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 Among the Financial Industry Regulatory Authority, Inc., The Nasdaq Stock Market LLC, and Nasdaq BX, Inc., 53996-54003 [2021-21113]

Download as PDF 53996 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices The Commission received two comment letters on the proposal from the Exchanges.8 Section 19(b)(2) of the Act 9 provides that, after initiating proceedings, the Commission shall issue an order approving or disapproving the proposed rule change not later than 180 days after the date of publication of notice of the filing of the proposed rule change. The Commission may extend the period for issuing an order approving or disapproving the proposed rule change, however, by not more than 60 days if the Commission determines that a longer period is appropriate and publishes the reasons for such determination. The proposed rule changes were published for comment in the Federal Register on March 29, 2021.10 The 180th day after publication of the Notices is September 25, 2021. The Commission is extending the time period for approving or disapproving the proposal for an additional 60 days. The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule changes along with the comments received. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,11 designates November 24, 2021 as the date by which the Commission should either approve or disapprove the proposed rule changes (File Nos. SR– NYSE–2021–15, SR–NYSEAMER–2021– 13, SR–NYSEArca–2021–15, SR– NYSENAT–2021–05, NYSECHX–2021– 04). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–21109 Filed 9–28–21; 8:45 am] lotter on DSK11XQN23PROD with NOTICES1 BILLING CODE 8011–01–P NYSE–2021–15, NYSEAMER–2021–13, SR– NYSEArca–2021–15, SR–NYSENAT–2021–05, SR– NYSECHX–2021–04). 8 See, respectively, letter dated June 21, 2021 from Elizabeth K. King, Chief Regulatory Officer, ICE, General Counsel and Corporate Secretary, NYSE to Vanessa Countryman, Secretary, Commission; and letter dated September 7, 2021 from Elizabeth K. King, Chief Regulatory Office, ICE, General Counsel and Corporate Secretary, NYSE to Vanessa Countryman, Secretary, Commission. All comments received by the Commission on the proposed rule change are available on the Commission’s website at: https:// www.sec.gov/comments/sr-nyse-2021-15/ srnyse202115.htm. NYSE filed comment letters on behalf of all of the Exchanges. 9 15 U.S.C. 78s(b)(2). 10 See supra note 5. 11 15 U.S.C. 78s(b)(2). 12 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:22 Sep 28, 2021 Jkt 253001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93114; File No. 4–575] 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 Among the Financial Industry Regulatory Authority, Inc., The Nasdaq Stock Market LLC, and Nasdaq BX, Inc. September 23, 2021. Notice is hereby given that the Securities and Exchange Commission (‘‘Commission’’) has issued an Order, pursuant to Section 17(d) of the Securities Exchange Act of 1934 (‘‘Act’’),1 approving and declaring effective an amendment to the plan for allocating regulatory responsibility (‘‘Plan’’) filed on September 2, 2021, pursuant to Rule 17d–2 of the Act,2 by the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), The Nasdaq Stock Market LLC (‘‘Nasdaq’’), and Nasdaq BX, Inc. (‘‘BX’’) (collectively, ‘‘Participating Organizations’’ or ‘‘parties’’). This agreement amends and restates the agreement entered into between FINRA and BX on December 5, 2008, entitled ‘‘Agreement between Financial Industry Regulatory Authority, Inc. and Boston Stock Exchange, Incorporated pursuant to Rule 17d–2 under the Securities Exchange Act of 1934,’’ and any subsequent amendments thereafter, and the agreement entered into between FINRA and Nasdaq approved by the Commission on July 12, 2006, entitled ‘‘Agreement between the National Association of Securities Dealers, Inc. and The Nasdaq Stock Market LLC Pursuant to Section 17(d) and Rule 17d– 2,’’ and any subsequent amendments thereafter. 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 1 15 U.S.C. 78q(d). CFR 240.17d–2. 3 15 U.S.C. 78s(g)(1). 2 17 PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 17(d) 4 or Section 19(g)(2) 5 of the Act. Without this relief, the statutory obligation of each individual SRO could result in a pattern of multiple examinations of broker-dealers that maintain memberships in more than one SRO (‘‘common members’’). Such regulatory duplication would add unnecessary expenses for common members and their SROs. Section 17(d)(1) of the Act 6 was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.7 With respect to a common member, Section 17(d)(1) authorizes the Commission, by rule or order, to relieve an SRO of the responsibility to receive regulatory reports, to examine for and enforce compliance with applicable statutes, rules, and regulations, or to perform other specified regulatory functions. To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d–1 and Rule 17d–2 under the Act.8 Rule 17d–1 authorizes the Commission to name a single SRO as the designated examining authority (‘‘DEA’’) to examine common members for compliance with the financial responsibility requirements imposed by the Act, or by Commission or SRO rules.9 When an SRO has been named as a common member’s DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d–1 deals only with an SRO’s obligations to enforce member compliance with financial responsibility requirements. Rule 17d–1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including 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 4 15 U.S.C. 78q(d). U.S.C. 78s(g)(2). 6 15 U.S.C. 78q(d)(1). 7 See Securities Act Amendments of 1975, Report of the Senate Committee on Banking, Housing, and Urban Affairs to Accompany S. 249, S. Rep. No. 94– 75, 94th Cong., 1st Session 32 (1975). 8 17 CFR 240.17d–1 and 17 CFR 240.17d–2, respectively. 9 See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). 10 See Securities Exchange Act Release No. 12935 (October 28, 1976), 41 FR 49091 (November 8, 1976). 5 15 E:\FR\FM\29SEN1.SGM 29SEN1 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices 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 January 8, 2009, the Commission declared effective the Plan entered into between FINRA and the Boston Stock Exchange, Incorporated (n/k/a Nasdaq BX, Inc. (‘‘BX’’)) 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 BX 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 BX rule for which FINRA bears responsibility under the Plan for overseeing and enforcing with respect to BX members that are also members of FINRA and the associated persons therewith (‘‘Certification’’). lotter on DSK11XQN23PROD with NOTICES1 III. Proposed Amendment to the Plan On September 2, 2021, 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, to reflect the name change of Boston Stock Exchange, Incorporated to Nasdaq BX, Inc., and to add Nasdaq as a Participant to the Plan.12 The text of the proposed Amended Plan, which replaces and supersedes the current Plan in its entirety, is as follows: * * * * * 11 See Securities Exchange Act Release No. 59218 (January 8, 2009), 74 FR 2143 (January 14, 2009). 12 The Amended Plan replaces and supersedes the agreement between FINRA and Nasdaq. See Securities Exchange Act Release No. 54136 (July 12, 2006), 71 FR 40759 (July 18, 2006). VerDate Sep<11>2014 18:22 Sep 28, 2021 Jkt 253001 Agreement [Between] Among Financial Industry Regulatory Authority, Inc., The NASDAQ Stock Market LLC and [Boston Stock Exchange, Incorporated] NASDAQ BX, Inc. Pursuant to Rule 17d–2 Under the Securities Exchange Act of 1934 This Agreement, by and [between]among the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’), The Nasdaq Stock Market LLC (‘‘Nasdaq’’) and [Boston Stock Exchange, Incorporated]Nasdaq BX, Inc. (‘‘BX’’), is made this [5th] 30th day of [December]August, [2008]2021 (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 selfregulatory organizations to allocate regulatory responsibility to eliminate regulatory duplication. FINRA, Nasdaq and BX may be referred to individually as a ‘‘party’’ and together as the ‘‘parties.’’ This Agreement amends and restates the agreement entered into between FINRA and BX on December 5, 2008, entitled ‘‘Agreement between Financial Industry Regulatory Authority, Inc. and Boston Stock Exchange, Incorporated pursuant to Rule 17d–2 under the Securities Exchange Act of 1934,’’ and any subsequent amendments thereafter and the agreement entered into between FINRA and Nasdaq approved by the SEC on July 12, 2006, entitled ‘‘Agreement between the National Association of Securities Dealers, Inc. and The Nasdaq Stock Market LLC Pursuant to Section 17(d) and Rule 17d–2,’’ and any subsequent amendments thereafter. Whereas, FINRA, Nasdaq and BX desire to reduce duplication in the examination, of their [Dual]Common Members (as defined herein) and in the filing and processing of certain registration and membership records; and Whereas, FINRA, Nasdaq and BX 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 U.S. Securities and Exchange Commission (the ‘‘SEC’’ or ‘‘Commission’’) for its approval. Now, therefore, in consideration of the mutual covenants contained hereinafter, FINRA, Nasdaq and BX hereby agree as follows: 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) ‘‘Nasdaq Rules’’, ‘‘BX Rules’’ or ‘‘FINRA Rules’’ shall mean: (i) The rules of Nasdaq, (ii) the rules of BX, or (iii) the rules of FINRA, respectively, as the rules of an exchange or association are defined in Exchange Act Section 3(a)(27). (b) ‘‘Common Rules’’ shall mean Nasdaq Rules and BX Rules that are substantially similar to the applicable FINRA Rules and certain provisions of the Exchange Act and SEC rules set forth on Exhibit 1 in that examination for compliance with such provisions and rules would not require PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 53997 FINRA to develop one or more new examination standards, modules, procedures, or criteria in order to analyze the application of the provision or rule, or a [Dual]Common Member’s activity, conduct, or output in relation to such provision or rule; provided, however, Common Rules shall not include the application of the SEC, Nasdaq, BX or FINRA rules as they pertain to violations of insider trading activities, which is covered by a separate 17d–2 Agreement by and among [the American Stock Exchange, LLC, BATS Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., and Philadelphia Stock Exchange, Inc.] Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., Investors Exchange LLC and LongTerm Stock Exchange, Inc. approved by the Commission on [October 17, 2008]September 23, 2020. Common Rules shall not include any provisions regarding: (i) Notice, reporting or any other filings made directly to or from Nasdaq or BX; (ii) incorporation by reference of other Nasdaq or BX 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 Nasdaq or BX; (iv) prior written approval of Nasdaq or BX; and (v) payment of fees or fines to Nasdaq or BX. (c) ‘‘[Dual]Common Members’’ shall mean those members of FINRA and a member of at least one of Nasdaq or BX [members that are also members of FINRA] and the associated persons therewith. (d) ‘‘Effective Date’’ shall have the meaning set forth in paragraph [14]13. (e) ‘‘Enforcement Responsibilities’’ shall mean the conduct of appropriate proceedings, in accordance with FINRA’s Code of Procedure (the [NASD] Rule 9000 Series) and other applicable FINRA procedural rules, to determine whether violations of Common Rules have occurred, and if such violations are deemed to have occurred, the imposition of appropriate sanctions as specified under FINRA’s Code of Procedure and sanctions guidelines. (f) ‘‘Regulatory Responsibilities’’ shall mean the examination responsibilities and Enforcement Responsibilities relating to compliance by the [Dual]Common Members with the Common Rules and the provisions of the Exchange Act and the rules and regulations thereunder, and other applicable laws, rules and regulations, each as set forth on Exhibit 1 attached hereto. The term ‘‘Regulatory Responsibilities’’ shall also include the surveillance, investigation and Enforcement Responsibilities relating to compliance by Common Members with Rule 14e–4 of the Securities Exchange Act (‘‘Rule E:\FR\FM\29SEN1.SGM 29SEN1 lotter on DSK11XQN23PROD with NOTICES1 53998 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices 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]Common Members. Attached as Exhibit 1 to this Agreement and made part hereof, Nasdaq and BX furnished FINRA with a current list of Common Rules and certified to FINRA that such rules that are Nasdaq Rules and BX Rules are substantially similar to the corresponding FINRA Rules (the ‘‘Certification’’). FINRA hereby agrees that the rules listed in the Certification are Common Rules as defined in this Agreement. Each year following the Effective Date of this Agreement, or more frequently if required by changes in either the rules of Nasdaq, BX or FINRA, Nasdaq and BX shall submit an updated list of Common Rules to FINRA for review which shall add Nasdaq Rules and BX Rules not included in the current list of Common Rules that qualify as Common Rules as defined in this Agreement; delete Nasdaq Rules and BX 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 Nasdaq Rules and BX 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 Nasdaq and BX shall retain full responsibility for (unless otherwise addressed by separate agreement or rule) (collectively, the ‘‘Retained Responsibilities’’) the following: (a) [S]surveillance, examination, investigation and enforcement with respect to trading activities or practices involving Nasdaq’s or BX’s own marketplaces; (b) registration pursuant to [its]Nasdaq’s or BX’s applicable rules of associated persons (i.e., registration rules that are not Common Rules); (c) discharge of [its]Nasdaq’s or BX’s duties and obligations as a Designated Examining Authority pursuant to Rule 17d–1 under the Exchange Act; and (d) any Nasdaq Rules and BX Rules that are not Common Rules. [3.] Dual Members. Prior to the Effective Date, BX shall furnish FINRA with a current list of Common Members, which shall be updated no less frequently than once each quarter.] [4.]3. No Charge. There shall be no charge to Nasdaq and BX by FINRA for performing the Regulatory Responsibilities [and Enforcement Responsibilities] under this Agreement except as hereinafter provided]. FINRA shall provide Nasdaq and BX with ninety (90) days advance written notice in the event FINRA decides to impose any charges to Nasdaq and BX for performing the Regulatory Responsibilities under this Agreement. If FINRA determines to impose a VerDate Sep<11>2014 18:22 Sep 28, 2021 Jkt 253001 charge, Nasdaq and BX 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.]4. Reassignment of Regulatory Responsibilities. Notwithstanding any provision hereof, this Agreement shall be subject to any statute, or any rule or order of the Commission 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.]5. Notification of Violations. In the event that FINRA becomes aware of apparent violations of any Nasdaq Rules or BX Rules, which are not listed as Common Rules, discovered pursuant to the performance of the Regulatory Responsibilities assumed hereunder, FINRA shall notify Nasdaq and BX of those apparent violations for such response as Nasdaq and BX deems appropriate. In the event that Nasdaq or BX becomes aware of apparent