Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and Nasdaq MRX, LLC, 84040-84045 [2020-28308]
Download as PDF
<![CDATA[
84040
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90703; File No. 4–697]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Notice of Filing and Order
Approving and Declaring Effective an
Amended Plan for the Allocation of
Regulatory Responsibilities Between
the Financial Industry Regulatory
Authority, Inc. and Nasdaq MRX, LLC
December 17, 2020.
Notice is hereby given that the
Securities and Exchange Commission
(‘‘Commission’’) has issued an Order,
pursuant to Section 17(d) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 approving and declaring
effective an amendment to the plan for
allocating regulatory responsibility
(‘‘Plan’’) filed on November 19, 2020,
pursuant to Rule 17d–2 of the Act,2 by
the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and Nasdaq
MRX, LLC (‘‘MRX’’) (collectively,
‘‘Participating Organizations’’ or
‘‘parties’’). This agreement amends and
restates the agreement entered into
between FINRA and ISE Mercury, LLC
(n/k/a MRX) on February 8, 2016,
entitled ‘‘Agreement Between Financial
Industry Regulatory Authority, Inc. and
ISE Mercury, LLC Pursuant to Rule 17d–
2 under the Securities Exchange Act of
1934,’’ and any subsequent amendments
thereafter.
jbell on DSKJLSW7X2PROD with NOTICES
I. Introduction
Section 19(g)(1) of the Act,3 among
other things, requires every selfregulatory organization (‘‘SRO’’)
registered as either a national securities
exchange or national securities
association to examine for, and enforce
compliance by, its members and persons
associated with its members with the
Act, the rules and regulations
thereunder, and the SRO’s own rules,
unless the SRO is relieved of this
responsibility pursuant to Section
17(d) 4 or Section 19(g)(2) 5 of the Act.
Without this relief, the statutory
obligation of each individual SRO could
result in a pattern of multiple
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.
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).
5 15 U.S.C. 78s(g)(2).
2 17
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
Section 17(d)(1) of the Act 6 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.7 With respect to
a common member, Section 17(d)(1)
authorizes the Commission, by rule or
order, to relieve an SRO of the
responsibility to receive regulatory
reports, to examine for and enforce
compliance with applicable statutes,
rules, and regulations, or to perform
other specified regulatory functions.
To implement Section 17(d)(1), the
Commission adopted two rules: Rule
17d–1 and Rule 17d–2 under the Act.8
Rule 17d–1 authorizes the Commission
to name a single SRO as the designated
examining authority (‘‘DEA’’) to
examine common members for
compliance with the financial
responsibility requirements imposed by
the Act, or by Commission or SRO
rules.9 When an SRO has been named as
a common member’s DEA, all other
SROs to which the common member
belongs are relieved of the responsibility
to examine the firm for compliance with
the applicable financial responsibility
rules. On its face, Rule 17d–1 deals only
with an SRO’s obligations to enforce
member compliance with financial
responsibility requirements. Rule 17d–1
does not relieve an SRO from its
obligation to examine a common
member for compliance with its own
rules and provisions of the federal
securities laws governing matters other
than financial responsibility, including
sales practices and trading activities and
practices.
To address regulatory duplication in
these and other areas, the Commission
adopted Rule 17d–2 under the Act.10
Rule 17d–2 permits SROs to propose
joint plans for the allocation of
regulatory responsibilities with respect
to their common members. Under
paragraph (c) of Rule 17d–2, the
Commission may declare such a plan
effective if, after providing for
appropriate notice and opportunity for
comment, it determines that the plan is
necessary or appropriate in the public
interest and for the protection of
investors, to foster cooperation and
coordination among the SROs, to
remove impediments to, and foster the
development of, a national market
6 15
U.S.C. 78q(d)(1).
Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
9 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
10 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
7 See
PO 00000
Frm 00158
Fmt 4703
Sfmt 4703
system and a national clearance and
settlement system, and is in conformity
with the factors set forth in Section
17(d) of the Act. Commission approval
of a plan filed pursuant to Rule 17d–2
relieves an SRO of those regulatory
responsibilities allocated by the plan to
another SRO.
II. The Plan
On March 8, 2016, the Commission
declared effective the Plan entered into
between FINRA and MRX for allocating
regulatory responsibility pursuant to
Rule 17d–2.11 The Plan is intended to
reduce regulatory duplication for firms
that are common members of FINRA
and MRX by allocating regulatory
responsibility with respect to certain
applicable laws, rules, and regulations
that are common among them. Included
in the Plan is an exhibit that lists every
MRX rule for which FINRA bears
responsibility under the Plan for
overseeing and enforcing with respect to
MRX members that are also members of
FINRA and the associated persons
therewith (‘‘Certification’’).
III. Proposed Amendment to the Plan
On November 19, 2020, the parties
submitted a proposed amendment to the
Plan (‘‘Amended Plan’’). The primary
purpose of the Amended Plan is to
allocate surveillance, investigation, and
enforcement responsibilities for Rule
14e–4 under the Act and to reflect the
name change of ISE Mercury, LLC to
Nasdaq MRX, LLC. The text of the
proposed Amended Plan is as follows
(additions are italicized; deletions are
[bracketed]):
*
*
*
*
*
AGREEMENT BETWEEN
FINANCIAL INDUSTRY
REGULATORY AUTHORITY, INC.
AND [ISE MERCURY]NASDAQ MRX,
LLC PURSUANT TO RULE 17d–2
UNDER THE SECURITIES EXCHANGE
ACT OF 1934
This Agreement, by and between
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and [ISE
Mercury]Nasdaq MRX, LLC (‘‘[ISE
Mercury]MRX’’), is made this [8th]16th
day of [February]November, 20[16]20
(the ‘‘Agreement’’), pursuant to Section
17(d) of the Securities Exchange Act of
1934 (the ‘‘Exchange Act’’) and Rule
17d–2 thereunder which permits
agreements between self-regulatory
organizations to allocate regulatory
responsibility to eliminate regulatory
duplication. FINRA and [ISE
Mercury]MRX may be referred to
11 See Securities Exchange Act Release No. 77321
(March 8, 2016), 81 FR 13434 (March 14, 2016).
E:\FR\FM\23DEN1.SGM
23DEN1
jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
individually as a ‘‘party’’ and together
as the ‘‘parties.’’
This Agreement amends and restates
this agreement entered into between
FINRA and MRX on February 8, 2016,
entitled ‘‘Agreement between Financial
Industry Regulatory Authority, Inc. and
ISE Mercury, LLC Pursuant to Rule 17d–
2 under the Securities Exchange Act of
1934,’’ and any subsequent
amendments thereafter.
Whereas, FINRA and [ISE
Mercury]MRX desire to reduce
duplication in the examination of their
Dual Members (as defined herein) and
in the filing and processing of certain
registration and membership records;
and
Whereas, FINRA and [ISE
Mercury]MRX desire to execute an
agreement covering such subjects
pursuant to the provisions of Rule 17d–
2 under the Exchange Act and to file
such agreement with the Securities and
Exchange Commission (the ‘‘SEC’’ or
‘‘Commission’’) for its approval.
Now, therefore, in consideration of
the mutual covenants contained
hereinafter, FINRA and [ISE
Mercury]MRX 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) ‘‘[ISE Mercury]MRX Rules’’ or
‘‘FINRA Rules’’ shall mean the rules of
[ISE Mercury]MRX or FINRA,
respectively, as the rules of an exchange
or association are defined in Exchange
Act Section 3(a)(27).
