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 GEMX, LLC, 84074-84079 [2020-28309]
Download as PDF
<![CDATA[
84074
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
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–NYSECHX–2020–32, and
should be submitted on or before
January 13, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–28313 Filed 12–22–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90704; File No. 4–663]
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 GEMX, LLC
jbell on DSKJLSW7X2PROD with NOTICES
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
GEMX, LLC (‘‘GEMX’’) (collectively,
‘‘Participating Organizations’’ or
‘‘parties’’). This agreement amends and
restates the agreement entered into
between FINRA and Topaz Exchange,
LLC (n/k/a GEMX) on June 21, 2013,
entitled ‘‘Agreement Between Financial
Industry Regulatory Authority, Inc. and
Topaz Exchange Pursuant to Rule 17d–
2 under the Securities Exchange Act of
1934,’’ and any subsequent amendments
thereafter.
22 17
CFR 200.30–3(a)(12).
U.S.C. 78q(d).
2 17 CFR 240.17d–2.
1 15
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
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.
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
3 15
U.S.C. 78s(g)(1).
U.S.C. 78q(d).
5 15 U.S.C. 78s(g)(2).
6 15 U.S.C. 78q(d)(1).
7 See Securities Act Amendments of 1975, Report
of the Senate Committee on Banking, Housing, and
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
75, 94th Cong., 1st Session 32 (1975).
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
respectively.
9 See Securities Exchange Act Release No. 12352
(April 20, 1976), 41 FR 18808 (May 7, 1976).
4 15
PO 00000
Frm 00192
Fmt 4703
Sfmt 4703
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
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 August 19, 2013, the Commission
declared effective the Plan entered into
between FINRA and GEMX 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 GEMX 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 GEMX rule for which
FINRA bears responsibility under the
Plan for overseeing and enforcing with
respect to GEMX 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 Topaz Exchange, LLC to
Nasdaq GEMX, LLC. The text of the
proposed Amended Plan is as follows
10 See Securities Exchange Act Release No. 12935
(October 28, 1976), 41 FR 49091 (November 8,
1976).
11 See Securities Exchange Act Release No. 70228
(August 19, 2013), 78 FR 52587 (August 23, 2013).
E:\FR\FM\23DEN1.SGM
23DEN1
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
(additions are italicized; deletions are
[bracketed]):
*
*
*
*
*
AGREEMENT BETWEEN FINANCIAL
INDUSTRY REGULATORY
AUTHORITY, INC. AND [TOPAZ
EXCHANGE]NASDAQ GEMX, 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 [Topaz
Exchange, LLC (‘‘Topaz’’)]Nasdaq
GEMX, LLC (‘‘GEMX’’), is made this
[21st] 16th day of [June]November,
20[13]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 [Topaz]GEMX
may be referred to individually as a
‘‘party’’ and together as the ‘‘parties.’’
This Agreement amends and restates
this agreement entered into between
FINRA and GEMX on June 21, 2013,
entitled ‘‘Agreement between Financial
Industry Regulatory Authority, Inc. and
Topaz Exchange, LLC Pursuant to Rule
17d–2 under the Securities Exchange
Act of 1934,’’ and any subsequent
amendments thereafter.
Whereas, FINRA and [Topaz]GEMX
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 [Topaz]GEMX
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 [Topaz]GEMX
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) ‘‘[Topaz]GEMX Rules’’ or ‘‘FINRA
Rules’’ shall mean the rules of
[Topaz]GEMX or FINRA, respectively,
as the rules of an exchange or
association are defined in Exchange Act
Section 3(a)(27).
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
(b) ‘‘Common Rules’’ shall mean the
[Topaz]GEMX Rules that are
substantially similar to the applicable
FINRA Rules 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.
(c) ‘‘Dual Members’’ shall mean those
[Topaz]GEMX 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 pertinent laws,
rules or regulations 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. Common Rules
shall not include any provisions
regarding (i) notice, reporting or any
other filings made directly to or from
GEMX, (ii) incorporation by reference of
GEMX 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 GEMX, (iv) prior written
approval of GEMX and (v) payment of
fees or fines to GEMX.
