Program for Allocation of Regulatory Responsibilities Pursuant to Rule17d-2; Notice of Filing and Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Among the Financial Industry Regulatory Authority, Inc., Miami International Securities Exchange, LLC, and MIAX PEARL, LLC, 35682-35696 [2018-16110]
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35682
Federal Register / Vol. 83, No. 145 / Friday, July 27, 2018 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83696; File No. 4–678]
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 Among the
Financial Industry Regulatory
Authority, Inc., Miami International
Securities Exchange, LLC, and MIAX
PEARL, LLC
July 24, 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 28, 2018,
pursuant to Rule 17d–2 of the Act,2 by
the Miami International Securities
Exchange, LLC (‘‘MIAX’’), MIAX
PEARL, LLC (‘‘MIAX PEARL’’), and the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (collectively,
‘‘Participating Organizations’’ or
‘‘parties’’). This agreement amends and
restates the agreement entered into
between FINRA, MIAX, and MIAX
PEARL on June 27, 2018, entitled
‘‘Agreement between Financial Industry
Regulatory Authority, Inc., Miami
International Securities Exchange, LLC
and MIAX PEARL, LLC Pursuant to
Rule 17d–2 under the Securities
Exchange Act of 1934,’’ and any
subsequent amendments thereafter.
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I. Introduction
Section 19(g)(1) of the Act,3 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or national securities
association to examine for, and enforce
compliance by, its members and persons
associated with its members with the
Act, the rules and regulations
thereunder, and the SRO’s own rules,
unless the SRO is relieved of this
responsibility pursuant to Section
17(d) 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
1 15
U.S.C. 78q(d).
2 17 CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
4 15 U.S.C. 78q(d).
5 15 U.S.C. 78s(g)(2).
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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
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
U.S.C. 78q(d)(1).
Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
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).
PO 00000
6 15
7 See
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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 November 19, 2014, the
Commission declared effective the Plan
entered into between FINRA and MIAX
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 both MIAX and FINRA. The
plan reduces regulatory duplication for
firms that are members of MIAX and
FINRA by allocating regulatory
responsibility with respect to certain
applicable laws, rules, and regulations.
Included in the Plan is an exhibit that
lists every MIAX rule for which FINRA
bears responsibility under the Plan for
overseeing and enforcing with respect to
MIAX members that are also members of
FINRA and the associated persons
therewith (‘‘Certification’’). On January
12, 2017, the parties submitted a
proposed amendment to the Plan to add
MIAX PEARL as a Participant to the
Plan.12
III. Proposed Amendment to the Plan
On June 28, 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 underlined;
deletions are [bracketed]):
*
*
*
*
*
11 See Securities Exchange Act Release No. 73641
(November 19, 2014), 79 FR 70230 (November 25,
2014).
12 See Securities Exchange Act Release No. 79974
(February 6, 2017), 82 FR 10417 (February 10,
2017).
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Federal Register / Vol. 83, No. 145 / Friday, July 27, 2018 / Notices
35683
AGREEMENT AMONG FINANCIAL INDUSTRY
REGULATORY AUTHORITY, INC.,
MIAMI INTERNATIONAL SECURITIES EXCHANGE, LLC AND MIAX PEARL, LLC
PURSUANT TO
RULE 17d-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934
This Agreement, by and among the Financial Industry Regulatory Authority, Inc. ("FINRA"),
Miami International Securities Exchange, LLC ("MIAX") and MIAX PEARL, LLC ("MIAX
PEARL"), is made this [11 1h]27th day of [January, 2017]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, MIAX and MIAX PEARL
may be referred to individually as a "party" and together as the "parties."
This Agreement amends and restates the agreement entered into between FINRA_, [and] MIAX
and MIAX PEARL on [October 13, 2014] January 11, 2017, entitled "Agreement between
Financial Industry Regulatory Authority, Inc._, [and] Miami International Securities Exchange,
LLC and MIAX PEARL, LLC Pursuant to Rule 17d-2 under the Securities Exchange Act of
1934," and any subsequent amendments thereafter.