(b) ‘‘Common Rules’’ shall mean the
[ISE Mercury]MRX Rules that are
substantially similar to the applicable
FINRA Rules set forth in Exhibit 1 in
that examination for compliance with
such rules would not require FINRA to
develop one or more new examination
standards, modules, procedures, or
criteria in order to analyze the
application of the rule, or a Dual
Member’s activity, conduct, or output in
relation to such rule. Common Rules
shall not include any provisions
regarding (i) notice, reporting or any
other filings made directly to or from
MRX, (ii) incorporation by reference of
MRX 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 MRX,
(iv) prior written approval of MRX and
(v) payment of fees or fines to MRX.
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
(c) ‘‘Dual Members’’ shall mean those
[ISE Mercury]MRX members that are
also members of FINRA and the
associated persons therewith.
(d) ‘‘Effective Date’’ shall have the
meaning set forth in paragraph 13.
(e) ‘‘Enforcement Responsibilities’’
shall mean the conduct of appropriate
proceedings, in accordance with the
FINRA 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 the FINRA’s Code of
Procedure and sanctions guidelines.
(f) ‘‘Regulatory Responsibilities’’ shall
mean the examination responsibilities
and Enforcement Responsibilities
relating to compliance by the Dual
Members with the Common Rules and
the provisions of the Exchange Act and
the rules and regulations thereunder,
and other applicable laws, rules and
regulations, each as set forth on Exhibit
1 attached hereto. The term ‘‘Regulatory
Responsibilities’’ shall also include the
surveillance, investigation and
Enforcement Responsibilities relating to
compliance by Common Members with
Rule 14e–4 of the Securities Exchange
Act (‘‘Rule 14e–4’’), with a focus on the
standardized call option provision of
Rule 14e–4(a)(1)(ii)(D).
2. Regulatory and Enforcement
Responsibilities. FINRA shall assume
Regulatory Responsibilities and
Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this
Agreement and made part hereof, [ISE
Mercury]MRX furnished FINRA with a
current list of Common Rules and
certified to FINRA that such rules are
substantially similar to the
corresponding FINRA Rule (the
‘‘Certification’’). FINRA hereby agrees
that the rules listed in the Certification
are Common Rules as defined in this
Agreement. Each year following the
Effective Date of this Agreement, or
more frequently if required by changes
in either the [ISE Mercury]MRX Rules or
FINRA Rules, [ISE Mercury]MRX shall
submit an updated list of Common
Rules to FINRA for review which shall
add [ISE Mercury]MRX Rules not
included in the current list of Common
Rules that qualify as Common Rules as
defined in this Agreement; delete [ISE
Mercury]MRX 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
[ISE Mercury]MRX Rules that qualify as
Common Rules as defined in this
PO 00000
Frm 00159
Fmt 4703
Sfmt 4703
84041
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 [ISE
Mercury]MRX shall retain full
responsibility for (unless otherwise
addressed by separate agreement or
rule) the following (collectively, the
‘‘Retained Responsibilities’’):
(a) surveillance and enforcement with
respect to trading activities or practices
involving [ISE Mercury’s]MRX’s own
marketplaces, including without
limitation [ISE Mercury’s]MRX’s Rules
relating to the rights and obligations of
market makers;
(b) registration pursuant to its
applicable rules of associated persons
(i.e., registration rules that are not
Common Rules);
(c) discharge of its duties and
obligations as a Designated Examining
Authority pursuant to Rule 17d–1 under
the Exchange Act; and
(d) any [ISE Mercury]MRX Rules that
are not Common Rules.
3. Dual Members. Prior to the
Effective Date, [ISE Mercury]MRX shall
furnish FINRA with a current list of
Dual Members, which shall be updated
no less frequently than once each
quarter.
4. No Charge. There shall be no
charge to [ISE Mercury]MRX by FINRA
for performing the Regulatory
Responsibilities and Enforcement
Responsibilities under this Agreement
except as hereinafter provided. FINRA
shall provide [ISE Mercury]MRX with
ninety (90) days advance written notice
in the event FINRA decides to impose
any charges to [ISE Mercury]MRX for
performing the Regulatory
Responsibilities under this Agreement.
If FINRA determines to impose a charge,
[ISE Mercury]MRX 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. Reassignment of Regulatory
Responsibilities. Notwithstanding any
provision hereof, this Agreement shall
be subject to any statute, or any rule or
order of the Commission. To the extent
such action is inconsistent with this
Agreement, such action shall supersede
the provisions hereof to the extent
necessary for them to be properly
effectuated and the provisions hereof in
that respect shall be null and void.
E:\FR\FM\23DEN1.SGM
23DEN1
jbell on DSKJLSW7X2PROD with NOTICES
84042
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
6. Notification of Violations. In the
event that FINRA becomes aware of
apparent violations of any [ISE
Mercury]MRX Rules, which are not
listed as Common Rules, discovered
pursuant to the performance of the
Regulatory Responsibilities assumed
hereunder, FINRA shall notify [ISE
Mercury]MRX of those apparent
violations for such response as [ISE
Mercury]MRX deems appropriate. In the
event [ISE Mercury]MRX becomes aware
of apparent violations of the Common
Rules, discovered pursuant to the
performance of the Retained
Responsibilities, [ISE Mercury]MRX
shall notify FINRA of those apparent
violations and such matters shall be
handled by FINRA as provided in this
Agreement. Apparent violations of all
the Common Rules shall be processed
by, and enforcement proceedings in
respect thereto shall be conducted by
FINRA as provided hereinbefore;
provided, however, that in the event a
Dual Member is the subject of an
investigation relating to a transaction on
[ISE Mercury]MRX, [ISE Mercury]MRX
may in its discretion assume concurrent
jurisdiction and responsibility. Each
party agrees to make available promptly
all files, records and witnesses
necessary to assist the other in its
investigation or proceedings.
7. Continued Assistance. FINRA shall
make available to [ISE Mercury]MRX all
information obtained by FINRA in the
performance by it of the Regulatory
Responsibilities hereunder in respect to
the Dual Members subject to this
Agreement. In particular, and not in
limitation of the foregoing, FINRA shall
furnish [ISE Mercury]MRX any
information it obtains about Dual
Members which reflects adversely on
their financial condition. It is
understood that such information is of
an extremely sensitive nature and,
accordingly, [ISE Mercury]MRX
acknowledges and agrees to take all
reasonable steps to maintain its
confidentiality. [ISE Mercury]MRX shall
make available to FINRA any
information coming to its attention that
reflects adversely on the financial
condition of Dual Members or indicates
possible violations of applicable laws,
rules or regulations by such firms.
8. Dual Member Applications.
(a) Dual Members subject to this
Agreement shall be required to submit,
and FINRA shall be responsible for
processing and acting upon all
applications submitted on behalf of
allied persons, partners, officers,
registered personnel and any other
person required to be approved by the
[ISE Mercury]MRX Rules and FINRA
Rules or associated with Dual Members
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
thereof. Upon request, FINRA shall
advise [ISE Mercury]MRX of any
changes of allied members, partners,
officers, registered personnel and other
persons required to be approved by the
[ISE Mercury]MRX Rules and FINRA
Rules.
(b) Dual Members shall be required to
send to FINRA all letters, termination
notices or other material respecting the
individuals listed in paragraph 8(a).
(c) When as a result of processing
such submissions FINRA becomes
aware of a statutory disqualification as
defined in the Exchange Act with
respect to a Dual Member, FINRA shall
determine pursuant to Sections 15A(g)
and/or Section 6(c) of the Exchange Act
the acceptability or continued
applicability of the person to whom
such disqualification applies and keep
[ISE Mercury]MRX advised of its actions
in this regard for such subsequent
proceedings as [ISE Mercury]MRX may
initiate.