violations of any Common Rules, discovered pursuant to the performance of the Retained Responsibilities, Nasdaq and BX shall notify FINRA of those apparent violations and such matters shall be handled by FINRA as provided in this Agreement. Each party agrees to make available promptly all files, records and witnesses necessary to assist the other in its investigation or proceedings. Apparent violations of Common Rules, FINRA Rules, federal securities laws, and rules and regulations thereunder, 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]Common Member is the subject of an investigation relating to a transaction on Nasdaq or BX, Nasdaq and BX, at each party’s [may in its] discretion assume concurrent jurisdiction and responsibility. [7.]6. Continued Assistance. (a) FINRA shall make available to Nasdaq and BX all information obtained by FINRA in the performance by it of the Regulatory Responsibilities hereunder with respect to the [Dual]Common Members subject to this Agreement. In particular, and not in limitation of the foregoing, FINRA shall furnish Nasdaq and BX any information it obtains about [Dual]Common Members which reflects adversely on their financial condition. Nasdaq and BX shall make available to FINRA any information coming to [its]their attention that reflects adversely on the financial condition of [Dual]Common Members or indicates possible violations of applicable laws, rules or regulations by such firms. (b) The parties agree that documents or information shared shall be held in confidence, and used only for the purposes of carrying out their respective regulatory obligations. Neither party shall assert regulatory or other privileges as against the other with respect to documents or PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 information that is required to be shared pursuant to this Agreement. (c) The sharing of documents or information between the parties pursuant to this Agreement shall not be deemed a waiver as against third parties of regulatory or other privileges relating to the discovery of documents or information. [8.]7. [Dual]Common Member Applications. (a) [Dual]Common 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 rules of [both]Nasdaq, BX and FINRA or associated with [Dual]Common Members thereof. Upon request, FINRA shall advise Nasdaq and BX of any changes of allied members, partners, officers, registered personnel and other persons required to be approved by the rules of [both]Nasdaq, BX and FINRA. (b) [Dual]Common Members shall be required to send to FINRA all letters, termination notices or other material respecting the individuals listed in paragraph [8]7(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]Common Member, FINRA shall determine pursuant to Sections 15A(g) and/ or Section 6(c) of the Exchange Act the acceptability or continued applicability of the person to whom such disqualification applies and keep Nasdaq and BX advised of its actions in this regard for such subsequent proceedings as Nasdaq and BX 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 meets the Nasdaq or BX requirements for general membership or for specified categories of membership or participation in Nasdaq or BX, such as Equities Market Maker, Equities ECN, Order Entry Firm, or any similar type of Nasdaq or BX membership or participation 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]7(d), including termination or limitation on activities, of a member or a participant of Nasdaq or BX, or a person associated with, or requesting association with, a member or participant of Nasdaq or BX. [9.]8. 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]Common Members and any other applications required of [Dual]Common Members with respect to the Common Rules as they may be amended from time to time. Upon request, FINRA shall advise Nasdaq and BX of the opening, address change and termination of branch E:\FR\FM\29SEN1.SGM 29SEN1 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices and main offices of [Dual]Common Members and the names of such branch office managers. [10.]9. Customer Complaints. Nasdaq and BX shall forward to FINRA copies of all customer complaints involving [Dual]Common Members received by Nasdaq and BX 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.]10. Advertising. FINRA shall assume responsibility to review the advertising of [Dual]Common Members subject to the Agreement, provided that such material is filed with FINRA in accordance with FINRA’s filing procedures and is accompanied with any applicable filing fees set forth in FINRA Rules. [12.]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]Common Members, as either party, in its sole discretion, shall deem appropriate or necessary. [13.]12. Termination. This Agreement may be terminated by Nasdaq, BX or FINRA at any time upon the approval of the Commission after one (1) year’s written notice to the other party, except as provided in paragraph [4]3. [14.]13. Effective Date. This Agreement shall be effective upon approval of the Commission. [15.]14. Arbitration. In the event of a dispute between the parties as to the operation of this Agreement, Nasdaq, BX and FINRA hereby agree that any such dispute shall be settled by arbitration in Washington, DC in accordance with the rules of the American Arbitration Association then in effect, or such other procedures as the parties may mutually agree upon. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. Each party acknowledges that the timely and complete performance of its obligations pursuant to this Agreement is critical to the business and operations of the other party. In the event of a dispute between the parties, the parties shall continue to perform their respective obligations under this Agreement in good faith during the resolution of such dispute unless and until this Agreement is terminated in accordance with its provisions. Nothing in this Section [15]14 shall interfere with a party’s right to terminate this Agreement as set forth herein. [16. Notification of Members. BX and FINRA shall notify Dual Members of this Agreement after the Effective Date by means of a uniform joint notice.] [17.]15. 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.]16. Limitation of Liability. [Neither FINRA nor BX]None of the parties nor any of their respective directors, governors, officers or employees shall be liable to [the]any other party to this Agreement for any liability, loss or damage resulting from or claimed to have resulted from any delays, inaccuracies, errors or omissions with respect to the provision of Regulatory Responsibilities as provided hereby or for the failure to provide any such responsibility, except with respect to such liability, loss or damages as shall have been suffered by any party [one or the other of FINRA or BX] and caused by the willful misconduct of [the other]another party or their respective directors, governors, officers or employees. No warranties, express or implied, are made by [FINRA or BX]any party hereto with respect to any of the responsibilities to be performed by [each of] them hereunder. [19.]17. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d–2 thereunder, FINRA, Nasdaq and BX join in requesting the Commission, upon its approval of this Agreement or any part thereof, to relieve Nasdaq and BX 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. [20.]18. 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. [21.]19. Separate Agreement. This Agreement is wholly separate from (1) the multiparty Agreement made pursuant to Rule 170d–2 of the Exchange Act among 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, lotter on DSK11XQN23PROD with NOTICES1 BX Rule VerDate Sep<11>2014 18:22 Sep 28, 2021 MIAX PEARL, LLC, and MIAX Emerald, LLC approved by the Commission on 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, index warrants, currency index warrants and currency warrants or (2) the multiparty Agreement made pursuant to Rule 17d–2 of the Exchange Act among 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 February 11, 2019 involving optionsrelated market surveillance matters and such agreements as may be amended from time to time. [22.]20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and such counterparts together shall constitute one and the same instrument. Exhibit 1 [Valid beginning December 15, 2008] NOTE: The entire existing table of rules should be deleted and replaced with the table below and for the remainder of the exhibit new text is underlined and deleted text is in brackets. NASDAQ AND BX RULES CERTIFICATION FOR 17d–2 AGREEMENT WITH FINRA The Nasdaq Stock Market LLC (‘‘Nasdaq’’) and [Boston Stock Exchange, Incorporated]Nasdaq BX, Inc. (‘‘BX’’) hereby certify[ies] that the requirements contained in the Nasdaq and BX rules listed below are identical to, or substantially similar to, the [NASD and] FINRA rules noted below: #Common Rules shall not include provisions regarding (i) notice, reporting or any other filings made directly to or from Nasdaq or BX, (ii) incorporation by reference to other Nasdaq or BX 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 Nasdaq or BX, (iv) prior written approval of Nasdaq or BX, and (v) payment of fees or fines to Nasdaq or BX. Nasdaq Rule General 2, Section 15. Business Continuity Plans#. General 2, Section 10. Executive Representative. General 3, Rule 1002(b) Qualifications of Exchange Members and Associated Persons; Registration of Branch Offices and Designation of Office of Supervisory Jurisdiction#. Jkt 253001 FINRA Rule General 2, Section 15. Business Continuity Plans#. General 2, Section 10. Executive Representative. General 3, Rule 1002(b) Qualifications of Exchange Members and Associated Persons; Registration of Branch Offices and Designation of Office of Supervisory Jurisdiction#. PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 53999 4370. Business Continuity Plans. 4517. Member Filing and Contact Information Requirements. FINRA Bylaws Article III, Sec. 1. E:\FR\FM\29SEN1.SGM 29SEN1 54000 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices BX Rule Nasdaq Rule FINRA Rule General 3, Rule 1002(d). Registration of Branch Offices and Designation of Office of Supervisory Jurisdiction#. General 3, 1012(c)(1). Duty to Ensure the Accuracy, Completeness, and Current Nature of Membership Information Filed with the Exchange#. General 4, Section 1, 1210. Registration Requirements#. General 4, Section 1, 1220. Registration Categories1#. General 4, Section 1, 1220.06. Eliminated Registration Categories1. General 3, Rule 1002(d). Registration of Branch Offices and Designation of Office of Supervisory Jurisdiction#. General 3, Rule 1012(c)(1). Duty to Ensure the Accuracy, Completeness, and Current Nature of Membership Information Filed with the Exchange#. General 4, Section 1, 1210. Registration Requirements#. General 4, Section 1, 1220. Registration Categories1#. General 4, Section 1, 1220.06. Eliminated Registration Categories2. 3110(a)(3) Supervision and SM .01 and .02 Supervision* and FINRA By-Laws Article IV, Sec. 8. 1122. Filing of Misleading Information as to Membership or Registration; FINRA Bylaws Article IV, sec. 1(c) of the By-Laws. 1210. Registration Requirements. 1220. Registration Categories. 1220.06. Eliminated Registration Categories. 1 FINRA shall only have Regulatory Responsibilities regarding BX General 4, Section 1220 to the extent that BX recognizes the same categories of limited principal and representative registration as the BX Rule, by incorporating Nasdaq General 4, Section 1220, does not recognize registration related to investment banking, research, government securities, investment company and variable contracts products, direct participation programs, private securities offerings, and operations professional. 2 FINRA shall only have Regulatory Responsibilities regarding Nasdaq General 4, Section 1220 to the extent that Nasdaq recognizes the same categories of limited principal and representative registration as Nasdaq General 4, Section 1220 does not recognize registration related to investment banking, research, government securities, investment company and variable contracts products, direct participation programs, private securities offerings, and operations professional. lotter on DSK11XQN23PROD with NOTICES1 General 4, Section 1, Rule 1230(1)–(2)(D) Associated Persons Exempt from Registration#. General 4, Section 1, 1240. Continuing Education Requirements. General 4, Section 1, 1250. Electronic Filing Requirements for Uniform Forms#. General 4, Section 1, Rule 1230(1)–(2)(D) Associated Persons Exempt from Registration#. General 4, Section 1, 1240. Continuing Education Requirements. General 4, Section 1, 1250. Electronic Filing Requirements for Uniform Forms#. Equity 5, Section 1. Definitions .......................... Equity 5, Section 2. Applicability ........................ Equity 5, Section 3. Synchronization of Member Business Clocks. Equity 5, Section 4. Recording of Order Information. Equity 5, Section 5. Order Data Transmission Requirements. Equity 5, Section 6. Violation of Order Audit Trail System Rules. General 9, Section 1(a). Standards of Commercial Honor and Principles of Trade. General 9, Section 1(b). Trading Ahead of Customer Orders. General 9, Section 1(c). Front Running Policy .. General 9, Section 1(d). Trading Ahead of Research Reports. General 9, Section 1(e). Anti-Intimidation/Coordination. General 9, Section 1(f). Confirmation of Callable Common Stock. General 9, Section 1(g). Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes. General 9, Section 1(i). Use of Manipulative, Deceptive or Other Fraudulent Devices. General 9, Section 2. Customers’ Securities or Funds. Equity 5, Section 1. Definitions ........................ Equity 5, Section 2. Applicability ..................... Equity 5, Section 3. Synchronization of Member Business Clocks. Equity 5, Section 4. Recording of Order Information. Equity 5, Section 5. Order Data Transmission Requirements. Equity 5, Section 6. Violation of Order Audit Trail System Rules. General 9, Section 1(a). Standards of Commercial Honor and Principles of Trade. General 9, Section 1(b). Prohibition Against Trading Ahead of Customer Orders. General 9, Section 1(c). Front Running Policy General 9, Section 1(d). Trading Ahead of Research Reports. General 9, Section 1(e). Anti-Intimidation/Coordination. General 9, Section 1(f). Confirmation of Callable Common Stock. General 9, Section 1(h). Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes. General 9, Section 1(g). Use of Manipulative, Deceptive or Other Fraudulent Devices. General 9, Section 2. Customers’ Securities or Funds. General 9, Section 3. Communications with the Public. General 9, Section 5. Telemarketing ................. General 9, Section 6. Forwarding of Proxy and Other Issuer-Related Materials. General 9, Section 7(a). Disclosure of Financial Condition. General 9, Section 7(b). Disclosure of Control Relationship with Issuer. General 9, Section 7(c). Disclosure of Participation or Interest in Primary or Secondary Distribution. General 9, Section 10 Recommendations to Customers (Suitability). General 9, Section 3. Communications with the Public. General 9, Section 5. Telemarketing ............... General 9, Section 6. Forwarding of Proxy and Other Issuer-Related Materials. General 9, Section 7(a). Disclosure of Financial Condition. General 9, Section 7(b). Disclosure of Control Relationship with Issuer. General 9, Section 7(c). Disclosure of Participation or Interest in Primary or Secondary Distribution. General 9, Section 10 Recommendations to Customers (Suitability). VerDate Sep<11>2014 18:22 Sep 28, 2021 Jkt 253001 PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 1230. Associated Persons Exempt from Registration. 