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 NYSE National, Inc., 55410-55416 [2018-24070]
Download as PDF
<![CDATA[
55410
Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
section by
telephone for advice on filing
alternatives.
INFORMATION CONTACT
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
II. Docketed Proceeding(s)
Table of Contents
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service has filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
requests(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request.1 For
each request, the Commission appoints
an officer of the Commission to
represent the interests of the general
public in the proceeding, pursuant to 39
U.S.C. 505 (Public Representative).
Section II also establishes comment
deadline(s) pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.301.2
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
1 While the Postal Service cites no specific
authority for its filing, the Commission construes
the request as filed under 39 CFR 3015.5 which
governs amendments to rates or classes not of
general applicability.
2 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
VerDate Sep<11>2014
18:38 Nov 02, 2018
Jkt 247001
1. Docket No(s).: CP2015–61; Filing
Title: USPS Notice of Amendment to
Priority Mail Express & Priority Mail
Contract 18, Filed Under Seal: October
29, 2018; Filing Authority: 39 CFR
3015.5; Public Representative: Curtis E.
Kidd; Comments Due: November 6,
2018.
This notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2018–24060 Filed 11–2–18; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84502; File No. 4–694]
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 NYSE National, Inc.
October 30, 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 September 27, 2018,
pursuant to Rule 17d–2 of the Act,2 by
the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and NYSE
National, Inc. (‘‘NYSE National’’)
(collectively, ‘‘Participating
Organizations’’ or ‘‘parties’’). This
Agreement amends and restates the
agreement entered into between the
parties on December 22, 2015, entitled
‘‘Agreement Among Financial Industry
Regulatory Authority, Inc. and National
Stock Exchange, Inc. 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 self1 15
U.S.C. 78q(d).
CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
2 17
PO 00000
Frm 00065
Fmt 4703
Sfmt 4703
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.
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
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).
5 15
E:\FR\FM\05NON1.SGM
05NON1
Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices
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 notice
and comment, it determines that the
plan is necessary or appropriate in the
public interest and for the protection of
investors, to foster cooperation and
coordination among the SROs, to
remove impediments to, and foster the
development of, a national market
system and a national clearance and
settlement system, and is in conformity
with the factors set forth in Section
17(d) of the Act. Commission approval
of a plan filed pursuant to Rule 17d–2
relieves an SRO of those regulatory
responsibilities allocated by the plan to
another SRO.
II. The Plan
On February 9, 2016, the Commission
declared effective the Plan entered into
between FINRA and the National Stock
Exchange, Inc. (n/k/a NYSE National,
Inc.) for allocating regulatory
responsibility pursuant to Rule 17d–2.11
The Plan is intended to reduce
regulatory duplication for firms that are
dual members of FINRA and NYSE
National 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
NYSE National rule for which FINRA
bears responsibility under the Plan for
overseeing and enforcing with respect to
NYSE National members that are also
members of FINRA and the associated
persons therewith.
III. Proposed Amendment to the Plan
On September 27, 2018, the parties
submitted a proposed amendment to the
Plan (‘‘Amended Plan’’). The primary
purposes of the Amended Plan are to (1)
reflect the name change of National
Stock Exchange, Inc. to NYSE National,
Inc., (2) update the SRO rules that are
covered by the agreement, and (3) to the
extent that it becomes a member of
NYSE National, allocate regulatory
responsibility to FINRA for NYSE
National’s affiliated routing brokerdealer, Archipelago Securities. The text
10 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
11 See Securities Exchange Act Release No. 77089
(February 9, 2016), 81 FR 7871 (February 16, 2016).
VerDate Sep<11>2014
18:38 Nov 02, 2018
Jkt 247001
of the proposed Amended Plan is as
follows (additions are underlined;
deletions are [bracketed]):
*
*
*
*
*
Agreement Between Financial Industry
Regulatory Authority, Inc. and NYSE
National [Stock Exchange], Inc.
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 the
NYSE National [Stock Exchange], Inc.
(‘‘[[NSX]NYSE NATIONAL ]NYSE
National’’), is made this [22nd]26th day
of September[December], 201[5]8 (the
‘‘Agreement’’), pursuant to Section 17(d)
of the Securities Exchange Act of 1934,
as amended (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 [NSX]NYSE
National may be referred to individually
as a ‘‘party’’ and together as the
‘‘parties.’’
This Agreement replaces and restates
the agreement entered into between the
parties on [June 20, 1977 as amended,
entitled ‘‘Agreement Between the
National Association of Securities
Dealers, Inc. and the Cincinnati Stock
Exchange] December 22, 2015 entitled
‘‘Agreement between Financial Industry
Regulatory Authority, Inc. and National
Stock Exchange, Inc. Pursuant to SEC
Rule 17d–2 Under the Securities
Exchange Act of 1934,’’ and any
subsequent amendments thereafter.
WHEREAS, FINRA and [NSX]NYSE
National 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 [NSX]NYSE
National 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 [NSX]NYSE
National 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:
PO 00000
Frm 00066
Fmt 4703
Sfmt 4703
55411
(a) ‘‘[NSX]NYSE National Rules’’ or
‘‘FINRA Rules’’ shall mean: (i) The rules
of [NSX]NYSE National 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
[NSX]NYSE National 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; provided, however Common Rules
shall not include the application of the
SEC, [NSX]NYSE National or FINRA
rules as they pertain to violations of
insider trading activities, which is
covered by a separate 17d–2 Agreement
by and among the Bats BZX Exchange,
Inc., Bats BYX Exchange, Inc., Chicago
Stock Exchange, Inc., Bats EDGA
Exchange, Inc., Bats EDGX Exchange,
Inc., Financial Industry Regulatory
Authority, Inc., NASDAQ BX, Inc.,
NASDAQ PHLX LLC, The NASDAQ
Stock Market LLC, National Stock
Exchange, Inc., New York Stock
Exchange LLC, NYSE MKT LLC, NYSE
Arca, Inc., and Investors Exchange LLC,
approved by the SEC on August 3, 2016
as the same may be amended from time
to time. Common Rules shall not
include provisions regarding (i) notice,
reporting or any other filings made
directly to or from NYSE National, (ii)
incorporation by reference of other
NYSE National 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 NYSE National,
(iv) prior written approval of NYSE
National, and (v) payment of fees or
fines to NYSE National.
(c) ‘‘Dual Members’’ shall mean those
[NSX]NYSE National 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
E:\FR\FM\05NON1.SGM
05NON1
55412
Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices
imposition of appropriate sanctions as
specified under FINRA’s Code of
Procedure and sanctions guidelines.