(d) Notwithstanding the foregoing,
FINRA shall not review the membership
application, reports, filings, fingerprint
cards, notices, or other writings filed to
determine if such documentation
submitted by a broker or dealer, or a
person associated therewith or other
persons required to register or qualify by
examination: (i) meets the [ISE
Mercury]MRX requirements for general
membership or for specified categories
of membership or participation in [ISE
Mercury]MRX, such as (A) Primary
Market Maker Membership (‘‘PMM’’);
(B) Competitive Market Maker
Membership (‘‘CMM’’); (C) Electronic
Access Membership (‘‘EAM’’) (or any
similar type of [ISE Mercury]MRX
membership or participation that is
created after this Agreement is
executed); or (ii) meets the [ISE
Mercury]MRX requirements to be
associated with, or employed by, a [ISE
Mercury]MRX member or participant in
any capacity, such a Designated Trading
Representative (‘‘DTR’’) (or any similar
type of participation, employment
category or title, or associate-person
category or class that is created after this
Agreement is executed). FINRA shall
not review applications or other
documentation filed to request a change
in the rights or status described in this
paragraph 8(d), including termination or
limitation on activities, of a member or
a participant of [ISE Mercury]MRX, or a
person associated with, or requesting
association with, a member or
participant of [ISE Mercury]MRX.
9. Branch Office Information. FINRA
shall also be responsible for processing
and, if required, acting upon all requests
for the opening, address changes, and
terminations of branch offices by Dual
PO 00000
Frm 00160
Fmt 4703
Sfmt 4703
Members and any other applications
required of Dual Members with respect
to the Common Rules as they may be
amended from time to time. Upon
request, FINRA shall advise [ISE
Mercury]MRX of the opening, address
change and termination of branch and
main offices of Dual Members and the
names of such branch office managers.
10. Customer Complaints. [ISE
Mercury]MRX shall forward to FINRA
copies of all customer complaints
involving Dual Members received by
[ISE Mercury]MRX 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.
11. No Restrictions on Regulatory
Action. Nothing contained in this
Agreement shall restrict or in any way
encumber the right of either party to
conduct its own independent or
concurrent investigation, examination
or enforcement proceeding of or against
Dual Members, as either party, in its
sole discretion, shall deem appropriate
or necessary.
12. Termination. This Agreement may
be terminated by [ISE Mercury]MRX or
FINRA at any time upon the approval of
the Commission after one (1) year’s
written notice to the other party (or such
shorter time as may be agreed by the
parties), except as provided in
paragraph 4.
13. Effective Date. This Agreement
shall be effective upon approval of the
Commission.
14. Arbitration. In the event of a
dispute between the parties as to the
operation of this Agreement, [ISE
Mercury]MRX and FINRA hereby agree
that any such dispute shall be settled by
arbitration in Washington, DC in
accordance with the rules of the
American Arbitration Association then
in effect, or such other procedures as the
parties may mutually agree upon.
Judgment on the award rendered by the
arbitrator(s) may be entered in any court
having jurisdiction.
15. Separate Agreement. This
Agreement is wholly separate from (1)
the multiparty Agreement made
pursuant to Rule 17d–2 of the Exchange
Act among [BATS Exchange, Inc., BOX
Options Exchange, LLC, the Chicago
Board Options Exchange, Incorporated,
C2 Options Exchange, Incorporated, the
International Securities Exchange, LLC,
Financial Industry Regulatory
Authority, Inc., Miami International
Securities Exchange, LLC, the New York
Stock Exchange, LLC, the NYSE MKT
LLC, the NYSE Arca Inc., The NASDAQ
Stock Market LLC, NASDAQ OMX BX,
Inc., and the NASDAQ OMX PHLX,
E:\FR\FM\23DEN1.SGM
23DEN1
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
LLC] NYSE American LLC, Cboe BZX
Exchange, Inc., the Cboe EDGX
Exchange, Inc., Cboe C2 Exchange, Inc.,
Cboe Exchange, Inc., Nasdaq ISE, LLC,
Financial Industry Regulatory
Authority, Inc., NYSE Arca, Inc., The
NASDAQ Stock Market LLC, BOX
Exchange LLC, NASDAQ BX, Inc.,
NASDAQ PHLX LLC, Miami
International Securities Exchange, LLC,
Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
MIAX PEARL, LLC, and MIAX Emerald,
LLC approved by the Commission on
[December 5, 2012]February 12, 2019
involving the allocation of regulatory
responsibilities with respect to common
members for compliance with common
rules relating to the conduct by brokerdealers of accounts for listed options or
index warrants or (2) the multiparty
Agreement made pursuant to Rule 17d–
2 of the Exchange Act among [NYSE
MKT LLC, BATS Exchange, Inc., BOX
Options Exchange, LLC, C2 Options
Exchange, Incorporated, Chicago Board
Options Exchange, Incorporated,
International Securities Exchange LLC,
Financial Industry Regulatory
Authority, Inc., NYSE Arca, Inc., The
NASDAQ Stock Market LLC, NASDAQ
OMX BX, Inc., NASDAQ OMX PHLX,
Inc. and Miami International Securities
Exchange, LLC,] NYSE American LLC,
Cboe BZX Exchange, Inc., the Cboe
EDGX Exchange, Inc., Cboe C2
Exchange, Inc., Cboe Exchange, Inc.,
Nasdaq ISE, LLC, Financial Industry
Regulatory Authority, Inc., NYSE Arca,
Inc., The NASDAQ Stock Market LLC,
BOX Exchange LLC, NASDAQ BX, Inc.,
NASDAQ PHLX LLC, Miami
International Securities Exchange, LLC,
Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
MIAX PEARL, LLC, and MIAX Emerald,
LLC approved by the Commission on
[December 5, 2012]February 11, 2019
involving options-related market
surveillance matters and such
agreements as may be amended from
time to time.
16. Notification of Members. [ISE
Mercury]MRX and FINRA shall notify
Dual Members of this Agreement after
the Effective Date by means of a uniform
joint notice.
17. Amendment. This Agreement may
be amended in writing duly approved
by each party. All such amendments
must be filed with and approved by the
Commission before they become
effective.
18. Limitation of Liability. Neither
FINRA nor [ISE Mercury]MRX nor any
of their respective directors, governors,
officers or employees shall be liable to
the other party to this Agreement for
any liability, loss or damage resulting
from or claimed to have resulted from
any delays, inaccuracies, errors or
omissions with respect to the provision
of Regulatory Responsibilities as
provided hereby or for the failure to
provide any such responsibility, except
with respect to such liability, loss or
damages as shall have been suffered by
one or the other of FINRA or [ISE
Mercury]MRX and caused by the willful
misconduct of the other party or their
respective directors, governors, officers
or employees. No warranties, express or
implied, are made by FINRA or [ISE
Mercury]MRX with respect to any of the
responsibilities to be performed by each
of them hereunder.
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. Relief From Responsibility.
Pursuant to Sections 17(d)(1)(A) and
19(g) of the Exchange Act and Rule 17d–
2 thereunder, FINRA and [ISE
Mercury]MRX join in requesting the
Commission, upon its approval of this
Agreement or any part thereof, to relieve
[ISE Mercury]MRX of any and all
84043
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.
21. 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.
FINANCIAL INDUSTRY REGULATORY
AUTHORITY, INC.
By lllllllllllllllll
Name:
Title:
[ISE MERCURY]NASDAQ MRX, LLC
By lllllllllllllllll
Name:
Title:
Note: The entire existing table of rules
should be deleted and replaced with the table
below.
EXHIBIT 1
[ISE MERCURY]MRX CERTIFICATION
OF COMMON RULES
[ISE Mercury]MRX hereby certifies
that the requirements contained in the
rules listed below for [ISE Mercury]MRX
are identical to, or substantially similar
to, the comparable FINRA Rules or SEC
Rules identified.
# Common Rules shall not include
provisions regarding (i) notice, reporting
or any other filings made directly to or
from MRX, (ii) incorporations by
reference to other MRX 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 MRX, (iv) prior
written approval of MRX, and (v)
payment of fees or fines to MRX.
