Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing of Proposed Amended Plan for the Allocation of Regulatory Responsibilities Among the Financial Industry Regulatory Authority, Inc., Miami International Securities Exchange, LLC, MIAX PEARL, LLC, and MIAX EMERALD, LLC., 1252-1257 [2019-00725]
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Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices
note) (Inflation Adjustment Act) to
require agencies to publish regulations
adjusting the amount of civil monetary
penalties provided by law within the
jurisdiction of the agency not later than
July 1, 2016, and annual adjustments
thereafter.
For the 2019 annual adjustment for
inflation of the maximum civil penalty
under the Program Fraud Civil
Remedies Act of 1986, the Board applies
the formula provided by the 2015 Act
and the Board’s regulations at Title 20,
Code of Federal Regulations, Part 356.
In accordance with the 2015 Act, the
amount of the adjustment is based on
the percent increase between the
Consumer Price Index (CPI–U) for the
month of October preceding the date of
the adjustment and the CPI–U for the
October one year prior to the October
immediately preceding the date of the
adjustment. If there is no increase, there
is no adjustment of civil penalties. The
percent increase between the CPI–U for
October 2018 and October 2017, as
provided by Office of Management and
Budget Memorandum M–19–04
(December 14, 2018) is 1.02522 percent.
Therefore, the new maximum penalty
under the Program Fraud Civil
Remedies Act is $11,463 (the 2018
maximum penalty of $11,181 multiplied
by 1.02522, rounded to the nearest
dollar). The new minimum penalty
under the False Claims Act is $11,463
(the 2018 minimum penalty of $11,181
multiplied by 1.02522, rounded to the
nearest dollar), and the new maximum
penalty is $22,927 (the 2018 maximum
penalty of $22,363 multiplied by
1.02522, rounded to the nearest dollar).
The adjustments in penalties will be
effective February 1, 2019.
By Authority of the Board.
Sylvia Zaragoza,
Acting Secretary to the Board.
[FR Doc. 2019–00729 Filed 1–31–19; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84997; File No. 4–678]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule
17d–2; Notice of Filing of Proposed
Amended Plan for the Allocation of
Regulatory Responsibilities Among the
Financial Industry Regulatory
Authority, Inc., Miami International
Securities Exchange, LLC, MIAX
PEARL, LLC, and MIAX EMERALD,
LLC.
January 29, 2019.
Pursuant to Section 17(d) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 17d–2 thereunder,2
notice is hereby given that on December
20, 2018, Miami International Securities
Exchange, LLC (‘‘MIAX’’), MIAX
PEARL, LLC (‘‘MIAX PEARL’’), MIAX
EMERALD, LLC (‘‘MIAX EMERALD’’)
and the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) (together, the
‘‘Parties’’) filed with the Securities and
Exchange Commission (‘‘Commission’’
or ‘‘SEC’’) an amended plan for the
allocation of regulatory responsibilities,
dated December 19, 2018 (‘‘17d–2 Plan’’
or the ‘‘Plan’’). The Commission is
publishing this notice to solicit
comments on the 17d–2 Plan from
interested persons.
I. Introduction
Section 19(g)(1) of the Act,3 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or national securities
association to examine for, and enforce
compliance by, its members and persons
associated with its members with the
Act, the rules and regulations
thereunder, and the SRO’s own rules,
unless the SRO is relieved of this
responsibility pursuant to Section 17(d)
or Section 19(g)(2) of the Act.4 Without
this relief, the statutory obligation of
each individual SRO could result in a
pattern of multiple examinations of
broker-dealers that maintain
memberships in more than one SRO
(‘‘common members’’). Such regulatory
duplication would add unnecessary
expenses for common members and
their SROs.
Section 17(d)(1) of the Act 5 was
intended, in part, to eliminate
unnecessary multiple examinations and
1 15
U.S.C. 78q(d).
CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
4 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2),
respectively.
5 15 U.S.C. 78q(d)(1).
2 17
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regulatory duplication.6 With respect to
a common member, Section 17(d)(1)
authorizes the Commission, by rule or
order, to relieve an SRO of the
responsibility to receive regulatory
reports, to examine for and enforce
compliance with applicable statutes,
rules, and regulations, or to perform
other specified regulatory functions.
To implement Section 17(d)(1), the
Commission adopted two rules: Rule
17d–1 and Rule 17d–2 under the Act.7
Rule 17d–1 authorizes the Commission
to name a single SRO as the designated
examining authority (‘‘DEA’’) to
examine common members for
compliance with the financial
responsibility requirements imposed by
the Act, or by Commission or SRO
rules.8 When an SRO has been named as
a common member’s DEA, all other
SROs to which the common member
belongs are relieved of the responsibility
to examine the firm for compliance with
the applicable financial responsibility
rules. On its face, Rule 17d–1 deals only
with an SRO’s obligations to enforce
member compliance with financial
responsibility requirements. Rule 17d–1
does not relieve an SRO from its
obligation to examine a common
member for compliance with its own
rules and provisions of the federal
securities laws governing matters other
than financial responsibility, including
sales practices and trading activities and
practices.
To address regulatory duplication in
these and other areas, the Commission
adopted Rule 17d–2 under the Act.9
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities with respect
to their common members. Under
paragraph (c) of Rule 17d–2, the
Commission may declare such a plan
effective if, after providing for
appropriate notice and comment, it
determines that the plan is necessary or
appropriate in the public interest and
for the protection of investors; to foster
cooperation and coordination among the
SROs; to remove impediments to, and
foster the development of, a national
market system and a national clearance
and settlement system; and is in
conformity with the factors set forth in
Section 17(d) of the Act. Commission
6 See Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
7 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
8 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
9 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
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Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices
approval of a plan filed pursuant to Rule
17d–2 relieves an SRO of those
regulatory responsibilities allocated by
the plan to another SRO.
II. The Plan
On November 19, 2014, the
Commission declared effective the Plan
entered into between FINRA and MIAX
for allocating regulatory responsibility
pursuant to Rule 17d–2.10 The Plan is
intended to reduce regulatory
duplication for firms that are common
members of both MIAX and FINRA. The
plan reduces regulatory duplication for
firms that are members of MIAX and
FINRA by allocating regulatory
responsibility with respect to certain
applicable laws, rules, and regulations.
Included in the Plan is an exhibit that
lists every MIAX rule for which FINRA
bears responsibility under the Plan for
overseeing and enforcing with respect to
MIAX members that are also members of
FINRA and the associated persons
therewith. On January 12, 2017, the
parties submitted a proposed
amendment to the Plan to add MIAX
PEARL as a Participant to the Plan.11 On
June 28, 2018, the parties submitted a
proposed amendment to the Plan to
allocate surveillance, investigation, and
enforcement responsibilities for Rule
14e–4 under the Act, as well as certain
provisions of Regulation SHO.12
III. Proposed Amendment to Plan
On December 20, 2018, the parties
submitted a proposed amendment to the
Plan. The primary purpose of the
amendment is to add MIAX EMERALD
as a Participant to the Plan. The text of
the proposed amended 17d–2 plan is as
follows (additions are italicized;
deletions are [bracketed]):
Agreement Among Financial Industry
Regulatory Authority, Inc., Miami
International Securities Exchange, LLC
[AND], MIAX Pearl, LLC and Miax
Emerald, LLC, Pursuant To Rule 17d–
2 Under The Securities Exchange Act of
1934
This Agreement, by and among the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’), Miami
International Securities Exchange, LLC
(‘‘MIAX’’) [and], MIAX PEARL, LLC
(‘‘MIAX PEARL’’), and MIAX Emerald,
LLC (‘‘MIAX Emerald’’) is made this
10 See Securities Exchange Act Release No. 73641
(November 19, 2014), 79 FR 70230 (November 25,
2014).