(f) ‘‘Regulatory Responsibilities’’ shall
mean the examination responsibilities
and Enforcement Responsibilities
relating to compliance by the Dual
Members with the Common Rules and
the provisions of the Exchange Act and
the rules and regulations thereunder,
and other applicable laws, rules and
regulations, each as set forth on Exhibit
1 attached hereto.
2. Regulatory and Enforcement
Responsibilities. FINRA shall assume
Regulatory Responsibilities and
Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this
Agreement and made part hereof,
[NSX]NYSE National furnished FINRA
with a current list of Common Rules and
certified to FINRA that such rules that
are [NSX]NYSE National 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 [NSX]NYSE
National or FINRA, [NSX]NYSE
National shall submit an updated list of
Common Rules to FINRA for review
which shall add [NSX]NYSE National
Rules not included in the current list of
Common Rules that qualify as Common
Rules as defined in this Agreement;
delete [NSX]NYSE National 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 [NSX]NYSE National 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
[NSX]NYSE National 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 [NSX]NYSE National’s own
marketplace;
(b) registration pursuant to its
applicable rules of associated persons
VerDate Sep<11>2014
18:38 Nov 02, 2018
Jkt 247001
(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 [NSX]NYSE National Rules
that are not Common Rules, except for
NYSE National rules for any NYSE
National affiliate that is a member that
operates as a facility (as defined in
Section 3(a)(2) of the Exchange Act),
acts as a router for NYSE National and
is a member of FINRA (‘‘Router
Member’’) as provided in paragraph 6.
As of the date of this Agreement,
Archipelago Securities is the only
Router Member.
3. Dual Members. Prior to the
Effective Date, [NSX]NYSE National
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 [NSX]NYSE National by
FINRA for performing the Regulatory
Responsibilities and Enforcement
Responsibilities under this Agreement
except as hereinafter provided. FINRA
shall provide [NSX]NYSE National with
ninety (90) days advance written notice
in the event FINRA decides to impose
any charges to [NSX]NYSE National for
performing the Regulatory
Responsibilities under this Agreement.
If FINRA determines to impose a charge,
[NSX]NYSE National 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
Commission. To the extent such statute,
rule, order or action is inconsistent with
this Agreement, the statute, rule, order
or action shall supersede the
provision(s) hereof to the extent
necessary for them to be properly
effectuated and the provision(s) hereof
in that respect shall be null and void.
6. Notification of Violations.
(a) In the event that FINRA becomes
aware of apparent violations of any
[NSX]NYSE National Rules, which are
not listed as Common Rules, discovered
pursuant to the performance of the
Regulatory Responsibilities assumed
hereunder, FINRA shall notify
[NSX]NYSE National of those apparent
violations for such response as
[NSX]NYSE National deems
PO 00000
Frm 00067
Fmt 4703
Sfmt 4703
appropriate. With respect to apparent
violations of any NYSE National Rules
by any Router Member, FINRA shall not
make referrals to NYSE National
pursuant to this paragraph 6. Such
apparent violations shall be processed
by, and enforcement proceedings in
respect thereto will be conducted by,
FINRA as provided in this agreement.
(b) In the event that [NSX]NYSE
National becomes aware of apparent
violations of any Common Rules,
discovered pursuant to the performance
of the Retained Responsibilities,
[NSX]NYSE National shall notify
FINRA of those apparent violations and
such matters shall be handled by FINRA
as provided in this Agreement.
(c) 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
[NSX]NYSE National, [NSX]NYSE
National may in its discretion assume
concurrent jurisdiction and
responsibility.
(d) 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
[NSX]NYSE National 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
[NSX]NYSE National any information it
obtains about Dual Members which
reflects adversely on their financial
condition. [NSX]NYSE National 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
E:\FR\FM\05NON1.SGM
05NON1
Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices
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
[NSX]NYSE National advised of its
actions in this regard for such
subsequent proceedings as [NSX]NYSE
National may initiate.
9. Customer Complaints. [NSX]NYSE
National shall forward to FINRA copies
of all customer complaints involving
Dual Members received by [NSX]NYSE
National 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 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 [NSX]NYSE National
or FINRA at any time upon the approval
of the Commission after one (1) year’s
written notice to the other party, except
as provided in paragraph 4.
13. Arbitration. In the event of a
dispute between the parties as to the
operation of this Agreement,
[NSX]NYSE National and FINRA hereby
agree that any such dispute shall be
settled by arbitration in Washington, DC
in accordance with the rules of the
American Arbitration Association then
in effect, or such other procedures as the
parties may mutually agree upon.
Judgment on the award rendered by the
arbitrator(s) may be entered in any court
having jurisdiction. Each party
acknowledges that the timely and
complete performance of its obligations
pursuant to this Agreement is critical to
the business and operations of the other
party. In the event of a dispute between
the parties, the parties shall continue to
perform their respective obligations
VerDate Sep<11>2014
18:38 Nov 02, 2018
Jkt 247001
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 agreements: (1) The
multiparty agreement for insider trading
activities, which is covered by a
separate 17d–2 Agreement by and
among Bats BZX Exchange, Inc., Bats
BYX Exchange, Inc., Chicago Stock
Exchange, Inc., Bats EDGA Exchange,
Inc., Bats EDGX Exchange, Inc.,
Financial Industry Regulatory
Authority, Inc., NASDAQ BX, Inc.,
NASDAQ PHLX LLC, The NASDAQ
Stock Market LLC, National Stock
Exchange, Inc., New York Stock
Exchange LLC, NYSE MKT LLC, and
NYSE Arca Inc., and Investors Exchange
LLC effective August 3, 2016, as may be
amended from time to time and (2) the
multiparty 17d–2 agreement relating to
Regulation NMS rules by and among
Bats BZX Exchange, Inc., Bats BYX
Exchange, Inc., BOX Options Exchange
LLC, Chicago Board Options Exchange,
Incorporated, C2 Options Exchange,
Incorporated, Chicago Stock Exchange,
Inc., Bats EDGA Exchange, Inc., Bats
EDGX Exchange, Inc., Financial
Industry Regulatory Authority, Inc.,
International Securities Exchange, LLC,
Investors Exchange LLC, ISE Gemini,
LLC, ISE Mercury, LLC, Miami
International Securities Exchange, LLC,
MIAX PEARL, LLC, The NASDAQ Stock
Market LLC, NASDAQ BX, Inc.,
NASDAQ PHLX, Inc., National Stock
Exchange, Inc., New York Stock
Exchange LLC, NYSE MKT LLC, and
NYSE Arca, Inc. effective February 2,
2017 as may be amended from time to
time.
15. Notification of Members.
[NSX]NYSE National 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 duly approved
by each party. All such amendments
must be filed with and approved by the
Commission before they become
effective.