WHEREAS, the parties desire to reduce duplication in the examination of their Common
Members (as defined herein) and in the filing and processing of certain registration and
membership records; and
WHEREAS, the parties desire to execute an agreement covering such subjects pursuant to the
and Exchange Commission (the "SEC" or "Commission") for its approval.
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provisions of Rule 17d-2 under the Exchange Act and to file such agreement with the Securities
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NOW, THEREFORE, in consideration of the mutual covenants contained hereinafter, the parties
hereby agree as follows:
1. Definitions. Unless otherwise defined in this Agreement or the context otherwise requires,
the terms used in this Agreement shall have the same meaning as they have under the
Exchange Act and the rules and regulations thereunder. As used in this Agreement, the
following terms shall have the following meanings:
(a) "MIAX Rules," "MIAX PEARL Rules or "FINRA Rules" shall mean: (i) the
rules ofMIAX or MIAX PEARL, respectively, or (ii) the rules ofFINRA,
respectively, as the rules of an exchange or association are defined in Exchange
Act Section 3(a)(27).
(b) "Common Rules" shall mean MIAX Rules and MIAX PEARL 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 Common 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 MIAX or MIAX PEARL, (ii) [compliance with other
referenced]incorporation by reference of MIAX or MIAX PEARL Rules that are
not Common Rules, (iii) exercise of discretion in a manner that differs from
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FINRA' s exercise of discretion including, but not limited to exercise of exemptive
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authority, by MIAX or MIAX PEARL, (iv) prior written approval ofMIAX or
MIAX PEARL and (v) payment of fees or fines to MIAX or MIAX PEARL.
(c) "Common Members" shall mean members ofFINRA and at least one ofMIAX or
MIAXPEARL.
(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 ofProcedure and sanctions guidelines.
(f) "Regulatory Responsibilities" shall mean the examination responsibilities and
Enforcement Responsibilities relating to compliance by the Common Members
with the Common Rules and the provisions of the Exchange Act and the rules and
regulations thereunder, and other applicable laws, rules and regulations, each as
set forth on Exhibit 1 attached hereto. 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 ofRule 14e-4(a)(l)(ii)(D).
Responsibilities and Enforcement Responsibilities for Common Members. Attached as
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2. Regulatory and Enforcement Responsibilities. FINRA shall assume Regulatory
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Exhibit 1 to this Agreement and made part hereof, MIAX and MIAX PEARL furnished
FINRA with a current list of Common Rules and certified to FINRA that such rules that are
MIAX Rules and MIAX PEARL 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 the rules of the parties, MIAX and
MIAX PEARL shall submit an updated list of Common Rules to FINRA for review which
shall add MIAX Rules or MIAX PEARL Rules not included in the current list of Common
Rules that qualify as Common Rules as defined in this Agreement; delete MIAX Rules or
MIAX PEARL 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 MIAX Rules or MIAX PEARL 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 MIAX and MIAX PEARL 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 MIAX's and MIAX PEARL's own marketplace;
registration rules that are not Common Rules);
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(b) registration pursuant to their applicable rules of associated persons (i.e.,
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(c) discharge of their duties and obligations as a Designated Examining Authority
pursuant to Rule 17d-l under the Exchange Act; and
(d) any MIAX Rules and MIAX PEARL Rules that are not Common Rules as
provided in paragraph 6.
3. Common Members. Prior to the Effective Date, MIAX and MIAX PEARL shall furnish
FINRA with a current list of Common Members, which shall be updated no less frequently
than once each quarter.
4. No Charge. There shall be no charge to MIAX and MIAX PEARL by FINRA for
performing the Regulatory Responsibilities and Enforcement Responsibilities under this
Agreement except as hereinafter provided. FINRA shall provide MIAX and MIAX PEARL
with ninety (90) days advance written notice in the event FINRA decides to impose any
charges to MIAX and MIAX PEARL for performing the Regulatory Responsibilities under
this Agreement. IfFINRA determines to impose a charge, MIAX and MIAX PEARL 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
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and void.