(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,
[Topaz]GEMX furnished FINRA with a
current list of Common Rules and
certified to FINRA that such rules are
PO 00000
Frm 00193
Fmt 4703
Sfmt 4703
84075
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 [Topaz]GEMX Rules or
FINRA Rules, [Topaz]GEMX shall
submit an updated list of Common
Rules to FINRA for review which shall
add [Topaz]GEMX Rules not included in
the current list of Common Rules that
qualify as Common Rules as defined in
this Agreement; delete [Topaz]GEMX
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
[Topaz]GEMX 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 [Topaz]GEMX
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 [Topaz]GEMX’s own
marketplaces, including without
limitation [Topaz]GEMX’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 [Topaz]GEMX Rules that are
not Common Rules.
3. Dual Members. Prior to the
Effective Date, [Topaz]GEMX 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 [Topaz]GEMX by FINRA for
performing the Regulatory
Responsibilities and Enforcement
Responsibilities under this Agreement
except as hereinafter provided. FINRA
shall provide [Topaz]GEMX with ninety
(90) days advance written notice in the
E:\FR\FM\23DEN1.SGM
23DEN1
jbell on DSKJLSW7X2PROD with NOTICES
84076
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
event FINRA decides to impose any
charges to [Topaz]GEMX for performing
the Regulatory Responsibilities under
this Agreement. If FINRA determines to
impose a charge, [Topaz]GEMX 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, or effective
industry agreement, restructuring the
regulatory framework of the securities
industry or reassigning Regulatory
Responsibilities between self-regulatory
organizations. 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.
6. Notification of Violations. In the
event that FINRA becomes aware of
apparent violations of any
[Topaz]GEMX Rules, which are not
listed as Common Rules, discovered
pursuant to the performance of the
Regulatory Responsibilities assumed
hereunder, FINRA shall notify
[Topaz]GEMX of those apparent
violations for such response as
[Topaz]GEMX deems appropriate. In the
event [Topaz]GEMX becomes aware of
apparent violations of the Common
Rules, discovered pursuant to the
performance of the Retained
Responsibilities, [Topaz]GEMX 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
[Topaz]GEMX, [Topaz]GEMX 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 [Topaz]GEMX 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
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
limitation of the foregoing, FINRA shall
furnish [Topaz]GEMX 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, [Topaz]GEMX
acknowledges and agrees to take all
reasonable steps to maintain its
confidentiality. [Topaz]GEMX 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
[Topaz]GEMX Rules and FINRA Rules
or associated with Dual Members
thereof. Upon request, FINRA shall
advise [Topaz]GEMX of any changes of
allied members, partners, officers,
registered personnel and other persons
required to be approved by the
[Topaz]GEMX 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
[Topaz]GEMX advised of its actions in
this regard for such subsequent
proceedings as [Topaz]GEMX 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
[Topaz]GEMX requirements for general
membership or for specified categories
of membership or participation in
[Topaz]GEMX, such as (A) Primary
Market Maker Membership (‘‘PMM’’);
(B) Competitive Market Maker
Membership (‘‘CMM’’); (C) Electronic
Access Membership (‘‘EAM’’) (or any
similar type of [Topaz]GEMX
PO 00000
Frm 00194
Fmt 4703
Sfmt 4703
membership or participation that is
created after this Agreement is
executed); or (ii) meets the
[Topaz]GEMX requirements to be
associated with, or employed by, a
[Topaz]GEMX 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 [Topaz]GEMX, or a
person associated with, or requesting
association with, a member or
participant of [Topaz]GEMX.
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
[Topaz]GEMX 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.
[Topaz]GEMX shall forward to FINRA
copies of all customer complaints
involving Dual Members received by
[Topaz]GEMX 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 [Topaz]GEMX 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,
E:\FR\FM\23DEN1.SGM
23DEN1
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
[Topaz]GEMX 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,
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.
[Topaz]GEMX 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 [Topaz]GEMX 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
[Topaz]GEMX 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
[Topaz]GEMX 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
84077
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 [Topaz]GEMX
join in requesting the Commission,
upon its approval of this Agreement or
any part thereof, to relieve
[Topaz]GEMX 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.
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:
[TOPAZ EXCHANGE]NASDAQ GEMX,
LLC
By lllllllllllllllll
Name:
Title:
NOTE: The entire existing table of
rules should be deleted and replaced
with the table below.
EXHIBIT 1
[TOPAZ]GEMX CERTIFICATION OF
COMMON RULES
[Topaz]GEMX hereby certifies that the
requirements contained in the rules
listed below for [Topaz]GEMX 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 GEMX, (ii) incorporations by
reference to other GEMX 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 GEMX, (iv) prior
written approval of GEMX, and (v)
payment of fees or fines to GEMX.