17. Limitation of Liability. Neither
FINRA nor [NSX]NYSE National 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
PO 00000
Frm 00068
Fmt 4703
Sfmt 4703
55413
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 [NSX]NYSE National 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 [NSX]NYSE National 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 17d2 thereunder, FINRA and [NSX]NYSE
National join in requesting the
Commission, upon its approval of this
Agreement or any part thereof, to relieve
[NSX]NYSE National 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
Note: The entire existing table of rules
should be deleted and replaced with the table
below and for the remainder of the exhibit
new text is italicized and deleted text is in
brackets.
NYSE National [Stock Exchange]
(‘‘[NSX] NYSE National’’) Rules
Certification for 17d–2 Agreement With
FINRA
[NSX]NYSE National hereby certifies
that the requirements contained in the
rules listed below are identical to, or
substantially similar to, the comparable
E:\FR\FM\05NON1.SGM
05NON1
55414
Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices
FINRA Rule, NASD Rule, Exchange Act
provision or SEC rule identified
(‘‘Common Rules’’).
#Common Rules shall not include
provisions regarding (i) notice, reporting
or any other filings made directly to or
from NYSE National, (ii) incorporation
by reference to other NYSE National
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
NYSE National, (iv) prior written
approval of NYSE National, and (v)
payment of fees or fines to NYSE
National.
NYSE national rule:
FINRA rule, NASD rule, Exchange Act provision or SEC rule:
Rule 2.2(e) Obligations of ETP Holders and the Exchange # ..................
Rule 2.2 Obligations of ETP Holders and the Exchange Commentary
.05 #.
FINRA Rule 1250 Continuing Education Requirements.
FINRA Rule 1010(a), (c) Electronic Filing Requirements for Uniform
Forms, and FINRA By-Laws Article V, Sec. 2 and Sec. 3 Registered
Representatives and Associated Persons.
FINRA Rule 4530(a)(1)(D) Reporting Requirements.1
FINRA Rule 7410 Definitions.
FINRA Rule 7420 Applicability.2
FINRA Rule 4590 Synchronization of member Business Clocks.3
FINRA Rule 7440 Recording of Order Information.
FINRA Rule 7450 Order Data Transmission Requirements.
FINRA Rule 7460 Violation of Order Audit Trail System Rules.
FINRA Rule 7470 Exemption to the Order Recording and Data Transmission Requirements.
FINRA Rule 2232 Customer Confirmations and SEA Rule 10b–10 Confirmation of Transactions.
FINRA Rule 2265 Extended Hours Trading Risk Disclosure.
FINRA Rule 2111 Suitability.
FINRA Rule 2210 Communications with the Public.
FINRA Rule 2232 Customer Confirmations and SEA Rule 10b 10 Confirmation of Transactions.
FINRA Rule 2010 Standards of Commercial Honor and Principles of
Trade.* 4
FINRA Rule 2010 Standards of Commercial Honor and Principles of
Trade and FINRA Rule 3110 Supervision.* 5
FINRA Rule 2020 Use of Manipulative, Deceptive or Other Fraudulent
Device.*
FINRA Rule 2210(d)(1)(B) Communications with the Public.
FINRA Rule 2210(d)(1) Communications with the Public.
FINRA Rule 2020 Use of Manipulative, Deceptive or Other Fraudulent
Device, FINRA 2010 Standards of Commercial Honor and Principles
of Trade, and FINRA Rule 2111 Suitability.6
FINRA Rule 11860 COD Orders.
FINRA Rule 2122 Charges for Services Performed.
FINRA Rule 2060 Use of Information Obtained in Fiduciary Capacity.
FINRA Rule 5210 Publication of Transactions and Quotations.
FINRA Rule 5220 Offers at Stated Prices.
FINRA Rule 5230 Payments Involving Publications that Influence the
Market Price of a Security.7
FINRA Rule 2262 Disclosure of Control Relationship With Issuer.
NASD Rule 2510 Discretionary Accounts.8
FINRA Rule 2150(a) Customers’ Securities or Funds—Improper Use.
FINRA Rule 2150(b) Customers’ Securities or Funds—Prohibition
Against Guarantees.
FINRA Rule 2150(c)(1) Customers’ Securities or Funds—Sharing in
Accounts; Extent Permissible.
FINRA Rule 3230 Telemarketing.
FINRA Rule 3310 Anti-Money Laundering Compliance Program.
FINRA Rule 4511 General Requirements.*
FINRA Rule 4513 Records of Written Customer Complaints.
FINRA Rule 3110(b) Supervision—Written Procedures.*
FINRA Rule 3110(a) and (b)(7) Supervision.*
FINRA Rule 3110(a) and (b) Supervision; * and FINRA Rule 4511 General Requirements.
FINRA Rule 3110(c) and (d) Supervision—Internal Inspections/Review
of Transactions and Correspondence.* 9
FINRA Rule 3130 Annual Certification of Compliance and Supervisory
Processes.
FINRA Rule 5210 .03 Disruptive Quoting and Trading Activity Prohibited.
FINRA Rule 5320 Prohibition Against Trading Ahead of Customer Orders.
FINRA Rule 5310 Best Execution and Interpositioning.10ROW≤
Rule 3.10(b) Notice of Expulsion or Suspension # ...................................
Rule 6.7410 Definitions(a)–(o) .................................................................
Rule 6.7420 Applicability ..........................................................................
Rule 6.7430 Synchronization of ETP Holder Business Clocks # .............
Rule 6.7440 Recording of Order Information # .........................................
Rule 6.7450 Order Data Transmission Requirements .............................
Rule 6.7460 Violation of Order Audit Trail System Rules .......................
Rule 6.7470 Exemption to the Order Recording and Data Transmission
Requirements #.
Rule 7.3 (b) and (c) Commissions ...........................................................
Rule
Rule
Rule
Rule
7.34(d)(3) Trading Sessions ............................................................
11.2111 Suitability ............................................................................
11.2210 Communications with the Public .......................................
11.2232 Customer Confirmations ....................................................
Rule 11.3.1 Business Conduct of ETP Holders * .....................................
Rule 11.3.2 Violations Prohibited * # .........................................................
Rule 11.3.3 Use of Fraudulent Devices * .................................................
Rule 11.3.5(a) Advertising Practices ........................................................
Rule 11.3.5(c) Advertising Practices ........................................................
Rule 11.3.6 Fair Dealing with Customers ................................................
Rule 11.3.8(a) The Prompt Receipt and Delivery of Securities ...............
Rule 11.3.9 Charges for Services Performed ..........................................
Rule 11.3.10 Use of Information ..............................................................
Rule 11.3.11 Publication of Transactions and Quotations # .....................
Rule 11.3.12 Offers at Stated Prices .......................................................
Rule 11.3.13 Payment Designed to Influence Market Prices, Other than
Paid Advertising.