11 See Securities Exchange Act Release Nos.
79779 (January 12, 2017), 82 FR 6674 (January 19,
2017) (notice) and 79974 (February 6, 2017), 82 FR
10417 (February 10, 2017) (order).
12 See Securities Exchange Act Release No. 83696
(July 24, 2018), 83 FR 35682 (July 27, 2018).
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[27th]19th day of [June]December, 2018
(the ‘‘Agreement’’), pursuant to Section
17(d) of the Securities Exchange Act of
1934 (the ‘‘Exchange Act’’) and Rule
17d–2 thereunder, which permits
agreements between self-regulatory
organizations to allocate regulatory
responsibility to eliminate regulatory
duplication. FINRA, MIAX [and], MIAX
PEARL and MIAX Emerald may be
referred to individually as a ‘‘party’’ and
together as the ‘‘parties.’’
This Agreement amends and restates
the agreement entered into between
FINRA, MIAX and MIAX PEARL on
[January 11, 2017]June 27, 2018, entitled
‘‘Agreement between Financial Industry
Regulatory Authority, Inc., Miami
International Securities Exchange, LLC
and MIAX PEARL, LLC Pursuant to
Rule 17d–2 under the Securities
Exchange Act of 1934,’’ and any
subsequent amendments thereafter.
Whereas, the parties desire to reduce
duplication in the examination of their
Common Members (as defined herein)
and in the filing and processing of
certain registration and membership
records; and
Whereas, the parties desire to execute
an agreement covering such subjects
pursuant to the 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, the parties hereby agree as
follows:
1. Definitions. Unless otherwise
defined in this Agreement or the context
otherwise requires, the terms used in
this Agreement shall have the same
meaning as they have under the
Exchange Act and the rules and
regulations thereunder. As used in this
Agreement, the following terms shall
have the following meanings:
(a) ‘‘MIAX Rules,’’ ‘‘MIAX PEARL
Rules’’, ‘‘MIAX Emerald Rules’’ or
‘‘FINRA Rules’’ shall mean: (i) The rules
of MIAX [or], MIAX PEARL or MIAX
Emerald, respectively, 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
MIAX Rules [and], MIAX PEARL Rules
and MIAX Emerald 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
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1253
application of the provision or rule, or
a Common Member’s activity, conduct,
or output in relation to such provision
or rule. Common Rules shall not include
any provisions regarding (i) notice,
reporting or any other filings made
directly to or from MIAX [or], MIAX
PEARL or MIAX Emerald, (ii)
incorporation by reference of MIAX [or],
MIAX PEARL Rules or MIAX Emerald
Rules that are not Common Rules, (iii)
exercise of discretion in a manner that
differs from FINRA’s exercise of
discretion including, but not limited to
exercise of exemptive authority, by
MIAX [or], MIAX PEARL or MIAX
Emerald, (iv) prior written approval of
MIAX [or], MIAX PEARL or MIAX
Emerald and (v) payment of fees or fines
to MIAX [or], MIAX PEARL or MIAX
Emerald.
(c) ‘‘Common Members’’ shall mean
members of FINRA and at least one of
MIAX [or], MIAX PEARL or MIAX
Emerald.
(d) ‘‘Effective Date’’ shall be the date
this Agreement is approved by the
Commission.
(e) ‘‘Enforcement Responsibilities’’
shall mean the conduct of appropriate
proceedings, in accordance with
FINRA’s Code of Procedure (the Rule
9000 Series) and other applicable
FINRA procedural rules, to determine
whether violations of Common Rules
have occurred, and if such violations are
deemed to have occurred, the
imposition of appropriate sanctions as
specified under FINRA’s Code of
Procedure and sanctions guidelines.
(f) ‘‘Regulatory Responsibilities’’ shall
mean the examination responsibilities
and Enforcement Responsibilities
relating to compliance by the Common
Members with the Common Rules and
the provisions of the Exchange Act and
the rules and regulations thereunder,
and other applicable laws, rules and
regulations, each as set forth on Exhibit
1 attached hereto. The term ‘‘Regulatory
Responsibilities’’ shall also include the
surveillance, investigation and
Enforcement Responsibilities relating to
compliance by Common Members with
Rule 14e–4 of the Securities Exchange
Act (‘‘Rule 14e–4’’), with a focus on the
standardized call option provision of
Rule 14e–4(a)(1)(ii)(D).
2. Regulatory and Enforcement
Responsibilities. FINRA shall assume
Regulatory Responsibilities and
Enforcement Responsibilities for
Common Members. Attached as Exhibit
1 to this Agreement and made part
hereof, MIAX [and], MIAX PEARL and
MIAX Emerald furnished FINRA with a
current list of Common Rules and
certified to FINRA that such rules that
are MIAX Rules [and], MIAX PEARL
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Rules and MIAX Emerald Rules are
substantially similar to the
corresponding FINRA Rules (the
‘‘Certification’’). FINRA hereby agrees
that the rules listed in the Certification
are Common Rules as defined in this
Agreement. Each year following the
Effective Date of this Agreement, or
more frequently if required by changes
in the rules of the parties, MIAX [and],
MIAX PEARL and MIAX Emerald shall
submit an updated list of Common
Rules to FINRA for review which shall
add MIAX Rules [or], MIAX PEARL
Rules or MIAX Emerald Rules not
included in the current list of Common
Rules that qualify as Common Rules as
defined in this Agreement; delete MIAX
Rules [or], MIAX PEARL Rules or MIAX
Emerald Rules included in the current
list of Common Rules that no longer
qualify as Common Rules as defined in
this Agreement; and confirm that the
remaining rules on the current list of
Common Rules continue to be MIAX
Rules [or], MIAX PEARL Rules or MIAX
Emerald Rules that qualify as Common
Rules as defined in this Agreement.
Within 30 days of receipt of such
updated list, FINRA shall confirm in
writing whether the rules listed in any
updated list are Common Rules as
defined in this Agreement.
Notwithstanding anything herein to the
contrary, it is explicitly understood that
the term ‘‘Regulatory Responsibilities’’
does not include, and MIAX [and],
MIAX PEARL and MIAX Emerald shall
retain full responsibility for (unless
otherwise addressed by separate
agreement or rule) (collectively, the
‘‘Retained Responsibilities’’) the
following:
(a) Surveillance, examination,
investigation and enforcement with
respect to trading activities or practices
involving MIAX’s [and], MIAX PEARL’s
and MIAX Emerald’s own marketplace;
(b) registration pursuant to their
applicable rules of associated persons
(i.e., registration rules that are not
Common Rules);
(c) discharge of their duties and
obligations as a Designated Examining
Authority pursuant to Rule 17d–1 under
the Exchange Act; and
(d) any MIAX Rules [or], MIAX
PEARL Rules or MIAX Emerald Rules
that are not Common Rules as provided
in paragraph 6.
3. Common Members. Prior to the
Effective Date, MIAX [and], MIAX
PEARL and MIAX Emerald shall furnish
FINRA with a current list of Common
Members, which shall be updated no
less frequently than once each quarter.
4. No Charge. There shall be no
charge to MIAX [and], MIAX PEARL
and MIAX Emerald by FINRA for
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performing the Regulatory
Responsibilities and Enforcement
Responsibilities under this Agreement
except as hereinafter provided. FINRA
shall provide MIAX [and], MIAX PEARL
and MIAX Emerald with ninety (90)
days advance written notice in the event
FINRA decides to impose any charges to
MIAX [and], MIAX PEARL and MIAX
Emerald for performing the Regulatory
Responsibilities under this Agreement.
