Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Order Approving and Declaring Effective a Proposed Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and MEMX LLC, 37701-37703 [2020-13433]
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Federal Register / Vol. 85, No. 121 / Tuesday, June 23, 2020 / Notices
receive the primary listing market’s
official opening and closing price from
the securities information processors
and include that information as part of
their market data products to be
disseminated to customers pursuant to
the same terms and policies as the
Exchange.13 Therefore, the Exchange
believes the inclusion of the primary
listing market’s official opening and
closing price in the Cboe One Feed
would not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 14 and Rule 19b–
4(f)(6) thereunder.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
13 See CTA Consolidated Volume Display Policy
with FAQ, supra note 7.
14 15 U.S.C. 78s(b)(3)(A).
15 17 CFR 240.19b–4(f)(6). In addition, Rule 19b4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
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change is consistent with the Act.
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 SRCboeEDGA–2020–017 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 SR-CboeEDGA–2020–017. 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 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,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
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 SR–CboeEDGA–2020–017, and
should be submitted on or before July
14, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–13435 Filed 6–22–20; 8:45 am]
BILLING CODE 8011–01–P
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37701
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89084; File No. 4–762]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Order Approving and Declaring
Effective a Proposed Plan for the
Allocation of Regulatory
Responsibilities Between the Financial
Industry Regulatory Authority, Inc. and
MEMX LLC
June 17, 2020.
On April 16, 2020, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) and MEMX LLC (‘‘MEMX’’)
(together with FINRA, the ‘‘Parties’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’)
a plan for the allocation of regulatory
responsibilities, dated July 11, 2019
(‘‘17d–2 Plan’’ or the ‘‘Plan’’). The Plan
was published for comment on May 27,
2020.1 The Commission received no
comments on the Plan. This order
approves and declares effective the
Plan.
I. Introduction
Section 19(g)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’),2 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or national securities
association to examine for, and enforce
compliance by, its members and persons
associated with its members with the
Act, the rules and regulations
thereunder, and the SRO’s own rules,
unless the SRO is relieved of this
responsibility pursuant to Section 17(d)
or Section 19(g)(2) of the Act.3 Without
this relief, the statutory obligation of
each individual SRO could result in a
pattern of multiple examinations of
broker-dealers that maintain
memberships in more than one SRO
(‘‘common members’’). Such regulatory
duplication would add unnecessary
expenses for common members and
their SROs.
Section 17(d)(1) of the Act 4 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.5 With respect to
a common member, Section 17(d)(1)
authorizes the Commission, by rule or
1 See Securities Exchange Act Release No. 88918
(May 20, 2020), 85 FR 31838.
2 15 U.S.C. 78s(g)(1).
3 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2),
respectively.
4 15 U.S.C. 78q(d)(1).
5 See Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
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order, to relieve an SRO of the
responsibility to receive regulatory
reports, to examine for and enforce
compliance with applicable statutes,
rules, and regulations, or to perform
other specified regulatory functions.
To implement Section 17(d)(1), the
Commission adopted two rules: Rule
17d–1 and Rule 17d–2 under the Act.6
Rule 17d–1 authorizes the Commission
to name a single SRO as the designated
examining authority (‘‘DEA’’) to
examine common members for
compliance with the financial
responsibility requirements imposed by
the Act, or by Commission or SRO
rules.7 When an SRO has been named as
a common member’s DEA, all other
SROs to which the common member
belongs are relieved of the responsibility
to examine the firm for compliance with
the applicable financial responsibility
rules. On its face, Rule 17d–1 deals only
with an SRO’s obligations to enforce
member compliance with financial
responsibility requirements. Rule 17d–1
does not relieve an SRO from its
obligation to examine a common
member for compliance with its own
rules and provisions of the federal
securities laws governing matters other
than financial responsibility, including
sales practices and trading activities and
practices.