Rule 11.3.15 Disclosure of Control ..........................................................
Rule 11.3.16 Discretionary Accounts .......................................................
Rule 11.3.17 Customer’s Securities or Funds .........................................
Rule 11.3.18 Prohibition Against Guarantees ..........................................
Rule 11.3.19 Sharing in Accounts; Extent Permissible ...........................
Rule
Rule
Rule
Rule
Rule
Rule
Rule
11.3.21 Telephone Solicitation ........................................................
11.3310 Anti-Money Laundering Compliance Program # ................
11.4.1 Requirements * # ....................................................................
11.4.3 Record of Written Complaints ..............................................
11.5.1 Written Procedures * # ...........................................................
11.5.2 Responsibility of ETP Holders ..............................................
11.5.3 Records * ...............................................................................
Rule 11.5.4 Review of Activities and Annual Inspections ........................
Rule 11.5.7 Annual Certification of Compliance and Supervisory Processes #.
Rule 11.5220 Disruptive Quoting and Trading Activity Prohibited # .........
Rule 11.5320 Prohibition Against Trading Ahead of Customer Orders ...
Rule 11.12.10 Best Execution ..................................................................
VerDate Sep<11>2014
18:38 Nov 02, 2018
Jkt 247001
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
E:\FR\FM\05NON1.SGM
05NON1
Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices
NYSE national rule:
FINRA rule, NASD rule, Exchange Act provision or SEC rule:
Rule 11.12.3 Excessive Sales by an ETP Holder ...................................
FINRA Rule 6140(c) Other Trading Practices.
55415
* FINRA shall not have any 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 Exchange, Inc., Chicago Stock Exchange, Inc., Bats EDGA
Exchange, Inc., Bats EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ PHLX LLC, The NASDAQ
Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE MKT LLC, and NYSE Arca, Inc. effective August 3,
2016, as may be amended from time to time.
1 FINRA shall only have Regulatory Responsibilities to the extent NYSE National has adopted or accepts interpretations consistent with FINRA
Rule 4530 regarding the specific timing and thresholds for reporting.
2 Applies only to NYSE National ETP Holders and their associated persons, as that term is defined in FINRA’s By-laws Art. I(rr).
3 FINRA shall not have regulatory responsibilities to the extent NYSE National prescribes additional procedures not required by FINRA.
4 FINRA shall not have Regulatory Responsibilities regarding .01 of NYSE National Rule 11.3.1.
5 FINRA shall only have Regulatory Responsibilities regarding the first phrase of the NYSE National Rule regarding prohibitions from violating
the Securities Exchange Act of 1934 and the rules and regulations thereunder; responsibility for the remainder of the Rule shall remain with
NYSE National.
6 FINRA shall not have Regulatory Responsibilities regarding .01 of NYSE National Rule 11.3.6.
7 FINRA shall not have Regulatory Responsibilities with regard to the prohibitions set forth under subsection (a) of FINRA Rule 5230 to the extent subsections (b)(2) or (b)(3) of the Rule apply.
8 FINRA shall not have Regulatory Responsibilities for the NYSE National rule to the extent the exception in FINRA Rule 2510(d)(2) applies.
9 FINRA shall not have Regulatory Responsibilities regarding the NYSE National requirement to annually inspect each office of the ETP Holder
(other than as required by the FINRA rule to annually inspect each OSJ and any branch office that supervises one or more non-branch locations).
10 FINRA shall not have Regulatory Responsibilities regarding .01 of NYSE National Rule 11.12.10.
[In addition, the following provisions
shall be part of this 17d–2 Agreement:]
[Securities Exchange Act of 1934:]
[Section 15(f)]
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–
694 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 4–694. 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,
VerDate Sep<11>2014
18:38 Nov 02, 2018
Jkt 247001
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the plan also
will be available for inspection and
copying at the principal offices of
FINRA and NYSE National. 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 4–694 and should be
submitted on or before November 26,
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
Dual Members that would otherwise be
performed by NYSE National and
FINRA. Accordingly, the proposed
Amended Plan promotes efficiency by
reducing costs to Dual Members.
Furthermore, because NYSE National
and FINRA will coordinate their
12 15
13 17
PO 00000
U.S.C. 78q(d).
CFR 240.17d–2(c).
Frm 00070
Fmt 4703
regulatory functions in accordance with
the Amended Plan, the Amended Plan
should promote investor protection.
The Commission notes that, under the
Amended Plan, NYSE National and
FINRA have allocated regulatory
responsibility for those NYSE National
rules, set forth in the Certification, that
are substantially similar to the
applicable FINRA rules in that
examination for compliance with such
provisions and rules would not require
FINRA to develop one or more new
examination standards, modules,
procedures, or criteria in order to
analyze the application of the rule, or a
Dual Member’s activity, conduct, or
output in relation to such rule. The
Common Rules covered by the
Amended Plan are specifically listed in
the Certification, as may be amended by
the Parties from time to time.
According to the Amended Plan,
NYSE National will review the
Certification, at least annually, or more
frequently if required by changes in
either the rules of NYSE National or
FINRA, and, if necessary, submit to
FINRA an updated list of Common
Rules to add NYSE National rules not
included on the then-current list of
Common Rules that are substantially
similar to FINRA rules; delete NYSE
National rules included in the thencurrent 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
NYSE National 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, NYSE
14 See
Sfmt 4703
E:\FR\FM\05NON1.SGM
paragraph 2 of the Amended Plan.
05NON1
55416
Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices
National will also provide FINRA with
a current list of Dual 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 NYSE
National rules that are substantially
similar to the rules of FINRA for Dual
Members of NYSE National 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 NYSE
National rules in the Certification in
conformance with the definition of
Common Rules provided in the
Amended Plan. However, should the
Parties decide to add an NYSE National
rule to the Certification that is not
substantially similar to a FINRA rule;
delete an NYSE National rule from the
Certification that is substantially similar
to a FINRA rule; or leave on the
Certification an NYSE National 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
appropriate notice and comment can
take place after the proposed
amendment is effective. The primary
purposes of the amendment are to (1)
reflect the name change of National
Stock Exchange, Inc. to NYSE National,
Inc., (2) update the SRO rules that are
covered by the agreement, and (3) to the
extent that it becomes a member of
NYSE National, allocate regulatory
responsibility to FINRA for NYSE
National’s affiliated routing brokerdealer, Archipelago Securities. By
declaring it effective today, the
Amended Plan can become effective and
15 See
paragraph 3 of the Amended Plan.
Commission also notes that the addition to
or deletion from the Certification of any federal
securities laws, rules, and regulations for which
FINRA would bear responsibility under the
Amended Plan for examining, and enforcing
compliance by, Dual Members, also would
constitute an amendment to the Amended Plan.