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6. Notification of Violations. In the event that FINRA becomes aware of apparent violations of
any MIAX Rules or MIAX PEARL Rules, which are not listed as Common Rules,
discovered pursuant to the performance of the Regulatory Responsibilities assumed
hereunder, FINRA shall notify MIAX and MIAX PEARL of those apparent violations for
such response as MIAX and MIAX PEARL deem appropriate. In the event that MIAX or
MIAX PEARL becomes aware of apparent violations of any Common Rules, discovered
pursuant to the performance of the Retained Responsibilities, MIAX and MIAX PEARL
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 Common Member is the subject of an
investigation relating to a transaction on MIAX or MIAX PEARL, MIAX and MIAX
PEARL may in their discretion assume concurrent jurisdiction and responsibility. Each party
agrees to make available promptly all files, records and witnesses necessary to assist the
other in its investigation or proceedings.
7.
Continued Assistance.
(a) FINRA shall make available to MIAX and MIAX PEARL all information
obtained by FINRA in the performance by it of the Regulatory Responsibilities
hereunder with respect to the Common Members subject to this Agreement. In
particular, and not in limitation of the foregoing, FINRA shall furnish MIAX and
MIAX PEARL any information it obtains about Common Members which
make available to FINRA any information coming to its attention that reflects
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reflects adversely on their financial condition. MIAX and MIAX PEARL shall
Federal Register / Vol. 83, No. 145 / Friday, July 27, 2018 / Notices
35689
adversely on the financial condition of Common 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. No party shall assert regulatory or other privileges as
against any other with respect to documents or information that is required to be
shared pursuant to this Agreement.
(c) The sharing of documents or information among 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 Common 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 MIAX
and MIAX PEARL advised of its actions in this regard for such subsequent proceedings as
MIAX and MIAX PEARL may initiate.
9. Customer Complaints. MIAX and MIAX PEARL shall forward to FINRA copies of all
customer complaints involving Common Members received by MIAX and MIAX PEARL
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 responsibility to review the advertising of Common
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Members subject to the Agreement, provided that such material is filed with FINRA in
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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 any party to conduct its own independent or concurrent
investigation, examination or enforcement proceeding of or against Common Members, as
any party, in its sole discretion, shall deem appropriate or necessary.
12. Termination. This Agreement may be terminated by any party at any time upon the approval
of the Commission after one (1) year's written notice to the other parties (or such shorter
time as agreed by the parties), except as provided in paragraph 4.
13. Arbitration. In the event of a dispute among the parties as to the operation of this
Agreement, the parties hereby agree that any such dispute shall be settled by arbitration in
Washington, D.C. in accordance with the rules of the American Arbitration Association then
in effect, or such other procedures as the parties may mutually agree upon. Judgment on the
award rendered by the arbitrator(s) may be entered in any court having jurisdiction. Each
party acknowledges that the timely and complete performance of its obligations pursuant to
this Agreement is critical to the business and operations of the other parties. In the event of a
dispute among 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)
Exchange, Inc., BOX Options Exchange, LLC, Chicago Board Options Exchange,
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the multiparty Agreement made pursuant to Rule 17d-2 of the Exchange Act among BATS
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Incorporated, C2 Options Exchange, Incorporated, the International Securities Exchange,
LLC, FINRA, MIAX, NYSE MKT LLC, the NYSE Area, Inc., The NASDAQ Stock Market
LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, ISE Gemini, LLC, EDGX
Exchange, Inc.,_[ and] 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 16, 2016]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 Area, Inc.,
The NASDAQ Stock Market LLC, NASDAQ OMX PHLX, Inc., [and] MIAX 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 16, 2016] February 2, 2017, and
as may be amended from time to time.
15. Notification of Members. The parties shall notify Common 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 each party. All such amendments must be filed with and approved by the
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Commission before they become effective.
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17. Limitation of Liability. None of the parties nor any of their respective directors, governors,
officers or employees shall be liable to any other party to this Agreement for any liability,
loss or damage resulting from or claimed to have resulted from any delays, inaccuracies,
errors or omissions with respect to the provision of Regulatory Responsibilities as provided
hereby or for the failure to provide any such responsibility, except with respect to such
liability, loss or damages as shall have been suffered by any party and caused by the willful
misconduct of another party or their respective directors, governors, officers or employees.