1240. Continuing Education Requirements. 1010. Electronic Filing Requirements for Uniform Forms and FINRA Bylaws Article V, Section 2. 7410. Definitions. 7420. Applicability. 7430. Synchronization of Member Business Clocks. 7440. Recording of Order Information. 7450. Order Data Transmission Requirements. 7460. Violation of Order Audit Trail System Rules. 2010. Standards of Commercial Honor and Principles of Trade.* 5320. Prohibition Against Trading Ahead of Customer Orders. 5270. Front Running of Block Transactions. 5280. Trading Ahead of Research Reports. 5240. Anti-Intimidation/Coordination. 2232. Customer Confirmations. 2140. Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes. 2020. Use of Manipulative, Deceptive or Other Fraudulent Devices.* 2150. Improper Use of Customers’ Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts. 2210. Communications with the Public. 3230. Telemarketing. 2251. Processing and Forwarding of Proxy and Other Issuer-Related Materials. 2261. Disclosure of Financial Condition. 2262. Disclosure of Control Relationship with Issuer. 2269. Disclosure of Participation or Interest in Primary or Secondary Distribution. 2111. Suitability. E:\FR\FM\29SEN1.SGM 29SEN1 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices General 9, Section 11. Best Execution and Interpositioning. General 9, Section 12. Customer Account Statements. General 9, Section 13. Margin Disclosure Statement. General 9, Section 14. Approval Procedures for Day-Trading Accounts. General 9, Section 11. Best Execution and Interpositioning. General 9, Section 12. Customer Account Statements. General 9, Section 13. Margin Disclosure Statement. General 9, Section 14. Approval Procedures for Day-Trading Accounts. General 9, Section 15. Borrowing From or Lending to Customers. General 9, Section 16. Charges for Services Performed. General 9, Section 18. Payments for Market Making. General 9, Section 19. Discretionary Accounts General 9, Section 20. Supervision ................... General 9, Section 21(a). Supervisory Control System, Annual Certification of Compliance and Supervisory Processes. General 9, Section 21(c). Supervisory Control System, Annual Certification of Compliance and Supervisory Processes. General 9, Section 23. Outside Business Activities of an Associated Person. General 9, Section 24. Private Securities Transactions of an Associated Person. General 9, Section 25. Transactions for or by Associated Persons. General 9, Section 26. Influencing or Rewarding Employees of Others. General 9, Section 27. Reporting Requirements#. General 9, Section 28. Disclosure to Associated Persons When Signing Form U–4. General 9, Section 15. Borrowing From or Lending to Customers. General 9, Section 16. Charges for Services Performed. General 9, Section 18. Payments for Market Making. General 9, Section 19. Discretionary Accounts General 9, Section 20. Supervision ................. General 9, Section 21(a). Supervisory Control System, Annual Certification of Compliance and Supervisory Processes. General 9, Section 21(c). Supervisory Control System, Annual Certification of Compliance and Supervisory Processes. General 9, Section 23. Outside Business Activities of an Associated Person. General 9, Section 24. Private Securities Transactions of an Associated Person. General 9, Section 25. Transactions for or by Associated Persons. General 9, Section 26. Influencing or Rewarding Employees of Others. General 9, Section 27. Reporting Requirements#. General 9, Section 28. Disclosure to Associated Persons When Signing Form U–4. General 9, Section 30. Books and Records, Section 43. General Requirements. General 9, Section 31. Use of Information Obtained in Fiduciary Capacity. General 9, Section 37. Anti-Money Laundering Compliance Program. General 9, Section 39. Fidelity Bonds ............... General 9, Section 30. Books and Records, (d) Record of Written Complaints; (e) ‘‘Complaint’’ Defined. General 9, Section 30. Books and Records, (b) Customer Account Information. General 9, Section 30. Books and Records, (g) Negotiable Instruments Drawn From A Customer’s Account. General 9, Section 30. Books and Records, (j) Changes in Account Name or Designation. General 9, Section 30. Books and Records, Section 43. General Requirements. General 9, Section 31. Use of Information Obtained in Fiduciary Capacity. General 9, Section 37. Anti-Money Laundering Compliance Program. General 9, Section 39. Fidelity Bonds ............. General 9, Section 44. Records of Written Customer Complaints. General 9, Section Publications that of a Security. General 9, Section General 9, Section 49. Payments Involving Influence the Market Price 50. Foreign Members# ........ 51. Research Analysts ........ lotter on DSK11XQN23PROD with NOTICES1 General 9, Section 71. Custodian of Books and Records. Equity 9, Section 1 Adjustment of Open Orders Equity 9, Section 3. Publication of Transactions and Quotations. Equity 9, Section 10. Prompt Receipt and Delivery of Securities. Equity 10, Section 1. Direct Participation Programs. Equity 10, Section 2. Investment Company Securities. 2841. General ..................................................... VerDate Sep<11>2014 18:22 Sep 28, 2021 Jkt 253001 General 9, Section 45. Customer Account Information. General 9, Section 46. Authorization Records for Negotiable Instruments Drawn From a Customer’s Account. General 9, Section 47. Approval and Documentation of Changes in Account Name or Designation. General 9, Section 49. Payments Involving Publications that Influence the Market Price of a Security. General 9, Section 50. Foreign Members# ...... General 9, Section 51. Research Analyst ....... General 9, Section 71. Custodian of Books and Records. Equity 9, Section 1. Adjustment of Open Orders. Equity 9, Section 3. Publication of Transactions and Quotations. Equity 9, Section 10. Prompt Receipt and Delivery of Securities. Equity 10, Section 1. Direct Participation Programs. Equity 10, Section 2. Investment Company Securities. Equity 10, Section 3(a). General ..................... PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 54001 5310. Best Execution and Interpositioning. 2231. Customer Account Statements. 2264. Margin Disclosure Statement. 2130. Approval Procedures for Day-Trading Accounts and Rule 2270 Day-Trading Risk Disclosure Statement. 3240. Borrowing From or Lending to Customers. 2122. Charges for Services Performed. 5250. Payments for Market Making. 3260. Discretionary Accounts. 3110. Supervision. 3120. Supervisory Control System. 3130. Annual Certification of Compliance and Supervisory Processes. 3270. Outside Business Activities of an Associated Person. 3280. Private Securities Transactions of an Associated Person. 3210. Accounts at Other Broker-Dealers and Financial Institutions. 3220. Influencing or Rewarding Employees of Others. 4530. Reporting Requirements. 2263. Arbitration Disclosure to Associated Persons When Signing or Acknowledging Form U–4. 4511. General Requirements. 2060. Use of Information Obtained in Fiduciary Capacity. 3310. Anti-Money Laundering Compliance Program. 4360. Fidelity Bonds. 4513. Records of Written Customer Complaints. 4512. Customer Account Information. 4514. Authorization Records for Negotiable Instruments Drawn From a Customer’s Account. 4515. Approval and Documentation of Changes in Account Name or Designation. 5230. Payments Involving Publications that Influence the Market Price of a Security. 1021. Foreign Members. 2241. Research Analysts and Research Reports. 4570. Custodian of Books and Record, (a) Designation of Custodian. 5330. Adjustment of Orders. 5210. Publication of Transactions and Quotations. 11860(a)(4)(A). Purchases. 2310. Direct Participation Programs. 2341. Investment Company Securities. 2351(a). General Provisions Applicable to Trading in Index Warrants, Currency Index Warrants and Currency Warrants. E:\FR\FM\29SEN1.SGM 29SEN1 54002 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices Equity 10, Section 4 Position Limits; 5 Exercise Limits; and 7 Liquidation of Index Warrant Positions. Equity 10, Section 4 Position Limits; 5 Exercise Limits; and 7 Liquidation of Index Warrant Positions. The following provisions are covered by the Agreement between the Parties: • SEC ’34 Act Section 28(e) Effect on Existing Law • SEC ’34 Act Rule 10b–10 Confirmation of Transactions • SEC ’34 Act Rule 203 of Regulation SHO Borrowing and Delivery Requirements • SEC ’34 Act Rule 606 of Regulation NMS Disclosure of Order Routing Information • SEC ’34 Act Rule 607 of Regulation NMS Customer Account Statements • 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 any Regulatory Responsibilities for these rules as they pertain to violations of insider trading activities, which is covered by a separate 17d–2 Agreement by and among [the American Stock Exchange, LLC, BATS Exchange, Inc. Boston Stock Exchange, Inc., CBOE Stock Exchange, LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., and Philadelphia Stock Exchange, Inc.] Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, Inc., Cboe EDGA Exchange Inc., Cboe EDGX Exchange Inc., Financial Industry Regulatory Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock Exchange, LLC, NYSE American LLC, NYSE Arca Inc., and Investors’ Exchange LLC and the Long-Term Stock Exchange, Inc. as approved by the SEC on [October 17, 2008]September 23, 2020. 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, BX, and Nasdaq. 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 4–575 and should be submitted on or before October 20, 2021. 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: lotter on DSK11XQN23PROD with NOTICES1 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– 575 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 4–575. This file number should VerDate Sep<11>2014 18:22 Sep 28, 2021 Jkt 253001 V. Discussion The Commission finds that the proposed Amended Plan is consistent with the factors set forth in Section 17(d) of the Act 13 and Rule 17d–2(c) thereunder 14 in that the proposed 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 FINRA, BX, and Nasdaq. Accordingly, the proposed Amended Plan promotes efficiency by reducing costs to Common Members. Furthermore, because BX, Nasdaq and 13 15 14 17 PO 00000 U.S.C. 78q(d). CFR 240.17d–2(c). Frm 00061 Fmt 4703 2357. Position and Exercise Limits; Liquidations. 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, BX, Nasdaq and FINRA have allocated regulatory responsibility for those BX and Nasdaq 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, BX and Nasdaq will each review the Certification at least annually, or more frequently if required by changes in either the rules of BX, Nasdaq, or FINRA, and, if necessary, submit to FINRA an updated list of Common Rules to add BX or Nasdaq rules not included on the then-current list of Common Rules that are substantially similar to FINRA rules; delete BX or Nasdaq rules included in the thencurrent list of Common Rules that no longer qualify as common rules; and confirm that the remaining rules on the list of Common Rules continue to be BX or Nasdaq rules that qualify as common rules.15 FINRA will then confirm in writing whether the rules listed in any updated list are Common Rules as defined in the Amended Plan. 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 BX and Nasdaq rules that are substantially 15 See Sfmt 4703 E:\FR\FM\29SEN1.SGM paragraph 2 of the Amended Plan. 29SEN1 Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Notices similar to the rules of FINRA for Common Members of BX and FINRA, and Nasdaq 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 BX or Nasdaq 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 BX and Nasdaq rule to the Certification that is not substantially similar to a FINRA rule; delete a BX and Nasdaq rule from the Certification that is substantially similar to a FINRA rule; or leave on the Certification a BX and Nasdaq 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 Amended Plan is to allocate surveillance, investigation, and enforcement responsibilities for Rule 14e–4 under the Act, to reflect the name change of Boston Stock Exchange, Incorporated to Nasdaq BX, Inc., and to add Nasdaq as a Participant to the Plan. 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. lotter on DSK11XQN23PROD with NOTICES1 VI. Conclusion This order gives effect to the Amended Plan filed with the Commission in File No. 4–575. 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 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. 17 See supra note 11 (citing to Securities Exchange Act Release No. 59218). VerDate Sep<11>2014 18:22 Sep 28, 2021 Jkt 253001 Amended Plan in File No. 4–575, between the FINRA, BX, and Nasdaq, filed pursuant to Rule 17d–2 under the Act, hereby is approved and declared effective. It is further ordered that BX and Nasdaq are relieved of those responsibilities allocated to FINRA under the Amended Plan in File No. 4– 575. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–21113 Filed 9–28–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93113; File No. SR–Phlx– 2021–55] Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Pricing Schedule at Equity 7, Section 3(a) September 23, 2021. 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 September 13, 2021, Nasdaq PHLX LLC (‘‘Phlx’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s pricing schedule at Equity 7, Section 3(a), as described further below. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/phlx/rules, at the principal office of the Exchange, and at the Commission’s Public Reference Room. CFR 200.30–3(a)(34). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these 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 aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend the Exchange’s schedule of credits, at Equity 7, Section 3(a). Specifically, the Exchange proposes to eliminate an existing credit of $0.0033 per share executed to members that provide liquidity for displayed quotes/orders executed. The Exchange currently provides a $0.0033 per share executed credit for displayed quotes/orders executed at or between $1.00 and $5.00 per share. The Exchange proposes to eliminate the existing credit as it has not been effective in accomplishing its intended purpose, which is to incent members to increase their liquidity adding activity. This credit has served to neither sufficiently increase activity on, nor improved the market quality of, the Exchange. The Exchange therefore proposes to eliminate it. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,3 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,4 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The proposal is also consistent with Section 11A of the Act relating to the establishment of the national market system for securities. 18 17 1 15 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 54003 3 15 4 15 E:\FR\FM\29SEN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 29SEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 186 (Wednesday, September 29, 2021)]
[Notices]
[Pages 53996-54003]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21113]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93114; File No. 4-575]