To address regulatory duplication in
these and other areas, the Commission
adopted Rule 17d–2 under the Act.8
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities with respect
to their common members. Under
paragraph (c) of Rule 17d–2, the
Commission may declare such a plan
effective if, after providing for
appropriate notice and comment, it
determines that the plan is necessary or
appropriate in the public interest and
for the protection of investors; to foster
cooperation and coordination among the
SROs; to remove impediments to, and
foster the development of, a national
market system and a national clearance
and settlement system; and is in
conformity with the factors set forth in
Section 17(d) of the Act. Commission
approval of a plan filed pursuant to Rule
17d–2 relieves an SRO of those
regulatory responsibilities allocated by
the plan to another SRO.
6 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
7 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
8 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
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II. Proposed Plan
The proposed 17d–2 Plan is intended
to reduce regulatory duplication for
firms that are common members of both
MEMX and FINRA.9 Pursuant to the
proposed 17d–2 Plan, FINRA would
assume certain examination and
enforcement responsibilities for
common members with respect to
certain applicable laws, rules, and
regulations.
The text of the Plan delineates the
proposed regulatory responsibilities
with respect to the Parties. Included in
the proposed Plan is an exhibit (the
‘‘MEMX Certification of Common
Rules,’’ referred to herein as the
‘‘Certification’’) that lists every MEMX
rule, and select federal securities laws,
rules, and regulations, for which FINRA
would bear responsibility under the
Plan for overseeing and enforcing with
respect to MEMX members that are also
members of FINRA and the associated
persons therewith (‘‘Dual Members’’).
Specifically, under the 17d–2 Plan,
FINRA would assume examination and
enforcement responsibility relating to
compliance by Dual Members with the
rules of MEMX that are substantially
similar to the applicable rules of
FINRA,10 as well as any provisions of
the federal securities laws and the rules
and regulations thereunder delineated
in the Certification (‘‘Common Rules’’).
In the event that a Dual Member is the
subject of an investigation relating to a
transaction on MEMX, the plan
acknowledges that MEMX may, in its
discretion, exercise concurrent
jurisdiction and responsibility for such
matter.11
Under the Plan, MEMX would retain
full responsibility for surveillance,
examination, investigation and
enforcement with respect to trading
activities or practices involving MEMX’s
own marketplace, including, without
limitation, registration pursuant to its
applicable rules of associated persons
(i.e., registration rules that are not
Common Rules); its duties as a DEA
pursuant to Rule 17d–1 under the Act;
9 The proposed 17d–2 Plan refers to these
common members as ‘‘Dual Members.’’ See
Paragraph 1(c) of the proposed 17d–2 Plan.
10 See paragraph 1(b) of the proposed 17d–2 Plan
(defining Common Rules). See also paragraph 1(f)
of the proposed 17d–2 Plan (defining Regulatory
Responsibilities). Paragraph 2 of the Plan provides
that annually, or more frequently as required by
changes in either MEMX rules or FINRA rules, the
parties shall review and update, if necessary, the
list of Common Rules. Further, paragraph 3 of the
Plan provides that MEMX shall furnish FINRA with
a list of Dual Members, and shall update the list no
less frequently than once each calendar quarter.
11 See paragraph 6 of the proposed 17d–2 Plan.
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and any MEMX rules that are not
Common Rules.12
III. Discussion
The Commission finds that the
proposed Plan is consistent with the
factors set forth in Section 17(d) of the
Act 13 and Rule 17d–2(c) thereunder 14
in that the proposed Plan is necessary
or appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the proposed
Plan should reduce unnecessary
regulatory duplication by allocating to
FINRA certain examination and
enforcement responsibilities for
common members that would otherwise
be performed by MEMX and FINRA.
Accordingly, the proposed Plan
promotes efficiency by reducing costs to
common members. Furthermore,
because MEMX and FINRA will
coordinate their regulatory functions in
accordance with the Plan, the Plan
should promote investor protection.
