Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amended Plan for the Allocation of Regulatory Responsibilities Between the Financial Industry Regulatory Authority, Inc. and Investors' Exchange LLC, 58110-58116 [2021-22810]
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Federal Register / Vol. 86, No. 200 / Wednesday, October 20, 2021 / Notices
NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE
National, Inc. (‘‘NYSE National’’), and
NYSE Chicago, Inc. (‘‘NYSE Chicago’’)
(each an ‘‘Exchange,’’ collectively, the
‘‘Exchanges’’) each filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend the Exchanges’ fee schedules
related to co-location to provide Users
with access to the systems and
connectivity to the data feeds of several
third parties and establish associated
fees. Each proposed rule change was
immediately effective upon filing with
the Commission pursuant to Section
19(b)(3)(A) of the Act.3
The proposed rule changes were
published for comment in the Federal
Register on March 29, 2021.4 On May 7,
2021, the Commission, pursuant to
Section 19(b)(3)(C) of the Act 5
temporarily suspended File Nos. SR–
NYSE–2021–15, SR–NYSEAMER–2021–
13, SR–NYSEArca–2021–15, SR–
NYSENAT–2021–05, and SR–
NYSECHX–2021–04; and (2) instituted
proceedings to determine whether to
approve or disapprove File Nos. SR–
NYSE–2021–15, SR–NYSEAMER–2021–
13, SR–NYSEArca–2021–15, SR–
NYSENAT–2021–05, and SR–
NYSECHX–2021–04.6 The Commission
received two comment letters on the
proposal from the Exchanges.7 On
September 23, 2021, pursuant to Section
19(b)(2) of the Act,8 the Commission
designated a longer period for
Commission action on the proceedings
to determine whether to approve or
disapprove the proposed rule changes.9
On October 12, 2021, each Exchange
withdrew its proposed rule change (SR–
NYSE–2021–15, SR–NYSEAMER–2021–
13, SR–NYSEArca–2021–15, SR–
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 See Securities Exchange Act Release Nos. 91386
(March 23, 2021), 86 FR 16410 (March 29, 2021);
91387 (March 23, 2021), 86 FR 16417 (March 29,
2021); 91388 (March 23, 2021), 86 FR 16433 (March
29, 2021); 91389 (March 23, 2021), 86 FR 16403
(March 29, 2021); 91390 (March 23, 2021), 86 FR
16424 (March 29, 2021).
5 15 U.S.C. 78s(b)(3)(C).
6 See Securities Exchange Act Release No. 91790
(May 7, 2021), 86 FR 26242 (May 13, 2021).
7 The comment letters received by the
Commission on the proposed rule changes 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.
8 15 U.S.C. 78s(b)(2).
9 See Securities Exchange Act Release No. 93107,
86 FR 53995 (September 29, 2021).
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2 17
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NYSENAT–2021–05, SR–NYSECHX–
2021–04).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–22799 Filed 10–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93324; File No. 4–700]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Notice of Filing and Order
Approving and Declaring Effective an
Amended Plan for the Allocation of
Regulatory Responsibilities Between
the Financial Industry Regulatory
Authority, Inc. and Investors’
Exchange LLC
October 14, 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 13, 2021,
pursuant to Rule 17d–2 of the Act,2 by
the Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) and
Investors’ Exchange LLC (‘‘IEX’’)
(collectively, ‘‘Participating
Organizations’’ or ‘‘parties’’). This
agreement amends and restates the
agreement entered into between FINRA
and IEX on June 20, 2016, entitled
‘‘Agreement between Financial Industry
Regulatory Authority, Inc. and
Investors’ Exchange LLC pursuant to
Rule 17d–2 under the Securities
Exchange Act of 1934,’’ 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
10 17
CFR 200.30–3(a)(12).
U.S.C. 78q(d).
2 17 CFR 240.17d–2.
3 15 U.S.C. 78s(g)(1).
1 15
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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
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Federal Register / Vol. 86, No. 200 / Wednesday, October 20, 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 July 28, 2016, the Commission
declared effective the Plan entered into
between FINRA and IEX 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 IEX 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
IEX rule for which FINRA bears
responsibility under the Plan for
overseeing and enforcing with respect to
IEX members that are also members of
FINRA and the associated persons
therewith (‘‘Certification’’).
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III. Proposed Amendment to the Plan
On September 13, 2021, the parties
submitted a proposed amendment to the
Plan (‘‘Amended Plan’’). The primary
purpose of the Amended Plan is to
clarify what is considered a Common
Rule under the Plan, add Securities
Exchange Act Rules 604, 610(d), and
611 to the Certification, eliminate the
requirement that IEX provide to FINRA
a current list of members each quarter,
and eliminate the requirement that IEX
and FINRA notify Dual Members of the
Agreement after the Effective Date by a
uniform joint notice. The text of the
proposed Amended Plan is as follows
(additions are italicized; deletions are
[bracketed]):
*
*
*
*
*
11 See Securities Exchange Act Release No. 54136
(July 12, 2006), 81 FR 51256 (August 3, 2016).
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AGREEMENT BETWEEN FINANCIAL
INDUSTRY REGULATORY AUTHORITY,
INC. AND INVESTORS’ EXCHANGE LLC
PURSUANT TO RULE 17d–2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
This Agreement, by and between the
Financial Industry Regulatory Authority, Inc.
(‘‘FINRA’’) and Investors’ Exchange LLC
(‘‘IEX’’), is made this [20th]9th day of [June
20, 2016] September, 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 and IEX 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
IEX on June 20, 2016, entitled ‘‘Agreement
between Financial Industry Regulatory
Authority, Inc. and Investors’ Exchange LLC
pursuant to Rule 17d–2 under the Securities
Exchange Act of 1934,’’ and any subsequent
amendments thereafter.
WHEREAS, FINRA and IEX desire to
reduce duplication in the examination and
surveillance of their Dual Members (as
defined herein) and in the filing and
processing of certain registration and
membership records; and
WHEREAS, FINRA and IEX desire to
execute an agreement covering such subjects
pursuant to the provisions of Rule 17d–2
under the Exchange Act and to file such
agreement with the Securities and Exchange
Commission (the ‘‘SEC’’ or ‘‘Commission’’)
for its approval.
NOW, THEREFORE, in consideration of
the mutual covenants contained hereinafter,
FINRA and IEX hereby agree as follows:
1. Definitions. Unless otherwise defined in
this Agreement or the context otherwise
requires, the terms used in this Agreement
shall have the same meaning as they have
under the Exchange Act and the rules and
regulations thereunder. As used in this
Agreement, the following terms shall have
the following meanings:
(a) ‘‘IEX Rules’’ or ‘‘FINRA Rules’’ shall
mean: (i) The rules of IEX, or (ii) the rules
of FINRA, respectively, as the rules of an
exchange or association are defined in
Exchange Act Section 3(a)(27).
(b) ‘‘Common Rules’’ shall mean IEX 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 or
surveillance for compliance with such
provisions and rules would not require
FINRA to develop one or more new
examination or surveillance standards,
modules, procedures, or criteria in order to
analyze the application of the provision or
rule, or a Dual 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, IEX or
FINRA rules as they pertain to violations of
insider trading activities, which is covered by
a separate 17d–2 Agreement by and among
[BATS Exchange, Inc., BATS Y–Exchange,
Inc., Chicago Board Options Exchange, Inc.,
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Fmt 4703
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58111
Chicago Stock Exchange, Inc., EDGA
Exchange, Inc., EDGX Exchange, Inc.,
Financial Industry Regulatory Authority,
Inc., NASDAQ OMX BX, Inc., NASDAQ
OMX PHLX LLC, the NASDAQ Stock Market
LLC, National Stock Exchange, Inc., New
York Stock Exchange LLC, NYSE Amex LLC,
and NYSE Arca Inc., effective December 16,
2011], Cboe BZX Exchange, Inc., Cboe BYX
Exchange, Inc., NYSE Chicago, 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 September
23, 2020 as may be amended from time to
time. Common Rules shall not include any
provisions regarding: (i) Notice, reporting or
any other filings made directly to or from
IEX; (ii) incorporation by reference of other
IEX 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 IEX; (iv) prior written
approval of IEX; and (v) payment of fees or
fines to IEX.