MRX Rule
FINRA or SEC Rule
General 3, Section 3(b)—Persons Associated with Members; General
4—Nasdaq Stock Market General 4, Rule 1.1250 Electronic Filing
Requirements for Uniform Forms incorporated by reference #.
FINRA Rule 1010 Electronic Filing Requirements for Uniform Forms;
FINRA By-Laws Article IV, Sec. 1(c) Application for Membership;
FINRA By-Laws, Article V, Section 1 Qualification Requirements;
FINRA By-Laws, Article V, Sec. 2 Application for Registration; and
FINRA By-Laws Article V, Section 3 Notification by Member to the
Corporation and Associated Person of Termination; Amendments to
Notification.
FINRA Rule 1240 Continuing Education Requirements.
General 4—Nasdaq Stock Market General 4, Section 1.1240 Continuing Education Requirements incorporated by reference #.
Options 9—Nasdaq ISE Options 9, Section 1 Just and Equitable Prin- FINRA Rule 2010 Standards of Commercial Honor and Principles of
ciples of Trade incorporated by reference 1.
Trade; FINRA Rule 0140(a) Applicability.
Options 9—Nasdaq ISE Options 9, Section 9(a)(1)Prevention of the Section 15(g) of the Securities Exchange Act of 1934, and FINRA Rule
Misuse of Material, Nonpublic Information incorporated by reference #.
3110(b)(1), (d) Supervision.
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
PO 00000
Frm 00161
Fmt 4703
Sfmt 4703
E:\FR\FM\23DEN1.SGM
23DEN1
84044
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
MRX Rule
FINRA or SEC Rule
Options 9—Nasdaq ISE Options 9, Section 10 Disciplinary Action by
Other Organizations incorporated by reference #.
FINRA Rule 4530(a)(1)(A) and (2) Reporting Requirements; FINRA ByLaws, Article V, Section 2(c); and FINRA By-Laws, Article V, Section
3.
FINRA Rule 3310 Anti-Money Laundering Compliance Program.
Options 9—Nasdaq ISE Options 9, Section 21 Anti-Money Laundering
Compliance Program incorporated by reference #.
Options 10—Nasdaq ISE Options 10, Section 12 Statements of Financial Condition to Customers incorporated by reference.
Options 10—Nasdaq ISE Options 10, Section 19 Transfer of Accounts
incorporated by reference #.
Options 10—Nasdaq ISE Options 10, Section 23. Telemarketing incorporated by reference.
Options 6E—Nasdaq ISE Options 6E, Section 1 Maintenance, Retention, and Furnishing of Books, Records and Other Information incorporated by reference #.
Rule 17a–5 of the Securities Exchange Act of 1934.
FINRA Rule 11870 Customer Account Transfer Contracts.
FINRA Rule 3230 Telemarketing.
FINRA Rule 4511(a) Books and Records—Requirements.
1 FINRA shall not have Regulatory Responsibilities with respect to the Supplementary Material to Nasdaq ISE Options 9, Section 1. Responsibility for such shall remain with MRX.
In addition, the following provisions
shall be part of this 17d–2 Agreement:
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).
[# FINRA shall not have Regulatory
Responsibilities regarding notification
or reporting to ISE Mercury. In addition,
FINRA shall only have Regulatory
Responsibilities to the extent the
exercise of discretion by ISE Mercury is
the same as FINRA.]
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number
4–697 on the subject line.
jbell on DSKJLSW7X2PROD with NOTICES
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number 4–697. This file number should
be included on the subject line if email
is used. To help the Commission
process and review your comments
more efficiently, please use only one
method. The Commission will post all
comments on the Commission’s internet
website (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
plan that are filed with the Commission,
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
and all written communications relating
to the proposed plan between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
plan also will be available for inspection
and copying at the principal offices of
FINRA and MRX. 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 4–697 and should be submitted
on or before January 13, 2021.
V. Discussion
The Commission finds that the
proposed Amended Plan is consistent
with the factors set forth in Section
17(d) of the Act 12 and Rule 17d–2(c)
thereunder 13 in that the proposed
Amended Plan is necessary or
appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the proposed
Amended Plan should reduce
unnecessary regulatory duplication by
allocating to FINRA certain examination
and enforcement responsibilities for
Common Members that would
otherwise be performed by both FINRA
and MRX. Accordingly, the proposed
12 15
13 17
PO 00000
U.S.C. 78q(d).
CFR 240.17d–2(c).
Frm 00162
Fmt 4703
Amended Plan promotes efficiency by
reducing costs to Common Members.
Furthermore, because MRX and FINRA
will coordinate their regulatory
functions in accordance with the
Amended Plan, the Amended Plan
should promote investor protection.
The Commission notes that, under the
Amended Plan, MRX and FINRA have
allocated regulatory responsibility for
those MRX rules, set forth in the
Certification, that are substantially
similar to the applicable FINRA rules in
that examination for compliance with
such provisions and rules would not
require FINRA to develop one or more
new examination standards, modules,
procedures, or criteria in order to
analyze the application of the rule, or a
Common Member’s activity, conduct, or
output in relation to such rule. In
addition, under the Amended Plan,
FINRA would assume regulatory
responsibility for certain provisions of
the federal securities laws and the rules
and regulations thereunder that are set
forth in the Certification. The Common
Rules covered by the Amended Plan are
specifically listed in the Certification, as
may be amended by the Parties from
time to time.
According to the Amended Plan, MRX
will review the Certification at least
annually, or more frequently if required
by changes in either the rules of MRX
or FINRA, and, if necessary, submit to
FINRA an updated list of Common
Rules to add MRX rules not included on
the then-current list of Common Rules
that are substantially similar to FINRA
rules; delete MRX rules included in the
then-current list of Common Rules that
no longer qualify as common rules; and
confirm that the remaining rules on the
list of Common Rules continue to be
MRX rules that qualify as common
rules.14 FINRA will then confirm in
writing whether the rules listed in any
14 See
Sfmt 4703
E:\FR\FM\23DEN1.SGM
paragraph 2 of the Amended Plan.
23DEN1
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
updated list are Common Rules as
defined in the Amended Plan. Under
the Amended Plan, MRX also will
provide FINRA with a current list of
Common Members and will update the
list no less frequently than once each
quarter.15 The Commission believes that
these provisions are designed to provide
for continuing communication between
the Parties to ensure the continued
accuracy of the scope of the proposed
allocation of regulatory responsibility.
The Commission is hereby declaring
effective an Amended Plan that, among
other things, allocates regulatory
responsibility to FINRA for the
oversight and enforcement of all MRX
rules that are substantially similar to the
rules of FINRA for Common Members of
MRX and FINRA. Therefore,
modifications to the Certification need
not be filed with the Commission as an
amendment to the Amended Plan,
provided that the Parties are only
adding to, deleting from, or confirming
changes to MRX rules in the
Certification in conformance with the
definition of Common Rules provided in
the Amended Plan. However, should the
Parties decide to add a MRX rule to the
Certification that is not substantially
similar to a FINRA rule; delete a MRX
rule from the Certification that is
substantially similar to a FINRA rule; or
leave on the Certification a MRX rule
that is no longer substantially similar to
a FINRA rule, then such a change would
constitute an amendment to the
Amended Plan, which must be filed
with the Commission pursuant to Rule
17d-2 under the Act.16
Under paragraph (c) of Rule 17d–2,
the Commission may, after appropriate
notice and comment, declare a plan, or
any part of a plan, effective. In this
instance, the Commission believes that
appropriate notice and comment can
take place after the proposed
amendment is effective. The primary
purpose of the amendment is to allocate
surveillance, investigation, and
enforcement responsibilities for Rule
14e–4 under the Act, to reflect the name
change of ISE Mercury, LLC to Nasdaq
MRX, LLC. By declaring it effective
today, the Amended Plan can become
effective and be implemented without
undue delay. The Commission notes
that the prior version of this plan
immediately prior to this proposed
amendment was published for comment
15 See
paragraph 3 of the Amended Plan.
addition to or deletion from the
Certification of any federal securities laws, rules,
and regulations for which FINRA would bear
responsibility under the Amended Plan for
examining, and enforcing compliance by, Common
Members, also would constitute an amendment to
the Amended Plan.
and the Commission did not receive any
comments thereon.17 Furthermore, the
Commission does not believe that the
amendment to the plan raises any new
regulatory issues that the Commission
has not previously considered.