If FINRA determines to impose a charge,
MIAX [and], MIAX PEARL and MIAX
Emerald shall have the right at the time
of the imposition of such charge to
terminate this Agreement; provided,
however, that FINRA’s Regulatory
Responsibilities under this Agreement
shall continue until the Commission
approves the termination of this
Agreement.
5. Applicability of Certain Laws,
Rules, Regulations or Orders.
Notwithstanding any provision hereof,
this Agreement shall be subject to any
statute, or any rule or order of the SEC.
To the extent such statute, rule or order
is inconsistent with one or more
provisions of this Agreement, the
statute, rule or order shall supersede the
provision(s) hereof to the extent
necessary to be properly effectuated and
the provision(s) hereof in that respect
shall be null and void.
6. Notification of Violations. In the
event that FINRA becomes aware of
apparent violations of any MIAX Rules
[or], MIAX PEARL Rules or MIAX
Emerald Rules, which are not listed as
Common Rules, discovered pursuant to
the performance of the Regulatory
Responsibilities assumed hereunder,
FINRA shall notify MIAX [and], MIAX
PEARL and MIAX Emerald of those
apparent violations for such response as
MIAX [and], MIAX PEARL and MIAX
Emerald deem appropriate. In the event
that MIAX [or], MIAX PEARL or MIAX
Emerald becomes aware of apparent
violations of any Common Rules,
discovered pursuant to the performance
of the Retained Responsibilities, MIAX
[and], MIAX PEARL and MIAX Emerald
shall notify FINRA of those apparent
violations and such matters shall be
handled by FINRA as provided in this
Agreement. Apparent violations of
Common Rules shall be processed by,
and enforcement proceedings in respect
thereto shall be conducted by FINRA as
provided hereinbefore; provided,
however, that in the event a Common
Member is the subject of an
investigation relating to a transaction on
MIAX [or], MIAX PEARL or MIAX
Emerald, MIAX [and], MIAX PEARL
and MIAX Emerald may in their
discretion assume concurrent
jurisdiction and responsibility. Each
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party agrees to make available promptly
all files, records and witnesses
necessary to assist the other in its
investigation or proceedings.
7. Continued Assistance.
(a) FINRA shall make available to
MIAX [and], MIAX PEARL and MIAX
Emerald all information obtained by
FINRA in the performance by it of the
Regulatory Responsibilities hereunder
with respect to the Common Members
subject to this Agreement. In particular,
and not in limitation of the foregoing,
FINRA shall furnish MIAX [and], MIAX
PEARL and MIAX Emerald any
information it obtains about Common
Members which reflects adversely on
their financial condition. MIAX [and],
MIAX PEARL and MIAX Emerald shall
make available to FINRA any
information coming to its attention that
reflects adversely on the financial
condition of Common Members or
indicates possible violations of
applicable laws, rules or regulations by
such firms.
(b) The parties agree that documents
or information shared shall be held in
confidence, and used only for the
purposes of carrying out their respective
regulatory obligations. No party shall
assert regulatory or other privileges as
against any other with respect to
documents or information that is
required to be shared pursuant to this
Agreement.
(c) The sharing of documents or
information among the parties pursuant
to this Agreement shall not be deemed
a waiver as against third parties of
regulatory or other privileges relating to
the discovery of documents or
information.
8. Statutory Disqualifications. When
FINRA becomes aware of a statutory
disqualification as defined in the
Exchange Act with respect to a Common
Member, FINRA shall determine
pursuant to Sections 15A(g) and/or
Section 6(c) of the Exchange Act the
acceptability or continued applicability
of the person to whom such
disqualification applies and keep MIAX
[and], MIAX PEARL and MIAX Emerald
advised of its actions in this regard for
such subsequent proceedings as MIAX
[and], MIAX PEARL and MIAX Emerald
may initiate.
9. Customer Complaints. MIAX [and],
MIAX PEARL and MIAX Emerald shall
forward to FINRA copies of all customer
complaints involving Common
Members received by MIAX [and],
MIAX PEARL and MIAX Emerald
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.
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10. Advertising. FINRA shall assume
responsibility to review the advertising
of Common 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 any party to
conduct its own independent or
concurrent investigation, examination
or enforcement proceeding of or against
Common Members, as any party, in its
sole discretion, shall deem appropriate
or necessary.
12. Termination. This Agreement may
be terminated by any party at any time
upon the approval of the Commission
after one (1) year’s written notice to the
other parties (or such shorter time as
agreed by the parties), except as
provided in paragraph 4.
13. Arbitration. In the event of a
dispute among the parties as to the
operation of this Agreement, the parties
hereby agree that any such dispute shall
be settled by arbitration in Washington,
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
parties. In the event of a dispute among
the parties, the parties shall continue to
perform their respective obligations
under this Agreement in good faith
during the resolution of such dispute
unless and until this Agreement is
terminated in accordance with its
provisions. Nothing in this Section 13
shall interfere with a party’s right to
terminate this Agreement as set forth
herein.
14. Separate Agreement. This
Agreement is wholly separate from the
following agreement: (1) The multiparty
Agreement made pursuant to Rule 17d–
2 of the Exchange Act among BATS
Exchange, Inc., BOX Options Exchange,
LLC, Chicago Board Options Exchange,
Incorporated, C2 Options Exchange,
Incorporated, the International
Securities Exchange, LLC, FINRA,
MIAX, NYSE MKT LLC, the NYSE Arca,
Inc., The NASDAQ Stock Market LLC,
NASDAQ OMX BX, Inc., NASDAQ
OMX PHLX LLC, ISE Gemini, LLC,
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EDGX Exchange, Inc., ISE Mercury, LLC
and MIAX PEARL, LLC involving the
allocation of regulatory responsibilities
with respect to common members for
compliance with common rules relating
to the conduct by broker-dealers of
accounts for listed options or index
warrants entered as approved by the
SEC on February 2, 2017, and as may be
amended from time to time; and (2) the
multiparty Agreement made pursuant to
Rule 17d–2 of the Exchange Act among
NYSE MKT LLC, BATS Exchange, Inc.,
EDGX Exchange, Inc., BOX Options
Exchange LLC, NASDAQ OMX BX, Inc.,
C2 Options Exchange, Incorporated,
Chicago Board Options Exchange,
Incorporated, International Securities
Exchange LLC, ISE Gemini, LLC, ISE
Mercury, LLC, FINRA, NYSE Arca, Inc.,
The NASDAQ Stock Market LLC,
NASDAQ OMX PHLX, Inc., MIAX and
MIAX PEARL, LLC involving the
allocation of regulatory responsibilities
with respect to SRO market surveillance
of common members activities with
regard to certain common rules relating
to listed options approved by the SEC
on February 2, 2017, and as may be
amended from time to time.
15. Notification of Members. The
parties shall notify Common Members
of this Agreement after the Effective
Date by means of a uniform joint notice.
16. Amendment. This Agreement may
be amended in writing provided that the
changes are approved by each party. All
such amendments must be filed with
and approved by the Commission before
they become effective.
17. Limitation of Liability. None of
the parties nor any of their respective
directors, governors, officers or
employees shall be liable to any other
party to this Agreement for any liability,
loss or damage resulting from or
claimed to have resulted from any
delays, inaccuracies, errors or omissions
with respect to the provision of
Regulatory Responsibilities as provided
hereby or for the failure to provide any
such responsibility, except with respect
to such liability, loss or damages as
shall have been suffered by any party
and caused by the willful misconduct of
another party or their respective
directors, governors, officers or
employees. No warranties, express or
implied, are made by any party hereto
with respect to any of the
responsibilities to be performed by them
hereunder.