No warranties, express or implied, are made by any party hereto with respect to any of the
responsibilities to be performed by 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, MIAX and MIAX PEARL join in requesting the
Commission, upon its approval of this Agreement or any part thereof, to relieve MIAX and
MIAX PEARL 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
instrument.
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shall be deemed an original, and such counterparts together shall constitute one and the same
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35693
*****
EXHIBIT 1
Miami International Securities Exchange, LLC and MIAX PEARL, LLC Rules Certification for
17d-2 Agreement with FINRA
Miami International Securities Exchange, LLC ("MIAX") and MIAX PEARL, LLC ("MIAX
PEARL") hereby certify 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 include any provisions regarding (i) notice, reporting or any other
filings made directly to or from MIAX or MIAX PEARL, (ii) incorporation by reference of
MIAX or MIAX PEARL 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 MIAX or MIAX PEARL, (iv) prior written approval ofMIAX or MIAX
PEARL and (v) payment of fees or fines to MIAX or MIAX PEARL.
MIAX PEARL RULES
Rule 301
Just and Equitable
Principles of Trade 13
Rule 303 Prevention of
the Misuse of Material
Nonpublic Information 1'#
Rule 315
Anti-Money Laundering
Compliance Program#
Rule 318(a)
Manipulation
Rule 301
Just and Equitable
Principles of Trade 1
Rule 303 Prevention ofthe
Misuse ofMaterial
Nonpublic Information 1• #
Rule 315
Anti-Money Laundering
Compliance Program#
Rule 318(a)
Manipulation
Rule318(b)
Manipulation
Rule 319
Forwarding of Proxy and
Other Issuer-Related
Materials
Rule318(b)
Manipulation
Rule 319
Forwarding of Proxy and
Other Issuer-Related
Materials
FINRA (NASD) RULES,
EXCHANGE ACT PROVISION
OR
SEC RULE
FINRA Rule 2010 Standards of
Commercial Honor and Principles
of Trade[*]
Section 15(g) of the Exchange Act
and FINRA Rule 311 O(b )(1)
Supervision
FINRA Rule 3310 Anti-Money
Laundering Compliance Program
FINRA Rule 2020 Use of
Manipulative, Deceptive or other
Fraudulent Devices[*]
FINRA Rule 6140@ Other
Trading Practices
FINRA Rule 2251 Processing and
Forwarding of Proxy and Other
Issuer-Related Materials
13
FINRA shall only have Regulatory Responsibilities regarding the rule and not the
interpretations and policies.
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MIAXRULES
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Rule 320
Trading Ahead of
Research Reports
Rule 800(a), (b) and (d)
Maintenance, Retention
and Furnishing of Books,
Records and Other
Information 1#
Rule 1304
Continuing Education for
Registered Persons#
Rule 320
Trading Ahead of Research
Reports
Rule 800(a), (b) and (d)
Maintenance, Retention and
Furnishing ofBooks,
Records and Other
Information 1·#
Rule 1304
Continuing Education for
Registered Persons#
Rule 1321
Transfer of Accounts
Rule 1325
Telemarketing
Rule 1321
Transfer of Accounts
Rule 1325
Telemarketing
FINRA Rule 5280 Trading Ahead
of Research Reports
FINRA Rule 4511 General
Requirements* and Section 17 of
the Exchange Act and the rules
thereunder#
FINRARule 1250(a)(1)-(4), (6)
and (b) Continuing Education
R eqmrements #
.
FINRA Rule 11870 Customer
Account Transfer Contracts
FINRA Rule 3230 Telemarketing
In addition, the following provisions shall be part of this 17d-2 Agreement:
SEA Rule
SEA Rule
SEA Rule
SEA Rule
SEA Rule
200 of Regulation SHO- Definition of"Short Sale" and Marking Requirements and
201 of Regulation SHO- Circuit Breaker
203 of Regulation SHO- Borrowing and Delivery Requirements
204 of Regulation SHO - Close-Out Requirement
14e-4 -Prohibited Transactions in Connection with Partial Tender Offers/\
AFINRA shall perform surveillance, investigation, and Enforcement Responsibilities for SEA
Rule 14e-4(a) l)(ii)(D).