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 Among the Financial Industry Regulatory Authority, 
Inc., The Nasdaq Stock Market LLC, and Nasdaq BX, Inc.

September 23, 2021.
    Notice is hereby given that the Securities and Exchange Commission 
(``Commission'') has issued an Order, pursuant to Section 17(d) of the 
Securities Exchange Act of 1934 (``Act''),\1\ approving and declaring 
effective an amendment to the plan for allocating regulatory 
responsibility (``Plan'') filed on September 2, 2021, pursuant to Rule 
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority, 
Inc. (``FINRA''), The Nasdaq Stock Market LLC (``Nasdaq''), and Nasdaq 
BX, Inc. (``BX'') (collectively, ``Participating Organizations'' or 
``parties''). This agreement amends and restates the agreement entered 
into between FINRA and BX on December 5, 2008, entitled ``Agreement 
between Financial Industry Regulatory Authority, Inc. and Boston Stock 
Exchange, Incorporated pursuant to Rule 17d-2 under the Securities 
Exchange Act of 1934,'' and any subsequent amendments thereafter, and 
the agreement entered into between FINRA and Nasdaq approved by the 
Commission on July 12, 2006, entitled ``Agreement between the National 
Association of Securities Dealers, Inc. and The Nasdaq Stock Market LLC 
Pursuant to Section 17(d) and Rule 17d-2,'' and any subsequent 
amendments thereafter.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78q(d).
    \2\ 17 CFR 240.17d-2.
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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).
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    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.
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    \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).
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    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

