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., The Nasdaq Stock Market LLC, and Nasdaq BX, Inc., 58819-58828 [2024-15910]
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Federal Register / Vol. 89, No. 139 / Friday, July 19, 2024 / Notices
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
credits and fees to remain competitive
with other exchanges and with
alternative trading systems that have
been exempted from compliance with
the statutory standards applicable to
exchanges. Because competitors are free
to modify their own credits and fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which credit
or fee changes in this market may
impose any burden on competition is
extremely limited. The proposal is
reflective of this competition.
Even the largest U.S. equities
exchange by volume has less than 20%
market share, which in most markets
could hardly be categorized as having
enough market power to burden
competition. Moreover, as noted above,
price competition between exchanges is
fierce, with liquidity and market share
moving freely between exchanges in
reaction to fee and credit changes. This
is in addition to free flow of order flow
to and among off-exchange venues,
which comprises upwards of 40% of
industry volume.
In sum, if the changes proposed
herein are unattractive to market
participants, it is likely that the
Exchange will lose market share as a
result. Accordingly, the Exchange does
not believe that the proposed changes
will impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.9
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) necessary or appropriate in
9 15
U.S.C. 78s(b)(3)(A)(ii).
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58819
SR–BX–2024–022 and should be
submitted on or before August 9, 2024.
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matther DeLesDernier,
Deputy Secretary.
IV. Solicitation of Comments
[FR Doc. 2024–15911 Filed 7–18–24; 8:45 am]
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100536; File No. 4–575]
• 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 SR–
BX–2024–022 on the subject line.
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., The Nasdaq Stock
Market LLC, and Nasdaq BX, Inc.
Paper Comments
July 15, 2024.
Electronic Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–BX–2024–022. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
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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 July 1, 2024, pursuant
to Rule 17d–2 of the Act,2 by the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’), The Nasdaq
Stock Market LLC (‘‘Nasdaq’’), and
Nasdaq BX, Inc. (‘‘BX’’) (collectively,
‘‘Participating Organizations’’ or
‘‘parties’’). This Agreement amends and
restates the agreement entered into
between FINRA, Nasdaq, and BX
approved by the SEC on September 23,
2021, entitled ‘‘Agreement Among
Financial Industry Regulatory
Authority, Inc., The Nasdaq Stock
Market LLC and Nasdaq BX, Inc.
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,
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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Federal Register / Vol. 89, No. 139 / Friday, July 19, 2024 / Notices
unless the SRO is relieved of this
responsibility pursuant to Section
17(d) 4 or Section 19(g)(2) 5 of the Act.
Without this relief, the statutory
obligation of each individual SRO could
result in a pattern of multiple
examinations of broker-dealers that
maintain memberships in more than one
SRO (‘‘common members’’). Such
regulatory duplication would add
unnecessary expenses for common
members and their SROs.
Section 17(d)(1) of the Act 6 was
intended, in part, to eliminate
unnecessary multiple examinations and
regulatory duplication.7 With respect to
a common member, Section 17(d)(1)
authorizes the Commission, by rule or
order, to relieve an SRO of the
responsibility to receive regulatory
reports, to examine for and enforce
compliance with applicable statutes,
rules, and regulations, or to perform
other specified regulatory functions.
To implement Section 17(d)(1), the
Commission adopted two rules: Rule
17d–1 and Rule 17d–2 under the Act.8
Rule 17d–1 authorizes the Commission
to name a single SRO as the designated
examining authority (‘‘DEA’’) to
examine common members for
compliance with the financial
responsibility requirements imposed by
the Act, or by Commission or SRO
rules.9 When an SRO has been named as
a common member’s DEA, all other
SROs to which the common member
belongs are relieved of the responsibility
to examine the firm for compliance with
the applicable financial responsibility
rules. On its face, Rule 17d–1 deals only
with an SRO’s obligations to enforce
member compliance with financial
responsibility requirements. Rule 17d–1
does not relieve an SRO from its
obligation to examine a common
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
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).