(c) ‘‘Dual Members’’ shall mean those IEX
members that are also members of FINRA
and the associated persons therewith.
(d) ‘‘Effective Date’’ shall be the date this
Agreement is approved by the Commission.
(e) ‘‘Enforcement Responsibilities’’ shall
mean the conduct of appropriate
proceedings, in accordance with FINRA’s
Code of Procedure (the Rule 9000 Series) and
other applicable FINRA procedural rules, to
determine whether violations of Common
Rules have occurred, and if such violations
are deemed to have occurred, the imposition
of appropriate sanctions as specified under
FINRA’s Code of Procedure and sanctions
guidelines.
(f) ‘‘Regulatory Responsibilities’’ shall
mean the examination responsibilities,
surveillance responsibilities and
Enforcement Responsibilities relating to
compliance by the Dual Members with the
Common Rules and the provisions of the
Exchange Act and the rules and regulations
thereunder, and other applicable laws, rules
and regulations, each as set forth on Exhibit
1 attached hereto.
2. Regulatory and Enforcement
Responsibilities. FINRA shall assume
Regulatory Responsibilities and Enforcement
Responsibilities for Dual Members. Attached
as Exhibit 1 to this Agreement and made part
hereof, IEX furnished FINRA with a current
list of Common Rules and certified to FINRA
that such rules that are IEX 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 IEX or FINRA, IEX shall submit
an updated list of Common Rules to FINRA
for review which shall add IEX Rules not
included in the current list of Common Rules
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Federal Register / Vol. 86, No. 200 / Wednesday, October 20, 2021 / Notices
that qualify as Common Rules as defined in
this Agreement; delete IEX 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 IEX 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 IEX shall retain full
responsibility for (unless otherwise
addressed by separate agreement or rule)
(collectively, the ‘‘Retained
Responsibilities’’) the following:
(a) Surveillance, examination, investigation
and enforcement with respect to trading
activities or practices involving IEX’s own
marketplace for rules that are not Common
Rules;
(b) registration pursuant to its applicable
rules of associated persons (i.e., registration
rules that are not Common Rules);
(c) discharge of its duties and obligations
as a Designated Examining Authority
pursuant to Rule 17d–1 under the Exchange
Act; and
(d) any IEX Rules that are not Common
Rules, except for IEX Rules for IEX Services
LLC as provided in paragraph [6]5.
[3. Dual Members. Prior to the Effective
Date, IEX shall furnish FINRA with a current
list of Dual Members, which shall be updated
no less frequently than once each quarter.]
[4]3. No Charge. There shall be no charge
to IEX by FINRA for performing the
Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except
as otherwise agreed by the parties, either
herein or in a separate agreement.
[5]4. Applicability of Certain Laws, Rules,
Regulations or Orders. Notwithstanding any
provision hereof, this Agreement shall be
subject to any statute, or any rule or order of
the Commission. To the extent such statute,
rule or order is inconsistent with this
Agreement, the statute, rule or order shall
supersede the provision(s) hereof to the
extent necessary for them to be properly
effectuated and the provision(s) hereof in that
respect shall be null and void.
[6]5. Notification of Violations.
(a) In the event that FINRA becomes aware
of apparent violations of any IEX Rules,
which are not listed as Common Rules,
discovered pursuant to the performance of
the Regulatory Responsibilities assumed
hereunder, FINRA shall notify IEX of those
apparent violations for such response as IEX
deems appropriate.
(b) In the event that IEX becomes aware of
apparent violations of any Common Rules,
discovered pursuant to the performance of
the Retained Responsibilities, IEX shall
notify FINRA of those apparent violations
and such matters shall be handled by FINRA
as provided in this Agreement. With respect
to apparent violations of IEX Services LLC
FINRA shall not make referrals to IEX
pursuant to this paragraph [6]5. Such
apparent violations shall be processed by,
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and enforcement proceedings in respect
thereto will be conducted by, FINRA as
provided in this Agreement.
(c) Apparent violations of Common Rules
shall be processed by, and enforcement
proceedings in respect thereto shall be
conducted by FINRA as provided
hereinbefore; provided, however, that in the
event a Dual Member is the subject of an
investigation relating to a transaction on IEX,
IEX may in its discretion assume concurrent
jurisdiction and responsibility.
(d) Each party agrees to make available
promptly all files, records and witnesses
necessary to assist the other in its
investigation or proceedings.
[7]6. Continued Assistance.
(a) FINRA shall make available to IEX all
information obtained by FINRA in the
performance by it of the Regulatory
Responsibilities hereunder with respect to
the Dual Members subject to this Agreement.
In particular, and not in limitation of the
foregoing, FINRA shall furnish IEX any
information it obtains about Dual Members
which reflects adversely on their financial
condition. IEX shall make available to FINRA
any information coming to its attention that
reflects adversely on the financial condition
of Dual Members or indicates possible
violations of applicable laws, rules or
regulations by such firms.
(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. Statutory Disqualifications. When
FINRA becomes aware of a statutory
disqualification as defined in the Exchange
Act with respect to a Dual Member, FINRA
shall determine pursuant to Sections 15A(g)
and/or Section 6(c) of the Exchange Act the
acceptability or continued applicability of
the person to whom such disqualification
applies and keep IEX advised of its actions
in this regard for such subsequent
proceedings as IEX may initiate.
[9]8. Customer Complaints. IEX shall
forward to FINRA copies of all customer
complaints involving Dual Members received
by IEX 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.
[10]9. Advertising. FINRA shall assume
responsibility to review the advertising of
Dual Members subject to the Agreement,
provided that such material is filed with
FINRA in accordance with FINRA’s filing
procedures and is accompanied with any
applicable filing fees set forth in FINRA
Rules.
[11]10. No Restrictions on Regulatory
Action. Nothing contained in this Agreement
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shall restrict or in any way encumber the
right of either party to conduct its own
independent or concurrent investigation,
examination or enforcement proceeding of or
against Dual Members, as either party, in its
sole discretion, shall deem appropriate or
necessary.
[12]11. Termination. This Agreement may
be terminated by IEX or FINRA at any time
upon the approval of the Commission after
one (1) year’s written notice to the other
party.
[13]12. Arbitration. In the event of a
dispute between the parties as to the
operation of this Agreement, IEX 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 [13]12 shall interfere
with a party’s right to terminate this
Agreement as set forth herein.
[14. Notification of Members. IEX and
FINRA shall notify Dual Members of this
Agreement after the Effective Date by means
of a uniform joint notice.]
[15]13. 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.
[16]14. Limitation of Liability. Neither
FINRA nor IEX nor any of their respective
directors, governors, officers or employees
shall be liable to the other party to this
Agreement for any liability, loss or damage
resulting from or claimed to have resulted
from any delays, inaccuracies, errors or
omissions with respect to the provision of
Regulatory Responsibilities as provided
hereby or for the failure to provide any such
responsibility, except with respect to such
liability, loss or damages as shall have been
suffered by one or the other of FINRA or IEX
and caused by the willful misconduct of the
other party or their respective directors,
governors, officers or employees. No
warranties, express or implied, are made by
FINRA or IEX with respect to any of the
responsibilities to be performed by each of
them hereunder.
[17]15. Relief from Responsibility.
Pursuant to Sections 17(d)(1)(A) and 19(g) of
the Exchange Act and Rule 17d–2
thereunder, FINRA and IEX join in
requesting the Commission, upon its
approval of this Agreement or any part
thereof, to relieve IEX 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.
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[18]16. 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.
[19]17. 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.
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 italicized and deleted text is in
brackets.
EXHIBIT 1
IEX CERTIFICATION OF COMMON RULES
IEX hereby certifies that the requirements
contained in the rules listed below for IEX
are identical to, or substantially similar to,
the comparable FINRA [(NASD)] Rules,
Exchange Act provision or SEC rule
identified (‘‘Common Rules’’).