GEMX 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
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
PO 00000
Frm 00195
Fmt 4703
Sfmt 4703
E:\FR\FM\23DEN1.SGM
23DEN1
84078
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
GEMX RULE
FINRA or SEC RULE
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 Principles of Trade incorporated by reference 1.
Options 9—Nasdaq ISE Options 9, Section 9(a)(1) Prevention of the
Misuse of Material, Nonpublic Information incorporated by reference #.
Options 9—Nasdaq ISE Options 9, Section 10 Disciplinary Action by
Other Organizations incorporated by reference #.
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 #.
FINRA Rule 1240 Continuing Education Requirements
FINRA Rule 2010 Standards of Commercial Honor and Principles of
Trade; FINRA Rule 0140(a) Applicability
Section 15(g) of the Securities Exchange Act of 1934, and FINRA Rule
3110(b)(1), (d) Supervision
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
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 GEMX.
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).
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:
jbell on DSKJLSW7X2PROD with NOTICES
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–
663 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 4–663. 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
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
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 GEMX. 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 4–663 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
12 15
13 17
PO 00000
U.S.C. 78q(d).
CFR 240.17d–2(c).
Frm 00196
Fmt 4703
Sfmt 4703
Common Members that would
otherwise be performed by both FINRA
and GEMX. Accordingly, the proposed
Amended Plan promotes efficiency by
reducing costs to Common Members.
Furthermore, because GEMX 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, GEMX and FINRA have
allocated regulatory responsibility for
those GEMX 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,
GEMX will review the Certification at
least annually, or more frequently if
required by changes in either the rules
of GEMX or FINRA, and, if necessary,
submit to FINRA an updated list of
Common Rules to add GEMX rules not
included on the then-current list of
Common Rules that are substantially
similar to FINRA rules; delete GEMX
E:\FR\FM\23DEN1.SGM
23DEN1
Federal Register / Vol. 85, No. 247 / Wednesday, December 23, 2020 / Notices
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 GEMX rules that
qualify as common rules.14 FINRA will
then confirm in writing whether the
rules listed in any updated list are
Common Rules as defined in the
Amended Plan. Under the Amended
Plan, GEMX 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 GEMX
rules that are substantially similar to the
rules of FINRA for Common Members of
GEMX 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 GEMX 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 GEMX rule to the
Certification that is not substantially
similar to a FINRA rule; delete a GEMX
rule from the Certification that is
substantially similar to a FINRA rule; or
leave on the Certification a GEMX 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
jbell on DSKJLSW7X2PROD with NOTICES
14 See
paragraph 2 of the Amended Plan.
paragraph 3 of the Amended Plan.
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.
15 See
VerDate Sep<11>2014
21:21 Dec 22, 2020
Jkt 253001
14e–4 under the Act, to reflect the name
change of Topaz Exchange, LLC to
Nasdaq GEMX, 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.
VI. Conclusion
This order gives effect to the
Amended Plan filed with the
Commission in File No. 4–663. 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. 4–663,
between the FINRA and GEMX, filed
pursuant to Rule 17d–2 under the Act,
hereby is approved and declared
effective.
It is further ordered that GEMX is
relieved of those responsibilities
allocated to FINRA under the Amended
Plan in File No. 4–663.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–28309 Filed 12–22–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–90709; File No. SR–
NYSEARCA–2020–108]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Rule
11.6800 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 Arca, Inc. (‘‘NYSE Arca’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
17 See supra note 11 (citing to Securities
Exchange Act Release No. 70228).
18 17 CFR 200.30–3(a)(34).
1 15 U.S.C. 78a.
2 17 CFR 240.19b–4.
PO 00000
Frm 00197
Fmt 4703
Sfmt 4703
84079
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Rule 11.6800 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 11.6800
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’’).
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 84074-84079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28309]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-90704; File No. 4-663]
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 GEMX, 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 GEMX, LLC (``GEMX'') (collectively,
``Participating Organizations'' or ``parties''). This agreement amends
and restates the agreement entered into between FINRA and Topaz
Exchange, LLC (n/k/a GEMX) on June 21, 2013, entitled ``Agreement
Between Financial Industry Regulatory Authority, Inc. and Topaz
Exchange 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 August 19, 2013, the Commission declared effective the Plan
entered into between FINRA and GEMX 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 GEMX 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 GEMX rule for
which FINRA bears responsibility under the Plan for overseeing and
enforcing with respect to GEMX members that are also members of FINRA
and the associated persons therewith (``Certification'').