VI. Conclusion
This order gives effect to the
Amended Plan filed with the
Commission in File No. 4–697. The
Parties shall notify all members affected
by the Amended Plan of their rights and
obligations under the Amended Plan.
It is therefore ordered, pursuant to
Section 17(d) of the Act, that the
Amended Plan in File No. 4–697,
between the FINRA and MRX, filed
pursuant to Rule 17d–2 under the Act,
hereby is approved and declared
effective.
It is further ordered that MRX is
relieved of those responsibilities
allocated to FINRA under the Amended
Plan in File No. 4–697.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–28308 Filed 12–22–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90710; File No. SR–
NYSEAMER–2020–83]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Rule 6800
Series
December 17, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
4, 2020, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
84045
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Rule 6800 Series, the Exchange’s
compliance rule (‘‘Compliance Rule’’)
regarding the National Market System
Plan Governing the Consolidated Audit
Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’) 3
to be consistent with a conditional
exemption granted by the Commission
from certain allocation reporting
requirements set forth in Sections
6.4(d)(ii)(A)(1) and (2) of the CAT NMS
Plan (‘‘Allocation Exemption’’).4 The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of this proposed rule
change is to amend the Rule 6800 Series
to be consistent with the Allocation
Exemption. The Commission granted
the relief conditioned upon the
Participants’ adoption of Compliance
Rules that implement the alternative
approach to reporting allocations to the
Central Repository described in the
Allocation Exemption (referred to as the
‘‘Allocation Alternative’’).
(1) Request for Exemptive Relief
Pursuant to Section 6.4(d)(ii)(A) of the
CAT NMS Plan, each Participant must,
through its Compliance Rule, require its
Industry Members to record and report
to the Central Repository, if the order is
executed, in whole or in part: (1) An
16 The
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
17 See supra note 11 (citing to Securities
Exchange Act Release No. 77321).
18 17 CFR 200.30–3(a)(34).
1 15 U.S.C. 78a.
2 17 CFR 240.19b–4.
PO 00000
Frm 00163
Fmt 4703
Sfmt 4703
3 Unless otherwise specified, capitalized terms
used in this rule filing are defined as set forth in
the Compliance Rule.
4 See Securities Exchange Act Rel. No. 90223
(October 19, 2020), 85 FR 67576 (October 23, 2020)
(‘‘Allocation Exemptive Order’’).
E:\FR\FM\23DEN1.SGM
23DEN1
]]>Agencies
[Federal Register Volume 85, Number 247 (Wednesday, December 23, 2020)]
[Notices]
[Pages 84040-84045]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28308]
[[Page 84040]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90703; File No. 4-697]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing and Order Approving and Declaring
Effective an Amended Plan for the Allocation of Regulatory
Responsibilities Between the Financial Industry Regulatory Authority,
Inc. and Nasdaq MRX, LLC
December 17, 2020.
Notice is hereby given that the Securities and Exchange Commission
(``Commission'') has issued an Order, pursuant to Section 17(d) of the
Securities Exchange Act of 1934 (``Act''),\1\ approving and declaring
effective an amendment to the plan for allocating regulatory
responsibility (``Plan'') filed on November 19, 2020, pursuant to Rule
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority,
Inc. (``FINRA'') and Nasdaq MRX, LLC (``MRX'') (collectively,
``Participating Organizations'' or ``parties''). This agreement amends
and restates the agreement entered into between FINRA and ISE Mercury,
LLC (n/k/a MRX) on February 8, 2016, entitled ``Agreement Between
Financial Industry Regulatory Authority, Inc. and ISE Mercury, LLC
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and
any subsequent amendments thereafter.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act.
Without this relief, the statutory obligation of each individual SRO
could result in a pattern of multiple examinations of broker-dealers
that maintain memberships in more than one SRO (``common members'').
Such regulatory duplication would add unnecessary expenses for common
members and their SROs.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d).
\5\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\7\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q(d)(1).
\7\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------
To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\9\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
---------------------------------------------------------------------------
\8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\9\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits
SROs to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for appropriate notice and opportunity for comment, it
determines that the plan is necessary or appropriate in the public
interest and for the protection of investors, to foster cooperation and
coordination among the SROs, to remove impediments to, and foster the
development of, a national market system and a national clearance and
settlement system, and is in conformity with the factors set forth in
Section 17(d) of the Act. Commission approval of a plan filed pursuant
to Rule 17d-2 relieves an SRO of those regulatory responsibilities
allocated by the plan to another SRO.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. The Plan
On March 8, 2016, the Commission declared effective the Plan
entered into between FINRA and MRX for allocating regulatory
responsibility pursuant to Rule 17d-2.\11\ The Plan is intended to
reduce regulatory duplication for firms that are common members of
FINRA and MRX by allocating regulatory responsibility with respect to
certain applicable laws, rules, and regulations that are common among
them. Included in the Plan is an exhibit that lists every MRX rule for
which FINRA bears responsibility under the Plan for overseeing and
enforcing with respect to MRX members that are also members of FINRA
and the associated persons therewith (``Certification'').
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 77321 (March 8,
2016), 81 FR 13434 (March 14, 2016).
---------------------------------------------------------------------------
III. Proposed Amendment to the Plan
On November 19, 2020, the parties submitted a proposed amendment to
the Plan (``Amended Plan''). The primary purpose of the Amended Plan is
to allocate surveillance, investigation, and enforcement
responsibilities for Rule 14e-4 under the Act and to reflect the name
change of ISE Mercury, LLC to Nasdaq MRX, LLC. The text of the proposed
Amended Plan is as follows (additions are italicized; deletions are
[bracketed]):
* * * * *
AGREEMENT BETWEEN
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND [ISE MERCURY]NASDAQ
MRX, LLC PURSUANT TO RULE 17d-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934
This Agreement, by and between Financial Industry Regulatory
Authority, Inc. (``FINRA'') and [ISE Mercury]Nasdaq MRX, LLC (``[ISE
Mercury]MRX''), is made this [8th]16th day of [February]November,
20[16]20 (the ``Agreement''), pursuant to Section 17(d) of the
Securities Exchange Act of 1934 (the ``Exchange Act'') and Rule 17d-2
thereunder which permits agreements between self-regulatory
organizations to allocate regulatory responsibility to eliminate
regulatory duplication. FINRA and [ISE Mercury]MRX may be referred to
[[Page 84041]]
individually as a ``party'' and together as the ``parties.''
This Agreement amends and restates this agreement entered into
between FINRA and MRX on February 8, 2016, entitled ``Agreement between
Financial Industry Regulatory Authority, Inc. and ISE Mercury, LLC
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and
any subsequent amendments thereafter.
Whereas, FINRA and [ISE Mercury]MRX desire to reduce duplication in
the examination of their Dual Members (as defined herein) and in the
filing and processing of certain registration and membership records;
and
Whereas, FINRA and [ISE Mercury]MRX desire to execute an agreement
covering such subjects pursuant to the provisions of Rule 17d-2 under
the Exchange Act and to file such agreement with the Securities and
Exchange Commission (the ``SEC'' or ``Commission'') for its approval.