The Commission notes that, under the
Plan, MEMX and FINRA have allocated
regulatory responsibility for those
MEMX rules, set forth in the
Certification, that are substantially
similar to the applicable FINRA rules in
that examination for compliance with
such provisions and rules would not
require FINRA to develop one or more
new examination standards, modules,
procedures, or criteria in order to
analyze the application of the rule, or a
common member’s activity, conduct, or
output in relation to such rule. In
addition, under the Plan, FINRA would
assume regulatory responsibility for
certain provisions of the federal
securities laws and the rules and
regulations thereunder that are set forth
in the Certification. The Common Rules
covered by the Plan are specifically
listed in the Certification, as may be
amended by the Parties from time to
time.
According to the Plan, MEMX will
review the Certification, at least
annually, or more frequently if required
by changes in either the rules of MEMX
or FINRA, and, if necessary, submit to
FINRA an updated list of Common
Rules to add MEMX rules not included
on the then-current list of Common
Rules that are substantially similar to
FINRA rules; delete MEMX rules
included in the then-current list of
Common Rules that are no longer
12 See
paragraph 2 of the proposed 17d–2 Plan.
U.S.C. 78q(d).
14 17 CFR 240.17d–2(c).
13 15
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Federal Register / Vol. 85, No. 121 / Tuesday, June 23, 2020 / Notices
substantially similar to FINRA rules;
and confirm that the remaining rules on
the list of Common Rules continue to be
MEMX rules that are substantially
similar to FINRA rules.15 FINRA will
then confirm in writing whether the
rules listed in any updated list are
Common Rules as defined in the Plan.
Under the Plan, MEMX will also
provide FINRA with a current list of
common members and shall update the
list no less frequently than once each
quarter.16 The Commission believes that
these provisions are designed to provide
for continuing communication between
the Parties to ensure the continued
accuracy of the scope of the proposed
allocation of regulatory responsibility.
The Commission is hereby declaring
effective a Plan that, among other
things, allocates regulatory
responsibility to FINRA for the
oversight and enforcement of all MEMX
rules that are substantially similar to the
rules of FINRA for common members of
MEMX and FINRA. Therefore,
modifications to the Certification need
not be filed with the Commission as an
amendment to the Plan, provided that
the Parties are only adding to, deleting
from, or confirming changes to MEMX
rules in the Certification in conformance
with the definition of Common Rules
provided in the Plan. However, should
the Parties decide to add an MEMX rule
to the Certification that is not
substantially similar to a FINRA rule;
delete an MEMX rule from the
Certification that is substantially similar
to a FINRA rule; or leave on the
Certification an MEMX rule that is no
longer substantially similar to a FINRA
rule, then such a change would
constitute an amendment to the Plan,
which must be filed with the
Commission pursuant to Rule 17d–2
under the Act.17
IV. Conclusion
This Order gives effect to the Plan
filed with the Commission in File No.
4–762. The Parties shall notify all
members affected by the Plan of their
rights and obligations under the Plan.
It is therefore ordered, pursuant to
Section 17(d) of the Act, that the Plan
in File No. 4–762, between FINRA and
MEMX, filed pursuant to Rule 17d–2
under the Act, is approved and declared
effective.
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15 See
paragraph 2 of the Plan.
paragraph 3 of the Plan.
17 The Commission also notes that the addition to
or deletion from the Certification of any federal
securities laws, rules, and regulations for which
FINRA would bear responsibility under the Plan for
examining, and enforcing compliance by, common
members, also would constitute an amendment to
the Plan.
16 See
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It is further ordered that MEMX is
relieved of those responsibilities
allocated to FINRA under the Plan in
File No. 4–762.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–13433 Filed 6–22–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33896; 812–15098]
Hamilton Lane Private Assets Fund
and Hamilton Lane Advisors, L.L.C.
June 17, 2020.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c) and 18(i) of the
Act, and for an order pursuant to section
17(d) of the Act and rule 17d–1 under
the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
registered closed-end management
investment companies to issue multiple
classes of shares of beneficial interest
with varying sales loads and to impose
asset-based distribution and/or service
fees.