# Common Rules shall not include
provisions regarding (i) notice, reporting or
any other filings made directly to or from
IEX, (ii) incorporations by reference of other
IEX 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 IEX, (iv) prior written
approval of IEX, and (v) payment of fees or
fines to IEX.
IEX rule
FINRA rule, exchange act provision, SEC rule
Rule 2.140 Prohibited Conditions Relating to Expungement of Customer Dispute.
Rule 2.160(o) Lapse of Registration and Expiration of SIE .....................
FINRA Rule 2081 Prohibited Conditions Relating to Expungement of
Customer Dispute.
FINRA Rule 1210.08—Registration Requirements—Lapse of Registration and Expiration of SIE.
FINRA Rule 1240(a)(1)–(4), (6)–(7) and (b) Continuing Education Requirements.
FINRA By-Laws of the Corporation Article IV, Sec 1(c) Application for
Membership, Article V, Sections 2 and 3 Application for Registration
and Notification by Member to the Corporation and Associated Person of Termination; Amendments to Notification, FINRA Rule 1010(c)
and (e) Electronic Filing Requirements for Uniform Forms and FINRA
Rule 4517 Members Filing and Contact Information Requirements.
FINRA Rule 4360 Fidelity Bonds.
FINRA Rule 2010 Standards of Commercial Honor and Principles of
Trade. ∧
FINRA Rule 2010 Standards of Commercial Honor and Principles of
Trade ∧ and FINRA Rule 3110 Supervision.
FINRA Rule 2020 Use of Manipulative, Deceptive or Other Fraudulent
Devices. ∧
FINRA Rule 2090 Know Your Customer.
FINRA Rule 2020 Use of Manipulative, Deceptive or Other Fraudulent
Devices. ∧
FINRA Rule 2111 Suitability.
FINRA Rule 11860 COD Orders.
SEA Regulation SHO.
FINRA Rule 2122 Charges for Services Performed.
FINRA Rule 2060 Use of Information Obtained in Fiduciary Capacity.
FINRA Rule 5210 Publication of Transactions and Quotations.
FINRA Rule 5220 Offers at Stated Prices.
FINRA Rule 5230 Payments Involving Publications that Influence the
Market Price of a Security.
FINRA Rule 2232(a) Customer Confirmations and SEA Rule 10b–10
Confirmation of Transactions.
FINRA Rule 2262 Disclosure of Control Relationship with Issuer.
FINRA Rule 3260 Discretionary Accounts.
FINRA Rule 2150(a)–(c) and SM .03 Improper Use of Customers’ Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts.
FINRA Rule 2210 Communications with the Public.
FINRA Rule 2265 Extended Hours Trading Risk Disclosure.
FINRA Rule 3220 Influencing or Rewarding Employees of Others.
FINRA Rule 3230 Telemarketing.
FINRA Rule 4560 Short-Interest Reporting.
FINRA Rule 4511 General Requirements.
FINRA Rule 4512 Customer Account Information.
FINRA Rule 4513 Record of Written Customer Complaints.
FINRA Rule 2261 Disclosure of Financial Condition.
FINRA Rule 3110 Supervision.
FINRA Rule 3120 Supervisory Control System.
FINRA Rule 3130 Annual Certification of Compliance and Supervisory
Processes.
FINRA Rule 3310 Anti-Money Laundering Compliance Program.
FINRA Rule 3210 Accounts At Other Broker-Dealers and Financial Institutions.
Regulation SHO Rules 200 and 203.
FINRA Rule 2251 Processing and Forwarding of Proxy and Other
Issuer-Related Materials.
FINRA Rule 6140 Other Trading Practices.
Rule 2.160(p) Restrictions on Membership—Continuing Education Requirements #.
Rule 2.160(q) and (r) Registration Requirements and Restrictions on
Membership, and Rule 2.170(b) and (g) Application Procedures for
Membership or to become an Associated Person of a Member #.
Rule 2.240
Rule 3.110
Fidelity Bonds # ....................................................................
Business Conduct of Members ∧ .........................................
Rule 3.120
Violations Prohibited1 ∧ # ......................................................
Rule 3.130
Use of Fraudulent Devices ∧ ...............................................
Rule 3.150
Rule 3.160
Know Your Customer ..........................................................
Fair Dealing with Customers ...............................................
Rule 3.170 Suitability .............................................................................
Rule 3.180(a) The Prompt Receipt and Delivery of Securities ................
Rule 3.180(b) The Prompt Receipt and Delivery of Securities ................
Rule 3.190 Charges for Services Performed .........................................
Rule 3.200 Use of Information Obtained in a Fiduciary Capacity .........
Rule 3.210 Publication of Transactions and Quotations .......................
Rule 3.220 Offers at Stated Prices ........................................................
Rule 3.230 Payments Involving Publications that Influence the Market
Price of a Security.
Rule 3.240 Customer Confirmations ......................................................
Rule 3.250 Disclosure of Control Relationship with Issuer ...................
Rule 3.260 Discretionary Accounts ........................................................
Rule 3.270 Improper Use of Customers’ Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts.
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58113
Rule 3.280
Communications with the Public .........................................
Rule 3.291
Rule 3.292
Rule 3.293
Rule 4.511
Rule 4.512
Rule 4.513
Rule 4.550
Rule 5.110
Rule 5.120
Rule 5.130
esses #.
Rule 5.160
Rule 5.170
Influencing or Rewarding Employees of Others; Gratuities
Telemarketing ......................................................................
Short-Interest Reporting ......................................................
General Requirements ........................................................
Customer Account Information ............................................
Record of Written Customer Complaints ............................
Disclosure of Financial Condition ........................................
Supervision # ........................................................................
Supervisory Control System # ..............................................
Annual Certification of Compliance and Supervisory ProcAnti-Money Laundering Compliance Program # ..................
Transactions for or by Associated Persons ........................
Rule 6.120 Failure to Deliver and Failure to Receive ...........................
Rule 6.130(a), (b), (d)–(i) Forwarding of Proxy and Other Issuer-Related Materials; Proxy Voting.
Rule 10.110(a) Market Manipulation ........................................................
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Federal Register / Vol. 86, No. 200 / Wednesday, October 20, 2021 / Notices
IEX rule
FINRA rule, exchange act provision, SEC rule
Rule 10.110(b) Market Manipulation ........................................................
FINRA Rule 5210 Publication of Transactions and Quotations, FINRA
Rule 2020 Use of Manipulative, Deceptive or Other Fraudulent Devices, FINRA Rule 2010 Standards of Commercial Honor and Principles of Trade, and FINRA Rule 6140(a) Other Trading Practices.
FINRA Rule 6140 Other Trading Practices and FINRA Rule 5210
Supplementary Material .02 Self-Trades.
FINRA Rule 6140(c) Other Trading Practices.
FINRA Rule 6140 Other Trading Practices.
FINRA Rule 6140(e) Other Trading Practices.
FINRA Rule 5320 Prohibition Against Trading Ahead of Customer Orders. **
FINRA Rule 6140(a) Other Trading Practices and FINRA Rule 5210
Publication of Transactions and Quotations.
FINRA Rule 5290 Order Entry and Execution Practices.
FINRA Rule 5310 Best Execution and Interpositioning. **
FINRA Rule 5280 Trading Ahead of Research Reports. **
FINRA Rule 5270 Front Running of Block Transactions. **
FINRA Rule 6240(a)–(c), (d)(1) and (2) Prohibition from Locking or
Crossing Quotations in NMS Stocks
FINRA Rule 6190(a)&(b) Compliance with Regulation NMS Plan to Address Extraordinary Market Volatility.
FINRA Rule 6240(a),–(c), (d)(1) and (2) Prohibition from Locking or
Crossing Quotations in NMS Stocks. **
FINRA Rule 4590 Synchronization of Member Business Clocks.
FINRA Rule 7440—Recording of Order Information.
Rule 10.120
Rule
Rule
Rule
Rule
10.130 Excessive Sales By A Member .........................................
10.140 Manipulative Transactions .................................................
10.150 Dissemination of False Information ...................................
10.160 Prohibition Against Trading Ahead of Customer Orders # **
Rule 10.180
Rule
Rule
Rule
Rule
Rule
Fictitious Transactions .......................................................