18. Relief from Responsibility.
Pursuant to Sections 17(d)(1)(A) and
19(g) of the Exchange Act and Rule 17d–
2 thereunder, FINRA, MIAX [and],
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1255
MIAX PEARL and MIAX Emerald join
in requesting the Commission, upon its
approval of this Agreement or any part
thereof, to relieve MIAX [and], MIAX
PEARL and MIAX Emerald 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.
MIAMI INTERNATIONAL SECURITIES
EXCHANGE, LLC
By: lllllllllllllllllll
Name:
Title:
MIAX PEARL, LLC
By: lllllllllllllllllll
Name:
Title:
MIAX EMERALD, LLC
By: lllllllllllllllllll
Name:
Title:
FINANCIAL INDUSTRY REGULATORY
AUTHORITY, INC.
By: lllllllllllllllllll
Name:
Title:
Exhibit 1
Miami International Securities Exchange,
LLC [and], MIAX PEARL, LLC and MIAX
Emerald, LLC Rules Certification for 17d–2
Agreement With FINRA
Miami International Securities Exchange,
LLC (‘‘MIAX’’) [and], MIAX PEARL, LLC
(‘‘MIAX PEARL’’) and MIAX Emerald, LLC
(‘‘MIAX Emerald’’) hereby certify that the
requirements contained in the rules listed
below are identical to, or substantially
similar to, the comparable FINRA (NASD)
Rule, Exchange Act provision or SEC rule
identified (‘‘Common Rules’’).
E:\FR\FM\01FEN1.SGM
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Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices
MIAX rules
MIAX Pearl rules
MIAX Emerald rules
FINRA (NASD) rules, Exchange
Act provision or SEC rule
Rule 301 Just and Equitable Principles of Trade 1.
Rule 301 Just and Equitable Principles of Trade 1.
Rule 301 Just and Equitable Principles of Trade 1.
Rule 303 Prevention of the Misuse
of Material Nonpublic Information 1 #.
Rule 315 Anti-Money Laundering
Compliance Program #.
Rule 303 Prevention of the Misuse of Material Nonpublic Information 1 #.
Rule 315 Anti-Money Laundering
Compliance Program #.
Rule 303 Prevention of the Misuse of Material Nonpublic Information 1 #.
Rule 315 Anti-Money Laundering
Compliance Program 1 #.
Rule 318(a) Manipulation ...............
Rule 318(a) Manipulation .............
Rule 318(a) Manipulation .............
Rule 318(b) Manipulation ...............
Rule 318(b) Manipulation .............
Rule 318(b) Manipulation .............
Rule 319 Forwarding of Proxy and
Other Issuer-Related Materials.
Rule 320 Trading Ahead of Research Reports.
Rule 800(a), (b) and (d) Maintenance, Retention and Furnishing
of Books, Records and Other Information 1#.
Rule 1304 Continuing Education
for Registered Persons #.
Rule 319 Forwarding of Proxy
and Other Issuer-Related Materials.
Rule 320 Trading Ahead of Research Reports.
Rule 800(a), (b) and (d) Maintenance, Retention and Furnishing of Books, Records and
Other Information 1#.
Rule 1304 Continuing Education
for Registered Persons #.
Rule 319 Forwarding of Proxy
and Other Issuer-Related Materials.
Rule 320 Trading Ahead of Research Reports.
Rule 800(a), (b) and (d) Maintenance, Retention and Furnishing of Books, Records and
Other Information 1 #.
Rule 1304 Continuing Education
for Registered Persons. #.
Rule 1321 Transfer of Accounts ....
Rule 1321 Transfer of Accounts ..
Rule 1321 Transfer of Accounts ..
Rule 1325 Telemarketing ...............
Rule 1325 Telemarketing .............
Rule 1325 Telemarketing .............
FINRA Rule 2010 Standards of
Commercial Honor and Principles of Trade.
Section 15(g) of the Exchange
Act and FINRA Rule 3110(b)(1)
Supervision.
FINRA Rule 3310 Anti-Money
Laundering Compliance Program.
FINRA Rule 2020 Use of Manipulative, Deceptive or other
Fraudulent Devices.
FINRA Rule 6140(d) Other Trading Practices.
FINRA Rule 2251 Processing and
Forwarding of Proxy and Other
Issuer-Related Materials.
FINRA Rule 5280 Trading Ahead
of Research Reports.
FINRA
Rule
4511
General
Requirements* and Section 17
of the Exchange Act and the
rules thereunder #.
FINRA Rule 1250(a)(1)–(4), (6)
and (b) Continuing Education
Requirements.#
FINRA Rule 11870 Customer Account Transfer Contracts.
FINRA Rule 3230 Telemarketing.
1 FINRA
shall only have Regulatory Responsibilities regarding the rule and not the interpretations and policies.
# Common Rules shall not include any provisions regarding (i) notice, reporting or any other filings made directly to or from MIAX [or], MIAX
PEARL or MIAX Emerald, (ii) incorporation by reference of MIAX [or], MIAX PEARL or MIAX Emerald Rules that are not Common Rules, (iii) exercise of discretion in a manner that differs from FINRA’s exercise of discretion including, but not limited to exercise of exemptive authority by
MIAX [or], MIAX PEARL or MIAX Emerald, (iv) prior written approval of MIAX [or], MIAX PEARL or MIAX Emerald and (v) payment of fees or
fines to MIAX [or], MIAX PEARL or MIAX Emerald.
In addition, the following provisions
shall be part of this 17d–2 Agreement:
SEA Rule 200 of Regulation SHO—
Definition of ‘‘Short Sale’’ and
Marking Requirements and
SEA Rule 201 of Regulation SHO—
Circuit Breaker
SEA Rule 203 of Regulation SHO—
Borrowing and Delivery Requirements
SEA Rule 204 of Regulation SHO—
Close-Out Requirement
SEA Rule 14e–4—Prohibited
Transactions in Connection with
Partial Tender Offers ∧
∧ FINRA shall perform surveillance,
investigation, and Enforcement
Responsibilities for SEA Rule 14e–
4(a)(1)(ii)(D).
III. Date of Effectiveness of the
Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the
Act 13 and Rule 17d–2 thereunder,14
after February 19, 2019, the Commission
may, by written notice, declare the plan
submitted by MIAX, MIAX PEARL,
MIAX EMERALD, and FINRA, File No.
4–678, to be effective if the Commission
13 15
14 17
U.S.C. 78q(d)(1).
CFR 240.17d–2.
VerDate Sep<11>2014
21:23 Jan 31, 2019
Jkt 247001
finds that the plan is necessary or
appropriate in the public interest and
for the protection of investors, to foster
cooperation and coordination among
self-regulatory organizations, or to
remove impediments to and foster the
development of the national market
system and a national system for the
clearance and settlement of securities
transactions and in conformity with the
factors set forth in Section 17(d) of the
Act.
IV. Solicitation of Comments
In order to assist the Commission in
determining whether to approve the
proposed 17d–2 Plan and to relieve
MIAX, MIAX PEARL, and MIAX
EMERALD of the responsibilities which
would be assigned to FINRA, interested
persons are invited to submit written
data, views, and arguments concerning
the foregoing. Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/other.shtml); or
PO 00000
Frm 00210
Fmt 4703
Sfmt 4703
• Send an email to rule-comments@
sec.gov. Please include File Number 4–
678 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, Station Place, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number 4–678. This file number should
be included on the subject line if email
is used. To help the Commission
process and review your comments
more efficiently, please use only one
method. The Commission will post all
comments on the Commission’s internet
website (https://www.sec.gov/rules/
other.shtml). Copies of the submission,
all subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
E:\FR\FM\01FEN1.SGM
01FEN1
Federal Register / Vol. 84, No. 22 / Friday, February 1, 2019 / Notices
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
plan also will be available for inspection
and copying at the principal offices of
MIAX, MIAX PEARL, MIAX EMERALD,
and FINRA. All comments received will
be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit personal
identifying information from comment
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number 4–678 and
should be submitted on or before
February 19, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–00725 Filed 1–31–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–258, OMB Control No.