16 The
VerDate Sep<11>2014
18:38 Nov 02, 2018
Jkt 247001
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. 4–694. 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. 4–694,
between the FINRA and NYSE National,
filed pursuant to Rule 17d-2 under the
Act, hereby is approved and declared
effective.
It is further ordered that NYSE
National is relieved of those
responsibilities allocated to FINRA
under the Amended Plan in File No. 4–
694.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–24070 Filed 11–2–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84505; File No. SR–
NASDAQ–2018–080]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of a Proposed Rule Change To
List and Trade Shares of the
BrandywineGLOBAL—Global Total
Return ETF, a Series of Legg Mason
ETF Investment Trust Under Nasdaq
Rule 5735
October 30, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
17, 2018, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
17 See supra note 11 (citing to Securities
Exchange Act Release No. 77089).
18 17 CFR 200.30–3(a)(34).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade the shares of the
BrandywineGLOBAL—Global Total
Return ETF (the ‘‘Fund’’), a series of
Legg Mason ETF Investment Trust (the
‘‘Trust’’) under Nasdaq Rule 5735
(‘‘Managed Fund Shares’’).3 The shares
of the Fund are collectively referred to
herein as the ‘‘Shares.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.cchwallstreet.com, at the
principal office of the Exchange, 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
Exchange included statements
concerning the purpose of and basis for
3 The Commission approved Nasdaq Rule 5735 in
Securities Exchange Act Release No. 57962 (June
13, 2008), 73 FR 35175 (June 20, 2008) (SR–
NASDAQ–2008–039). There are already multiple
actively-managed funds listed on the Exchange.
See, e.g., Securities Exchange Act Release Nos.
80946 (June 15, 2017), 82 FR 28126 (June 20, 2017)
(SR–NASDAQ–2017–039) (order approving listing
and trading of Guggenheim Limited Duration ETF);
78592 (August 16, 2016), 81 FR 56729 (August 22,
2016) (SR–NASDAQ–2016–061) (order approving
listing and trading of First Trust Equity Market
Neutral ETF); 78443 (July 29, 2016), 81 FR 51517
(August 4, 2016) (SR–NASDAQ–2016–064) (order
approving listing and trading of First Trust Strategic
Mortgage REIT ETF); 71913 (April 9, 2014), 79 FR
21333 (April 15, 2014) (SR–NASDAQ–2014–019)
(order approving listing and trading of First Trust
Managed Municipal ETF); 69464 (April 26, 2013),
78 FR 25774 (May 2, 2013) (SR–NASDAQ–2013–
036) (order approving listing and trading of First
Trust Senior Loan Fund); 66489 (February 29,
2012), 77 FR 13379 (March 6, 2012) (SR–NASDAQ–
2012–004) (order approving listing and trading of
WisdomTree Emerging Markets Corporate Bond
Fund); see also filings for similar ETFs listed on
other national securities exchanges: Securities
Exchange Act Release Nos. 80657 (May 11, 2017)
82 FR 22702 (May 17, 2017) (SR–NYSE Arca–2017–
09) (order approving listing and trading of Janus
Short Duration Income ETF); 79683 (December 23,
2016), 81 FR 96539 (December 30, 2016) (SR–
NYSEArca–2016–82) (order approving listing and
trading of JPMorgan Diversified Event Driven ETF);
77904 (May 25, 2016), 81 FR 35101 (SR–NYSE
Arca–2016–17) (order approving listing and trading
of JPMorgan Diversified Alternative ETF); 68870
(February 8 2013), 78 FR 11245 (February 15, 2013)
(SR–NYSEArca–2012–139) (order approving listing
and trading of First Trust Preferred Securities and
Income ETF). The Exchange believes the proposed
rule change raises no significant issues not
previously addressed in those prior Commission
orders.
E:\FR\FM\05NON1.SGM
05NON1
]]>Agencies
[Federal Register Volume 83, Number 214 (Monday, November 5, 2018)]
[Notices]
[Pages 55410-55416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24070]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84502; File No. 4-694]
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 NYSE National, Inc.
October 30, 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 September 27, 2018, pursuant to Rule
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority,
Inc. (``FINRA'') and NYSE National, Inc. (``NYSE National'')
(collectively, ``Participating Organizations'' or ``parties''). This
Agreement amends and restates the agreement entered into between the
parties on December 22, 2015, entitled ``Agreement Among Financial
Industry Regulatory Authority, Inc. and National Stock Exchange, Inc.
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
[[Page 55411]]
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 notice and comment, it determines that the plan is
necessary or appropriate in the public interest and for the protection
of investors, to foster cooperation and coordination among the SROs, to
remove impediments to, and foster the development of, a national market
system and a national clearance and settlement system, and is in
conformity with the factors set forth in Section 17(d) of the Act.
Commission approval of a plan filed pursuant to Rule 17d-2 relieves an
SRO of those regulatory responsibilities allocated by the plan to
another SRO.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. The Plan
On February 9, 2016, the Commission declared effective the Plan
entered into between FINRA and the National Stock Exchange, Inc. (n/k/a
NYSE National, Inc.) for allocating regulatory responsibility pursuant
to Rule 17d-2.\11\ The Plan is intended to reduce regulatory
duplication for firms that are dual members of FINRA and NYSE National
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 NYSE National rule
for which FINRA bears responsibility under the Plan for overseeing and
enforcing with respect to NYSE National members that are also members
of FINRA and the associated persons therewith.
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 77089 (February 9,
2016), 81 FR 7871 (February 16, 2016).
---------------------------------------------------------------------------
III. Proposed Amendment to the Plan
On September 27, 2018, the parties submitted a proposed amendment
to the Plan (``Amended Plan''). The primary purposes of the Amended
Plan are to (1) reflect the name change of National Stock Exchange,
Inc. to NYSE National, Inc., (2) update the SRO rules that are covered
by the agreement, and (3) to the extent that it becomes a member of
NYSE National, allocate regulatory responsibility to FINRA for NYSE
National's affiliated routing broker-dealer, Archipelago Securities.
The text of the proposed Amended Plan is as follows (additions are
underlined; deletions are [bracketed]):
* * * * *
Agreement Between Financial Industry Regulatory Authority, Inc. and
NYSE National [Stock Exchange], Inc. 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 the NYSE National [Stock Exchange],
Inc. (``[[NSX]NYSE NATIONAL ]NYSE National''), is made this [22nd]26th
day of September[December], 201[5]8 (the ``Agreement''), pursuant to
Section 17(d) of the Securities Exchange Act of 1934, as amended (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 [NSX]NYSE
National may be referred to individually as a ``party'' and together as
the ``parties.''