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joint plans for the allocation of
regulatory responsibilities with respect
to their common members. Under
paragraph (c) of Rule 17d–2, the
Commission may declare such a plan
effective if, after providing for
appropriate notice and opportunity for
comment, it determines that the plan is
necessary or appropriate in the public
interest and for the protection of
investors, to foster cooperation and
coordination among the SROs, to
remove impediments to, and foster the
development of, a national market
system and a national clearance and
settlement system, and is in conformity
with the factors set forth in Section
17(d) of the Act. Commission approval
of a plan filed pursuant to Rule 17d–2
relieves an SRO of those regulatory
responsibilities allocated by the plan to
another SRO.
II. The Plan
On January 8, 2009, the Commission
declared effective the Plan entered into
between FINRA and the Boston Stock
Exchange, Incorporated (n/k/a Nasdaq
BX, Inc. (‘‘BX’’)) for allocating
regulatory responsibility pursuant to
Rule 17d–2.11 The Plan is intended to
reduce regulatory duplication for firms
that are common members of FINRA
and BX by allocating regulatory
responsibility with respect to certain
applicable laws, rules, and regulations
that are common among them. Included
in the Plan is an exhibit that lists every
BX rule for which FINRA bears
responsibility under the Plan for
overseeing and enforcing with respect to
BX members that are also members of
FINRA and the associated persons
therewith (‘‘Certification’’). On
September 23, 2021, the Commission
declared effective an amendment to the
Plan to allocate surveillance,
investigation, and enforcement
responsibilities for Rule 14e–4 under
the Act, to reflect the name change of
Boston Stock Exchange, Incorporated to
Nasdaq BX, Inc., and to add Nasdaq as
a Participant to the Plan.12
III. Proposed Amendment to the Plan
On July 1, 2024, the parties submitted
a proposed amendment to the Plan
(‘‘Amended Plan’’). The primary
purpose of the Amended Plan is to: (i)
update the list of Common Rules; (ii)
add surveillance and investigation
coverage for certain Common Rules
specified in Exhibit 1 to the Amended
Plan; (iii) to reflect that, for Router
11 See Securities Exchange Act Release No. 59218
(January 8, 2009), 74 FR 2143 (January 14, 2009).
12 See Securities Exchange Act Release No. 93114
(September 23, 2021), 86 FR 53996 (September 29,
2021).
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Members, FINRA will retain regulatory
responsibility for Nasdaq and BX rules
that are not Common Rules; and (iv) to
reflect that FINRA will not make
referrals to Nasdaq and BX for apparent
violations of any Nasdaq or BX Rules by
any Router Member. The text of the
proposed Amended Plan is as follows
(additions are in italics; deletions are
[bracketed]):
*
*
*
*
*
AGREEMENT AMONG FINANCIAL
INDUSTRY REGULATORY
AUTHORITY, INC., THE NASDAQ
STOCK MARKET LLC AND NASDAQ
BX, INC. PURSUANT TO RULE 17d–2
UNDER THE SECURITIES EXCHANGE
ACT OF 1934
This Agreement, by and among the
Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’), The Nasdaq
Stock Market LLC (‘‘Nasdaq’’) and
Nasdaq BX, Inc. (‘‘BX’’), is made this
[30th]1st day of [August, 2021] July,
2024 (the ‘‘Agreement’’), pursuant to
Section 17(d) of the Securities Exchange
Act of 1934 (the ‘‘Exchange Act’’) and
Rule 17d–2 thereunder, which permits
agreements between self-regulatory
organizations to allocate regulatory
responsibility to eliminate regulatory
duplication. FINRA, Nasdaq and BX
may be referred to individually as a
‘‘party’’ and together as the ‘‘parties.’’