Influencing the Consolidated Tape ...................................
10.190 Trade Shredding ................................................................
10.220 Best Execution and Interpositioning ** ..............................
10.240 Trading Ahead of Research Reports ** ...............................
10.260 Front Running of Block Transactions ** ............................
11.151(e) Market Maker Obligations. ..............................................
Rule 11.280(e)(3) & (4) Trading Halts Due to Extraordinary Market Volatility.
Rule 11.310 Locking or Crossing Quotations in NMS Stocks ** ...........
Rule 11.420(c) Order Audit Trail System Requirements .........................
Rule 11.420(d)—Order Audit Trail System Requirements—Recording of
Order Information.
Rule 11.420(e)—Order Audit Trail System Requirements—Order Data
Transmission Requirements.
Rule 12.110(c) Arbitration ........................................................................
FINRA Rule 7450—Order Data Transmission.
FINRA Rule 2268 Requirements When Using Predispute Arbitration
Agreements for Customer Accounts.
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1 FINRA shall only have Regulatory Responsibilities for Rule 3.120(a) regarding conduct in violation of the Act, or the rules or regulations
thereunder.
In addition, the following provisions shall be part of this 17d–2 Agreement:
Securities Exchange Act of 1934 (‘‘SEA’’):
Section 15(g)
SEA Rules:
• SEA Rule 200 of Regulation SHO—Definition of Short Sales and Marking Requirements**
• SEA Rule 201 of Regulation SHO—Circuit Breaker**
• SEA Rule 203 of Regulation SHO—Borrowing and Delivery Requirements**
• SEA Rule 204 of Regulation SHO—Close-Out Requirement**
• SEA Rule 101 of Regulation M—Activities by Distribution Participants**
• SEA Rule 102 of Regulation M—Activities by Issuers and Selling Security Holders During a Distribution**
• SEA Rule 103 of Regulation M—Nasdaq Passive Market Making**
• SEA Rule 104 of Regulation M—Stabilizing and Other Activities in Connection with an Offering**
• SEA Rule 105 of Regulation M—Short Selling in Connection With a Public Offering**
• SEA Rule 604 of Regulation NMS—Display of Customer Limit Orders**
• SEA Rule 610(d) of Regulation NMS—Locking or Crossing Quotations**
• SEA Rule 611 of Regulation NMS—Order Protection Rule**
• SEA Rule 10b–5 Employment of Manipulative and Deceptive Devices ∧
• SEA Rule 17a–3/17a–4—Records to Be Made by Certain Exchange Members, Brokers, and Dealers/Records to Be Preserved by Certain
Exchange Members, Brokers, and Dealers ∧
[# FINRA shall not have Regulatory Responsibilities regarding notification or reporting to IEX.]
∧ 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 [BATS Exchange, Inc., BATS–Y Exchange, Inc., Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange Inc., EDGX Exchange Inc., Financial Industry Regulatory Authority, Inc., NASDAQ
OMX BX, Inc., NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC,
NYSE Amex LLC, and NYSE Arca Inc. effective December 16, 2011] Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., NYSE Chicago, 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 September 23, 2020, as may be
amended from time to time.
** FINRA shall perform the surveillance responsibilities for the double star rules. These rules may be cited by FINRA in both the context of this
Agreement and the Regulatory Services Agreement.
IV. Solicitation of Comments
Electronic Comments
Paper 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:
• 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–
700 on the subject line.
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
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All submissions should refer to File
Number 4–700. This file number should
be included on the subject line if email
is used. To help the Commission
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process and review your comments
more efficiently, please use only one
method. The Commission will post all
comments on the Commission’s internet
website (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
plan that are filed with the Commission,
and all written communications relating
to the proposed plan between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
plan also will be available for inspection
and copying at the principal offices of
FINRA and IEX. 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 4–700 and
should be submitted on or before
November 10, 2021.
V. Discussion
The Commission finds that the
proposed Amended Plan is consistent
with the factors set forth in Section
17(d) of the Act 12 and Rule 17d–2(c)
thereunder 13 in that the proposed
Amended Plan is necessary or
appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the proposed
Amended Plan should reduce
unnecessary regulatory duplication by
allocating to FINRA certain examination
and enforcement responsibilities for
Dual Members that would otherwise be
performed by FINRA and IEX.
Accordingly, the proposed Amended
Plan promotes efficiency by reducing
costs to Dual Members. Furthermore,
because IEX and FINRA will coordinate
their regulatory functions in accordance
with the Amended Plan, the Amended
Plan should promote investor
protection.
The Commission notes that, under the
Amended Plan, IEX and FINRA have
allocated regulatory responsibility for
12 15
13 17
U.S.C. 78q(d).
CFR 240.17d–2(c).
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17:55 Oct 19, 2021
those IEX 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
Dual 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, IEX
will review the Certification at least
annually, or more frequently if required
by changes in either the rules of IEX or
FINRA, and, if necessary, submit to
FINRA an updated list of Common
Rules to add IEX rules not included on
the then-current list of Common Rules
that are substantially similar to FINRA
rules; delete IEX 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 IEX
rules that qualify as common rules.14
FINRA will then confirm in writing
whether the rules listed in any updated
list are Common Rules as defined in the
Amended Plan. 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 IEX
rules that are substantially similar to the
rules of FINRA for Dual Members of IEX
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 IEX rules
in the Certification in conformance with
the definition of Common Rules
provided in the Amended Plan.
However, should the Parties decide to
add an IEX rule to the Certification that
is not substantially similar to a FINRA
rule; delete an IEX rule from the
Certification that is substantially similar
14 See
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58115
to a FINRA rule; or leave on the
Certification an IEX 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.15
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 to clarify
what is considered a Common Rule
under the Plan, add Securities Exchange
Act Rules 604, 610(d), and 611 to the
Certification, eliminate the requirement
that IEX provide FINRA a current list of
members each quarter, and eliminate
the requirements that IEX and FINRA
notify Dual Members of the Agreement
after the Effective Date by a uniform
joint notice. 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.16 Furthermore, the
Commission does not believe that the
amendment to the plan raises any new
regulatory issues that the Commission
has not previously considered. The
Commission notes that FINRA has
access to real-time information
regarding Exchange membership via its
Central Registration Depository.
VI. Conclusion
This order gives effect to the
Amended Plan filed with the
Commission in File No. 4–700. 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. 4–700,
between the FINRA and IEX, filed
pursuant to Rule 17d–2 under the Act,
hereby is approved and declared
effective.
It is further ordered that IEX is
relieved of those responsibilities
allocated to FINRA under the Amended
Plan in File No. 4–700.
15 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, Dual
Members, also would constitute an amendment to
the Amended Plan.
16 See supra note 11 (citing to Securities
Exchange Act Release No. 78434).
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–22810 Filed 10–19–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93333; File Nos. SR–NYSE–
2021–25, SR–NYSEAMER–2021–21, SR–
NYSEArca–2021–24, SR–NYSECHX–2021–
07, SR–NYSENAT–2021–09]
Self-Regulatory Organizations; New
York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE
Chicago, Inc., and NYSE National, Inc.;
Notice of Withdrawal of Proposed Rule
Changes To Amend the Fee Schedule
To Add Meet-Me-Room Connectivity
Services Available at the Mahwah Data
Center
instituted proceedings under Section
19(b)(2)(B) of the Act 6 to determine
whether to approve or disapprove the
proposed rule changes.7 On September
28, 2021, pursuant to Section 19(b)(2) of
the Act,8 the Commission designated a
longer period for Commission action on
the proceedings to determine whether to
approve or disapprove the proposed
rule changes.9 The Commission has
received one comment letter on the
proposed rule changes.10 On October
12, 2021, the Exchanges withdrew the
proposed rule changes (SR–NYSE–
2021–25, SR–NYSEAMER–2021–21,
SR–NYSEArca–2021–24, SR–
NYSECHX–2021–07, SR–NYSENAT–
2021–09).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–22800 Filed 10–19–21; 8:45 am]
BILLING CODE 8011–01–P
October 14, 2021.