This Agreement replaces and restates the agreement entered into
between the parties on [June 20, 1977 as amended, entitled ``Agreement
Between the National Association of Securities Dealers, Inc. and the
Cincinnati Stock Exchange] December 22, 2015 entitled ``Agreement
between Financial Industry Regulatory Authority, Inc. and National
Stock Exchange, Inc. Pursuant to SEC Rule 17d-2 Under the Securities
Exchange Act of 1934,'' and any subsequent amendments thereafter.
WHEREAS, FINRA and [NSX]NYSE National 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 [NSX]NYSE National 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 [NSX]NYSE National 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) ``[NSX]NYSE National Rules'' or ``FINRA Rules'' shall mean: (i)
The rules of [NSX]NYSE National 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 [NSX]NYSE National 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; provided, however Common Rules
shall not include the application of the SEC, [NSX]NYSE National or
FINRA rules as they pertain to violations of insider trading
activities, which is covered by a separate 17d-2 Agreement by and among
the Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., Chicago Stock
Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc.,
Financial Industry Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ
PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc.,
New York Stock Exchange LLC, NYSE MKT LLC, NYSE Arca, Inc., and
Investors Exchange LLC, approved by the SEC on August 3, 2016 as the
same may be amended from time to time. Common Rules shall not include
provisions regarding (i) notice, reporting or any other filings made
directly to or from NYSE National, (ii) incorporation by reference of
other NYSE National 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 NYSE National, (iv) prior written approval of NYSE
National, and (v) payment of fees or fines to NYSE National.
(c) ``Dual Members'' shall mean those [NSX]NYSE National 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
[[Page 55412]]
imposition of appropriate sanctions as specified under FINRA's Code of
Procedure and sanctions guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities and Enforcement Responsibilities relating to
compliance by the Dual Members with the Common Rules and the provisions
of the Exchange Act and the rules and regulations thereunder, and other
applicable laws, rules and regulations, each as set forth on Exhibit 1
attached hereto.
2. Regulatory and Enforcement Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
[NSX]NYSE National furnished FINRA with a current list of Common Rules
and certified to FINRA that such rules that are [NSX]NYSE National
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 [NSX]NYSE National or FINRA,
[NSX]NYSE National shall submit an updated list of Common Rules to
FINRA for review which shall add [NSX]NYSE National Rules not included
in the current list of Common Rules that qualify as Common Rules as
defined in this Agreement; delete [NSX]NYSE National 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 [NSX]NYSE National
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 [NSX]NYSE National 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 [NSX]NYSE
National'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 [NSX]NYSE National Rules that are not Common Rules, except
for NYSE National rules for any NYSE National affiliate that is a
member that operates as a facility (as defined in Section 3(a)(2) of
the Exchange Act), acts as a router for NYSE National and is a member
of FINRA (``Router Member'') as provided in paragraph 6. As of the date
of this Agreement, Archipelago Securities is the only Router Member.
3. Dual Members. Prior to the Effective Date, [NSX]NYSE National
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 [NSX]NYSE National by
FINRA for performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter provided.
FINRA shall provide [NSX]NYSE National with ninety (90) days advance
written notice in the event FINRA decides to impose any charges to
[NSX]NYSE National for performing the Regulatory Responsibilities under
this Agreement. If FINRA determines to impose a charge, [NSX]NYSE
National 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 Commission. To the extent
such statute, rule, order or action is inconsistent with this
Agreement, the statute, rule, order or action shall supersede the
provision(s) hereof to the extent necessary for them to be properly
effectuated and the provision(s) hereof in that respect shall be null
and void.
6. Notification of Violations.
(a) In the event that FINRA becomes aware of apparent violations of
any [NSX]NYSE National Rules, which are not listed as Common Rules,
discovered pursuant to the performance of the Regulatory
Responsibilities assumed hereunder, FINRA shall notify [NSX]NYSE
National of those apparent violations for such response as [NSX]NYSE
National deems appropriate. With respect to apparent violations of any
NYSE National Rules by any Router Member, FINRA shall not make
referrals to NYSE National pursuant to this paragraph 6. Such apparent
violations shall be processed by, and enforcement proceedings in
respect thereto will be conducted by, FINRA as provided in this
agreement.
(b) In the event that [NSX]NYSE National becomes aware of apparent
violations of any Common Rules, discovered pursuant to the performance
of the Retained Responsibilities, [NSX]NYSE National shall notify FINRA
of those apparent violations and such matters shall be handled by FINRA
as provided in this Agreement.
(c) 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
[NSX]NYSE National, [NSX]NYSE National may in its discretion assume
concurrent jurisdiction and responsibility.
(d) 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 [NSX]NYSE National 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 [NSX]NYSE National any information it
obtains about Dual Members which reflects adversely on their financial
condition. [NSX]NYSE National 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
[[Page 55413]]
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 [NSX]NYSE National advised of its actions in this regard for such
subsequent proceedings as [NSX]NYSE National may initiate.
9. Customer Complaints. [NSX]NYSE National shall forward to FINRA
copies of all customer complaints involving Dual Members received by
[NSX]NYSE National 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 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 [NSX]NYSE
National or FINRA at any time upon the approval of the Commission after
one (1) year's written notice to the other party, except as provided in
paragraph 4.
13. Arbitration. In the event of a dispute between the parties as
to the operation of this Agreement, [NSX]NYSE National and FINRA hereby
agree that any such dispute shall be settled by arbitration in
Washington, DC in accordance with the rules of the American Arbitration
Association then in effect, or such other procedures as the parties may
mutually agree upon. Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. Each
party acknowledges that the timely and complete performance of its
obligations pursuant to this Agreement is critical to the business and
operations of the other party. In the event of a dispute between the
parties, the parties shall continue to perform their respective
obligations under this Agreement in good faith during the resolution of
such dispute unless and until this Agreement is terminated in
accordance with its provisions. Nothing in this Section 13 shall
interfere with a party's right to terminate this Agreement as set forth
herein.
14. Separate Agreement. This Agreement is wholly separate from the
following agreements: (1) The multiparty agreement for insider trading
activities, which is covered by a separate 17d-2 Agreement by and among
Bats BZX Exchange, Inc., Bats BYX Exchange, Inc., Chicago Stock
Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc.,
Financial Industry Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ
PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc.,
New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca Inc., and
Investors Exchange LLC effective August 3, 2016, as may be amended from
time to time and (2) the multiparty 17d-2 agreement relating to
Regulation NMS rules by and among Bats BZX Exchange, Inc., Bats BYX
Exchange, Inc., BOX Options Exchange LLC, Chicago Board Options
Exchange, Incorporated, C2 Options Exchange, Incorporated, Chicago
Stock Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange,
Inc., Financial Industry Regulatory Authority, Inc., International
Securities Exchange, LLC, Investors Exchange LLC, ISE Gemini, LLC, ISE
Mercury, LLC, Miami International Securities Exchange, LLC, MIAX PEARL,
LLC, The NASDAQ Stock Market LLC, NASDAQ BX, Inc., NASDAQ PHLX, Inc.,
National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT
LLC, and NYSE Arca, Inc. effective February 2, 2017 as may be amended
from time to time.