This Agreement amends and restates
the agreement entered into between
FINRA, Nasdaq and BX approved by the
SEC on September 23, 2021 [on
December 5, 2008], entitled ‘‘Agreement
[between] among Financial Industry
Regulatory Authority, Inc., The Nasdaq
Stock Market LLC and [Boston Stock
Exchange, Incorporated] Nasdaq BX,
Inc. pursuant to Rule 17d–2 under the
Securities Exchange Act of 1934,’’ and
any subsequent amendments thereafter
[and the agreement entered into
between FINRA and Nasdaq approved
by the SEC on July 12, 2006, entitled
‘‘Agreement between the National
Association of Securities Dealers, Inc.
and The Nasdaq Stock Market LLC
Pursuant to Section 17(d) and Rule 17d–
2,’’ and any subsequent amendments
thereafter].
Whereas, FINRA, Nasdaq and BX
desire to reduce duplication in the
examination, surveillance and
investigation of their Common Members
(as defined herein) and in the filing and
processing of certain registration and
membership records; and
Whereas, FINRA, Nasdaq and BX
desire to execute an agreement covering
such subjects pursuant to the provisions
of Rule 17d–2 under the Exchange Act
and to file such agreement with the U.S.
Securities and Exchange Commission
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(the ‘‘SEC’’ or ‘‘Commission’’) for its
approval.
Now, therefore, in consideration of
the mutual covenants contained
hereinafter, FINRA, Nasdaq and BX
hereby agree as follows:
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) ‘‘Nasdaq Rules’’, ‘‘BX Rules’’ or
‘‘FINRA Rules’’ shall mean: (i) the rules
of Nasdaq, (ii) the rules of BX, or (iii)
the rules of FINRA, respectively, as the
rules of an exchange or association are
defined in Exchange Act Section
3(a)(27).
(b) ‘‘Common Rules’’ shall mean
Nasdaq Rules and BX Rules that are
substantially similar to the applicable
FINRA Rules and certain provisions of
the Exchange Act and SEC rules set
forth on Exhibit 1 in that examination,
surveillance or investigation for
compliance with such provisions and
rules would not require FINRA to
develop one or more new examination,
surveillance or investigation standards,
modules, procedures, or criteria in order
to analyze the application of the
provision or rule, or a Common
Member’s activity, conduct, or output in
relation to such provision or rule;
provided, however, Common Rules
shall not include the application of the
SEC, Nasdaq, BX or FINRA rules as they
pertain to violations of insider trading
activities, which is covered by a
separate 17d–2 Agreement by and
among Cboe BZX Exchange, Inc., Cboe
BYX Exchange, Inc., Chicago Stock
Exchange, Inc., Cboe EDGA Exchange,
Inc., Cboe EDGX Exchange, Inc.,
Financial Industry Regulatory
Authority, Inc., MEMX, LLC, MIAX
PEARL, LLC, Nasdaq BX, Inc., Nasdaq
PHLX LLC, The Nasdaq Stock Market
LLC, NYSE National, Inc., New York
Stock Exchange LLC, NYSE American
LLC, NYSE Arca, Inc., Investors
Exchange LLC and Long-Term Stock
Exchange, Inc. approved by the
Commission on 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 Nasdaq or BX; (ii)
incorporation by reference of other
Nasdaq or BX Rules that are not
Common Rules; (iii) exercise of
discretion in a manner that differs from
FINRA’s exercise of discretion
including, but not limited to exercise of
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exemptive authority by Nasdaq or BX;
(iv) prior written approval of Nasdaq or
BX; and (v) payment of fees or fines to
Nasdaq or BX.
(c) ‘‘Common Members’’ shall mean
those members of FINRA and a member
of at least one of Nasdaq or BX and the
associated persons therewith.
(d) ‘‘Effective Date’’ shall [have the
meaning set forth in paragraph 13]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, surveillance and
investigation responsibilities and
Enforcement Responsibilities relating to
compliance by the Common Members
with the Common Rules and the
provisions of the Exchange Act and the
rules and regulations thereunder, and
other applicable laws, rules and
regulations, each as set forth on Exhibit
1 attached hereto. [The term
‘‘Regulatory Responsibilities’’ shall also
include the surveillance, investigation
and Enforcement Responsibilities
relating to compliance by Common
Members with Rule 14e–4 of the
Securities Exchange Act (‘‘Rule 14e–4’’),
with a focus on the standardized call
option provision of Rule 14e–
4(a)(1)(ii)(D).]