Now, therefore, in consideration of the mutual covenants contained
hereinafter, FINRA and [ISE Mercury]MRX 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) ``[ISE Mercury]MRX Rules'' or ``FINRA Rules'' shall mean the
rules of [ISE Mercury]MRX or FINRA, respectively, as the rules of an
exchange or association are defined in Exchange Act Section 3(a)(27).
(b) ``Common Rules'' shall mean the [ISE Mercury]MRX Rules that are
substantially similar to the applicable FINRA Rules set forth in
Exhibit 1 in that examination for compliance with such rules would not
require FINRA to develop one or more new examination standards,
modules, procedures, or criteria in order to analyze the application of
the rule, or a Dual Member's activity, conduct, or output in relation
to such rule. Common Rules shall not include any provisions regarding
(i) notice, reporting or any other filings made directly to or from
MRX, (ii) incorporation by reference of MRX 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 MRX, (iv) prior written approval of MRX and
(v) payment of fees or fines to MRX.
(c) ``Dual Members'' shall mean those [ISE Mercury]MRX members that
are also members of FINRA and the associated persons therewith.
(d) ``Effective Date'' shall have the meaning set forth in
paragraph 13.
(e) ``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with the FINRA 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 the FINRA's Code of Procedure and
sanctions guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities and Enforcement Responsibilities relating to
compliance by the Dual Members with the Common Rules and the provisions
of the Exchange Act and the rules and regulations thereunder, and other
applicable laws, rules and regulations, each as set forth on Exhibit 1
attached hereto. The term ``Regulatory Responsibilities'' shall also
include the surveillance, investigation and Enforcement
Responsibilities relating to compliance by Common Members with Rule
14e-4 of the Securities Exchange Act (``Rule 14e-4''), with a focus on
the standardized call option provision of Rule 14e-4(a)(1)(ii)(D).
2. Regulatory and Enforcement Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement Responsibilities for Dual
Members. Attached as Exhibit 1 to this Agreement and made part hereof,
[ISE Mercury]MRX furnished FINRA with a current list of Common Rules
and certified to FINRA that such rules are substantially similar to the
corresponding FINRA Rule (the ``Certification''). FINRA hereby agrees
that the rules listed in the Certification are Common Rules as defined
in this Agreement. Each year following the Effective Date of this
Agreement, or more frequently if required by changes in either the [ISE
Mercury]MRX Rules or FINRA Rules, [ISE Mercury]MRX shall submit an
updated list of Common Rules to FINRA for review which shall add [ISE
Mercury]MRX Rules not included in the current list of Common Rules that
qualify as Common Rules as defined in this Agreement; delete [ISE
Mercury]MRX 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 [ISE Mercury]MRX 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 [ISE Mercury]MRX shall retain full responsibility for
(unless otherwise addressed by separate agreement or rule) the
following (collectively, the ``Retained Responsibilities''):
(a) surveillance and enforcement with respect to trading activities
or practices involving [ISE Mercury's]MRX's own marketplaces, including
without limitation [ISE Mercury's]MRX's Rules relating to the rights
and obligations of market makers;
(b) registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of its duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act; and
(d) any [ISE Mercury]MRX Rules that are not Common Rules.
3. Dual Members. Prior to the Effective Date, [ISE Mercury]MRX
shall furnish FINRA with a current list of Dual Members, which shall be
updated no less frequently than once each quarter.
4. No Charge. There shall be no charge to [ISE Mercury]MRX by FINRA
for performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter provided.
FINRA shall provide [ISE Mercury]MRX with ninety (90) days advance
written notice in the event FINRA decides to impose any charges to [ISE
Mercury]MRX for performing the Regulatory Responsibilities under this
Agreement. If FINRA determines to impose a charge, [ISE Mercury]MRX
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. Reassignment of Regulatory Responsibilities. Notwithstanding any
provision hereof, this Agreement shall be subject to any statute, or
any rule or order of the Commission. To the extent such action is
inconsistent with this Agreement, such action shall supersede the
provisions hereof to the extent necessary for them to be properly
effectuated and the provisions hereof in that respect shall be null and
void.
[[Page 84042]]
6. Notification of Violations. In the event that FINRA becomes
aware of apparent violations of any [ISE Mercury]MRX Rules, which are
not listed as Common Rules, discovered pursuant to the performance of
the Regulatory Responsibilities assumed hereunder, FINRA shall notify
[ISE Mercury]MRX of those apparent violations for such response as [ISE
Mercury]MRX deems appropriate. In the event [ISE Mercury]MRX becomes
aware of apparent violations of the Common Rules, discovered pursuant
to the performance of the Retained Responsibilities, [ISE Mercury]MRX
shall notify FINRA of those apparent violations and such matters shall
be handled by FINRA as provided in this Agreement. Apparent violations
of all the Common Rules shall be processed by, and enforcement
proceedings in respect thereto shall be conducted by FINRA as provided
hereinbefore; provided, however, that in the event a Dual Member is the
subject of an investigation relating to a transaction on [ISE
Mercury]MRX, [ISE Mercury]MRX may in its discretion assume concurrent
jurisdiction and responsibility. Each party agrees to make available
promptly all files, records and witnesses necessary to assist the other
in its investigation or proceedings.
7. Continued Assistance. FINRA shall make available to [ISE
Mercury]MRX all information obtained by FINRA in the performance by it
of the Regulatory Responsibilities hereunder in respect to the Dual
Members subject to this Agreement. In particular, and not in limitation
of the foregoing, FINRA shall furnish [ISE Mercury]MRX any information
it obtains about Dual Members which reflects adversely on their
financial condition. It is understood that such information is of an
extremely sensitive nature and, accordingly, [ISE Mercury]MRX
acknowledges and agrees to take all reasonable steps to maintain its
confidentiality. [ISE Mercury]MRX shall make available to FINRA any
information coming to its attention that reflects adversely on the
financial condition of Dual Members or indicates possible violations of
applicable laws, rules or regulations by such firms.
8. Dual Member Applications.
(a) Dual Members subject to this Agreement shall be required to
submit, and FINRA shall be responsible for processing and acting upon
all applications submitted on behalf of allied persons, partners,
officers, registered personnel and any other person required to be
approved by the [ISE Mercury]MRX Rules and FINRA Rules or associated
with Dual Members thereof. Upon request, FINRA shall advise [ISE
Mercury]MRX of any changes of allied members, partners, officers,
registered personnel and other persons required to be approved by the
[ISE Mercury]MRX Rules and FINRA Rules.
(b) Dual Members shall be required to send to FINRA all letters,
termination notices or other material respecting the individuals listed
in paragraph 8(a).
(c) When as a result of processing such submissions FINRA becomes
aware of a statutory disqualification as defined in the Exchange Act
with respect to a Dual Member, FINRA shall determine pursuant to
Sections 15A(g) and/or Section 6(c) of the Exchange Act the
acceptability or continued applicability of the person to whom such
disqualification applies and keep [ISE Mercury]MRX advised of its
actions in this regard for such subsequent proceedings as [ISE
Mercury]MRX may initiate.
(d) Notwithstanding the foregoing, FINRA shall not review the
membership application, reports, filings, fingerprint cards, notices,
or other writings filed to determine if such documentation submitted by
a broker or dealer, or a person associated therewith or other persons
required to register or qualify by examination: (i) meets the [ISE
Mercury]MRX requirements for general membership or for specified
categories of membership or participation in [ISE Mercury]MRX, such as
(A) Primary Market Maker Membership (``PMM''); (B) Competitive Market
Maker Membership (``CMM''); (C) Electronic Access Membership (``EAM'')
(or any similar type of [ISE Mercury]MRX membership or participation
that is created after this Agreement is executed); or (ii) meets the
[ISE Mercury]MRX requirements to be associated with, or employed by, a
[ISE Mercury]MRX member or participant in any capacity, such a
Designated Trading Representative (``DTR'') (or any similar type of
participation, employment category or title, or associate-person
category or class that is created after this Agreement is executed).