3235–0268]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 2a–7
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Rule 2a–7 (17 CFR 270.2a–7) under
the Investment Company Act of 1940
(15 U.S.C. 80a) (the ‘‘Act’’) governs
money market funds. Money market
funds are open-end management
investment companies that differ from
other open-end management investment
companies in that they seek to maintain
a stable price per share, usually $1.00.
The rule exempts money market funds
from the valuation requirements of the
Act, and, subject to certain risk-limiting
conditions, permits money market funds
to use the ‘‘amortized cost method’’ of
asset valuation or the ‘‘penny-rounding
method’’ of share pricing.
15 17
CFR 200.30–3(a)(34).
VerDate Sep<11>2014
21:23 Jan 31, 2019
Jkt 247001
Rule 2a–7 also imposes certain
recordkeeping and reporting obligations
on money market funds. The board of
directors of a money market fund, in
supervising the fund’s operations, must
establish written procedures designed to
stabilize the fund’s net asset value
(‘‘NAV’’); establish written procedures
to test periodically the ability of the
fund to maintain a stable NAV based on
certain hypothetical events (‘‘stress
testing’’); review, revise, and approve
written procedures to stress test a fund’s
portfolio; and create a report to the fund
board documenting the results of stress
testing. The board must also adopt
guidelines and procedures relating to
certain responsibilities it delegates to
the fund’s investment adviser. These
procedures and guidelines typically
address various aspects of the fund’s
operations. The fund must maintain and
preserve for six years a written copy of
both these procedures and guidelines.
The fund also must maintain and
preserve for six years a written record of
the board’s considerations and actions
taken in connection with the discharge
of its responsibilities, to be included in
the board’s minutes, including
determinations to impose any liquidity
fees or temporary suspension of
redemptions. In addition, the fund must
maintain and preserve for three years
written records of certain credit risk
analyses, evaluations with respect to
securities subject to demand features or
guarantees, evaluations with respect to
asset-backed securities not subject to
guarantees, and determinations with
respect to adjustable rate securities and
asset-backed securities. If the board
takes action with respect to defaulted
securities, events of insolvency, or
deviations in share price, the fund must
file with the Commission an exhibit to
Form N–CR describing the nature and
circumstances of the action. If any
portfolio security fails to meet certain
eligibility standards under the rule, the
fund also must identify those securities
in an exhibit to Form N–CR. After
certain events of default or insolvency
relating to a portfolio security, the fund
must notify the Commission of the event
and the actions the fund intends to take
in response to the situation.
A fund must also post certain periodic
information on the its website including
disclosure of portfolio holdings,
disclosure of daily and weekly liquid
assets and net shareholder flow,
disclosure of daily current NAV, and
disclosures of financial support received
by the fund, the imposition and removal
of liquidity fees, and the suspension and
resumption of fund redemptions. Lastly,
for funds that elect to be retail funds,
PO 00000
Frm 00211
Fmt 4703
Sfmt 4703
1257
they must create written policies and
procedures reasonably designed to limit
all beneficial owners of the fund to
natural persons.
The recordkeeping requirements in
rule 2a–7 are designed to enable
Commission staff in its examinations of
money market funds to determine
compliance with the rule, as well as to
ensure that money market funds have
established procedures for collecting the
information necessary to make adequate
credit reviews of securities in their
portfolios. The reporting requirements
of rule 2a–7 are intended to assist
Commission staff in overseeing money
market funds and reduce the likelihood
that a fund is unable to maintain a
stable NAV.
Commission staff estimates that there
are 433 money market funds (91 fund
complexes), all of which are subject to
rule 2a–7. Commission staff further
estimates that there will be
approximately 10 new money market
funds established each year.
Commission staff estimates that rule 2a–
7 contains the following collection of
information requirements:
• Record of credit risk analyses, and
determinations regarding adjustable rate
securities, asset-backed securities, assetbacked securities not subject to
guarantees, securities subject to a
demand feature or guarantee, and
counterparties to repurchase
agreements. Commission staff estimates
a total annual hour burden for 433 funds
to be 294,440 hours.
• Establishment of written procedures
designed to stabilize NAV and
guidelines and procedures for board
delegation of authority. Commission
staff estimates a total annual hour
burden for 10 new money market funds
to be 155 hours.
• Board review of procedures and
guidelines of any investment adviser or
officers to whom the fund’s board has
delegated responsibility under rule 2a–
7 and amendment of such procedures
and guidelines. Commission staff
estimates a total annual hour burden for
108 funds to be 540 hours.
• Records of the board’s
determination for imposing any
liquidity fees or temporary suspension
of redemptions. Commission staff
estimates a total annual hour burden for
2 funds to be 14 hours.
• Establishment of written procedures
to test periodically the ability of the
fund to maintain a stable NAV per share
based on certain hypothetical events
(‘‘stress testing’’). Commission staff
estimates a total annual hour burden for
10 new money market funds to be 220
hours.
E:\FR\FM\01FEN1.SGM
01FEN1
]]>Agencies
[Federal Register Volume 84, Number 22 (Friday, February 1, 2019)]
[Notices]
[Pages 1252-1257]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00725]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84997; File No. 4-678]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing of Proposed Amended Plan for the
Allocation of Regulatory Responsibilities Among the Financial Industry
Regulatory Authority, Inc., Miami International Securities Exchange,
LLC, MIAX PEARL, LLC, and MIAX EMERALD, LLC.
January 29, 2019.
Pursuant to Section 17(d) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 17d-2 thereunder,\2\ notice is hereby given that
on December 20, 2018, Miami International Securities Exchange, LLC
(``MIAX''), MIAX PEARL, LLC (``MIAX PEARL''), MIAX EMERALD, LLC (``MIAX
EMERALD'') and the Financial Industry Regulatory Authority, Inc.
(``FINRA'') (together, the ``Parties'') filed with the Securities and
Exchange Commission (``Commission'' or ``SEC'') an amended plan for the
allocation of regulatory responsibilities, dated December 19, 2018
(``17d-2 Plan'' or the ``Plan''). The Commission is publishing this
notice to solicit comments on the 17d-2 Plan from interested persons.
---------------------------------------------------------------------------
\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) or Section 19(g)(2) of the Act.\4\ Without
this relief, the statutory obligation of each individual SRO could
result in a pattern of multiple examinations of broker-dealers that
maintain memberships in more than one SRO (``common members''). Such
regulatory duplication would add unnecessary expenses for common
members and their SROs.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \5\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\6\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78q(d)(1).
\6\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------
To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\7\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\8\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
---------------------------------------------------------------------------
\7\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\8\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\9\ Rule 17d-2 permits SROs
to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for appropriate notice and comment, it determines that
the plan is necessary or appropriate in the public interest and for the
protection of investors; to foster cooperation and coordination among
the SROs; to remove impediments to, and foster the development of, a
national market system and a national clearance and settlement system;
and is in conformity with the factors set forth in Section 17(d) of the
Act. Commission
[[Page 1253]]
approval of a plan filed pursuant to Rule 17d-2 relieves an SRO of
those regulatory responsibilities allocated by the plan to another SRO.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. The Plan
On November 19, 2014, the Commission declared effective the Plan
entered into between FINRA and MIAX for allocating regulatory
responsibility pursuant to Rule 17d-2.\10\ The Plan is intended to
reduce regulatory duplication for firms that are common members of both
MIAX and FINRA. The plan reduces regulatory duplication for firms that
are members of MIAX and FINRA by allocating regulatory responsibility
with respect to certain applicable laws, rules, and regulations.