2. Regulatory Responsibilities. FINRA
shall assume Regulatory
Responsibilities for Common Members.
Attached as Exhibit 1 to this Agreement
and made part hereof, Nasdaq and BX
furnished FINRA with a current list of
Common Rules and certified to FINRA
that such rules that are Nasdaq Rules
and BX Rules are substantially similar
to the corresponding FINRA Rules (the
‘‘Certification’’). FINRA hereby agrees
that the rules listed in the Certification
are Common Rules as defined in this
Agreement. Each year following the
Effective Date of this Agreement, or
more frequently if required by changes
in either the rules of Nasdaq, BX or
FINRA, Nasdaq and BX shall submit an
updated list of Common Rules to FINRA
for review which shall add Nasdaq
Rules and BX Rules not included in the
current list of Common Rules that
qualify as Common Rules as defined in
this Agreement; delete Nasdaq Rules
and BX Rules included in the current
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58821
list of Common Rules that no longer
qualify as Common Rules as defined in
this Agreement; and confirm that the
remaining rules on the current list of
Common Rules continue to be Nasdaq
Rules and BX Rules that qualify as
Common Rules as defined in this
Agreement. Within 30 days of receipt of
such updated list, FINRA shall confirm
in writing whether the rules listed in
any updated list are Common Rules, as
defined in this Agreement.
Notwithstanding anything herein to the
contrary, it is explicitly understood that
the term ‘‘Regulatory Responsibilities’’
does not include, and Nasdaq and BX
shall retain full responsibility for
(unless otherwise addressed by separate
agreement or rule) (collectively, the
‘‘Retained Responsibilities’’) the
following:
(a) surveillance, examination,
investigation and enforcement with
respect to trading activities or practices
involving Nasdaq’s or BX’s own
marketplaces;
(b) registration pursuant to Nasdaq’s
or BX’s applicable rules of associated
persons (i.e., registration rules that are
not Common Rules);
(c) discharge of Nasdaq’s or BX’s
duties and obligations as a Designated
Examining Authority pursuant to Rule
17d–1 under the Exchange Act; and
(d) any Nasdaq Rules and BX Rules
that are not Common Rules, except for
Nasdaq Rules and BX Rules for any
Nasdaq member or BX member that
operates as a facility (as defined in
Section 3(a)(2) of the Exchange Act),
acts as an outbound router for Nasdaq
or BX, and is a member of FINRA
(‘‘Router Member’’) as provided in
paragraph 5. As of the date of this
Agreement, the only Router Member is
Nasdaq Execution Services, LLC.
3. No Charge. There shall be no charge
to Nasdaq and BX by FINRA for
performing the Regulatory
Responsibilities under this Agreement
except as hereinafter provided. FINRA
shall provide Nasdaq and BX with
ninety (90) days advance written notice
in the event FINRA decides to impose
any charges to Nasdaq and BX for
performing the Regulatory
Responsibilities under this Agreement.
If FINRA determines to impose a charge,
Nasdaq and BX shall have the right at
the time of the imposition of such
charge to terminate this Agreement;
provided, however, that FINRA’s
Regulatory Responsibilities under this
Agreement shall continue until the
Commission approves the termination
of this Agreement.
4. [Reassignment of Regulatory
Responsibilities] Applicability of
Certain Laws, Rules, Regulations or
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Orders. Notwithstanding any provision
hereof, this Agreement shall be subject
to any statute, or any rule or order of the
Commission [reassigning Regulatory
Responsibilities between self-regulatory
organizations]. To the extent such
[action] statute, rule or order is
inconsistent with this Agreement, the
statue, rule or order [such action] 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.