15. Notification of Members. [NSX]NYSE National 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 duly
approved by each party. All such amendments must be filed with and
approved by the Commission before they become effective.
17. Limitation of Liability. Neither FINRA nor [NSX]NYSE National
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 [NSX]NYSE National 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
[NSX]NYSE National 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
[NSX]NYSE National join in requesting the Commission, upon its approval
of this Agreement or any part thereof, to relieve [NSX]NYSE National 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
Note: The entire existing table of rules should be deleted and
replaced with the table below and for the remainder of the exhibit
new text is italicized and deleted text is in brackets.
NYSE National [Stock Exchange] (``[NSX] NYSE National'') Rules
Certification for 17d-2 Agreement With FINRA
[NSX]NYSE National hereby certifies that the requirements contained in
the rules listed below are identical to, or substantially similar to,
the comparable
[[Page 55414]]
FINRA Rule, NASD Rule, Exchange Act provision or SEC rule identified
(``Common Rules'').
#Common Rules shall not include provisions regarding (i) notice,
reporting or any other filings made directly to or from NYSE National,
(ii) incorporation by reference to other NYSE National 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 NYSE National, (iv) prior written
approval of NYSE National, and (v) payment of fees or fines to NYSE
National.
------------------------------------------------------------------------
FINRA rule, NASD rule, Exchange
NYSE national rule: Act provision or SEC rule:
------------------------------------------------------------------------
Rule 2.2(e) Obligations of ETP Holders FINRA Rule 1250 Continuing
and the Exchange . Education Requirements.
Rule 2.2 Obligations of ETP Holders and FINRA Rule 1010(a), (c)
the Exchange Commentary .05 . Electronic Filing Requirements
for Uniform Forms, and FINRA
By-Laws Article V, Sec. 2 and
Sec. 3 Registered
Representatives and Associated
Persons.
Rule 3.10(b) Notice of Expulsion or FINRA Rule 4530(a)(1)(D)
Suspension . Reporting Requirements.\1\
Rule 6.7410 Definitions(a)-(o)......... FINRA Rule 7410 Definitions.
Rule 6.7420 Applicability.............. FINRA Rule 7420
Applicability.\2\
Rule 6.7430 Synchronization of ETP FINRA Rule 4590 Synchronization
Holder Business Clocks . of member Business Clocks.\3\
Rule 6.7440 Recording of Order FINRA Rule 7440 Recording of
Information . Order Information.
Rule 6.7450 Order Data Transmission FINRA Rule 7450 Order Data
Requirements. Transmission Requirements.
Rule 6.7460 Violation of Order Audit FINRA Rule 7460 Violation of
Trail System Rules. Order Audit Trail System
Rules.
Rule 6.7470 Exemption to the Order FINRA Rule 7470 Exemption to
Recording and Data Transmission the Order Recording and Data
Requirements . Transmission Requirements.
Rule 7.3 (b) and (c) Commissions....... FINRA Rule 2232 Customer
Confirmations and SEA Rule 10b-
10 Confirmation of
Transactions.
Rule 7.34(d)(3) Trading Sessions....... FINRA Rule 2265 Extended Hours
Trading Risk Disclosure.
Rule 11.2111 Suitability............... FINRA Rule 2111 Suitability.
Rule 11.2210 Communications with the FINRA Rule 2210 Communications
Public. with the Public.
Rule 11.2232 Customer Confirmations.... FINRA Rule 2232 Customer
Confirmations and SEA Rule 10b
10 Confirmation of
Transactions.
Rule 11.3.1 Business Conduct of ETP FINRA Rule 2010 Standards of
Holders *. Commercial Honor and
Principles of Trade.* \4\
Rule 11.3.2 Violations Prohibited * .. FINRA Rule 2010 Standards of
Commercial Honor and
Principles of Trade and FINRA
Rule 3110 Supervision.* \5\
Rule 11.3.3 Use of Fraudulent Devices * FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Device.*
Rule 11.3.5(a) Advertising Practices... FINRA Rule 2210(d)(1)(B)
Communications with the
Public.
Rule 11.3.5(c) Advertising Practices... FINRA Rule 2210(d)(1)
Communications with the
Public.
Rule 11.3.6 Fair Dealing with Customers FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Device, FINRA
2010 Standards of Commercial
Honor and Principles of Trade,
and FINRA Rule 2111
Suitability.\6\
Rule 11.3.8(a) The Prompt Receipt and FINRA Rule 11860 COD Orders.
Delivery of Securities.
Rule 11.3.9 Charges for Services FINRA Rule 2122 Charges for
Performed. Services Performed.
Rule 11.3.10 Use of Information........ FINRA Rule 2060 Use of
Information Obtained in
Fiduciary Capacity.
Rule 11.3.11 Publication of FINRA Rule 5210 Publication of
Transactions and Quotations . Transactions and Quotations.
Rule 11.3.12 Offers at Stated Prices... FINRA Rule 5220 Offers at
Stated Prices.
Rule 11.3.13 Payment Designed to FINRA Rule 5230 Payments
Influence Market Prices, Other than Involving Publications that
Paid Advertising. Influence the Market Price of
a Security.\7\
Rule 11.3.15 Disclosure of Control..... FINRA Rule 2262 Disclosure of
Control Relationship With
Issuer.
Rule 11.3.16 Discretionary Accounts.... NASD Rule 2510 Discretionary
Accounts.\8\
Rule 11.3.17 Customer's Securities or FINRA Rule 2150(a) Customers'
Funds. Securities or Funds--Improper
Use.
Rule 11.3.18 Prohibition Against FINRA Rule 2150(b) Customers'
Guarantees. Securities or Funds--
Prohibition Against
Guarantees.
Rule 11.3.19 Sharing in Accounts; FINRA Rule 2150(c)(1)
Extent Permissible. Customers' Securities or
Funds--Sharing in Accounts;
Extent Permissible.
Rule 11.3.21 Telephone Solicitation.... FINRA Rule 3230 Telemarketing.
Rule 11.3310 Anti-Money Laundering FINRA Rule 3310 Anti-Money
Compliance Program . Laundering Compliance Program.
Rule 11.4.1 Requirements * ........... FINRA Rule 4511 General
Requirements.*
Rule 11.4.3 Record of Written FINRA Rule 4513 Records of
Complaints. Written Customer Complaints.