FINRA shall not review applications or other documentation filed to
request a change in the rights or status described in this paragraph
8(d), including termination or limitation on activities, of a member or
a participant of [ISE Mercury]MRX, or a person associated with, or
requesting association with, a member or participant of [ISE
Mercury]MRX.
9. Branch Office Information. FINRA shall also be responsible for
processing and, if required, acting upon all requests for the opening,
address changes, and terminations of branch offices by Dual Members and
any other applications required of Dual Members with respect to the
Common Rules as they may be amended from time to time. Upon request,
FINRA shall advise [ISE Mercury]MRX of the opening, address change and
termination of branch and main offices of Dual Members and the names of
such branch office managers.
10. Customer Complaints. [ISE Mercury]MRX shall forward to FINRA
copies of all customer complaints involving Dual Members received by
[ISE Mercury]MRX 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.
11. No Restrictions on Regulatory Action. Nothing contained in this
Agreement shall restrict or in any way encumber the right of either
party to conduct its own independent or concurrent investigation,
examination or enforcement proceeding of or against Dual Members, as
either party, in its sole discretion, shall deem appropriate or
necessary.
12. Termination. This Agreement may be terminated by [ISE
Mercury]MRX or FINRA at any time upon the approval of the Commission
after one (1) year's written notice to the other party (or such shorter
time as may be agreed by the parties), except as provided in paragraph
4.
13. Effective Date. This Agreement shall be effective upon approval
of the Commission.
14. Arbitration. In the event of a dispute between the parties as
to the operation of this Agreement, [ISE Mercury]MRX and FINRA hereby
agree that any such dispute shall be settled by arbitration in
Washington, DC in accordance with the rules of the American Arbitration
Association then in effect, or such other procedures as the parties may
mutually agree upon. Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.
15. Separate Agreement. This Agreement is wholly separate from (1)
the multiparty Agreement made pursuant to Rule 17d-2 of the Exchange
Act among [BATS Exchange, Inc., BOX Options Exchange, LLC, the Chicago
Board Options Exchange, Incorporated, C2 Options Exchange,
Incorporated, the International Securities Exchange, LLC, Financial
Industry Regulatory Authority, Inc., Miami International Securities
Exchange, LLC, the New York Stock Exchange, LLC, the NYSE MKT LLC, the
NYSE Arca Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., and
the NASDAQ OMX PHLX,
[[Page 84043]]
LLC] NYSE American LLC, Cboe BZX Exchange, Inc., the Cboe EDGX
Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Nasdaq
ISE, LLC, Financial Industry Regulatory Authority, Inc., NYSE Arca,
Inc., The NASDAQ Stock Market LLC, BOX Exchange LLC, NASDAQ BX, Inc.,
NASDAQ PHLX LLC, Miami International Securities Exchange, LLC, Nasdaq
GEMX, LLC, Nasdaq MRX, LLC, MIAX PEARL, LLC, and MIAX Emerald, LLC
approved by the Commission on [December 5, 2012]February 12, 2019
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 or
(2) the multiparty Agreement made pursuant to Rule 17d-2 of the
Exchange Act among [NYSE MKT LLC, BATS Exchange, Inc., BOX Options
Exchange, LLC, C2 Options Exchange, Incorporated, Chicago Board Options
Exchange, Incorporated, International Securities Exchange LLC,
Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., The
NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, Inc. and
Miami International Securities Exchange, LLC,] NYSE American LLC, Cboe
BZX Exchange, Inc., the Cboe EDGX Exchange, Inc., Cboe C2 Exchange,
Inc., Cboe Exchange, Inc., Nasdaq ISE, LLC, Financial Industry
Regulatory Authority, Inc., NYSE Arca, Inc., The NASDAQ Stock Market
LLC, BOX Exchange LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, Miami
International Securities Exchange, LLC, Nasdaq GEMX, LLC, Nasdaq MRX,
LLC, MIAX PEARL, LLC, and MIAX Emerald, LLC approved by the Commission
on [December 5, 2012]February 11, 2019 involving options-related market
surveillance matters and such agreements as may be amended from time to
time.
16. Notification of Members. [ISE Mercury]MRX and FINRA shall
notify Dual Members of this Agreement after the Effective Date by means
of a uniform joint notice.
17. Amendment. This Agreement may be amended in writing duly
approved by each party. All such amendments must be filed with and
approved by the Commission before they become effective.
18. Limitation of Liability. Neither FINRA nor [ISE Mercury]MRX nor
any of their respective directors, governors, officers or employees
shall be liable to the other party to this Agreement for any liability,
loss or damage resulting from or claimed to have resulted from any
delays, inaccuracies, errors or omissions with respect to the provision
of Regulatory Responsibilities as provided hereby or for the failure to
provide any such responsibility, except with respect to such liability,
loss or damages as shall have been suffered by one or the other of
FINRA or [ISE Mercury]MRX and caused by the willful misconduct of the
other party or their respective directors, governors, officers or
employees. No warranties, express or implied, are made by FINRA or [ISE
Mercury]MRX with respect to any of the responsibilities to be performed
by each of them hereunder.
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. Relief From Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA and [ISE
Mercury]MRX join in requesting the Commission, upon its approval of
this Agreement or any part thereof, to relieve [ISE Mercury]MRX 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.
21. 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.
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.
By---------------------------------------------------------------------
Name:
Title:
[ISE MERCURY]NASDAQ MRX, LLC
By---------------------------------------------------------------------
Name:
Title:
Note: The entire existing table of rules should be deleted and
replaced with the table below.
EXHIBIT 1
[ISE MERCURY]MRX CERTIFICATION OF COMMON RULES
[ISE Mercury]MRX hereby certifies that the requirements contained
in the rules listed below for [ISE Mercury]MRX are identical to, or
substantially similar to, the comparable FINRA Rules or SEC Rules
identified.
# Common Rules shall not include provisions regarding (i) notice,
reporting or any other filings made directly to or from MRX, (ii)
incorporations by reference to other MRX 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 MRX, (iv) prior written approval of MRX, and
(v) payment of fees or fines to MRX.
------------------------------------------------------------------------
MRX Rule FINRA or SEC Rule
------------------------------------------------------------------------
General 3, Section 3(b)--Persons FINRA Rule 1010 Electronic Filing
Associated with Members; General Requirements for Uniform Forms;
4--Nasdaq Stock Market General 4, FINRA By-Laws Article IV, Sec.
Rule 1.1250 Electronic Filing 1(c) Application for Membership;
Requirements for Uniform Forms FINRA By-Laws, Article V, Section
incorporated by reference . 1 Qualification Requirements;
FINRA By-Laws, Article V, Sec. 2
Application for Registration; and
FINRA By-Laws Article V, Section 3
Notification by Member to the
Corporation and Associated Person
of Termination; Amendments to
Notification.
General 4--Nasdaq Stock Market FINRA Rule 1240 Continuing
General 4, Section 1.1240 Education Requirements.
Continuing Education Requirements
incorporated by reference .
Options 9--Nasdaq ISE Options 9, FINRA Rule 2010 Standards of
Section 1 Just and Equitable Commercial Honor and Principles of
Principles of Trade incorporated Trade; FINRA Rule 0140(a)
by reference \1\. Applicability.
Options 9--Nasdaq ISE Options 9, Section 15(g) of the Securities
Section 9(a)(1)Prevention of the Exchange Act of 1934, and FINRA
Misuse of Material, Nonpublic Rule 3110(b)(1), (d) Supervision.
Information incorporated by
reference .