[[Page 53997]]

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.
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    \10\ See Securities Exchange Act Release No. 12935 (October 28, 
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------

II. The Plan

    On January 8, 2009, the Commission declared effective the Plan 
entered into between FINRA and the Boston Stock Exchange, Incorporated 
(n/k/a Nasdaq BX, Inc. (``BX'')) 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 BX 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 BX rule for 
which FINRA bears responsibility under the Plan for overseeing and 
enforcing with respect to BX members that are also members of FINRA and 
the associated persons therewith (``Certification'').
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 59218 (January 8, 
2009), 74 FR 2143 (January 14, 2009).
---------------------------------------------------------------------------

III. Proposed Amendment to the Plan

    On September 2, 2021, 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, to reflect the name 
change of Boston Stock Exchange, Incorporated to Nasdaq BX, Inc., and 
to add Nasdaq as a Participant to the Plan.\12\ The text of the 
proposed Amended Plan, which replaces and supersedes the current Plan 
in its entirety, is as follows:
---------------------------------------------------------------------------

    \12\ The Amended Plan replaces and supersedes the agreement 
between FINRA and Nasdaq. See Securities Exchange Act Release No. 
54136 (July 12, 2006), 71 FR 40759 (July 18, 2006).
---------------------------------------------------------------------------

* * * * *

Agreement [Between] Among Financial Industry Regulatory Authority, 
Inc., The NASDAQ Stock Market LLC and [Boston Stock Exchange, 
Incorporated] NASDAQ BX, Inc. Pursuant to Rule 17d-2 Under the 
Securities Exchange Act of 1934

    This Agreement, by and [between]among the Financial Industry 
Regulatory Authority, Inc. (``FINRA''), The Nasdaq Stock Market LLC 
(``Nasdaq'') and [Boston Stock Exchange, Incorporated]Nasdaq BX, 
Inc. (``BX''), is made this [5th] 30th day of [December]August, 
[2008]2021 (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, Nasdaq and BX may be referred to 
individually as a ``party'' and together as the ``parties.''
    This Agreement amends and restates the agreement entered into 
between FINRA and BX on December 5, 2008, entitled ``Agreement 
between Financial Industry Regulatory Authority, Inc. and Boston 
Stock Exchange, Incorporated pursuant to Rule 17d-2 under the 
Securities Exchange Act of 1934,'' and any subsequent amendments 
thereafter and the agreement entered into between FINRA and Nasdaq 
approved by the SEC on July 12, 2006, entitled ``Agreement between 
the National Association of Securities Dealers, Inc. and The Nasdaq 
Stock Market LLC Pursuant to Section 17(d) and Rule 17d-2,'' and any 
subsequent amendments thereafter.
    Whereas, FINRA, Nasdaq and BX desire to reduce duplication in 
the examination, of their [Dual]Common Members (as defined herein) 
and in the filing and processing of certain registration and 
membership records; and
    Whereas, FINRA, Nasdaq and BX 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 U.S. 
Securities and Exchange Commission (the ``SEC'' or ``Commission'') 
for its approval.
    Now, therefore, in consideration of the mutual covenants 
contained hereinafter, FINRA, Nasdaq and BX hereby agree as follows:
    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) ``Nasdaq Rules'', ``BX Rules'' or ``FINRA Rules'' shall 
mean: (i) The rules of Nasdaq, (ii) the rules of BX, or (iii) the 
rules of FINRA, respectively, as the rules of an exchange or 
association are defined in Exchange Act Section 3(a)(27).
    (b) ``Common Rules'' shall mean Nasdaq Rules and BX Rules that 
are substantially similar to the applicable FINRA Rules and certain 
provisions of the Exchange Act and SEC rules set forth on Exhibit 1 
in that examination for compliance with such provisions and rules 
would not require FINRA to develop one or more new examination 
standards, modules, procedures, or criteria in order to analyze the 
application of the provision or rule, or a [Dual]Common Member's 
activity, conduct, or output in relation to such provision or rule; 
provided, however, Common Rules shall not include the application of 
the SEC, Nasdaq, BX or FINRA rules as they pertain to violations of 
insider trading activities, which is covered by a separate 17d-2 
Agreement by and among [the American Stock Exchange, LLC, BATS 
Exchange, Inc., Boston Stock Exchange, Inc., CBOE Stock Exchange, 
LLC, Chicago Stock Exchange, Inc., Financial Industry Regulatory 
Authority, Inc., International Securities Exchange, LLC, The NASDAQ 
Stock Market LLC, National Stock Exchange, Inc., New York Stock 
Exchange, LLC, NYSE Arca Inc., NYSE Regulation, Inc., and 
Philadelphia Stock Exchange, Inc.] Cboe BZX Exchange, Inc., Cboe BYX 
Exchange, Inc., Chicago Stock Exchange, Inc., Cboe EDGA Exchange, 
Inc., Cboe EDGX Exchange, Inc., Financial Industry Regulatory 
Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq 
PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York 
Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., Investors 
Exchange LLC and Long-Term Stock Exchange, Inc. approved by the 
Commission on [October 17, 2008]September 23, 2020. Common Rules 
shall not include any provisions regarding: (i) Notice, reporting or 
any other filings made directly to or from Nasdaq or BX; (ii) 
incorporation by reference of other Nasdaq or BX 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 Nasdaq or BX; (iv) prior written 
approval of Nasdaq or BX; and (v) payment of fees or fines to Nasdaq 
or BX.
    (c) ``[Dual]Common Members'' shall mean those members of FINRA 
and a member of at least one of Nasdaq or BX [members that are also 
members of FINRA] and the associated persons therewith.
    (d) ``Effective Date'' shall have the meaning set forth in 
paragraph [14]13.
    (e) ``Enforcement Responsibilities'' shall mean the conduct of 
appropriate proceedings, in accordance with FINRA's Code of 
Procedure (the [NASD] Rule 9000 Series) and other applicable FINRA 
procedural rules, to determine whether violations of Common Rules 
have occurred, and if such violations are deemed to have occurred, 
the imposition of appropriate sanctions as specified under FINRA's 
Code of Procedure and sanctions guidelines.
    (f) ``Regulatory Responsibilities'' shall mean the examination 
responsibilities and Enforcement Responsibilities relating to 
compliance by the [Dual]Common Members with the Common Rules and the 
provisions of the Exchange Act and the rules and regulations 
thereunder, and other applicable laws, rules and regulations, each 
as set forth on Exhibit 1 attached hereto. The term ``Regulatory 
Responsibilities'' shall also include the surveillance, 
investigation and Enforcement Responsibilities relating to 
compliance by Common Members with Rule 14e-4 of the Securities 
Exchange Act (``Rule

[[Page 53998]]