Included in the Plan is an exhibit that lists every MIAX rule for which
FINRA bears responsibility under the Plan for overseeing and enforcing
with respect to MIAX members that are also members of FINRA and the
associated persons therewith. On January 12, 2017, the parties
submitted a proposed amendment to the Plan to add MIAX PEARL as a
Participant to the Plan.\11\ On June 28, 2018, the parties submitted a
proposed amendment to the Plan to allocate surveillance, investigation,
and enforcement responsibilities for Rule 14e-4 under the Act, as well
as certain provisions of Regulation SHO.\12\
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 73641 (November 19,
2014), 79 FR 70230 (November 25, 2014).
\11\ See Securities Exchange Act Release Nos. 79779 (January 12,
2017), 82 FR 6674 (January 19, 2017) (notice) and 79974 (February 6,
2017), 82 FR 10417 (February 10, 2017) (order).
\12\ See Securities Exchange Act Release No. 83696 (July 24,
2018), 83 FR 35682 (July 27, 2018).
---------------------------------------------------------------------------
III. Proposed Amendment to Plan
On December 20, 2018, the parties submitted a proposed amendment to
the Plan. The primary purpose of the amendment is to add MIAX EMERALD
as a Participant to the Plan. The text of the proposed amended 17d-2
plan is as follows (additions are italicized; deletions are
[bracketed]):
Agreement Among Financial Industry Regulatory Authority, Inc., Miami
International Securities Exchange, LLC [AND], MIAX Pearl, LLC and Miax
Emerald, LLC, Pursuant To Rule 17d-2 Under The Securities Exchange Act
of 1934
This Agreement, by and among the Financial Industry Regulatory
Authority, Inc. (``FINRA''), Miami International Securities Exchange,
LLC (``MIAX'') [and], MIAX PEARL, LLC (``MIAX PEARL''), and MIAX
Emerald, LLC (``MIAX Emerald'') is made this [27th]19th day of
[June]December, 2018 (the ``Agreement''), pursuant to Section 17(d) of
the Securities Exchange Act of 1934 (the ``Exchange Act'') and Rule
17d-2 thereunder, which permits agreements between self-regulatory
organizations to allocate regulatory responsibility to eliminate
regulatory duplication. FINRA, MIAX [and], MIAX PEARL and MIAX Emerald
may be referred to individually as a ``party'' and together as the
``parties.''
This Agreement amends and restates the agreement entered into
between FINRA, MIAX and MIAX PEARL on [January 11, 2017]June 27, 2018,
entitled ``Agreement between Financial Industry Regulatory Authority,
Inc., Miami International Securities Exchange, LLC and MIAX PEARL, LLC
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and
any subsequent amendments thereafter.
Whereas, the parties desire to reduce duplication in the
examination of their Common Members (as defined herein) and in the
filing and processing of certain registration and membership records;
and
Whereas, the parties desire to execute an agreement covering such
subjects pursuant to the 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, the parties hereby agree as follows:
1. Definitions. Unless otherwise defined in this Agreement or the
context otherwise requires, the terms used in this Agreement shall have
the same meaning as they have under the Exchange Act and the rules and
regulations thereunder. As used in this Agreement, the following terms
shall have the following meanings:
(a) ``MIAX Rules,'' ``MIAX PEARL Rules'', ``MIAX Emerald Rules'' or
``FINRA Rules'' shall mean: (i) The rules of MIAX [or], MIAX PEARL or
MIAX Emerald, respectively, 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 MIAX Rules [and], MIAX PEARL Rules
and MIAX Emerald Rules that are substantially similar to the applicable
FINRA Rules and certain provisions of the Exchange Act and SEC rules
set forth on Exhibit 1 in that examination for compliance with such
provisions and rules would not require FINRA to develop one or more new
examination standards, modules, procedures, or criteria in order to
analyze the application of the provision or rule, or a Common Member's
activity, conduct, or output in relation to such provision or rule.
Common Rules shall not include any provisions regarding (i) notice,
reporting or any other filings made directly to or from MIAX [or], MIAX
PEARL or MIAX Emerald, (ii) incorporation by reference of MIAX [or],
MIAX PEARL Rules or MIAX Emerald Rules that are not Common Rules, (iii)
exercise of discretion in a manner that differs from FINRA's exercise
of discretion including, but not limited to exercise of exemptive
authority, by MIAX [or], MIAX PEARL or MIAX Emerald, (iv) prior written
approval of MIAX [or], MIAX PEARL or MIAX Emerald and (v) payment of
fees or fines to MIAX [or], MIAX PEARL or MIAX Emerald.
(c) ``Common Members'' shall mean members of FINRA and at least one
of MIAX [or], MIAX PEARL or MIAX Emerald.
(d) ``Effective Date'' shall be the date this Agreement is approved
by the Commission.
(e) ``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with FINRA's Code of Procedure
(the Rule 9000 Series) and other applicable FINRA procedural rules, to
determine whether violations of Common Rules have occurred, and if such
violations are deemed to have occurred, the imposition of appropriate
sanctions as specified under FINRA's Code of Procedure and sanctions
guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities and Enforcement Responsibilities relating to
compliance by the Common Members with the Common Rules and the
provisions of the Exchange Act and the rules and regulations
thereunder, and other applicable laws, rules and regulations, each as
set forth on Exhibit 1 attached hereto. The term ``Regulatory
Responsibilities'' shall also include the surveillance, investigation
and Enforcement Responsibilities relating to compliance by Common
Members with Rule 14e-4 of the Securities Exchange Act (``Rule 14e-
4''), with a focus on the standardized call option provision of Rule
14e-4(a)(1)(ii)(D).
2. Regulatory and Enforcement Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement Responsibilities for Common
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
MIAX [and], MIAX PEARL and MIAX Emerald furnished FINRA with a current
list of Common Rules and certified to FINRA that such rules that are
MIAX Rules [and], MIAX PEARL
[[Page 1254]]
Rules and MIAX Emerald Rules are substantially similar to the
corresponding FINRA Rules (the ``Certification''). FINRA hereby agrees
that the rules listed in the Certification are Common Rules as defined
in this Agreement. Each year following the Effective Date of this
Agreement, or more frequently if required by changes in the rules of
the parties, MIAX [and], MIAX PEARL and MIAX Emerald shall submit an
updated list of Common Rules to FINRA for review which shall add MIAX
Rules [or], MIAX PEARL Rules or MIAX Emerald Rules not included in the
current list of Common Rules that qualify as Common Rules as defined in
this Agreement; delete MIAX Rules [or], MIAX PEARL Rules or MIAX
Emerald Rules included in the current list of Common Rules that no
longer qualify as Common Rules as defined in this Agreement; and
confirm that the remaining rules on the current list of Common Rules
continue to be MIAX Rules [or], MIAX PEARL Rules or MIAX Emerald Rules
that qualify as Common Rules as defined in this Agreement. Within 30
days of receipt of such updated list, FINRA shall confirm in writing
whether the rules listed in any updated list are Common Rules as
defined in this Agreement. Notwithstanding anything herein to the
contrary, it is explicitly understood that the term ``Regulatory
Responsibilities'' does not include, and MIAX [and], MIAX PEARL and
MIAX Emerald shall retain full responsibility for (unless otherwise
addressed by separate agreement or rule) (collectively, the ``Retained
Responsibilities'') the following:
(a) Surveillance, examination, investigation and enforcement with
respect to trading activities or practices involving MIAX's [and], MIAX
PEARL's and MIAX Emerald's own marketplace;
(b) registration pursuant to their applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of their duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
(d) any MIAX Rules [or], MIAX PEARL Rules or MIAX Emerald Rules
that are not Common Rules as provided in paragraph 6.