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 70228 (August 19,
2013), 78 FR 52587 (August 23, 2013).
---------------------------------------------------------------------------
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 Topaz Exchange, LLC to Nasdaq GEMX, LLC. The text of the
proposed Amended Plan is as follows
[[Page 84075]]
(additions are italicized; deletions are [bracketed]):
* * * * *
AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND
[TOPAZ EXCHANGE]NASDAQ GEMX, 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 [Topaz Exchange, LLC (``Topaz'')]Nasdaq
GEMX, LLC (``GEMX''), is made this [21st] 16th day of [June]November,
20[13]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 [Topaz]GEMX may be referred to
individually as a ``party'' and together as the ``parties.''
This Agreement amends and restates this agreement entered into
between FINRA and GEMX on June 21, 2013, entitled ``Agreement between
Financial Industry Regulatory Authority, Inc. and Topaz Exchange, LLC
Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934,'' and
any subsequent amendments thereafter.
Whereas, FINRA and [Topaz]GEMX 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 [Topaz]GEMX 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 [Topaz]GEMX 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) ``[Topaz]GEMX Rules'' or ``FINRA Rules'' shall mean the rules
of [Topaz]GEMX 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 [Topaz]GEMX Rules that are
substantially similar to the applicable FINRA Rules 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.
(c) ``Dual Members'' shall mean those [Topaz]GEMX 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 pertinent laws, rules or regulations
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. Common Rules shall not include
any provisions regarding (i) notice, reporting or any other filings
made directly to or from GEMX, (ii) incorporation by reference of GEMX
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 GEMX, (iv) prior
written approval of GEMX and (v) payment of fees or fines to GEMX.
(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,
[Topaz]GEMX 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
[Topaz]GEMX Rules or FINRA Rules, [Topaz]GEMX shall submit an updated
list of Common Rules to FINRA for review which shall add [Topaz]GEMX
Rules not included in the current list of Common Rules that qualify as
Common Rules as defined in this Agreement; delete [Topaz]GEMX 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
[Topaz]GEMX 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 [Topaz]GEMX 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 [Topaz]GEMX's own marketplaces, including
without limitation [Topaz]GEMX'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 [Topaz]GEMX Rules that are not Common Rules.
3. Dual Members. Prior to the Effective Date, [Topaz]GEMX 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 [Topaz]GEMX by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as hereinafter provided.
FINRA shall provide [Topaz]GEMX with ninety (90) days advance written
notice in the
[[Page 84076]]
event FINRA decides to impose any charges to [Topaz]GEMX for performing
the Regulatory Responsibilities under this Agreement. If FINRA
determines to impose a charge, [Topaz]GEMX 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, or effective industry agreement,
restructuring the regulatory framework of the securities industry or
reassigning Regulatory Responsibilities between self-regulatory
organizations. 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.
6. Notification of Violations. In the event that FINRA becomes
aware of apparent violations of any [Topaz]GEMX Rules, which are not
listed as Common Rules, discovered pursuant to the performance of the
Regulatory Responsibilities assumed hereunder, FINRA shall notify
[Topaz]GEMX of those apparent violations for such response as
[Topaz]GEMX deems appropriate. In the event [Topaz]GEMX becomes aware
of apparent violations of the Common Rules, discovered pursuant to the
performance of the Retained Responsibilities, [Topaz]GEMX 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 [Topaz]GEMX, [Topaz]GEMX 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 [Topaz]GEMX
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 [Topaz]GEMX 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, [Topaz]GEMX acknowledges and agrees
to take all reasonable steps to maintain its confidentiality.
[Topaz]GEMX 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 [Topaz]GEMX Rules and FINRA Rules or associated with
Dual Members thereof. Upon request, FINRA shall advise [Topaz]GEMX of
any changes of allied members, partners, officers, registered personnel
and other persons required to be approved by the [Topaz]GEMX 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 [Topaz]GEMX advised of its actions in
this regard for such subsequent proceedings as [Topaz]GEMX 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
[Topaz]GEMX requirements for general membership or for specified
categories of membership or participation in [Topaz]GEMX, such as (A)
Primary Market Maker Membership (``PMM''); (B) Competitive Market Maker
Membership (``CMM''); (C) Electronic Access Membership (``EAM'') (or
any similar type of [Topaz]GEMX membership or participation that is
created after this Agreement is executed); or (ii) meets the
[Topaz]GEMX requirements to be associated with, or employed by, a
[Topaz]GEMX 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 [Topaz]GEMX, or a person associated with, or requesting association
with, a member or participant of [Topaz]GEMX.