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]Common Members. Attached as Exhibit 1 to 
this Agreement and made part hereof, Nasdaq and BX furnished FINRA 
with a current list of Common Rules and certified to FINRA that such 
rules that are Nasdaq Rules and BX Rules are substantially similar 
to the corresponding FINRA Rules (the ``Certification''). FINRA 
hereby agrees that the rules listed in the Certification are Common 
Rules as defined in this Agreement. Each year following the 
Effective Date of this Agreement, or more frequently if required by 
changes in either the rules of Nasdaq, BX or FINRA, Nasdaq and BX 
shall submit an updated list of Common Rules to FINRA for review 
which shall add Nasdaq Rules and BX Rules not included in the 
current list of Common Rules that qualify as Common Rules as defined 
in this Agreement; delete Nasdaq Rules and BX 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 Nasdaq Rules and 
BX 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 Nasdaq and BX 
shall retain full responsibility for (unless otherwise addressed by 
separate agreement or rule) (collectively, the ``Retained 
Responsibilities'') the following:
    (a) [S]surveillance, examination, investigation and enforcement 
with respect to trading activities or practices involving Nasdaq's 
or BX's own marketplaces;
    (b) registration pursuant to [its]Nasdaq's or BX's applicable 
rules of associated persons (i.e., registration rules that are not 
Common Rules);
    (c) discharge of [its]Nasdaq's or BX's duties and obligations as 
a Designated Examining Authority pursuant to Rule 17d-1 under the 
Exchange Act; and
    (d) any Nasdaq Rules and BX Rules that are not Common Rules.
    [3.] Dual Members. Prior to the Effective Date, BX shall furnish 
FINRA with a current list of Common Members, which shall be updated 
no less frequently than once each quarter.]
    [4.]3. No Charge. There shall be no charge to Nasdaq and BX by 
FINRA for performing the Regulatory Responsibilities [and 
Enforcement Responsibilities] under this Agreement except as 
hereinafter provided]. FINRA shall provide Nasdaq and BX with ninety 
(90) days advance written notice in the event FINRA decides to 
impose any charges to Nasdaq and BX for performing the Regulatory 
Responsibilities under this Agreement. If FINRA determines to impose 
a charge, Nasdaq and BX 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.]4. Reassignment of Regulatory Responsibilities. 
Notwithstanding any provision hereof, this Agreement shall be 
subject to any statute, or any rule or order of the Commission 
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.]5. Notification of Violations. In the event that FINRA 
becomes aware of apparent violations of any Nasdaq Rules or BX 
Rules, which are not listed as Common Rules, discovered pursuant to 
the performance of the Regulatory Responsibilities assumed 
hereunder, FINRA shall notify Nasdaq and BX of those apparent 
violations for such response as Nasdaq and BX deems appropriate. In 
the event that Nasdaq or BX becomes aware of apparent violations of 
any Common Rules, discovered pursuant to the performance of the 
Retained Responsibilities, Nasdaq and BX shall notify FINRA of those 
apparent violations and such matters shall be handled by FINRA as 
provided in this Agreement. Each party agrees to make available 
promptly all files, records and witnesses necessary to assist the 
other in its investigation or proceedings. Apparent violations of 
Common Rules, FINRA Rules, federal securities laws, and rules and 
regulations thereunder, 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]Common Member is the subject of an investigation relating to a 
transaction on Nasdaq or BX, Nasdaq and BX, at each party's [may in 
its] discretion assume concurrent jurisdiction and responsibility.
    [7.]6. Continued Assistance.
    (a) FINRA shall make available to Nasdaq and BX all information 
obtained by FINRA in the performance by it of the Regulatory 
Responsibilities hereunder with respect to the [Dual]Common Members 
subject to this Agreement. In particular, and not in limitation of 
the foregoing, FINRA shall furnish Nasdaq and BX any information it 
obtains about [Dual]Common Members which reflects adversely on their 
financial condition. Nasdaq and BX shall make available to FINRA any 
information coming to [its]their attention that reflects adversely 
on the financial condition of [Dual]Common Members or indicates 
possible violations of applicable laws, rules or regulations by such 
firms.
    (b) The parties agree that documents or information shared shall 
be held in confidence, and used only for the purposes of carrying 
out their respective regulatory obligations. Neither party shall 
assert regulatory or other privileges as against the other with 
respect to documents or information that is required to be shared 
pursuant to this Agreement.
    (c) The sharing of documents or information between the parties 
pursuant to this Agreement shall not be deemed a waiver as against 
third parties of regulatory or other privileges relating to the 
discovery of documents or information.
    [8.]7. [Dual]Common Member Applications.
    (a) [Dual]Common 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 rules of [both]Nasdaq, BX and 
FINRA or associated with [Dual]Common Members thereof. Upon request, 
FINRA shall advise Nasdaq and BX of any changes of allied members, 
partners, officers, registered personnel and other persons required 
to be approved by the rules of [both]Nasdaq, BX and FINRA.
    (b) [Dual]Common Members shall be required to send to FINRA all 
letters, termination notices or other material respecting the 
individuals listed in paragraph [8]7(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]Common Member, FINRA shall 
determine pursuant to Sections 15A(g) and/or Section 6(c) of the 
Exchange Act the acceptability or continued applicability of the 
person to whom such disqualification applies and keep Nasdaq and BX 
advised of its actions in this regard for such subsequent 
proceedings as Nasdaq and BX 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 meets 
the Nasdaq or BX requirements for general membership or for 
specified categories of membership or participation in Nasdaq or BX, 
such as Equities Market Maker, Equities ECN, Order Entry Firm, or 
any similar type of Nasdaq or BX membership or participation 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]7(d), including 
termination or limitation on activities, of a member or a 
participant of Nasdaq or BX, or a person associated with, or 
requesting association with, a member or participant of Nasdaq or 
BX.
    [9.]8. 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]Common Members and any other applications 
required of [Dual]Common Members with respect to the Common Rules as 
they may be amended from time to time. Upon request, FINRA shall 
advise Nasdaq and BX of the opening, address change and termination 
of branch

[[Page 53999]]

and main offices of [Dual]Common Members and the names of such 
branch office managers.
    [10.]9. Customer Complaints. Nasdaq and BX shall forward to 
FINRA copies of all customer complaints involving [Dual]Common 
Members received by Nasdaq and BX 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.]10. Advertising. FINRA shall assume responsibility to 
review the advertising of [Dual]Common Members subject to the 
Agreement, provided that such material is filed with FINRA in 
accordance with FINRA's filing procedures and is accompanied with 
any applicable filing fees set forth in FINRA Rules.
    [12.]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]Common Members, as either party, in its sole discretion, shall 
deem appropriate or necessary.
    [13.]12. Termination. This Agreement may be terminated by 
Nasdaq, BX or FINRA at any time upon the approval of the Commission 
after one (1) year's written notice to the other party, except as 
provided in paragraph [4]3.
    [14.]13. Effective Date. This Agreement shall be effective upon 
approval of the Commission.
    [15.]14. Arbitration. In the event of a dispute between the 
parties as to the operation of this Agreement, Nasdaq, BX and FINRA 
hereby agree that any such dispute shall be settled by arbitration 
in Washington, DC in accordance with the rules of the American 
Arbitration Association then in effect, or such other procedures as 
the parties may mutually agree upon. Judgment on the award rendered 
by the arbitrator(s) may be entered in any court having 
jurisdiction. Each party acknowledges that the timely and complete 
performance of its obligations pursuant to this Agreement is 
critical to the business and operations of the other party. In the 
event of a dispute between the parties, the parties shall continue 
to perform their respective obligations under this Agreement in good 
faith during the resolution of such dispute unless and until this 
Agreement is terminated in accordance with its provisions. Nothing 
in this Section [15]14 shall interfere with a party's right to 
terminate this Agreement as set forth herein.
    [16. Notification of Members. BX and FINRA shall notify Dual 
Members of this Agreement after the Effective Date by means of a 
uniform joint notice.]
    [17.]15. 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.]16. Limitation of Liability. [Neither FINRA nor BX]None of 
the parties nor any of their respective directors, governors, 
officers or employees shall be liable to [the]any other party to 
this Agreement for any liability, loss or damage resulting from or 
claimed to have resulted from any delays, inaccuracies, errors or 
omissions with respect to the provision of Regulatory 
Responsibilities as provided hereby or for the failure to provide 
any such responsibility, except with respect to such liability, loss 
or damages as shall have been suffered by any party [one or the 
other of FINRA or BX] and caused by the willful misconduct of [the 
other]another party or their respective directors, governors, 
officers or employees. No warranties, express or implied, are made 
by [FINRA or BX]any party hereto with respect to any of the 
responsibilities to be performed by [each of] them hereunder.
    [19.]17. Relief from Responsibility. Pursuant to Sections 
17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d-2 thereunder, 
FINRA, Nasdaq and BX join in requesting the Commission, upon its 
approval of this Agreement or any part thereof, to relieve Nasdaq 
and BX 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.
    [20.]18. 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.
    [21.]19. Separate Agreement. This Agreement is wholly separate 
from (1) the multiparty Agreement made pursuant to Rule 170d-2 of 
the Exchange Act among 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 
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, index warrants, currency index warrants and 
currency warrants or (2) the multiparty Agreement made pursuant to 
Rule 17d-2 of the Exchange Act among 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 February 11, 2019 involving options-related market 
surveillance matters and such agreements as may be amended from time 
to time.
    [22.]20. Counterparts. This Agreement may be executed in one or 
more counterparts, each of which shall be deemed an original, and 
such counterparts together shall constitute one and the same 
instrument.

Exhibit 1

[Valid beginning December 15, 2008]

    NOTE: The entire existing table of rules should be deleted and 
replaced with the table below and for the remainder of the exhibit 
new text is underlined and deleted text is in brackets.

NASDAQ AND BX RULES CERTIFICATION FOR 17d-2 AGREEMENT WITH FINRA

    The Nasdaq Stock Market LLC (``Nasdaq'') and [Boston Stock 
Exchange, Incorporated]Nasdaq BX, Inc. (``BX'') hereby certify[ies] 
that the requirements contained in the Nasdaq and BX rules listed 
below are identical to, or substantially similar to, the [NASD and] 
FINRA rules noted below:
    #Common Rules shall not include provisions regarding (i) notice, 
reporting or any other filings made directly to or from Nasdaq or 
BX, (ii) incorporation by reference to other Nasdaq or BX 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 Nasdaq or BX, (iv) 
prior written approval of Nasdaq or BX, and (v) payment of fees or 
fines to Nasdaq or BX.

------------------------------------------------------------------------
           BX Rule                 Nasdaq Rule           FINRA Rule
------------------------------------------------------------------------
General 2, Section 15.        General 2, Section    4370. Business
 Business Continuity Plans.   15. Business          Continuity Plans.
                               Continuity Plans.
General 2, Section 10.        General 2, Section    4517. Member Filing
 Executive Representative.     10. Executive         and Contact
                               Representative.       Information
                                                     Requirements.
General 3, Rule 1002(b)       General 3, Rule       FINRA Bylaws Article
 Qualifications of Exchange    1002(b)               III, Sec. 1.
 Members and Associated        Qualifications of
 Persons; Registration of      Exchange Members
 Branch Offices and            and Associated
 Designation of Office of      Persons;
 Supervisory Jurisdiction.    Registration of
                               Branch Offices and
                               Designation of
                               Office of
                               Supervisory
                               Jurisdiction.