[#FINRA shall not have Regulatory Responsibilities regarding (i) notice, reporting or any other
filings made directly to or from MIAX or MIAX PEARL, (ii) compliance with other referenced
MIAX or MIAX PEARL Rules that are not Common Rules, (iii) exercise of discretion including,
but not limited to exercise of exemptive authority, by MIAX or MIAX PEARL, (iv) prior written
approval ofMIAX or MIAX PEARL and (v) payment of fees or fines to MIAX or MIAX
PEARL.]
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[* 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 Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options Exchange, Inc.,
Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry
Regulatory Authority, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, the
NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC,
NYSE Amex LLC, and NYSE Area Inc., effective December 16, 2011, as may be amended from
time to time.]
Federal Register / Vol. 83, No. 145 / Friday, July 27, 2018 / Notices
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 rule-comments@
sec.gov. Please include File Number 4–
678 on the subject line.
amozie on DSK3GDR082PROD with NOTICES1
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 4–678. 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, MIAX, and MIAX PEARL. 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 4–678 and should be
submitted on or before August 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 14 and Rule 17d–2(c)
thereunder 15 in that the proposed
Amended Plan is necessary or
14 15
15 17
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 FINRA and
MIAX or MIAX PEARL. Accordingly,
the proposed Amended Plan promotes
efficiency by reducing costs to Common
Members. Furthermore, because MIAX,
MIAX PEARL, 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, MIAX, MIAX PEARL,
and FINRA have allocated regulatory
responsibility for those MIAX and
MIAX PEARL 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,
MIAX and MIAX PEARL will review the
Certification at least annually, or more
frequently if required by changes in
either the rules of MIAX, MIAX PEARL
or FINRA, and, if necessary, submit to
FINRA an updated list of Common
Rules to add MIAX or MIAX PEARL
rules not included on the then-current
list of Common Rules that are
substantially similar to FINRA rules;
delete MIAX or MIAX PEARL 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 MIAX or MIAX
PEARL rules that qualify as common
rules.16 FINRA will then confirm in
writing whether the rules listed in any
U.S.C. 78q(d).
CFR 240.17d–2(c).
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16 See
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paragraph 2 of the Amended Plan.
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35695
updated list are Common Rules as
defined in the Amended Plan. Under
the Amended Plan, MIAX and MIAX
PEARL also will provide FINRA with a
current list of Common Members and
shall update the list no less frequently
than once each quarter.17 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 MIAX
and MIAX PEARL rules that are
substantially similar to the rules of
FINRA for Common Members of FINRA
and MIAX, and FINRA and MIAX
PEARL. 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 MIAX or
MIAX PEARL 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 MIAX or MIAX
PEARL rule to the Certification that is
not substantially similar to a FINRA
rule; delete a MIAX or MIAX PEARL
rule from the Certification that is
substantially similar to a FINRA rule; or
leave on the Certification a MIAX or
MIAX PEARL 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.18
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
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
17 See
paragraph 3 of the Amended Plan.
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.
18 The
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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.19 Furthermore, the
Commission does not believe that the
amendment to the plan raises any new
regulatory issues that the Commission
has not previously considered.
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
VI. Conclusion
This order gives effect to the
Amended Plan filed with the
Commission in File No. 4–678. 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. 4–678,
between the FINRA, MIAX, and MIAX
PEARL, filed pursuant to Rule 17d–2
under the Act, hereby is approved and
declared effective.
It is further ordered that MIAX and
MIAX PEARL are each relieved of those
responsibilities allocated to FINRA
under the Amended Plan in File No. 4–
678.
The Exchange proposes to amend its
Schedule of Fees and Rebates to adopt
(1) two new adding tiers, and (2)
regulatory fees in connection with use
of the Central Registration Depository
(‘‘CRD’’) by Exchange ETP Holders that
are not also members of the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’). The Exchange proposes to
implement the rule change on July 9,
2018.4 The proposed rule change is
available on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–16110 Filed 7–26–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83687; File No. SR–
NYSENAT–2018–16]
Self-Regulatory Organizations; NYSE
National, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Schedule of
Fees and Rebates To Adopt Two New
Adding Tiers and Regulatory Fees in
Connection With Use of the Central
Registration Depository
amozie on DSK3GDR082PROD with NOTICES1
July 23, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on July 9,
2018, NYSE National, Inc. (‘‘Exchange’’
or ‘‘NYSE National’’) filed with the
Securities and Exchange Commission
19 See supra note 12 (citing to Securities
Exchange Act Release No. 79974).