Rule 11.5.1 Written Procedures * ..... FINRA Rule 3110(b) Supervision--
Written Procedures.*
Rule 11.5.2 Responsibility of ETP FINRA Rule 3110(a) and (b)(7)
Holders. Supervision.*
Rule 11.5.3 Records *.................. FINRA Rule 3110(a) and (b)
Supervision; * and FINRA Rule
4511 General Requirements.
Rule 11.5.4 Review of Activities and FINRA Rule 3110(c) and (d)
Annual Inspections. Supervision--Internal
Inspections/Review of
Transactions and
Correspondence.* \9\
Rule 11.5.7 Annual Certification of FINRA Rule 3130 Annual
Compliance and Supervisory Processes . Certification of Compliance
and Supervisory Processes.
Rule 11.5220 Disruptive Quoting and FINRA Rule 5210 .03 Disruptive
Trading Activity Prohibited . Quoting and Trading Activity
Prohibited.
Rule 11.5320 Prohibition Against FINRA Rule 5320 Prohibition
Trading Ahead of Customer Orders. Against Trading Ahead of
Customer Orders.
Rule 11.12.10 Best Execution........... FINRA Rule 5310 Best Execution
and Interpositioning.\10\ROW>
[[Page 55415]]
Rule 11.12.3 Excessive Sales by an ETP FINRA Rule 6140(c) Other
Holder. Trading Practices.
------------------------------------------------------------------------
* FINRA shall not have any 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 Exchange, Inc., Chicago Stock Exchange, Inc., Bats EDGA
Exchange, Inc., Bats EDGX Exchange, Inc., Financial Industry
Regulatory Authority, Inc., NASDAQ BX, Inc., NASDAQ PHLX LLC, The
NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock
Exchange, LLC, NYSE MKT LLC, and NYSE Arca, Inc. effective August 3,
2016, as may be amended from time to time.
\1\ FINRA shall only have Regulatory Responsibilities to the extent NYSE
National has adopted or accepts interpretations consistent with FINRA
Rule 4530 regarding the specific timing and thresholds for reporting.
\2\ Applies only to NYSE National ETP Holders and their associated
persons, as that term is defined in FINRA's By-laws Art. I(rr).
\3\ FINRA shall not have regulatory responsibilities to the extent NYSE
National prescribes additional procedures not required by FINRA.
\4\ FINRA shall not have Regulatory Responsibilities regarding .01 of
NYSE National Rule 11.3.1.
\5\ FINRA shall only have Regulatory Responsibilities regarding the
first phrase of the NYSE National Rule regarding prohibitions from
violating the Securities Exchange Act of 1934 and the rules and
regulations thereunder; responsibility for the remainder of the Rule
shall remain with NYSE National.
\6\ FINRA shall not have Regulatory Responsibilities regarding .01 of
NYSE National Rule 11.3.6.
\7\ FINRA shall not have Regulatory Responsibilities with regard to the
prohibitions set forth under subsection (a) of FINRA Rule 5230 to the
extent subsections (b)(2) or (b)(3) of the Rule apply.
\8\ FINRA shall not have Regulatory Responsibilities for the NYSE
National rule to the extent the exception in FINRA Rule 2510(d)(2)
applies.
\9\ FINRA shall not have Regulatory Responsibilities regarding the NYSE
National requirement to annually inspect each office of the ETP Holder
(other than as required by the FINRA rule to annually inspect each OSJ
and any branch office that supervises one or more non-branch
locations).
\10\ FINRA shall not have Regulatory Responsibilities regarding .01 of
NYSE National Rule 11.12.10.
[In addition, the following provisions shall be part of this 17d-2
Agreement:]
[Securities Exchange Act of 1934:]
[Section 15(f)]
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 4-694 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 4-694. 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 a.m. and 3
p.m. Copies of the plan also will be available for inspection and
copying at the principal offices of FINRA and NYSE National. 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 4-694 and should be submitted
on or before November 26, 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 Dual Members that would otherwise be performed by
NYSE National and FINRA. Accordingly, the proposed Amended Plan
promotes efficiency by reducing costs to Dual Members. Furthermore,
because NYSE National 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, NYSE National
and FINRA have allocated regulatory responsibility for those NYSE
National rules, set forth in the Certification, that are substantially
similar to the applicable FINRA rules in that examination for
compliance with such provisions and rules would not require FINRA to
develop one or more new examination standards, modules, procedures, or
criteria in order to analyze the application of the rule, or a Dual
Member's activity, conduct, or output in relation to such rule. The
Common Rules covered by the Amended Plan are specifically listed in the
Certification, as may be amended by the Parties from time to time.
According to the Amended Plan, NYSE National will review the
Certification, at least annually, or more frequently if required by
changes in either the rules of NYSE National or FINRA, and, if
necessary, submit to FINRA an updated list of Common Rules to add NYSE
National rules not included on the then-current list of Common Rules
that are substantially similar to FINRA rules; delete NYSE National
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 NYSE National 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, NYSE
[[Page 55416]]
National will also provide FINRA with a current list of Dual 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 NYSE National rules that are
substantially similar to the rules of FINRA for Dual Members of NYSE
National 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 NYSE National rules in the Certification in
conformance with the definition of Common Rules provided in the Amended
Plan. However, should the Parties decide to add an NYSE National rule
to the Certification that is not substantially similar to a FINRA rule;
delete an NYSE National rule from the Certification that is
substantially similar to a FINRA rule; or leave on the Certification an
NYSE National 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\
---------------------------------------------------------------------------
\16\ The Commission also notes that the addition to or deletion
from the Certification of any federal securities laws, rules, and
regulations for which FINRA would bear responsibility under the
Amended Plan for examining, and enforcing compliance by, Dual
Members, also would constitute an amendment to the Amended Plan.
---------------------------------------------------------------------------
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 purposes of the amendment are to (1) reflect the
name change of National Stock Exchange, Inc. to NYSE National, Inc.,
(2) update the SRO rules that are covered by the agreement, and (3) to
the extent that it becomes a member of NYSE National, allocate
regulatory responsibility to FINRA for NYSE National's affiliated
routing broker-dealer, Archipelago Securities. 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 11 (citing to Securities Exchange Act
Release No. 77089).
---------------------------------------------------------------------------
VI. Conclusion
This order gives effect to the Amended Plan filed with the
Commission in File No. 4-694. 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. 4-694, between the FINRA and NYSE
National, filed pursuant to Rule 17d-2 under the Act, hereby is
approved and declared effective.
It is further ordered that NYSE National is relieved of those
responsibilities allocated to FINRA under the Amended Plan in File No.
4-694.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-24070 Filed 11-2-18; 8:45 am]
BILLING CODE 8011-01-P