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 [Topaz]GEMX 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. [Topaz]GEMX shall forward to FINRA copies
of all customer complaints involving Dual Members received by
[Topaz]GEMX 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 [Topaz]GEMX 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,
[[Page 84077]]
[Topaz]GEMX 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, 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. [Topaz]GEMX 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 [Topaz]GEMX 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 [Topaz]GEMX 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 [Topaz]GEMX
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
[Topaz]GEMX join in requesting the Commission, upon its approval of
this Agreement or any part thereof, to relieve [Topaz]GEMX 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.
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:
[TOPAZ EXCHANGE]NASDAQ GEMX, LLC
By---------------------------------------------------------------------
Name:
Title:
NOTE: The entire existing table of rules should be deleted and
replaced with the table below.
EXHIBIT 1
[TOPAZ]GEMX CERTIFICATION OF COMMON RULES
[Topaz]GEMX hereby certifies that the requirements contained in the
rules listed below for [Topaz]GEMX 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 GEMX, (ii)
incorporations by reference to other GEMX 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 GEMX, (iv) prior written approval of GEMX,
and (v) payment of fees or fines to GEMX.
------------------------------------------------------------------------
GEMX RULE FINRA or SEC RULE
------------------------------------------------------------------------
General 3, Section 3(b)--Persons FINRA Rule 1010 Electronic
Associated with Members; General 4-- Filing Requirements for
Nasdaq Stock Market General 4, Rule Uniform Forms; FINRA By-Laws
1.1250 Electronic Filing Requirements Article IV, Sec. 1(c)
for Uniform Forms incorporated by Application for Membership;
reference . 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
[[Page 84078]]
General 4--Nasdaq Stock Market General FINRA Rule 1240 Continuing
4, Section 1.1240 Continuing Education Education Requirements
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 Trade incorporated by Principles of Trade; FINRA
reference \1\. Rule 0140(a) 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
Misuse of Material, Nonpublic FINRA Rule 3110(b)(1), (d)
Information incorporated by reference Supervision
.
Options 9--Nasdaq ISE Options 9, FINRA Rule 4530(a)(1)(A) and
Section 10 Disciplinary Action by (2) Reporting Requirements;
Other Organizations incorporated by FINRA By-Laws, Article V,
reference . Section 2(c); and 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
Section 19 Transfer of Accounts Account 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, and Records--Requirements
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 GEMX.
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).
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 4-663 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 4-663. 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 GEMX. 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 4-663 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 GEMX. Accordingly, the proposed Amended Plan promotes
efficiency by reducing costs to Common Members. Furthermore, because
GEMX 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, GEMX and FINRA
have allocated regulatory responsibility for those GEMX 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, GEMX will review the Certification
at least annually, or more frequently if required by changes in either
the rules of GEMX or FINRA, and, if necessary, submit to FINRA an
updated list of Common Rules to add GEMX rules not included on the
then-current list of Common Rules that are substantially similar to
FINRA rules; delete GEMX
[[Page 84079]]
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 GEMX rules that qualify as common
rules.\14\ FINRA will then confirm in writing whether the rules listed
in any updated list are Common Rules as defined in the Amended Plan.
Under the Amended Plan, GEMX 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 GEMX rules that are substantially
similar to the rules of FINRA for Common Members of GEMX 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
GEMX 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 GEMX rule to the Certification that is not
substantially similar to a FINRA rule; delete a GEMX rule from the
Certification that is substantially similar to a FINRA rule; or leave
on the Certification a GEMX 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 Topaz Exchange, LLC
to Nasdaq GEMX, 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. 70228).
---------------------------------------------------------------------------
VI. Conclusion
This order gives effect to the Amended Plan filed with the
Commission in File No. 4-663. 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. 4-663, between the FINRA and GEMX, filed
pursuant to Rule 17d-2 under the Act, hereby is approved and declared
effective.
It is further ordered that GEMX is relieved of those
responsibilities allocated to FINRA under the Amended Plan in File No.
4-663.
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. 2020-28309 Filed 12-22-20; 8:45 am]
BILLING CODE 8011-01-P