3. Common Members. Prior to the Effective Date, MIAX [and], MIAX
PEARL and MIAX Emerald shall furnish FINRA with a current list of
Common Members, which shall be updated no less frequently than once
each quarter.
4. No Charge. There shall be no charge to MIAX [and], MIAX PEARL
and MIAX Emerald by FINRA for performing the Regulatory
Responsibilities and Enforcement Responsibilities under this Agreement
except as hereinafter provided. FINRA shall provide MIAX [and], MIAX
PEARL and MIAX Emerald with ninety (90) days advance written notice in
the event FINRA decides to impose any charges to MIAX [and], MIAX PEARL
and MIAX Emerald for performing the Regulatory Responsibilities under
this Agreement. If FINRA determines to impose a charge, MIAX [and],
MIAX PEARL and MIAX Emerald shall have the right at the time of the
imposition of such charge to terminate this Agreement; provided,
however, that FINRA's Regulatory Responsibilities under this Agreement
shall continue until the Commission approves the termination of this
Agreement.
5. Applicability of Certain Laws, Rules, Regulations or Orders.
Notwithstanding any provision hereof, this Agreement shall be subject
to any statute, or any rule or order of the SEC. To the extent such
statute, rule or order is inconsistent with one or more provisions of
this Agreement, the statute, rule or order shall supersede the
provision(s) hereof to the extent necessary to be properly effectuated
and the provision(s) hereof in that respect shall be null and void.
6. Notification of Violations. In the event that FINRA becomes
aware of apparent violations of any MIAX Rules [or], MIAX PEARL Rules
or MIAX Emerald Rules, which are not listed as Common Rules, discovered
pursuant to the performance of the Regulatory Responsibilities assumed
hereunder, FINRA shall notify MIAX [and], MIAX PEARL and MIAX Emerald
of those apparent violations for such response as MIAX [and], MIAX
PEARL and MIAX Emerald deem appropriate. In the event that MIAX [or],
MIAX PEARL or MIAX Emerald becomes aware of apparent violations of any
Common Rules, discovered pursuant to the performance of the Retained
Responsibilities, MIAX [and], MIAX PEARL and MIAX Emerald shall notify
FINRA of those apparent violations and such matters shall be handled by
FINRA as provided in this Agreement. Apparent violations of Common
Rules shall be processed by, and enforcement proceedings in respect
thereto shall be conducted by FINRA as provided hereinbefore; provided,
however, that in the event a Common Member is the subject of an
investigation relating to a transaction on MIAX [or], MIAX PEARL or
MIAX Emerald, MIAX [and], MIAX PEARL and MIAX Emerald may in their
discretion assume concurrent jurisdiction and responsibility. Each
party agrees to make available promptly all files, records and
witnesses necessary to assist the other in its investigation or
proceedings.
7. Continued Assistance.
(a) FINRA shall make available to MIAX [and], MIAX PEARL and MIAX
Emerald all information obtained by FINRA in the performance by it of
the Regulatory Responsibilities hereunder with respect to the Common
Members subject to this Agreement. In particular, and not in limitation
of the foregoing, FINRA shall furnish MIAX [and], MIAX PEARL and MIAX
Emerald any information it obtains about Common Members which reflects
adversely on their financial condition. MIAX [and], MIAX PEARL and MIAX
Emerald shall make available to FINRA any information coming to its
attention that reflects adversely on the financial condition of Common
Members or indicates possible violations of applicable laws, rules or
regulations by such firms.
(b) The parties agree that documents or information shared shall be
held in confidence, and used only for the purposes of carrying out
their respective regulatory obligations. No party shall assert
regulatory or other privileges as against any other with respect to
documents or information that is required to be shared pursuant to this
Agreement.
(c) The sharing of documents or information among the parties
pursuant to this Agreement shall not be deemed a waiver as against
third parties of regulatory or other privileges relating to the
discovery of documents or information.
8. Statutory Disqualifications. When FINRA becomes aware of a
statutory disqualification as defined in the Exchange Act with respect
to a Common Member, FINRA shall determine pursuant to Sections 15A(g)
and/or Section 6(c) of the Exchange Act the acceptability or continued
applicability of the person to whom such disqualification applies and
keep MIAX [and], MIAX PEARL and MIAX Emerald advised of its actions in
this regard for such subsequent proceedings as MIAX [and], MIAX PEARL
and MIAX Emerald may initiate.
9. Customer Complaints. MIAX [and], MIAX PEARL and MIAX Emerald
shall forward to FINRA copies of all customer complaints involving
Common Members received by MIAX [and], MIAX PEARL and MIAX Emerald
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.
[[Page 1255]]
10. Advertising. FINRA shall assume responsibility to review the
advertising of Common 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 any party
to conduct its own independent or concurrent investigation, examination
or enforcement proceeding of or against Common Members, as any party,
in its sole discretion, shall deem appropriate or necessary.
12. Termination. This Agreement may be terminated by any party at
any time upon the approval of the Commission after one (1) year's
written notice to the other parties (or such shorter time as agreed by
the parties), except as provided in paragraph 4.
13. Arbitration. In the event of a dispute among the parties as to
the operation of this Agreement, the parties hereby agree that any such
dispute shall be settled by arbitration in Washington, 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 parties. In the
event of a dispute among the parties, the parties shall continue to
perform their respective obligations under this Agreement in good faith
during the resolution of such dispute unless and until this Agreement
is terminated in accordance with its provisions. Nothing in this
Section 13 shall interfere with a party's right to terminate this
Agreement as set forth herein.
14. Separate Agreement. This Agreement is wholly separate from the
following agreement: (1) The multiparty Agreement made pursuant to Rule
17d-2 of the Exchange Act among BATS Exchange, Inc., BOX Options
Exchange, LLC, Chicago Board Options Exchange, Incorporated, C2 Options
Exchange, Incorporated, the International Securities Exchange, LLC,
FINRA, MIAX, NYSE MKT LLC, the NYSE Arca, Inc., The NASDAQ Stock Market
LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, ISE Gemini, LLC, EDGX
Exchange, Inc., ISE Mercury, LLC and MIAX PEARL, LLC involving the
allocation of regulatory responsibilities with respect to common
members for compliance with common rules relating to the conduct by
broker-dealers of accounts for listed options or index warrants entered
as approved by the SEC on February 2, 2017, and as may be amended from
time to time; and (2) the multiparty Agreement made pursuant to Rule
17d-2 of the Exchange Act among NYSE MKT LLC, BATS Exchange, Inc., EDGX
Exchange, Inc., BOX Options Exchange LLC, NASDAQ OMX BX, Inc., C2
Options Exchange, Incorporated, Chicago Board Options Exchange,
Incorporated, International Securities Exchange LLC, ISE Gemini, LLC,
ISE Mercury, LLC, FINRA, NYSE Arca, Inc., The NASDAQ Stock Market LLC,
NASDAQ OMX PHLX, Inc., MIAX and MIAX PEARL, LLC involving the
allocation of regulatory responsibilities with respect to SRO market
surveillance of common members activities with regard to certain common
rules relating to listed options approved by the SEC on February 2,
2017, and as may be amended from time to time.
15. Notification of Members. The parties shall notify Common
Members of this Agreement after the Effective Date by means of a
uniform joint notice.
16. Amendment. This Agreement may be amended in writing provided
that the changes are approved by each party. All such amendments must
be filed with and approved by the Commission before they become
effective.