[[Page 54000]]

 
General 3, Rule 1002(d).      General 3, Rule       3110(a)(3)
 Registration of Branch        1002(d).              Supervision and SM
 Offices and Designation of    Registration of       .01 and .02
 Office of Supervisory         Branch Offices and    Supervision* and
 Jurisdiction.                Designation of        FINRA By-Laws
                               Office of             Article IV, Sec. 8.
                               Supervisory
                               Jurisdiction.
General 3, 1012(c)(1). Duty   General 3, Rule       1122. Filing of
 to Ensure the Accuracy,       1012(c)(1). Duty to   Misleading
 Completeness, and Current     Ensure the            Information as to
 Nature of Membership          Accuracy,             Membership or
 Information Filed with the    Completeness, and     Registration; FINRA
 Exchange.                    Current Nature of     Bylaws Article IV,
                               Membership            sec. 1(c) of the By-
                               Information Filed     Laws.
                               with the Exchange.
General 4, Section 1, 1210.   General 4, Section    1210. Registration
 Registration Requirements.   1, 1210.              Requirements.
                               Registration
                               Requirements.
General 4, Section 1, 1220.   General 4, Section    1220. Registration
 Registration Categories1.    1, 1220.              Categories.
                               Registration
                               Categories1.
General 4, Section 1,         General 4, Section    1220.06. Eliminated
 1220.06. Eliminated           1, 1220.06.           Registration
 Registration Categories\1\.   Eliminated            Categories.
                               Registration
                               Categories\2\.
------------------------------------------------------------------------
\1\ FINRA shall only have Regulatory Responsibilities regarding BX
  General 4, Section 1220 to the extent that BX recognizes the same
  categories of limited principal and representative registration as the
  BX Rule, by incorporating Nasdaq General 4, Section 1220, does not
  recognize registration related to investment banking, research,
  government securities, investment company and variable contracts
  products, direct participation programs, private securities offerings,
  and operations professional.
\2\ FINRA shall only have Regulatory Responsibilities regarding Nasdaq
  General 4, Section 1220 to the extent that Nasdaq recognizes the same
  categories of limited principal and representative registration as
  Nasdaq General 4, Section 1220 does not recognize registration related
  to investment banking, research, government securities, investment
  company and variable contracts products, direct participation
  programs, private securities offerings, and operations professional.


------------------------------------------------------------------------
 
------------------------------------------------------------------------
General 4, Section 1, Rule    General 4, Section    1230. Associated
 1230(1)-(2)(D) Associated     1, Rule 1230(1)-      Persons Exempt from
 Persons Exempt from           (2)(D) Associated     Registration.
 Registration.                Persons Exempt from
                               Registration.
General 4, Section 1, 1240.   General 4, Section    1240. Continuing
 Continuing Education          1, 1240. Continuing   Education
 Requirements.                 Education             Requirements.
                               Requirements.
General 4, Section 1, 1250.   General 4, Section    1010. Electronic
 Electronic Filing             1, 1250. Electronic   Filing Requirements
 Requirements for Uniform      Filing Requirements   for Uniform Forms
 Forms.                       for Uniform Forms.   and FINRA Bylaws
                                                     Article V, Section
                                                     2.
Equity 5, Section 1.          Equity 5, Section 1.  7410. Definitions.
 Definitions.                  Definitions.
Equity 5, Section 2.          Equity 5, Section 2.  7420. Applicability.
 Applicability.                Applicability.
Equity 5, Section 3.          Equity 5, Section 3.  7430.
 Synchronization of Member     Synchronization of    Synchronization of
 Business Clocks.              Member Business       Member Business
                               Clocks.               Clocks.
Equity 5, Section 4.          Equity 5, Section 4.  7440. Recording of
 Recording of Order            Recording of Order    Order Information.
 Information.                  Information.
Equity 5, Section 5. Order    Equity 5, Section 5.  7450. Order Data
 Data Transmission             Order Data            Transmission
 Requirements.                 Transmission          Requirements.
                               Requirements.
Equity 5, Section 6.          Equity 5, Section 6.  7460. Violation of
 Violation of Order Audit      Violation of Order    Order Audit Trail
 Trail System Rules.           Audit Trail System    System Rules.
                               Rules.
General 9, Section 1(a).      General 9, Section    2010. Standards of
 Standards of Commercial       1(a). Standards of    Commercial Honor
 Honor and Principles of       Commercial Honor      and Principles of
 Trade.                        and Principles of     Trade.*
                               Trade.
General 9, Section 1(b).      General 9, Section    5320. Prohibition
 Trading Ahead of Customer     1(b). Prohibition     Against Trading
 Orders.                       Against Trading       Ahead of Customer
                               Ahead of Customer     Orders.
                               Orders.
General 9, Section 1(c).      General 9, Section    5270. Front Running
 Front Running Policy.         1(c). Front Running   of Block
                               Policy.               Transactions.
General 9, Section 1(d).      General 9, Section    5280. Trading Ahead
 Trading Ahead of Research     1(d). Trading Ahead   of Research
 Reports.                      of Research Reports.  Reports.
General 9, Section 1(e).      General 9, Section    5240. Anti-
 Anti-Intimidation/            1(e). Anti-           Intimidation/
 Coordination.                 Intimidation/         Coordination.
                               Coordination.
General 9, Section 1(f).      General 9, Section    2232. Customer
 Confirmation of Callable      1(f). Confirmation    Confirmations.
 Common Stock.                 of Callable Common
                               Stock.
General 9, Section 1(g).      General 9, Section    2140. Interfering
 Interfering With the          1(h). Interfering     With the Transfer
 Transfer of Customer          With the Transfer     of Customer
 Accounts in the Context of    of Customer           Accounts in the
 Employment Disputes.          Accounts in the       Context of
                               Context of            Employment
                               Employment Disputes.  Disputes.
General 9, Section 1(i). Use  General 9, Section    2020. Use of
 of Manipulative, Deceptive    1(g). Use of          Manipulative,
 or Other Fraudulent Devices.  Manipulative,         Deceptive or Other
                               Deceptive or Other    Fraudulent
                               Fraudulent Devices.   Devices.*
General 9, Section 2.         General 9, Section    2150. Improper Use
 Customers' Securities or      2. Customers'         of Customers'
 Funds.                        Securities or Funds.  Securities or
                                                     Funds; Prohibition
                                                     Against Guarantees
                                                     and Sharing in
                                                     Accounts.
General 9, Section 3.         General 9, Section    2210. Communications
 Communications with the       3. Communications     with the Public.
 Public.                       with the Public.
General 9, Section 5.         General 9, Section    3230. Telemarketing.
 Telemarketing.                5. Telemarketing.
General 9, Section 6.         General 9, Section    2251. Processing and
 Forwarding of Proxy and       6. Forwarding of      Forwarding of Proxy
 Other Issuer-Related          Proxy and Other       and Other Issuer-
 Materials.                    Issuer-Related        Related Materials.
                               Materials.
General 9, Section 7(a).      General 9, Section    2261. Disclosure of
 Disclosure of Financial       7(a). Disclosure of   Financial
 Condition.                    Financial Condition.  Condition.
General 9, Section 7(b).      General 9, Section    2262. Disclosure of
 Disclosure of Control         7(b). Disclosure of   Control
 Relationship with Issuer.     Control               Relationship with
                               Relationship with     Issuer.
                               Issuer.
General 9, Section 7(c).      General 9, Section    2269. Disclosure of
 Disclosure of Participation   7(c). Disclosure of   Participation or
 or Interest in Primary or     Participation or      Interest in Primary
 Secondary Distribution.       Interest in Primary   or Secondary
                               or Secondary          Distribution.
                               Distribution.
General 9, Section 10         General 9, Section    2111. Suitability.
 Recommendations to            10 Recommendations
 Customers (Suitability).      to Customers
                               (Suitability).

[[Page 54001]]