On April 9, 2021, New York Stock
Exchange LLC, NYSE American LLC,
NYSE Arca, Inc., NYSE Chicago, Inc.,
and NYSE National, Inc. (collectively,
the ‘‘Exchanges’’) each filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend the schedule of connectivity
services available at the Mahwah data
center to add services available to
customers in the meet me rooms in the
Mahwah data center and procedures for
the allocation of cabinets and power to
such customers.
The proposed rule changes were
published for comment in the Federal
Register on April 22, 2021.3 On June 2,
2021, pursuant to Section 19(b)(2) of the
Act,4 the Commission designated a
longer period within which to approve
the proposed rule changes, disapprove
the proposed rule changes, or institute
proceedings to determine whether to
disapprove the proposed rule changes.5
On July 9, 2021, the Commission
17 17
CFR 200.30–3(a)(34).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release Nos. 91598
(April 16, 2021), 86 FR 21373 (April 22, 2021) (SR–
NYSE–2021–25); 91599 (April 16, 2021), 86 FR
21365 (April 22, 2021) (SR–NYSEAMER–2021–21);
91600 (April 16, 2021), 86 FR 21384 (April 22,
2021) (SR–NYSEArca–2021–24); 91601 (April 16,
2021), 86 FR 21410 (April 22, 2021) (SR–
NYSECHX–2021–07); and 91602 (April 16, 2021),
86 FR 21393 (April 22, 2021) (SR–NYSENAT–2021–
09).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 92089
(June 2, 2021), 86 FR 30510 (June 8, 2021).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93328; File No. SR–BX–
2021–046]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Extend the Pilot
Related to Clearly Erroneous
Transactions Until April 20, 2022
October 14, 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 October
8, 2021, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II,
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.
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1 15
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17:55 Oct 19, 2021
Jkt 256001
6 15
U.S.C. 78s(b)(2)(B).
Securities Exchange Act Release No. 92368
(July 9, 2021), 86 FR 37356 (July 15, 2021).
8 15 U.S.C. 78s(b)(2).
9 See Securities Exchange Act Release No. 93160
(September 28, 2021), 86 FR 54770 (October 4,
2021).
10 The comment letter received on the proposed
rule changes is available at: https://www.sec.gov/
comments/sr-nyse-2021-25/srnyse202125.htm.
11 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
7 See
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to extend the
current pilot program related to BX
Equity 11, Rule 11890 (Clearly
Erroneous Transactions) to the close of
business on April 20, 2022.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/bx/rules, at the principal office
of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
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 extend the current pilot
program related to Equity 11, Rule
11890, Clearly Erroneous Transactions,
to the close of business on April 20,
2022. The pilot program is currently due
to expire on October 20, 2021.
On September 10, 2010, the
Commission approved, on a pilot basis,
changes to Equity 11, Rule 11890 that,
among other things: (i) Provided for
uniform treatment of clearly
erroneous execution reviews in multistock events involving twenty or more
securities; and (ii) reduced the ability of
the Exchange to deviate from the
objective standards set forth in the rule.3
In 2013, the Exchange adopted a
provision designed to address the
operation of the Plan.4 Finally, in 2014,
the Exchange adopted two additional
provisions providing that: (i) A series of
transactions in a particular security on
one or more trading days may be viewed
as one event if all such transactions
3 See Securities Exchange Act Release No. 62886
(September 10, 2010), 75 FR 56613 (September 16,
2010) (SR–BX–2010–040).
4 See Securities Exchange Act Release No. 68818
(February 1, 2013), 78 FR 9100 (February 7, 2013)
(SR–BX–2013–010).
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]]>Agencies
[Federal Register Volume 86, Number 200 (Wednesday, October 20, 2021)]
[Notices]
[Pages 58110-58116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22810]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93324; File No. 4-700]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing and Order Approving and Declaring
Effective an Amended Plan for the Allocation of Regulatory
Responsibilities Between the Financial Industry Regulatory Authority,
Inc. and Investors' Exchange LLC
October 14, 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 13, 2021, pursuant to Rule
17d-2 of the Act,\2\ by the Financial Industry Regulatory Authority,
Inc. (``FINRA'') and Investors' Exchange LLC (``IEX'') (collectively,
``Participating Organizations'' or ``parties''). This agreement amends
and restates the agreement entered into between FINRA and IEX on June
20, 2016, entitled ``Agreement between Financial Industry Regulatory
Authority, Inc. and Investors' Exchange LLC pursuant to Rule 17d-2
under the Securities Exchange Act of 1934,'' and any subsequent
amendments thereafter.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78q(d).
\2\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------
I. Introduction
Section 19(g)(1) of the Act,\3\ among other things, requires every
self-regulatory organization (``SRO'') registered as either a national
securities exchange or national securities association to examine for,
and enforce compliance by, its members and persons associated with its
members with the Act, the rules and regulations thereunder, and the
SRO's own rules, unless the SRO is relieved of this responsibility
pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act.
Without this relief, the statutory obligation of each individual SRO
could result in a pattern of multiple examinations of broker-dealers
that maintain memberships in more than one SRO (``common members'').
Such regulatory duplication would add unnecessary expenses for common
members and their SROs.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d).
\5\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\7\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q(d)(1).
\7\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------
To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\9\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
---------------------------------------------------------------------------
\8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\9\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits
SROs to propose joint plans for the allocation of regulatory
responsibilities with respect
[[Page 58111]]
to their common members. Under paragraph (c) of Rule 17d-2, the
Commission may declare such a plan effective if, after providing for
appropriate notice and opportunity for comment, it determines that the
plan is necessary or appropriate in the public interest and for the
protection of investors, to foster cooperation and coordination among
the SROs, to remove impediments to, and foster the development of, a
national market system and a national clearance and settlement system,
and is in conformity with the factors set forth in Section 17(d) of the
Act. Commission approval of a plan filed pursuant to Rule 17d-2
relieves an SRO of those regulatory responsibilities allocated by the
plan to another SRO.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. The Plan
On July 28, 2016, the Commission declared effective the Plan
entered into between FINRA and IEX 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 IEX 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 IEX rule for
which FINRA bears responsibility under the Plan for overseeing and
enforcing with respect to IEX members that are also members of FINRA
and the associated persons therewith (``Certification'').
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 54136 (July 12,
2006), 81 FR 51256 (August 3, 2016).
---------------------------------------------------------------------------
III. Proposed Amendment to the Plan
On September 13, 2021, the parties submitted a proposed amendment
to the Plan (``Amended Plan''). The primary purpose of the Amended Plan
is to clarify what is considered a Common Rule under the Plan, add
Securities Exchange Act Rules 604, 610(d), and 611 to the
Certification, eliminate the requirement that IEX provide to FINRA a
current list of members each quarter, and eliminate the requirement
that IEX and FINRA notify Dual Members of the Agreement after the
Effective Date by a uniform joint notice. The text of the proposed
Amended Plan is as follows (additions are italicized; deletions are
[bracketed]):
* * * * *
AGREEMENT BETWEEN FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. AND
INVESTORS' EXCHANGE LLC PURSUANT TO RULE 17d-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
This Agreement, by and between the Financial Industry Regulatory
Authority, Inc. (``FINRA'') and Investors' Exchange LLC (``IEX''),
is made this [20th]9th day of [June 20, 2016] September, 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
and IEX 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 IEX on June 20, 2016, entitled ``Agreement between
Financial Industry Regulatory Authority, Inc. and Investors'
Exchange LLC pursuant to Rule 17d-2 under the Securities Exchange
Act of 1934,'' and any subsequent amendments thereafter.
WHEREAS, FINRA and IEX desire to reduce duplication in the
examination and surveillance of their Dual Members (as defined
herein) and in the filing and processing of certain registration and
membership records; and
WHEREAS, FINRA and IEX desire to execute an agreement covering
such subjects pursuant to the provisions of Rule 17d-2 under the
Exchange Act and to file such agreement with the Securities and
Exchange Commission (the ``SEC'' or ``Commission'') for its
approval.