[[Page 84044]]
Options 9--Nasdaq ISE Options 9, FINRA Rule 4530(a)(1)(A) and (2)
Section 10 Disciplinary Action by Reporting Requirements; FINRA By-
Other Organizations incorporated Laws, Article V, Section 2(c); and
by reference . FINRA By-Laws, Article V, Section
3.
Options 9--Nasdaq ISE Options 9, FINRA Rule 3310 Anti-Money
Section 21 Anti-Money Laundering Laundering Compliance Program.
Compliance Program incorporated by
reference .
Options 10--Nasdaq ISE Options 10, Rule 17a-5 of the Securities
Section 12 Statements of Financial Exchange Act of 1934.
Condition to Customers
incorporated by reference.
Options 10--Nasdaq ISE Options 10, FINRA Rule 11870 Customer Account
Section 19 Transfer of Accounts Transfer Contracts.
incorporated by reference .
Options 10--Nasdaq ISE Options 10, FINRA Rule 3230 Telemarketing.
Section 23. Telemarketing
incorporated by reference.
Options 6E--Nasdaq ISE Options 6E, FINRA Rule 4511(a) Books and
Section 1 Maintenance, Retention, Records--Requirements.
and Furnishing of Books, Records
and Other Information incorporated
by reference .
------------------------------------------------------------------------
\1\ FINRA shall not have Regulatory Responsibilities with respect to the
Supplementary Material to Nasdaq ISE Options 9, Section 1.
Responsibility for such shall remain with MRX.
In addition, the following provisions shall be part of this 17d-2
Agreement:
SEA Rule 14e-4--Prohibited Transactions in Connection with Partial
Tender Offers [supcaret]
[supcaret] FINRA shall perform surveillance, investigation, and
Enforcement Responsibilities for SEA Rule 14e-4(a)1)(ii)(D).
[# FINRA shall not have Regulatory Responsibilities
regarding notification or reporting to ISE Mercury. In addition, FINRA
shall only have Regulatory Responsibilities to the extent the exercise
of discretion by ISE Mercury is the same as FINRA.]
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number 4-697 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number 4-697. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed plan that are filed with the
Commission, and all written communications relating to the proposed
plan between the Commission and any person, other than those that may
be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the plan also will be available for inspection and
copying at the principal offices of FINRA and MRX. 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 4-697 and should be submitted on or before
January 13, 2021.
V. Discussion
The Commission finds that the proposed Amended Plan is consistent
with the factors set forth in Section 17(d) of the Act \12\ and Rule
17d-2(c) thereunder \13\ in that the proposed Amended Plan is necessary
or appropriate in the public interest and for the protection of
investors, fosters cooperation and coordination among SROs, and removes
impediments to and fosters the development of the national market
system. In particular, the Commission believes that the proposed
Amended Plan should reduce unnecessary regulatory duplication by
allocating to FINRA certain examination and enforcement
responsibilities for Common Members that would otherwise be performed
by both FINRA and MRX. Accordingly, the proposed Amended Plan promotes
efficiency by reducing costs to Common Members. Furthermore, because
MRX and FINRA will coordinate their regulatory functions in accordance
with the Amended Plan, the Amended Plan should promote investor
protection.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78q(d).
\13\ 17 CFR 240.17d-2(c).
---------------------------------------------------------------------------
The Commission notes that, under the Amended Plan, MRX and FINRA
have allocated regulatory responsibility for those MRX rules, set forth
in the Certification, that are substantially similar to the applicable
FINRA rules in that examination for compliance with such provisions and
rules would not require FINRA to develop one or more new examination
standards, modules, procedures, or criteria in order to analyze the
application of the rule, or a Common Member's activity, conduct, or
output in relation to such rule. In addition, under the Amended Plan,
FINRA would assume regulatory responsibility for certain provisions of
the federal securities laws and the rules and regulations thereunder
that are set forth in the Certification. The Common Rules covered by
the Amended Plan are specifically listed in the Certification, as may
be amended by the Parties from time to time.
According to the Amended Plan, MRX will review the Certification at
least annually, or more frequently if required by changes in either the
rules of MRX or FINRA, and, if necessary, submit to FINRA an updated
list of Common Rules to add MRX rules not included on the then-current
list of Common Rules that are substantially similar to FINRA rules;
delete MRX rules included in the then-current list of Common Rules that
no longer qualify as common rules; and confirm that the remaining rules
on the list of Common Rules continue to be MRX rules that qualify as
common rules.\14\ FINRA will then confirm in writing whether the rules
listed in any
[[Page 84045]]
updated list are Common Rules as defined in the Amended Plan. Under the
Amended Plan, MRX also will provide FINRA with a current list of Common
Members and will update the list no less frequently than once each
quarter.\15\ The Commission believes that these provisions are designed
to provide for continuing communication between the Parties to ensure
the continued accuracy of the scope of the proposed allocation of
regulatory responsibility.
---------------------------------------------------------------------------
\14\ See paragraph 2 of the Amended Plan.
\15\ See paragraph 3 of the Amended Plan.
---------------------------------------------------------------------------
The Commission is hereby declaring effective an Amended Plan that,
among other things, allocates regulatory responsibility to FINRA for
the oversight and enforcement of all MRX rules that are substantially
similar to the rules of FINRA for Common Members of MRX and FINRA.
Therefore, modifications to the Certification need not be filed with
the Commission as an amendment to the Amended Plan, provided that the
Parties are only adding to, deleting from, or confirming changes to MRX
rules in the Certification in conformance with the definition of Common
Rules provided in the Amended Plan. However, should the Parties decide
to add a MRX rule to the Certification that is not substantially
similar to a FINRA rule; delete a MRX rule from the Certification that
is substantially similar to a FINRA rule; or leave on the Certification
a MRX rule that is no longer substantially similar to a FINRA rule,
then such a change would constitute an amendment to the Amended Plan,
which must be filed with the Commission pursuant to Rule 17d-2 under
the Act.\16\
---------------------------------------------------------------------------
\16\ The addition to or deletion from the Certification of any
federal securities laws, rules, and regulations for which FINRA
would bear responsibility under the Amended Plan for examining, and
enforcing compliance by, Common Members, also would constitute an
amendment to the Amended Plan.
---------------------------------------------------------------------------
Under paragraph (c) of Rule 17d-2, the Commission may, after
appropriate notice and comment, declare a plan, or any part of a plan,
effective. In this instance, the Commission believes that appropriate
notice and comment can take place after the proposed amendment is
effective. The primary purpose of the amendment is to allocate
surveillance, investigation, and enforcement responsibilities for Rule
14e-4 under the Act, to reflect the name change of ISE Mercury, LLC to
Nasdaq MRX, LLC. By declaring it effective today, the Amended Plan can
become effective and be implemented without undue delay. The Commission
notes that the prior version of this plan immediately prior to this
proposed amendment was published for comment and the Commission did not
receive any comments thereon.\17\ Furthermore, the Commission does not
believe that the amendment to the plan raises any new regulatory issues
that the Commission has not previously considered.
---------------------------------------------------------------------------
\17\ See supra note 11 (citing to Securities Exchange Act
Release No. 77321).
---------------------------------------------------------------------------
VI. Conclusion
This order gives effect to the Amended Plan filed with the
Commission in File No. 4-697. The Parties shall notify all members
affected by the Amended Plan of their rights and obligations under the
Amended Plan.
It is therefore ordered, pursuant to Section 17(d) of the Act, that
the Amended Plan in File No. 4-697, between the FINRA and MRX, filed
pursuant to Rule 17d-2 under the Act, hereby is approved and declared
effective.
It is further ordered that MRX is relieved of those
responsibilities allocated to FINRA under the Amended Plan in File No.
4-697.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(34).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-28308 Filed 12-22-20; 8:45 am]
BILLING CODE 8011-01-P