17. Limitation of Liability. None of the parties nor any of their
respective directors, governors, officers or employees shall be liable
to any other party to this Agreement for any liability, loss or damage
resulting from or claimed to have resulted from any delays,
inaccuracies, errors or omissions with respect to the provision of
Regulatory Responsibilities as provided hereby or for the failure to
provide any such responsibility, except with respect to such liability,
loss or damages as shall have been suffered by any party and caused by
the willful misconduct of another party or their respective directors,
governors, officers or employees. No warranties, express or implied,
are made by any party hereto with respect to any of the
responsibilities to be performed by them hereunder.
18. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA, MIAX
[and], MIAX PEARL and MIAX Emerald join in requesting the Commission,
upon its approval of this Agreement or any part thereof, to relieve
MIAX [and], MIAX PEARL and MIAX Emerald 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.
MIAMI INTERNATIONAL SECURITIES EXCHANGE, LLC
By:--------------------------------------------------------------------
Name:
Title:
MIAX PEARL, LLC
By:--------------------------------------------------------------------
Name:
Title:
MIAX EMERALD, LLC
By:--------------------------------------------------------------------
Name:
Title:
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
By:--------------------------------------------------------------------
Name:
Title:
Exhibit 1
Miami International Securities Exchange, LLC [and], MIAX PEARL, LLC and
MIAX Emerald, LLC Rules Certification for 17d-2 Agreement With FINRA
Miami International Securities Exchange, LLC (``MIAX'') [and],
MIAX PEARL, LLC (``MIAX PEARL'') and MIAX Emerald, LLC (``MIAX
Emerald'') hereby certify that the requirements contained in the
rules listed below are identical to, or substantially similar to,
the comparable FINRA (NASD) Rule, Exchange Act provision or SEC rule
identified (``Common Rules'').
[[Page 1256]]
----------------------------------------------------------------------------------------------------------------
FINRA (NASD) rules,
MIAX rules MIAX Pearl rules MIAX Emerald rules Exchange Act provision
or SEC rule
----------------------------------------------------------------------------------------------------------------
Rule 301 Just and Equitable Rule 301 Just and Rule 301 Just and FINRA Rule 2010
Principles of Trade \1\. Equitable Principles Equitable Principles Standards of
of Trade \1\. of Trade \1\. Commercial Honor and
Principles of Trade.
Rule 303 Prevention of the Misuse of Rule 303 Prevention of Rule 303 Prevention of Section 15(g) of the
Material Nonpublic Information \1\ . the Misuse of Material the Misuse of Material Exchange Act and FINRA
Nonpublic Information Nonpublic Information Rule 3110(b)(1)
\1\ . \1\ . Supervision.
Rule 315 Anti-Money Laundering Rule 315 Anti-Money Rule 315 Anti-Money FINRA Rule 3310 Anti-
Compliance Program . Laundering Compliance Laundering Compliance Money Laundering
Program . Program \1\ . Compliance Program.
Rule 318(a) Manipulation............. Rule 318(a) Rule 318(a) FINRA Rule 2020 Use of
Manipulation. Manipulation. Manipulative,
Deceptive or other
Fraudulent Devices.
Rule 318(b) Manipulation............. Rule 318(b) Rule 318(b) FINRA Rule 6140(d)
Manipulation. Manipulation. Other Trading
Practices.
Rule 319 Forwarding of Proxy and Rule 319 Forwarding of Rule 319 Forwarding of FINRA Rule 2251
Other Issuer-Related Materials. Proxy and Other Issuer- Proxy and Other Issuer- Processing and
Related Materials. Related Materials. Forwarding of Proxy
and Other Issuer-
Related Materials.
Rule 320 Trading Ahead of Research Rule 320 Trading Ahead Rule 320 Trading Ahead FINRA Rule 5280 Trading
Reports. of Research Reports. of Research Reports. Ahead of Research
Reports.
Rule 800(a), (b) and (d) Maintenance, Rule 800(a), (b) and Rule 800(a), (b) and FINRA Rule 4511 General
Retention and Furnishing of Books, (d) Maintenance, (d) Maintenance, Requirements* and
Records and Other Information 1. Retention and Retention and Section 17 of the
Furnishing of Books, Furnishing of Books, Exchange Act and the
Records and Other Records and Other rules thereunder .
Information 1. Information 1 .
Rule 1304 Continuing Education for Rule 1304 Continuing Rule 1304 Continuing FINRA Rule 1250(a)(1)-
Registered Persons . Education for Education for (4), (6) and (b)
Registered Persons . Registered Persons. . Continuing Education
Requirements.
Rule 1321 Transfer of Accounts....... Rule 1321 Transfer of Rule 1321 Transfer of FINRA Rule 11870
Accounts. Accounts. Customer Account
Transfer Contracts.
Rule 1325 Telemarketing.............. Rule 1325 Telemarketing Rule 1325 Telemarketing FINRA Rule 3230
Telemarketing.
----------------------------------------------------------------------------------------------------------------
\1\ FINRA shall only have Regulatory Responsibilities regarding the rule and not the interpretations and
policies.
# Common Rules shall not include any provisions regarding (i) notice, reporting or any other filings made
directly to or from MIAX [or], MIAX PEARL or MIAX Emerald, (ii) incorporation by reference of MIAX [or], MIAX
PEARL or MIAX Emerald Rules that are not Common Rules, (iii) exercise of discretion in a manner that differs
from FINRA's exercise of discretion including, but not limited to exercise of exemptive authority by MIAX
[or], MIAX PEARL or MIAX Emerald, (iv) prior written approval of MIAX [or], MIAX PEARL or MIAX Emerald and (v)
payment of fees or fines to MIAX [or], MIAX PEARL or MIAX Emerald.
In addition, the following provisions shall be part of this 17d-2
Agreement:
SEA Rule 200 of Regulation SHO--Definition of ``Short Sale'' and
Marking Requirements and
SEA Rule 201 of Regulation SHO--Circuit Breaker
SEA Rule 203 of Regulation SHO--Borrowing and Delivery Requirements
SEA Rule 204 of Regulation SHO--Close-Out Requirement
SEA Rule 14e-4--Prohibited Transactions in Connection with Partial
Tender Offers [supcaret]
[supcaret] FINRA shall perform surveillance, investigation, and
Enforcement Responsibilities for SEA Rule 14e-4(a)(1)(ii)(D).
III. Date of Effectiveness of the Proposed Plan and Timing for
Commission Action
Pursuant to Section 17(d)(1) of the Act \13\ and Rule 17d-2
thereunder,\14\ after February 19, 2019, the Commission may, by written
notice, declare the plan submitted by MIAX, MIAX PEARL, MIAX EMERALD,
and FINRA, File No. 4-678, to be effective if the Commission finds that
the plan is necessary or appropriate in the public interest and for the
protection of investors, to foster cooperation and coordination among
self-regulatory organizations, or to remove impediments to and foster
the development of the national market system and a national system for
the clearance and settlement of securities transactions and in
conformity with the factors set forth in Section 17(d) of the Act.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78q(d)(1).
\14\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
IV. Solicitation of Comments
In order to assist the Commission in determining whether to approve
the proposed 17d-2 Plan and to relieve MIAX, MIAX PEARL, and MIAX
EMERALD of the responsibilities which would be assigned to FINRA,
interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/other.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number 4-678 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, Station Place, 100 F Street NE, Washington, DC
20549-1090.
All submissions should refer to File Number 4-678. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (https://www.sec.gov/rules/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE,
[[Page 1257]]
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the plan also will be available for
inspection and copying at the principal offices of MIAX, MIAX PEARL,
MIAX EMERALD, and FINRA. All comments received will be posted without
change. Persons submitting comments are cautioned that we do not redact
or edit personal identifying information from comment submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number 4-678 and should
be submitted on or before February 19, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------
\15\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-00725 Filed 1-31-19; 8:45 am]
BILLING CODE 8011-01-P