APPLICANTS: Hamilton Lane Private
Assets Fund (the ‘‘Initial Fund’’) and
Hamilton Lane Advisors, L.L.C. (the
‘‘Adviser’’).
FILING DATES: The application was filed
on February 24, 2020, and amended on
April 24, 2020.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov and serving Applicants
with a copy of the request email.
Hearing requests should be received by
the Commission by 5:30 p.m. on July 13,
2020, and should be accompanied by
proof of service on the Applicants, in
the form of an affidavit, or, for lawyers,
a certificate of service. Pursuant to rule
0–5 under the Act, hearing requests
should state the nature of the writer’s
interest, any facts bearing upon the
desirability of a hearing on the matter,
18 17
PO 00000
CFR 200.30–3(a)(34).
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37703
the reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by emailing the
Commission’s Secretary.
The Commission:
Secretarys-Office@sec.gov. Applicants:
Attn: General Counsel, hllegal@
hamiltonlane.com.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or Kaitlin C. Bottock,
Branch Chief, at (202) 551–6825
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. The Initial Fund is a Delaware
statutory trust that is registered under
the Act as a non-diversified, closed-end
management investment company. The
Initial Fund’s primary investment
objective will be to generate capital
appreciation over the medium- and
long-term through investments in
private assets globally.
2. The Adviser, a Pennsylvania
limited liability company, is registered
as an investment adviser under the
Investment Advisers Act of 1940, as
amended (the ‘‘Advisers Act’’). The
Adviser will serve as investment adviser
to the Initial Fund.
3. Applicants seek an order to permit
the Initial Fund to issue multiple classes
of shares of beneficial interest with
varying sales loads and to impose assetbased distribution and/or service fees
and early repurchase fees.
4. Applicants request that the order
also apply to any continuously offered
registered closed-end management
investment company that has been
previously organized or that may be
organized in the future for which the
Adviser, or any entity controlling,
controlled by, or under common control
with the Adviser, or any successor in
interest to any such entity,1 acts as
investment adviser and which provides
periodic liquidity with respect to its
shares pursuant to rule 13e–4 under the
Securities Exchange Act of 1934 (each,
1 A successor in interest is limited to an entity
that results from a reorganization into another
jurisdiction or a change in the type of business
organization.
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]]>Agencies
[Federal Register Volume 85, Number 121 (Tuesday, June 23, 2020)]
[Notices]
[Pages 37701-37703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13433]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89084; File No. 4-762]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Order Approving and Declaring Effective a Proposed Plan for
the Allocation of Regulatory Responsibilities Between the Financial
Industry Regulatory Authority, Inc. and MEMX LLC
June 17, 2020.
On April 16, 2020, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') and MEMX LLC (``MEMX'') (together with FINRA, the
``Parties'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') a plan for the allocation of regulatory
responsibilities, dated July 11, 2019 (``17d-2 Plan'' or the ``Plan'').
The Plan was published for comment on May 27, 2020.\1\ The Commission
received no comments on the Plan. This order approves and declares
effective the Plan.
---------------------------------------------------------------------------
\1\ See Securities Exchange Act Release No. 88918 (May 20,
2020), 85 FR 31838.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Securities Exchange Act of 1934
(``Act''),\2\ among other things, requires every self-regulatory
organization (``SRO'') registered as either a national securities
exchange or national securities association to examine for, and enforce
compliance by, its members and persons associated with its members with
the Act, the rules and regulations thereunder, and the SRO's own rules,
unless the SRO is relieved of this responsibility pursuant to Section
17(d) or Section 19(g)(2) of the Act.\3\ Without this relief, the
statutory obligation of each individual SRO could result in a pattern
of multiple examinations of broker-dealers that maintain memberships in
more than one SRO (``common members''). Such regulatory duplication
would add unnecessary expenses for common members and their SROs.
---------------------------------------------------------------------------
\2\ 15 U.S.C. 78s(g)(1).
