amended Plan promotes 
efficiency by reducing costs to Common Members. Furthermore, because 
BOX and FINRA will coordinate their regulatory functions in accordance 
with the Amended Plan, the Amended Plan should promote investor 
protection.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78q(d).
    \13\ 17 CFR 240.17d-2(c).
---------------------------------------------------------------------------

    The Commission notes that, under the Amended 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 Common Member's activity, conduct, or 
output in relation to such rule. In addition, under the Amended Plan, 
FINRA would assume regulatory responsibility for certain provisions of 
the federal securities laws and the rules and regulations thereunder 
that are set forth in the Certification. The Common Rules covered by 
the Amended Plan are specifically listed in the Certification, as may 
be amended by the Parties from time to time.
    According to the Amended 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 
no longer qualify as common rules; and confirm that the remaining rules 
on the list of Common Rules continue to be BOX rules that qualify as 
common rules.\14\ FINRA will then confirm in writing whether the rules 
listed in any updated list are Common Rules as defined in the Amended 
Plan. Under the Amended Plan, BOX also will provide FINRA with a 
current list of Common Members and shall update the list no less 
frequently than once each quarter.\15\ 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.
---------------------------------------------------------------------------

    \14\ See paragraph 2 of the Amended Plan.
    \15\ See paragraph 3 of the Amended Plan.
---------------------------------------------------------------------------

    The Commission is hereby declaring effective an Amended 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 Common Members of BOX and FINRA. 
Therefore, modifications to the Certification need not be filed with 
the Commission as an amendment to the Amended 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 Amended 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 Amended Plan, 
which must be filed with the Commission pursuant to Rule 17d-2 under 
the Act.\16\
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    \16\ The addition to or deletion from the Certification of any 
federal securities laws, rules, and regulations for which FINRA 
would bear responsibility under the Amended Plan for examining, and 
enforcing compliance by, Common Members, also would constitute an 
amendment to the Amended Plan.
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    Under paragraph (c) of Rule 17d-2, the Commission may, after 
appropriate notice and comment, declare a plan, or any part of a plan, 
effective. In this instance, the Commission believes that

[[Page 29855]]

appropriate notice and comment can take place after the proposed 
amendment is effective. The primary purpose of the amendment is to 
allocate surveillance, investigation, and enforcement responsibilities 
for Rule 14e-4 under the Act, as well as certain provisions of 
Regulation SHO. By declaring it effective today, the Amended Plan can 
become effective and be implemented without undue delay. The Commission 
notes that the prior version of this plan immediately prior to this 
proposed amendment was published for comment and the Commission did not 
receive any comments thereon.\17\ Furthermore, the Commission does not 
believe that the amendment to the plan raises any new regulatory issues 
that the Commission has not previously considered.
---------------------------------------------------------------------------

    \17\ See supra note 12 (citing to Securities Exchange Act 
Release No. 72137).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the Amended Plan filed with the 
Commission in File No. 4-709. The Parties shall notify all members 
affected by the Amended Plan of their rights and obligations under the 
Amended Plan.
    It is therefore ordered, pursuant to Section 17(d) of the Act, that 
the Amended Plan in File No. 4-709, between the FINRA and BOX, filed 
pursuant to Rule 17d-2 under the Act, hereby is approved and declared 
effective.
    It is further ordered that BOX is relieved of those 
responsibilities allocated to FINRA under the Amended 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).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-13594 Filed 6-25-18; 8:45 am]
 BILLING CODE 8011-01-P
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