20 17 CFR 200.30–3(a)(34).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the 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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend its
Schedule of Fees and Rebates to adopt
(1) two new adding tiers, and (2)
regulatory fees in connection with use
of CRD.
The Exchange proposes to implement
the rule change on July 9, 2018.
Proposed Adding Tiers
The Exchange proposes two new
adding tiers for displayed and nondisplayed orders in securities priced at
or above $1.00, as follows. Current
4 The Exchange originally filed to amend the Fee
Schedule on June 27, 2018 (SR–NYSENAT–2018–
14) and withdrew such filing on July 9, 2018. This
filing replaces SR–NYSENAT–2018–14 in its
entirety.
PO 00000
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Adding Tier would be re-named
‘‘Adding Tier 1.’’
Adding Tier 2
Under proposed Adding Tier 2, the
Exchange would offer the following fees
for transactions in stocks with a per
share price of $1.00 or more when
adding liquidity to the Exchange if the
ETP Holder quotes at least 5% of the
NBBO 5 in 1,000 or more symbols on an
average daily basis, calculated monthly:
• $0.0005 per share for adding
displayed orders;
• $0.0005 per share for orders that set
a new Exchange BBO;
• $0.0007 per share for adding nondisplayed orders; and
• $0.0005 per share for MPL orders.
For example, in a given month, if an
ETP Holder quotes at least 5% of the
NBBO in 800 symbols in round lots on
the first day of the month and 1,400
symbols on the second day of the
month, the ETP Holder would have
1,100 securities on average daily basis
that meet the 5% NBBO requirement
after the second day, and would qualify
for the proposed Adding Tier 2 after the
second day. Further, in a given symbol
on a given day, if the ETP Holder
maintains a bid at the NBB for 4% of the
trading day and an offer at the NBO for
8% of the trading day, that would result
in the ETP Holder quoting 6% of the
NBBO in that symbol for that day and
that symbol meeting the 5% NBBO
requirement for that day.
Adding Tier 3
Under proposed Adding Tier 3, the
Exchange would offer the following fees
for transactions in stocks with a per
share price of $1.00 or more when
adding liquidity to the Exchange if the
ETP Holder quotes at least 5% of the
NBBO 6 in 600 or more symbols on an
average daily basis, calculated monthly:
• $0.0012 per share for adding
displayed orders;
• $0.0012 per share for orders that set
a new Exchange BBO;
• $0.0014 per share for adding nondisplayed orders; and
• $0.0005 per share for MPL orders.
Finally, as reflected in footnote * of
the Schedule of Fees and Rebates, the
volume requirements for the current
5 The Exchange would explain the proposed 5%
requirement in a new footnote **. As proposed,
ETP Holders would have to maintain a bid or an
offer at the NBB or the NBO for at least 5% of the
trading day in round lots in a security for that
security to count toward the tier requirement. The
terms ‘‘NBB,’’ ‘‘NBO,’’ ‘‘NBBO,’’ and ‘‘BBO’’ are
defined in NYSE National Rule 1.1. The Exchange
believes that the proposed 5% threshold is
appropriate for a market of NYSE National’s size
and trading volume.
6 See note 5, supra.
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]]>Agencies
[Federal Register Volume 83, Number 145 (Friday, July 27, 2018)]
[Notices]
[Pages 35682-35696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16110]
[[Page 35682]]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83696; File No. 4-678]
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 Among the Financial Industry Regulatory Authority,
Inc., Miami International Securities Exchange, LLC, and MIAX PEARL, LLC
July 24, 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 28, 2018, pursuant to Rule 17d-
2 of the Act,\2\ by the Miami International Securities Exchange, LLC
(``MIAX''), MIAX PEARL, LLC (``MIAX PEARL''), and the Financial
Industry Regulatory Authority, Inc. (``FINRA'') (collectively,
``Participating Organizations'' or ``parties''). This agreement amends
and restates the agreement entered into between FINRA, MIAX, and MIAX
PEARL on June 27, 2018, entitled ``Agreement between Financial Industry
Regulatory Authority, Inc., Miami International Securities Exchange,
LLC and MIAX PEARL, 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 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 November 19, 2014, the Commission declared effective the Plan
entered into between FINRA and MIAX 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 both
MIAX and FINRA. The plan reduces regulatory duplication for firms that
are members of MIAX and FINRA by allocating regulatory responsibility
with respect to certain applicable laws, rules, and regulations.