\3\ 15 U.S.C. 78q(d) and 15 U.S.C. 78s(g)(2), respectively.
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \4\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\5\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or
[[Page 37702]]
order, to relieve an SRO of the responsibility to receive regulatory
reports, to examine for and enforce compliance with applicable
statutes, rules, and regulations, or to perform other specified
regulatory functions.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78q(d)(1).
\5\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------
To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\6\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\7\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
---------------------------------------------------------------------------
\6\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\7\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\8\ Rule 17d-2 permits SROs
to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for appropriate notice and comment, it determines that
the plan is necessary or appropriate in the public interest and for the
protection of investors; to foster cooperation and coordination among
the SROs; to remove impediments to, and foster the development of, a
national market system and a national clearance and settlement system;
and is in conformity with the factors set forth in Section 17(d) of the
Act. Commission approval of a plan filed pursuant to Rule 17d-2
relieves an SRO of those regulatory responsibilities allocated by the
plan to another SRO.
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. Proposed Plan
The proposed 17d-2 Plan is intended to reduce regulatory
duplication for firms that are common members of both MEMX and
FINRA.\9\ Pursuant to the proposed 17d-2 Plan, FINRA would assume
certain examination and enforcement responsibilities for common members
with respect to certain applicable laws, rules, and regulations.
---------------------------------------------------------------------------
\9\ The proposed 17d-2 Plan refers to these common members as
``Dual Members.'' See Paragraph 1(c) of the proposed 17d-2 Plan.
---------------------------------------------------------------------------
The text of the Plan delineates the proposed regulatory
responsibilities with respect to the Parties. Included in the proposed
Plan is an exhibit (the ``MEMX Certification of Common Rules,''
referred to herein as the ``Certification'') that lists every MEMX
rule, and select federal securities laws, rules, and regulations, for
which FINRA would bear responsibility under the Plan for overseeing and
enforcing with respect to MEMX members that are also members of FINRA
and the associated persons therewith (``Dual Members'').
Specifically, under the 17d-2 Plan, FINRA would assume examination
and enforcement responsibility relating to compliance by Dual Members
with the rules of MEMX that are substantially similar to the applicable
rules of FINRA,\10\ as well as any provisions of the federal securities
laws and the rules and regulations thereunder delineated in the
Certification (``Common Rules''). In the event that a Dual Member is
the subject of an investigation relating to a transaction on MEMX, the
plan acknowledges that MEMX may, in its discretion, exercise concurrent
jurisdiction and responsibility for such matter.\11\
---------------------------------------------------------------------------
\10\ See paragraph 1(b) of the proposed 17d-2 Plan (defining
Common Rules). See also paragraph 1(f) of the proposed 17d-2 Plan
(defining Regulatory Responsibilities). Paragraph 2 of the Plan
provides that annually, or more frequently as required by changes in
either MEMX rules or FINRA rules, the parties shall review and
update, if necessary, the list of Common Rules. Further, paragraph 3
of the Plan provides that MEMX shall furnish FINRA with a list of
Dual Members, and shall update the list no less frequently than once
each calendar quarter.
\11\ See paragraph 6 of the proposed 17d-2 Plan.
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Under the Plan, MEMX would retain full responsibility for
surveillance, examination, investigation and enforcement with respect
to trading activities or practices involving MEMX's own marketplace,
including, without limitation, registration pursuant to its applicable
rules of associated persons (i.e., registration rules that are not
Common Rules); its duties as a DEA pursuant to Rule 17d-1 under the
Act; and any MEMX rules that are not Common Rules.\12\
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\12\ See paragraph 2 of the proposed 17d-2 Plan.
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III. Discussion
The Commission finds that the proposed Plan is consistent with the
factors set forth in Section 17(d) of the Act \13\ and Rule 17d-2(c)
thereunder \14\ in that the proposed Plan is necessary or appropriate
in the public interest and for the protection of investors, fosters
cooperation and coordination among SROs, and removes impediments to and
fosters the development of the national market system. In particular,
the Commission believes that the proposed Plan should reduce
unnecessary regulatory duplication by allocating to FINRA certain
examination and enforcement responsibilities for common members that
would otherwise be performed by MEMX and FINRA. Accordingly, the
proposed Plan promotes efficiency by reducing costs to common members.