5. Notification of Violations.
(a) In the event that FINRA becomes
aware of apparent violations of any
Nasdaq Rules or BX Rules, which are
not listed as Common Rules, discovered
pursuant to the performance of the
Regulatory Responsibilities assumed
hereunder, FINRA shall notify Nasdaq
and BX of those apparent violations for
such response as Nasdaq and BX
deem[s] appropriate. With respect to
apparent violations of any Nasdaq Rules
or BX Rules by any Router Member,
FINRA shall not make referrals to
Nasdaq and BX pursuant to this
paragraph 5. Such apparent violations
shall be processed by, and enforcement
proceedings in respect thereto will be
conducted by, FINRA as provided in
this Agreement.
(b) In the event that Nasdaq or BX
becomes aware of apparent violations of
any Common Rules, discovered
pursuant to the performance of the
Retained Responsibilities, Nasdaq and
BX shall notify FINRA of those apparent
violations and such matters shall be
handled by FINRA [as provided]
consistent with the provisions in this
Agreement. [Each party agrees to make
available promptly all files, records and
witnesses necessary to assist the other
in its investigation or proceedings.]
(c) Apparent violations of Common
Rules[, FINRA Rules, federal securities
laws, and rules and regulations
thereunder,] shall be processed by, and
enforcement proceedings in respect
thereto shall be conducted by FINRA as
provided hereinbefore; provided,
however, that in the event a Common
Member is the subject of an
investigation relating to a transaction on
Nasdaq or BX, Nasdaq and BX, at each
party’s discretion, may 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.
6. Continued Assistance.
(a) FINRA shall make available to
Nasdaq and BX all information obtained
by FINRA in the performance by it of
the Regulatory Responsibilities
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hereunder with respect to the Common
Members subject to this Agreement. In
particular, and not in limitation of the
foregoing, FINRA shall furnish Nasdaq
and BX any information it obtains about
Common Members which reflects
adversely on their financial condition.
Nasdaq and BX shall make available to
FINRA any information coming to their
attention that reflects adversely on the
financial condition of Common
Members or indicates possible
violations of applicable laws, rules or
regulations by such firms.
(b) The parties agree that documents
or information shared shall be held in
confidence, and used only for the
purposes of carrying out their respective
regulatory obligations. Neither party
shall assert regulatory or other
privileges as against the other with
respect to documents or information
that is required to be shared pursuant to
this Agreement.
(c) The sharing of documents or
information between the parties
pursuant to this Agreement shall not be
deemed a waiver as against third parties
of regulatory or other privileges relating
to the discovery of documents or
information.
7. Common Member Applications.
(a) Common Members subject to this
Agreement shall be required to submit,
and FINRA shall be responsible for
processing and acting upon all
applications submitted on behalf of
allied persons, partners, officers,
registered personnel and any other
person required to be approved by the
rules of Nasdaq, BX and FINRA or
associated with Common Members
thereof. Upon request, FINRA shall
advise Nasdaq and BX of any changes of
allied members, partners, officers,
registered personnel and other persons
required to be approved by the rules of
Nasdaq, BX and FINRA.
(b) Common Members shall be
required to send to FINRA all letters,
termination notices or other material
respecting the individuals listed in
paragraph 7(a).
(c) When as a result of processing
such submissions FINRA becomes
aware of a statutory disqualification as
defined in the Exchange Act with
respect to a Common Member, FINRA
shall determine pursuant to Sections
15A(g) and/or Section 6(c) of the
Exchange Act the acceptability or
continued applicability of the person to
whom such disqualification applies and
keep Nasdaq and BX advised of its
actions in this regard for such
subsequent proceedings as Nasdaq and
BX may initiate.