 
General 9, Section 11. Best   General 9, Section    5310. Best Execution
 Execution and                 11. Best Execution    and
 Interpositioning.             and                   Interpositioning.
                               Interpositioning.
General 9, Section 12.        General 9, Section    2231. Customer
 Customer Account Statements.  12. Customer          Account Statements.
                               Account Statements.
General 9, Section 13.        General 9, Section    2264. Margin
 Margin Disclosure Statement.  13. Margin            Disclosure
                               Disclosure            Statement.
                               Statement.
General 9, Section 14.        General 9, Section    2130. Approval
 Approval Procedures for Day-  14. Approval          Procedures for Day-
 Trading Accounts.             Procedures for Day-   Trading Accounts
                               Trading Accounts.     and Rule 2270 Day-
                                                     Trading Risk
                                                     Disclosure
                                                     Statement.
General 9, Section 15.        General 9, Section    3240. Borrowing From
 Borrowing From or Lending     15. Borrowing From    or Lending to
 to Customers.                 or Lending to         Customers.
                               Customers.
General 9, Section 16.        General 9, Section    2122. Charges for
 Charges for Services          16. Charges for       Services Performed.
 Performed.                    Services Performed.
General 9, Section 18.        General 9, Section    5250. Payments for
 Payments for Market Making.   18. Payments for      Market Making.
                               Market Making.
General 9, Section 19.        General 9, Section    3260. Discretionary
 Discretionary Accounts.       19. Discretionary     Accounts.
                               Accounts.
General 9, Section 20.        General 9, Section    3110. Supervision.
 Supervision.                  20. Supervision.
General 9, Section 21(a).     General 9, Section    3120. Supervisory
 Supervisory Control System,   21(a). Supervisory    Control System.
 Annual Certification of       Control System,
 Compliance and Supervisory    Annual
 Processes.                    Certification of
                               Compliance and
                               Supervisory
                               Processes.
General 9, Section 21(c).     General 9, Section    3130. Annual
 Supervisory Control System,   21(c). Supervisory    Certification of
 Annual Certification of       Control System,       Compliance and
 Compliance and Supervisory    Annual                Supervisory
 Processes.                    Certification of      Processes.
                               Compliance and
                               Supervisory
                               Processes.
General 9, Section 23.        General 9, Section    3270. Outside
 Outside Business Activities   23. Outside           Business Activities
 of an Associated Person.      Business Activities   of an Associated
                               of an Associated      Person.
                               Person.
General 9, Section 24.        General 9, Section    3280. Private
 Private Securities            24. Private           Securities
 Transactions of an            Securities            Transactions of an
 Associated Person.            Transactions of an    Associated Person.
                               Associated Person.
General 9, Section 25.        General 9, Section    3210. Accounts at
 Transactions for or by        25. Transactions      Other Broker-
 Associated Persons.           for or by             Dealers and
                               Associated Persons.   Financial
                                                     Institutions.
General 9, Section 26.        General 9, Section    3220. Influencing or
 Influencing or Rewarding      26. Influencing or    Rewarding Employees
 Employees of Others.          Rewarding Employees   of Others.
                               of Others.
General 9, Section 27.        General 9, Section    4530. Reporting
 Reporting Requirements.      27. Reporting         Requirements.
                               Requirements.
General 9, Section 28.        General 9, Section    2263. Arbitration
 Disclosure to Associated      28. Disclosure to     Disclosure to
 Persons When Signing Form U-  Associated Persons    Associated Persons
 4.                            When Signing Form U-  When Signing or
                               4.                    Acknowledging Form
                                                     U-4.
General 9, Section 30. Books  General 9, Section    4511. General
 and Records, Section 43.      30. Books and         Requirements.
 General Requirements.         Records, Section
                               43. General
                               Requirements.
General 9, Section 31. Use    General 9, Section    2060. Use of
 of Information Obtained in    31. Use of            Information
 Fiduciary Capacity.           Information           Obtained in
                               Obtained in           Fiduciary Capacity.
                               Fiduciary Capacity.
General 9, Section 37. Anti-  General 9, Section    3310. Anti-Money
 Money Laundering Compliance   37. Anti-Money        Laundering
 Program.                      Laundering            Compliance Program.
                               Compliance Program.
General 9, Section 39.        General 9, Section    4360. Fidelity
 Fidelity Bonds.               39. Fidelity Bonds.   Bonds.
General 9, Section 30. Books  General 9, Section    4513. Records of
 and Records, (d) Record of    44. Records of        Written Customer
 Written Complaints; (e)       Written Customer      Complaints.
 ``Complaint'' Defined.        Complaints.
General 9, Section 30. Books  General 9, Section    4512. Customer
 and Records, (b) Customer     45. Customer          Account
 Account Information.          Account Information.  Information.
General 9, Section 30. Books  General 9, Section    4514. Authorization
 and Records, (g) Negotiable   46. Authorization     Records for
 Instruments Drawn From A      Records for           Negotiable
 Customer's Account.           Negotiable            Instruments Drawn
                               Instruments Drawn     From a Customer's
                               From a Customer's     Account.
                               Account.
General 9, Section 30. Books  General 9, Section    4515. Approval and
 and Records, (j) Changes in   47. Approval and      Documentation of
 Account Name or Designation.  Documentation of      Changes in Account
                               Changes in Account    Name or
                               Name or Designation.  Designation.
General 9, Section 49.        General 9, Section    5230. Payments
 Payments Involving            49. Payments          Involving
 Publications that Influence   Involving             Publications that
 the Market Price of a         Publications that     Influence the
 Security.                     Influence the         Market Price of a
                               Market Price of a     Security.
                               Security.
General 9, Section 50.        General 9, Section    1021. Foreign
 Foreign Members.             50. Foreign           Members.
                               Members.
General 9, Section 51.        General 9, Section    2241. Research
 Research Analysts.            51. Research          Analysts and
                               Analyst.              Research Reports.
General 9, Section 71.        General 9, Section    4570. Custodian of
 Custodian of Books and        71. Custodian of      Books and Record,
 Records.                      Books and Records.    (a) Designation of
                                                     Custodian.
Equity 9, Section 1           Equity 9, Section 1.  5330. Adjustment of
 Adjustment of Open Orders.    Adjustment of Open    Orders.
                               Orders.
Equity 9, Section 3.          Equity 9, Section 3.  5210. Publication of
 Publication of Transactions   Publication of        Transactions and
 and Quotations.               Transactions and      Quotations.
                               Quotations.
Equity 9, Section 10. Prompt  Equity 9, Section     11860(a)(4)(A).
 Receipt and Delivery of       10. Prompt Receipt    Purchases.
 Securities.                   and Delivery of
                               Securities.
Equity 10, Section 1. Direct  Equity 10, Section    2310. Direct
 Participation Programs.       1. Direct             Participation
                               Participation         Programs.
                               Programs.
Equity 10, Section 2.         Equity 10, Section    2341. Investment
 Investment Company            2. Investment         Company Securities.
 Securities.                   Company Securities.
2841. General...............  Equity 10, Section    2351(a). General
                               3(a). General.        Provisions
                                                     Applicable to
                                                     Trading in Index
                                                     Warrants, Currency
                                                     Index Warrants and
                                                     Currency Warrants.

[[Page 54002]]

 
Equity 10, Section 4          Equity 10, Section 4  2357. Position and
 Position Limits; 5 Exercise   Position Limits; 5    Exercise Limits;
 Limits; and 7 Liquidation     Exercise Limits;      Liquidations.
 of Index Warrant Positions.   and 7 Liquidation
                               of Index Warrant
                               Positions.
------------------------------------------------------------------------

    The following provisions are covered by the Agreement between 
the Parties:

 SEC '34 Act Section 28(e) Effect on Existing Law
 SEC '34 Act Rule 10b-10 Confirmation of Transactions
 SEC '34 Act Rule 203 of Regulation SHO Borrowing and 
Delivery Requirements
 SEC '34 Act Rule 606 of Regulation NMS Disclosure of Order 
Routing Information
 SEC '34 Act Rule 607 of Regulation NMS Customer Account 
Statements
 SEA Rule 14e-4--Prohibited Transactions in Connection with 
Partial Tender Offers-
    [caret] FINRA shall perform surveillance, investigation, and 
Enforcement Responsibilities for SEA Rule 14e-4(a)(1)(ii)(D).
    * FINRA shall not have any Regulatory Responsibilities for these 
rules as they pertain to violations of insider trading activities, 
which is covered by a separate 17d-2 Agreement by and among [the 
American Stock Exchange, LLC, BATS Exchange, Inc. Boston Stock 
Exchange, Inc., CBOE Stock Exchange, LLC, Chicago Stock Exchange, 
Inc., Financial Industry Regulatory Authority, Inc., International 
Securities Exchange, LLC, The NASDAQ Stock Market LLC, National 
Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Arca Inc., 
NYSE Regulation, Inc., and Philadelphia Stock Exchange, Inc.] Cboe 
BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, 
Inc., Cboe EDGA Exchange Inc., Cboe EDGX Exchange Inc., Financial 
Industry Regulatory Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, 
Nasdaq BX, Inc., Nasdaq PHLX LLC, The Nasdaq Stock Market LLC, NYSE 
National, Inc., New York Stock Exchange, LLC, NYSE American LLC, 
NYSE Arca Inc., and Investors' Exchange LLC and the Long-Term Stock 
Exchange, Inc. as approved by the SEC on [October 17, 2008]September 
23, 2020.

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 4-575 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 4-575. 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, BX, and Nasdaq. 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 4-575 and should be submitted on or before 
October 20, 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 \13\ and Rule 
17d-2(c) thereunder \14\ 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 FINRA, BX, and Nasdaq. Accordingly, the proposed Amended Plan 
promotes efficiency by reducing costs to Common Members. Furthermore, 
because BX, Nasdaq and FINRA will coordinate their regulatory functions 
in accordance with the Amended Plan, the Amended Plan should promote 
investor protection.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78q(d).
    \14\ 17 CFR 240.17d-2(c).
---------------------------------------------------------------------------

    The Commission notes that, under the Amended Plan, BX, Nasdaq and 
FINRA have allocated regulatory responsibility for those BX and Nasdaq 
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, BX and Nasdaq will each review the 
Certification at least annually, or more frequently if required by 
changes in either the rules of BX, Nasdaq, or FINRA, and, if necessary, 
submit to FINRA an updated list of Common Rules to add BX or Nasdaq 
rules not included on the then-current list of Common Rules that are 
substantially similar to FINRA rules; delete BX or Nasdaq 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 BX or Nasdaq rules that qualify as 
common rules.\15\ FINRA will then confirm in writing whether the rules 
listed in any updated list are Common Rules as defined in the Amended 
Plan. 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.
---------------------------------------------------------------------------

    \15\ See paragraph 2 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 BX and Nasdaq rules that are 
substantially

[[Page 54003]]

similar to the rules of FINRA for Common Members of BX and FINRA, and 
Nasdaq 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 BX or Nasdaq 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 BX and Nasdaq rule to 
the Certification that is not substantially similar to a FINRA rule; 
delete a BX and Nasdaq rule from the Certification that is 
substantially similar to a FINRA rule; or leave on the Certification a 
BX and Nasdaq 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 Amended Plan is to allocate 
surveillance, investigation, and enforcement responsibilities for Rule 
14e-4 under the Act, to reflect the name change of Boston Stock 
Exchange, Incorporated to Nasdaq BX, Inc., and to add Nasdaq as a 
Participant to the Plan. 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. 59218).
---------------------------------------------------------------------------

VI. Conclusion

    This order gives effect to the Amended Plan filed with the 
Commission in File No. 4-575. 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. 4-575, between the FINRA, BX, and Nasdaq, 
filed pursuant to Rule 17d-2 under the Act, hereby is approved and 
declared effective.
    It is further ordered that BX and Nasdaq are relieved of those 
responsibilities allocated to FINRA under the Amended Plan in File No. 
4-575.

    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. 2021-21113 Filed 9-28-21; 8:45 am]
BILLING CODE 8011-01-P

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