Furthermore, because MEMX and FINRA will coordinate their regulatory
functions in accordance with the Plan, the Plan should promote investor
protection.
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\13\ 15 U.S.C. 78q(d).
\14\ 17 CFR 240.17d-2(c).
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The Commission notes that, under the Plan, MEMX and FINRA have
allocated regulatory responsibility for those MEMX rules, set forth in
the Certification, that are substantially similar to the applicable
FINRA rules in that examination for compliance with such provisions and
rules would not require FINRA to develop one or more new examination
standards, modules, procedures, or criteria in order to analyze the
application of the rule, or a common member's activity, conduct, or
output in relation to such rule. In addition, under the Plan, FINRA
would assume regulatory responsibility for certain provisions of the
federal securities laws and the rules and regulations thereunder that
are set forth in the Certification. The Common Rules covered by the
Plan are specifically listed in the Certification, as may be amended by
the Parties from time to time.
According to the Plan, MEMX will review the Certification, at least
annually, or more frequently if required by changes in either the rules
of MEMX or FINRA, and, if necessary, submit to FINRA an updated list of
Common Rules to add MEMX rules not included on the then-current list of
Common Rules that are substantially similar to FINRA rules; delete MEMX
rules included in the then-current list of Common Rules that are no
longer
[[Page 37703]]
substantially similar to FINRA rules; and confirm that the remaining
rules on the list of Common Rules continue to be MEMX rules that are
substantially similar to FINRA rules.\15\ FINRA will then confirm in
writing whether the rules listed in any updated list are Common Rules
as defined in the Plan. Under the Plan, MEMX will also provide FINRA
with a current list of common members and shall update the list no less
frequently than once each quarter.\16\ The Commission believes that
these provisions are designed to provide for continuing communication
between the Parties to ensure the continued accuracy of the scope of
the proposed allocation of regulatory responsibility.
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\15\ See paragraph 2 of the Plan.
\16\ See paragraph 3 of the Plan.
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The Commission is hereby declaring effective a Plan that, among
other things, allocates regulatory responsibility to FINRA for the
oversight and enforcement of all MEMX rules that are substantially
similar to the rules of FINRA for common members of MEMX and FINRA.
Therefore, modifications to the Certification need not be filed with
the Commission as an amendment to the Plan, provided that the Parties
are only adding to, deleting from, or confirming changes to MEMX rules
in the Certification in conformance with the definition of Common Rules
provided in the Plan. However, should the Parties decide to add an MEMX
rule to the Certification that is not substantially similar to a FINRA
rule; delete an MEMX rule from the Certification that is substantially
similar to a FINRA rule; or leave on the Certification an MEMX rule
that is no longer substantially similar to a FINRA rule, then such a
change would constitute an amendment to the Plan, which must be filed
with the Commission pursuant to Rule 17d-2 under the Act.\17\
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\17\ The Commission also notes that the addition to or deletion
from the Certification of any federal securities laws, rules, and
regulations for which FINRA would bear responsibility under the Plan
for examining, and enforcing compliance by, common members, also
would constitute an amendment to the Plan.
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IV. Conclusion
This Order gives effect to the Plan filed with the Commission in
File No. 4-762. The Parties shall notify all members affected by the
Plan of their rights and obligations under the Plan.
It is therefore ordered, pursuant to Section 17(d) of the Act, that
the Plan in File No. 4-762, between FINRA and MEMX, filed pursuant to
Rule 17d-2 under the Act, is approved and declared effective.
It is further ordered that MEMX is relieved of those
responsibilities allocated to FINRA under the Plan in File No. 4-762.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(34).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13433 Filed 6-22-20; 8:45 am]
BILLING CODE 8011-01-P