(d) Notwithstanding the foregoing,
FINRA shall not review the membership
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application, reports, filings, fingerprint
cards, notices, or other writings filed to
determine if such documentation
submitted by a broker or dealer, or a
person associated therewith or other
persons required to register or qualify by
examination meets the Nasdaq or BX
requirements for general membership or
for specified categories of membership
or participation in Nasdaq or BX, such
as Equities Market Maker, Equities ECN,
Order Entry Firm, or any similar type of
Nasdaq or BX membership or
participation that is created after this
Agreement is executed. FINRA shall not
review applications or other
documentation filed to request a change
in the rights or status described in this
paragraph 7(d), including termination or
limitation on activities, of a member or
a participant of Nasdaq or BX, or a
person associated with, or requesting
association with, a member or
participant of Nasdaq or BX.
8. Branch Office Information. FINRA
shall also be responsible for processing
and, if required, acting upon all requests
for the opening, address changes, and
terminations of branch offices by
Common Members and any other
applications required of Common
Members with respect to the Common
Rules as they may be amended from
time to time. Upon request, FINRA shall
advise Nasdaq and BX of the opening,
address change and termination of
branch and main offices of Common
Members and the names of such branch
office managers.
9. Customer Complaints. Nasdaq and
BX shall forward to FINRA copies of all
customer complaints involving
Common Members received by Nasdaq
and BX relating to FINRA’s Regulatory
Responsibilities under this Agreement.
It shall be FINRA’s responsibility to
review and take appropriate action in
respect to such complaints.
10. Advertising. FINRA shall assume
responsibility to review the advertising
of Common Members subject to the
Agreement, provided that such material
is filed with FINRA in accordance with
FINRA’s filing procedures and is
accompanied with any applicable filing
fees set forth in FINRA Rules.
11. No Restrictions on Regulatory
Action. Notwithstanding anything else
herein and to the contrary, except for
paragraph 5(a), [N]nothing contained in
this Agreement shall restrict or in any
way encumber the right of either FINRA,
or Nasdaq or BX, [party] to conduct its
own independent or concurrent
investigation, examination or
enforcement proceeding of or against
Common Members of the Common
Rules, as either [party] FINRA, or
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Nasdaq or BX, in its sole discretion,
shall deem appropriate or necessary.
12. Termination. This Agreement may
be terminated by Nasdaq, BX or FINRA
at any time upon the approval of the
Commission after one (1) year’s written
notice to the other party, except as
provided in paragraph 3.
[13. Effective Date. This Agreement
shall be effective upon approval of the
Commission.]
13[4]. Arbitration. In the event of a
dispute between the parties as to the
operation of this Agreement, Nasdaq,
BX and FINRA hereby agree that any
such dispute shall be settled by
arbitration in Washington, DC in
accordance with the rules of the
American Arbitration Association then
in effect, or such other procedures as the
parties may mutually agree upon.
Judgment on the award rendered by the
arbitrator(s) may be entered in any court
having jurisdiction. Each party
acknowledges that the timely and
complete performance of its obligations
pursuant to this Agreement is critical to
the business and operations of the other
party. In the event of a dispute between
the parties, the parties shall continue to
perform their respective obligations
under this Agreement in good faith
during the resolution of such dispute
unless and until this Agreement is
terminated in accordance with its
provisions. Nothing in this Section 1[4]3
shall interfere with a party’s right to
terminate this Agreement as set forth
herein.
14[5]. 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.
15[6]. Limitation of Liability. None of
the parties nor any of their respective
directors, governors, officers or
employees shall be liable to any other
party to this Agreement for any liability,
loss or damage resulting from or
claimed to have resulted from any
delays, inaccuracies, errors or omissions
with respect to the provision of
Regulatory Responsibilities as provided
hereby or for the failure to provide any
such responsibility, except with respect
to such liability, loss or damages as
shall have been suffered by any party
and caused by the willful misconduct of
another party or their respective
directors, governors, officers or
employees. No warranties, express or
implied, are made by any party hereto
with respect to any of the
responsibilities to be performed by them
hereunder.
16[7]. Relief from Responsibility.