NOW, THEREFORE, in consideration of the mutual covenants
contained hereinafter, FINRA and IEX hereby agree as follows:
1. Definitions. Unless otherwise defined in this Agreement or
the context otherwise requires, the terms used in this Agreement
shall have the same meaning as they have under the Exchange Act and
the rules and regulations thereunder. As used in this Agreement, the
following terms shall have the following meanings:
(a) ``IEX Rules'' or ``FINRA Rules'' shall mean: (i) The rules
of IEX, or (ii) the rules of FINRA, respectively, as the rules of an
exchange or association are defined in Exchange Act Section
3(a)(27).
(b) ``Common Rules'' shall mean IEX 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 or surveillance for compliance with such provisions and
rules would not require FINRA to develop one or more new examination
or surveillance standards, modules, procedures, or criteria in order
to analyze the application of the provision or rule, or a Dual
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, IEX or FINRA rules as they pertain to
violations of insider trading activities, which is covered by a
separate 17d-2 Agreement by and among [BATS Exchange, Inc., BATS Y-
Exchange, Inc., Chicago Board Options Exchange, Inc., Chicago Stock
Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial
Industry Regulatory Authority, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX
PHLX LLC, the NASDAQ Stock Market LLC, National Stock Exchange,
Inc., New York Stock Exchange LLC, NYSE Amex LLC, and NYSE Arca
Inc., effective December 16, 2011], Cboe BZX Exchange, Inc., Cboe
BYX Exchange, Inc., NYSE Chicago, 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
September 23, 2020 as may be amended from time to time. Common Rules
shall not include any provisions regarding: (i) Notice, reporting or
any other filings made directly to or from IEX; (ii) incorporation
by reference of other IEX 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 IEX; (iv) prior written approval of IEX; and
(v) payment of fees or fines to IEX.
(c) ``Dual Members'' shall mean those IEX members that are also
members of FINRA and the associated persons therewith.
(d) ``Effective Date'' shall be the date this Agreement is
approved by the Commission.
(e) ``Enforcement Responsibilities'' shall mean the conduct of
appropriate proceedings, in accordance with FINRA's Code of
Procedure (the Rule 9000 Series) and other applicable FINRA
procedural rules, to determine whether violations of Common Rules
have occurred, and if such violations are deemed to have occurred,
the imposition of appropriate sanctions as specified under FINRA's
Code of Procedure and sanctions guidelines.
(f) ``Regulatory Responsibilities'' shall mean the examination
responsibilities, surveillance responsibilities and Enforcement
Responsibilities relating to compliance by the Dual Members with the
Common Rules and the provisions of the Exchange Act and the rules
and regulations thereunder, and other applicable laws, rules and
regulations, each as set forth on Exhibit 1 attached hereto.
2. Regulatory and Enforcement Responsibilities. FINRA shall
assume Regulatory Responsibilities and Enforcement Responsibilities
for Dual Members. Attached as Exhibit 1 to this Agreement and made
part hereof, IEX furnished FINRA with a current list of Common Rules
and certified to FINRA that such rules that are IEX 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 IEX or
FINRA, IEX shall submit an updated list of Common Rules to FINRA for
review which shall add IEX Rules not included in the current list of
Common Rules
[[Page 58112]]
that qualify as Common Rules as defined in this Agreement; delete
IEX 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 IEX 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 IEX shall retain full responsibility for (unless
otherwise addressed by separate agreement or rule) (collectively,
the ``Retained Responsibilities'') the following:
(a) Surveillance, examination, investigation and enforcement
with respect to trading activities or practices involving IEX's own
marketplace for rules that are not Common Rules;
(b) registration pursuant to its applicable rules of associated
persons (i.e., registration rules that are not Common Rules);
(c) discharge of its duties and obligations as a Designated
Examining Authority pursuant to Rule 17d-1 under the Exchange Act;
and
(d) any IEX Rules that are not Common Rules, except for IEX
Rules for IEX Services LLC as provided in paragraph [6]5.
[3. Dual Members. Prior to the Effective Date, IEX shall furnish
FINRA with a current list of Dual Members, which shall be updated no
less frequently than once each quarter.]
[4]3. No Charge. There shall be no charge to IEX by FINRA for
performing the Regulatory Responsibilities and Enforcement
Responsibilities under this Agreement except as otherwise agreed by
the parties, either herein or in a separate agreement.
[5]4. Applicability of Certain Laws, Rules, Regulations or
Orders. Notwithstanding any provision hereof, this Agreement shall
be subject to any statute, or any rule or order of the Commission.
To the extent such statute, rule or order is inconsistent with this
Agreement, the statute, rule or order shall supersede the
provision(s) hereof to the extent necessary for them to be properly
effectuated and the provision(s) hereof in that respect shall be
null and void.
[6]5. Notification of Violations.
(a) In the event that FINRA becomes aware of apparent violations
of any IEX Rules, which are not listed as Common Rules, discovered
pursuant to the performance of the Regulatory Responsibilities
assumed hereunder, FINRA shall notify IEX of those apparent
violations for such response as IEX deems appropriate.
(b) In the event that IEX becomes aware of apparent violations
of any Common Rules, discovered pursuant to the performance of the
Retained Responsibilities, IEX shall notify FINRA of those apparent
violations and such matters shall be handled by FINRA as provided in
this Agreement. With respect to apparent violations of IEX Services
LLC FINRA shall not make referrals to IEX pursuant to this paragraph
[6]5. Such apparent violations shall be processed by, and
enforcement proceedings in respect thereto will be conducted by,
FINRA as provided in this Agreement.
(c) Apparent violations of Common Rules shall be processed by,
and enforcement proceedings in respect thereto shall be conducted by
FINRA as provided hereinbefore; provided, however, that in the event
a Dual Member is the subject of an investigation relating to a
transaction on IEX, IEX may in its discretion assume concurrent
jurisdiction and responsibility.
(d) Each party agrees to make available promptly all files,
records and witnesses necessary to assist the other in its
investigation or proceedings.
[7]6. Continued Assistance.
(a) FINRA shall make available to IEX all information obtained
by FINRA in the performance by it of the Regulatory Responsibilities
hereunder with respect to the Dual Members subject to this
Agreement. In particular, and not in limitation of the foregoing,
FINRA shall furnish IEX any information it obtains about Dual
Members which reflects adversely on their financial condition. IEX
shall make available to FINRA any information coming to its
attention that reflects adversely on the financial condition of Dual
Members or indicates possible violations of applicable laws, rules
or regulations by such firms.
(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. Statutory Disqualifications. When FINRA becomes aware of a
statutory disqualification as defined in the Exchange Act with
respect to a Dual Member, FINRA shall determine pursuant to Sections
15A(g) and/or Section 6(c) of the Exchange Act the acceptability or
continued applicability of the person to whom such disqualification
applies and keep IEX advised of its actions in this regard for such
subsequent proceedings as IEX may initiate.
[9]8. Customer Complaints. IEX shall forward to FINRA copies of
all customer complaints involving Dual Members received by IEX
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.
[10]9. Advertising. FINRA shall assume responsibility to review
the advertising of Dual Members subject to the Agreement, provided
that such material is filed with FINRA in accordance with FINRA's
filing procedures and is accompanied with any applicable filing fees
set forth in FINRA Rules.
[11]10. No Restrictions on Regulatory Action. Nothing contained
in this Agreement shall restrict or in any way encumber the right of
either party to conduct its own independent or concurrent
investigation, examination or enforcement proceeding of or against
Dual Members, as either party, in its sole discretion, shall deem
appropriate or necessary.
[12]11. Termination. This Agreement may be terminated by IEX or
FINRA at any time upon the approval of the Commission after one (1)
year's written notice to the other party.
[13]12. Arbitration. In the event of a dispute between the
parties as to the operation of this Agreement, IEX 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 [13]12 shall interfere with a party's right to
terminate this Agreement as set forth herein.
[14. Notification of Members. IEX and FINRA shall notify Dual
Members of this Agreement after the Effective Date by means of a
uniform joint notice.]
[15]13. 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.