Included in the Plan is an exhibit that lists every MIAX rule for which
FINRA bears responsibility under the Plan for overseeing and enforcing
with respect to MIAX members that are also members of FINRA and the
associated persons therewith (``Certification''). On January 12, 2017,
the parties submitted a proposed amendment to the Plan to add MIAX
PEARL as a Participant to the Plan.\12\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 73641 (November 19,
2014), 79 FR 70230 (November 25, 2014).
\12\ See Securities Exchange Act Release No. 79974 (February 6,
2017), 82 FR 10417 (February 10, 2017).
---------------------------------------------------------------------------
III. Proposed Amendment to the Plan
On June 28, 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 underlined; deletions are [bracketed]):
* * * * *
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[[Page 35695]]
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 4-678 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 4-678. 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, MIAX, and MIAX PEARL. 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 4-678 and should be submitted
on or before August 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 \14\ and Rule
17d-2(c) thereunder \15\ 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 FINRA and MIAX or MIAX PEARL. Accordingly, the proposed Amended Plan
promotes efficiency by reducing costs to Common Members. Furthermore,
because MIAX, MIAX PEARL, and FINRA will coordinate their regulatory
functions in accordance with the Amended Plan, the Amended Plan should
promote investor protection.
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\14\ 15 U.S.C. 78q(d).
\15\ 17 CFR 240.17d-2(c).
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The Commission notes that, under the Amended Plan, MIAX, MIAX
PEARL, and FINRA have allocated regulatory responsibility for those
MIAX and MIAX PEARL 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, MIAX and MIAX PEARL will review the
Certification at least annually, or more frequently if required by
changes in either the rules of MIAX, MIAX PEARL or FINRA, and, if
necessary, submit to FINRA an updated list of Common Rules to add MIAX
or MIAX PEARL rules not included on the then-current list of Common
Rules that are substantially similar to FINRA rules; delete MIAX or
MIAX PEARL 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 MIAX or MIAX PEARL rules
that qualify as common rules.\16\ 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, MIAX and MIAX
PEARL also will provide FINRA with a current list of Common Members and
shall update the list no less frequently than once each quarter.\17\
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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\16\ See paragraph 2 of the Amended Plan.
\17\ See paragraph 3 of the Amended Plan.
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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 MIAX and MIAX PEARL rules that are
substantially similar to the rules of FINRA for Common Members of FINRA
and MIAX, and FINRA and MIAX PEARL. 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 MIAX or MIAX PEARL 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 MIAX or MIAX PEARL rule to the Certification that is not
substantially similar to a FINRA rule; delete a MIAX or MIAX PEARL rule
from the Certification that is substantially similar to a FINRA rule;
or leave on the Certification a MIAX or MIAX PEARL 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.\18\
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\18\ 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 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
[[Page 35696]]
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.\19\ Furthermore, the Commission does not believe that the
amendment to the plan raises any new regulatory issues that the
Commission has not previously considered.
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\19\ See supra note 12 (citing to Securities Exchange Act
Release No. 79974).
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VI. Conclusion
This order gives effect to the Amended Plan filed with the
Commission in File No. 4-678. 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. 4-678, between the FINRA, MIAX, and MIAX
PEARL, filed pursuant to Rule 17d-2 under the Act, hereby is approved
and declared effective.
It is further ordered that MIAX and MIAX PEARL are each relieved of
those responsibilities allocated to FINRA under the Amended Plan in
File No. 4-678.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(34).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16110 Filed 7-26-18; 8:45 am]
BILLING CODE 8011-01-P