Pursuant to Sections 17(d)(1)(A) and
19(g) of the Exchange Act and Rule 17d–
2 thereunder, FINRA, Nasdaq and BX
join in requesting the Commission,
upon its approval of this Agreement or
any part thereof, to relieve Nasdaq and
BX of any and all responsibilities with
respect to matters allocated to FINRA
pursuant to this Agreement; provided,
however, that this Agreement shall not
be effective until the Effective Date.
17[8]. 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.
18[9]. Separate Agreement. This
Agreement is wholly separate from any
other 17d–2 agreement where FINRA,
NASDAQ and BX are parties, including
but not limited to, (1) the multiparty
Agreement made pursuant to Rule 17d–
2 of the Exchange Act among [NYSE
American LLC,] Cboe BZX Exchange,
Inc., BOX Exchange, LLC, [the Cboe
EDGX Exchange, Inc., Cboe C2
Exchange, Inc.,] Cboe Exchange, Inc.,
Cboe C2 Exchange, Inc., Nasdaq ISE,
LLC, Financial Industry Regulatory
Authority, Inc., [NYSE Arca, Inc., The
Nasdaq Stock Market LLC, BOX
Exchange LLC, Nasdaq BX, Inc., Nasdaq
PHLX LLC,] Miami International
Securities Exchange, LLC, NYSE
American LLC, NYSE Arca, Inc., The
Nasdaq Stock Market LLC, Nasdaq BX,
Inc., Nasdaq PHLX LLC, Nasdaq GEMX,
LLC, Cboe EDGX Exchange, Inc.,
Nasdaq MRX, LLC, MIAX PEARL, LLC,
[and] MIAX Emerald, LLC and MEMX
LLC approved by the Commission on
[February 12, 2019] October 18, 2022
concerning options related salespractice matters [involving the
allocation of regulatory responsibilities
BX rule
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General 2, Section 15. Business Continuity
Plans and General 2, Section 16. Emergency Contact Information #.
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Sfmt 4703
with respect to common members for
compliance with common rules relating
to the conduct by broker-dealers of
accounts for listed options, index
warrants, currency index warrants and
currency warrants or] and (2) the
multiparty Agreement made pursuant to
Rule 17d–2 of the Exchange Act among
NYSE American LLC, Cboe BZX
Exchange, Inc., the Cboe EDGX
Exchange, Inc., Cboe C2 Exchange, Inc.,
Cboe Exchange, Inc., Nasdaq ISE, LLC,
Financial Industry Regulatory
Authority, Inc., NYSE Arca, Inc., The
Nasdaq Stock Market LLC, BOX
Exchange LLC, Nasdaq BX, Inc., Nasdaq
PHLX LLC, Miami International
Securities Exchange, LLC, Nasdaq
GEMX, LLC, Nasdaq MRX, LLC, MIAX
PEARL, LLC, [and] MIAX Emerald, LLC,
and MEMX LLC approved by the
Commission on [February 11, 2019]
November 23, 2022 involving optionsrelated market surveillance matters and
such agreements as may be amended
from time to time.
19[20]. Counterparts. This Agreement
may be executed in one or more
counterparts, each of which shall be
deemed an original, and such
counterparts together shall constitute
one and the same instrument.
Exhibit 1
NASDAQ and BX Rules Certification
for 17d–2 Agreement With FINRA
The Nasdaq Stock Market LLC
(‘‘Nasdaq’’) and Nasdaq BX, Inc. (‘‘BX’’)
hereby certify that the requirements
contained in the Nasdaq and BX rules
listed below are identical to, or
substantially similar to, the FINRA
[r]Rules, Exchange Act provisions or
SEA rules identified (‘‘Common Rules’’).
[noted below:]
# Common Rules shall not include
provisions regarding (i) notice, reporting
or any other filings made directly to or
from Nasdaq or BX, (ii) incorporation by
reference to other Nasdaq or BX Rules
that are not Common Rules, (iii)
exercise of discretion in a manner that
differs from FINRA’s exercise of
discretion, including but not limited to
exercise of exemptive authority, by
Nasdaq or BX, (iv) prior written
approval of Nasdaq or BX, and (v)
payment of fees or fines to Nasdaq or
BX.