[16]14. Limitation of Liability. Neither FINRA nor IEX nor any
of their respective directors, governors, officers or employees
shall be liable to the other party to this Agreement for any
liability, loss or damage resulting from or claimed to have resulted
from any delays, inaccuracies, errors or omissions with respect to
the provision of Regulatory Responsibilities as provided hereby or
for the failure to provide any such responsibility, except with
respect to such liability, loss or damages as shall have been
suffered by one or the other of FINRA or IEX and caused by the
willful misconduct of the other party or their respective directors,
governors, officers or employees. No warranties, express or implied,
are made by FINRA or IEX with respect to any of the responsibilities
to be performed by each of them hereunder.
[17]15. Relief from Responsibility. Pursuant to Sections
17(d)(1)(A) and 19(g) of the Exchange Act and Rule 17d-2 thereunder,
FINRA and IEX join in requesting the Commission, upon its approval
of this Agreement or any part thereof, to relieve IEX 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.
[[Page 58113]]
[18]16. 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.
[19]17. 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.
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 italicized and deleted text is in brackets.
EXHIBIT 1
IEX CERTIFICATION OF COMMON RULES
IEX hereby certifies that the requirements contained in the
rules listed below for IEX are identical to, or substantially
similar to, the comparable FINRA [(NASD)] Rules, Exchange Act
provision or SEC rule identified (``Common Rules'').
# Common Rules shall not include provisions regarding (i)
notice, reporting or any other filings made directly to or from IEX,
(ii) incorporations by reference of other IEX 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 IEX, (iv) prior written approval
of IEX, and (v) payment of fees or fines to IEX.
------------------------------------------------------------------------
FINRA rule, exchange act
IEX rule provision, SEC rule
------------------------------------------------------------------------
Rule 2.140 Prohibited Conditions FINRA Rule 2081 Prohibited
Relating to Expungement of Customer Conditions Relating to
Dispute. Expungement of Customer
Dispute.
Rule 2.160(o) Lapse of Registration and FINRA Rule 1210.08--
Expiration of SIE. Registration Requirements--
Lapse of Registration and
Expiration of SIE.
Rule 2.160(p) Restrictions on FINRA Rule 1240(a)(1)-(4), (6)-
Membership--Continuing Education (7) and (b) Continuing
Requirements . Education Requirements.
Rule 2.160(q) and (r) Registration FINRA By-Laws of the
Requirements and Restrictions on Corporation Article IV, Sec
Membership, and Rule 2.170(b) and (g) 1(c) Application for
Application Procedures for Membership Membership, Article V,
or to become an Associated Person of a Sections 2 and 3 Application
Member . for Registration and
Notification by Member to the
Corporation and Associated
Person of Termination;
Amendments to Notification,
FINRA Rule 1010(c) and (e)
Electronic Filing Requirements
for Uniform Forms and FINRA
Rule 4517 Members Filing and
Contact Information
Requirements.
Rule 2.240 Fidelity Bonds ............ FINRA Rule 4360 Fidelity Bonds.
Rule 3.110 Business Conduct of Members FINRA Rule 2010 Standards of
caret. Commercial Honor and
Principles of Trade. caret
Rule 3.120 Violations Prohibited1 caret FINRA Rule 2010 Standards of
. Commercial Honor and
Principles of Trade caret and
FINRA Rule 3110 Supervision.
Rule 3.130 Use of Fraudulent Devices FINRA Rule 2020 Use of
caret. Manipulative, Deceptive or
Other Fraudulent Devices.
caret
Rule 3.150 Know Your Customer.......... FINRA Rule 2090 Know Your
Customer.
Rule 3.160 Fair Dealing with Customers. FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Devices.
caret
Rule 3.170 Suitability................. FINRA Rule 2111 Suitability.
Rule 3.180(a) The Prompt Receipt and FINRA Rule 11860 COD Orders.
Delivery of Securities.
Rule 3.180(b) The Prompt Receipt and SEA Regulation SHO.
Delivery of Securities.
Rule 3.190 Charges for Services FINRA Rule 2122 Charges for
Performed. Services Performed.
Rule 3.200 Use of Information Obtained FINRA Rule 2060 Use of
in a Fiduciary Capacity. Information Obtained in
Fiduciary Capacity.
Rule 3.210 Publication of Transactions FINRA Rule 5210 Publication of
and Quotations. Transactions and Quotations.
Rule 3.220 Offers at Stated Prices..... FINRA Rule 5220 Offers at
Stated Prices.
Rule 3.230 Payments Involving FINRA Rule 5230 Payments
Publications that Influence the Market Involving Publications that
Price of a Security. Influence the Market Price of
a Security.
Rule 3.240 Customer Confirmations...... FINRA Rule 2232(a) Customer
Confirmations and SEA Rule 10b-
10 Confirmation of
Transactions.
Rule 3.250 Disclosure of Control FINRA Rule 2262 Disclosure of
Relationship with Issuer. Control Relationship with
Issuer.
Rule 3.260 Discretionary Accounts...... FINRA Rule 3260 Discretionary
Accounts.
Rule 3.270 Improper Use of Customers' FINRA Rule 2150(a)-(c) and SM
Securities or Funds; Prohibition .03 Improper Use of Customers'
Against Guarantees and Sharing in Securities or Funds;
Accounts. Prohibition Against Guarantees
and Sharing in Accounts.
Rule 3.280 Communications with the FINRA Rule 2210 Communications
Public. with the Public.
FINRA Rule 2265 Extended Hours
Trading Risk Disclosure.
Rule 3.291 Influencing or Rewarding FINRA Rule 3220 Influencing or
Employees of Others; Gratuities. Rewarding Employees of Others.
Rule 3.292 Telemarketing............... FINRA Rule 3230 Telemarketing.
Rule 3.293 Short-Interest Reporting.... FINRA Rule 4560 Short-Interest
Reporting.
Rule 4.511 General Requirements........ FINRA Rule 4511 General
Requirements.
Rule 4.512 Customer Account Information FINRA Rule 4512 Customer
Account Information.
Rule 4.513 Record of Written Customer FINRA Rule 4513 Record of
Complaints. Written Customer Complaints.
Rule 4.550 Disclosure of Financial FINRA Rule 2261 Disclosure of
Condition. Financial Condition.
Rule 5.110 Supervision ............... FINRA Rule 3110 Supervision.
Rule 5.120 Supervisory Control System FINRA Rule 3120 Supervisory
Control System.
Rule 5.130 Annual Certification of FINRA Rule 3130 Annual
Compliance and Supervisory Processes . Certification of Compliance
and Supervisory Processes.
Rule 5.160 Anti-Money Laundering FINRA Rule 3310 Anti-Money
Compliance Program . Laundering Compliance Program.
Rule 5.170 Transactions for or by FINRA Rule 3210 Accounts At
Associated Persons. Other Broker-Dealers and
Financial Institutions.
Rule 6.120 Failure to Deliver and Regulation SHO Rules 200 and
Failure to Receive. 203.
Rule 6.130(a), (b), (d)-(i) Forwarding FINRA Rule 2251 Processing and
of Proxy and Other Issuer-Related Forwarding of Proxy and Other
Materials; Proxy Voting. Issuer-Related Materials.
Rule 10.110(a) Market Manipulation..... FINRA Rule 6140 Other Trading
Practices.
[[Page 58114]]
Rule 10.110(b) Market Manipulation..... FINRA Rule 5210 Publication of
Transactions and Quotations,
FINRA Rule 2020 Use of
Manipulative, Deceptive or
Other Fraudulent Devices,
FINRA Rule 2010 Standards of
Commercial Honor and
Principles of Trade, and FINRA
Rule 6140(a) Other Trading
Practices.
Rule 10.120 Fictitious Transactions.... FINRA Rule 6140 Other Trading
Practices and FINRA Rule 5210
Supplementary Material .02
Self-Trades.
Rule 10.130 Excessive Sales By A Member FINRA Rule 6140(c) Other
Trading Practices.
Rule 10.140 Manipulative Transactions.. FINRA Rule 6140 Other Trading
Practices.
Rule 10.150 Dissemination of False FINRA Rule 6140(e) Other
Information. Trading Practices.
Rule 10.160 Prohibition Against Trading FINRA Rule 5320 Prohibition
Ahead of Customer Orders **. Against Trading Ahead of
Customer Orders. **
Rule 10.180 Influencing the FINRA Rule 6140(a) Other
Consolidated Tape. Trading Practices and FINRA
Rule 5210 Publication of
Transactions and Quotations.
Rule 10.190 Trade Shredding............ FINRA Rule 5290 Order Entry and
Execution Practices.
Rule 10.220 Best Execution and FINRA Rule 5310 Best Execution
Interpositioning **. and Interpositioning. **
Rule 10.240 Trading Ahead of Research FINRA Rule 5280 Trading Ahead
Reports **. of Research Reports. **
Rule 10.260 Front Running of Block FINRA Rule 5270 Front Running
Transactions **. of Block Transactions. **
Rule 11.151(e) Market Maker FINRA Rule 6240(a)-(c), (d)(1)
Obligations.. and (2) Prohibition from
Locking or Crossing Quotations
in NMS Stocks
Rule 11.280(e)(3) & (4) Trading Halts FINRA Rule 6190(a)&(b)
Due to Extraordinary Market Volatility. Compliance with Regulation NMS
Plan to Address Extraordinary
Market Volatility.
Rule 11.310 Locking or Crossing FINRA Rule 6240(a),-(c), (d)(1)
Quotations in NMS Stocks **. and (2) Prohibition from
Locking or Crossing Quotations
in NMS Stocks. **
Rule 11.420(c) Order Audit Trail System FINRA Rule 4590 Synchronization
Requirements. of Member Business Clocks.
Rule 11.420(d)--Order Audit Trail FINRA Rule 7440--Recording of
System Requirements--Recording of Order Information.
Order Information.
Rule 11.420(e)--Order Audit Trail FINRA Rule 7450--Order Data
System Requirements--Order Data Transmission.
Transmission Requirements.
Rule 12.110(c) Arbitration............. FINRA Rule 2268 Requirements
When Using Predispute
Arbitration Agreements for
Customer Accounts.
------------------------------------------------------------------------
\1\ FINRA shall only have Regulatory Responsibilities for Rule 3.120(a)
regarding conduct in violation of the Act, or the rules or regulations
thereunder.
In addition, the following provisions shall be part of this 17d-2
Agreement:
Securities Exchange Act of 1934 (``SEA''):
Section 15(g)
SEA Rules:
SEA Rule 200 of Regulation SHO--Definition of Short Sales and
Marking Requirements**
SEA Rule 201 of Regulation SHO--Circuit Breaker**
SEA Rule 203 of Regulation SHO--Borrowing and Delivery
Requirements**
SEA Rule 204 of Regulation SHO--Close-Out Requirement**
SEA Rule 101 of Regulation M--Activities by Distribution
Participants**
SEA Rule 102 of Regulation M--Activities by Issuers and Selling
Security Holders During a Distribution**
SEA Rule 103 of Regulation M--Nasdaq Passive Market Making**
SEA Rule 104 of Regulation M--Stabilizing and Other Activities
in Connection with an Offering**
SEA Rule 105 of Regulation M--Short Selling in Connection With
a Public Offering**
SEA Rule 604 of Regulation NMS--Display of Customer Limit
Orders**
SEA Rule 610(d) of Regulation NMS--Locking or Crossing
Quotations**
SEA Rule 611 of Regulation NMS--Order Protection Rule**
SEA Rule 10b-5 Employment of Manipulative and Deceptive Devices
caret
SEA Rule 17a-3/17a-4--Records to Be Made by Certain Exchange
Members, Brokers, and Dealers/Records to Be Preserved by Certain
Exchange Members, Brokers, and Dealers caret
[ FINRA shall not have Regulatory Responsibilities regarding
notification or reporting to IEX.]
caret 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 [BATS
Exchange, Inc., BATS-Y Exchange, Inc., Chicago Board Options Exchange,
Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange Inc., EDGX
Exchange Inc., Financial Industry Regulatory Authority, Inc., NASDAQ
OMX BX, Inc., NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC,
National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Amex
LLC, and NYSE Arca Inc. effective December 16, 2011] Cboe BZX
Exchange, Inc., Cboe BYX Exchange, Inc., NYSE Chicago, 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 September 23, 2020, as may be amended from time to time.
** FINRA shall perform the surveillance responsibilities for the double
star rules. These rules may be cited by FINRA in both the context of
this Agreement and the Regulatory Services Agreement.
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 4-700 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 4-700. This file number
should be included on the subject line if email is used. To help the
Commission
[[Page 58115]]
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
internet website (https://www.sec.gov/rules/sro.shtml). Copies of the
submission, all subsequent amendments, all written statements with
respect to the proposed plan that are filed with the Commission, and
all written communications relating to the proposed plan between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the plan also will be available for inspection and copying at the
principal offices of FINRA and IEX. 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 4-700
and should be submitted on or before November 10, 2021.
V. Discussion
The Commission finds that the proposed Amended Plan is consistent
with the factors set forth in Section 17(d) of the Act \12\ and Rule
17d-2(c) thereunder \13\ in that the proposed Amended Plan is necessary
or appropriate in the public interest and for the protection of
investors, fosters cooperation and coordination among SROs, and removes
impediments to and fosters the development of the national market
system. In particular, the Commission believes that the proposed
Amended Plan should reduce unnecessary regulatory duplication by
allocating to FINRA certain examination and enforcement
responsibilities for Dual Members that would otherwise be performed by
FINRA and IEX. Accordingly, the proposed Amended Plan promotes
efficiency by reducing costs to Dual Members. Furthermore, because IEX
and FINRA will coordinate their regulatory functions in accordance with
the Amended Plan, the Amended Plan should promote investor protection.
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\12\ 15 U.S.C. 78q(d).
\13\ 17 CFR 240.17d-2(c).
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The Commission notes that, under the Amended Plan, IEX and FINRA
have allocated regulatory responsibility for those IEX 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 Dual 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, IEX will review the Certification at
least annually, or more frequently if required by changes in either the
rules of IEX or FINRA, and, if necessary, submit to FINRA an updated
list of Common Rules to add IEX rules not included on the then-current
list of Common Rules that are substantially similar to FINRA rules;
delete IEX 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 IEX rules that qualify as
common rules.\14\ FINRA will then confirm in writing whether the rules
listed in any updated list are Common Rules as defined in the Amended
Plan. The Commission believes that these provisions are designed to
provide for continuing communication between the Parties to ensure the
continued accuracy of the scope of the proposed allocation of
regulatory responsibility.
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\14\ See paragraph 2 of the Amended Plan.
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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 IEX rules that are substantially
similar to the rules of FINRA for Dual Members of IEX 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 IEX
rules in the Certification in conformance with the definition of Common
Rules provided in the Amended Plan. However, should the Parties decide
to add an IEX rule to the Certification that is not substantially
similar to a FINRA rule; delete an IEX rule from the Certification that
is substantially similar to a FINRA rule; or leave on the Certification
an IEX 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.\15\
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\15\ 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, Dual Members, also would constitute an
amendment to the Amended Plan.
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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 to clarify what is
considered a Common Rule under the Plan, add Securities Exchange Act
Rules 604, 610(d), and 611 to the Certification, eliminate the
requirement that IEX provide FINRA a current list of members each
quarter, and eliminate the requirements that IEX and FINRA notify Dual
Members of the Agreement after the Effective Date by a uniform joint
notice. 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.\16\
Furthermore, the Commission does not believe that the amendment to the
plan raises any new regulatory issues that the Commission has not
previously considered. The Commission notes that FINRA has access to
real-time information regarding Exchange membership via its Central
Registration Depository.
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\16\ See supra note 11 (citing to Securities Exchange Act
Release No. 78434).
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VI. Conclusion
This order gives effect to the Amended Plan filed with the
Commission in File No. 4-700. 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. 4-700, between the FINRA and IEX, filed
pursuant to Rule 17d-2 under the Act, hereby is approved and declared
effective.
It is further ordered that IEX is relieved of those
responsibilities allocated to FINRA under the Amended Plan in File No.
4-700.
[[Page 58116]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(34).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22810 Filed 10-19-21; 8:45 am]
BILLING CODE 8011-01-P