FINRA rule(s), exchange action provision(s),
or SEA rule(s)
Nasdaq rule
General 2, Section 15. Business Continuity
Plans and General 2, Section 16. Emergency
Contact Information #.
58823
4370. Business Continuity Plans and Emergency Contact Information.
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BX rule
Nasdaq rule
FINRA rule(s), exchange action provision(s),
or SEA rule(s)
General 2, Section 10. Executive Representative; General 2, Section 11. Contact Information Requirements #.
General 3, Rule 1002(b) Qualifications of Exchange Members and Associated Persons;
Registration of Branch Offices and Designation of Office of Supervisory Jurisdiction #.
General 3, Rule 1002(d). Registration of Branch
Offices and Designation of Office of Supervisory Jurisdiction #.
General 3, 1012(c)(1). Duty to Ensure the Accuracy, Completeness, and Current Nature of
Membership Information Filed with the Exchange #.
General 4, Section 1, 1210. Registration Requirements #.
General 4, Section 1, 1220. Registration Categories 1#.
General 4, Section 1, 1220.06. Eliminated Registration Categories 1.
General 4, Section 1, Rule 1230(1) (2)(D) Associated Persons Exempt from Registration #.
4517. Member Filing and Contact Information
Requirements.
General 4, Section 1, 1240. Continuing Education Requirements.
General 4, Section 1, 1250. Electronic Filing
Requirements for Uniform Forms #.
General 2, Section 10. Executive Representative; General 2, Section 11. Contact Information Requirements #.
General 3, Rule 1002(b) Qualifications of Exchange Members and Associated Persons;
Registration of Branch Offices and Designation of Office of Supervisory Jurisdiction #.
General 3, Rule 1002(d). Registration of
Branch Offices and Designation of Office of
Supervisory Jurisdiction #.
General 3, Rule 1012(c)(1). Duty to Ensure
the Accuracy, Completeness, and Current
Nature of Membership Information Filed
with the Exchange #.
General 4, Section 1, 1210. Registration Requirements #.
General 4, Section 1, 1220. Registration Categories 2[1]#.
General 4, Section 1, 1220.06. Eliminated
Registration Categories.
General 4, Section 1, Rule 1230(1)–(2)(D) Associated Persons Exempt from Registration #.
General 4, Section 1, 1240. Continuing Education Requirements 3.
General 4, Section 1, 1250. Electronic Filing
Requirements for Uniform Forms #.
[Equity 5, Section 1. Definitions] ........................
[Equity 5, Section 2. Applicability] ......................
[Equity 5, Section 3. Synchronization of Member Business Clocks].
[Equity 5, Section 4. Recording of Order Information].
[Equity 5, Section 5. Order Data Transmission
Requirements].
[Equity 5, Section 6. Violation of Order Audit
Trail System Rules].
General 9, Section 1(a). Standards of Commercial Honor and Principles of Trade.
General 9, Section 1(b). Prohibition Against
Trading Ahead of Customer Orders.
General 9, Section 1(c). Front Running Policy ..
General 9, Section 1(d). Trading Ahead of Research Reports.
General 9, Section 1(e). Anti-Intimidation/Coordination.
General 9, Section 1(f). Confirmation of Callable Common Stock.
General 9, Section 1(g). Interfering With the
Transfer of Customer Accounts in the Context of Employment Disputes.
General 9, Section 1[(i)] (h). Use of Manipulative, Deceptive or Other Fraudulent Devices.
General 9, Section 2. Customers’ Securities or
Funds.
[Equity 5, Section 1. Definitions] ......................
[Equity 5, Section 2. Applicability] ...................
[Equity 5, Section 3. Synchronization of Member Business Clocks].
[Equity 5, Section 4. Recording of Order Information].
[Equity 5, Section 5. Order Data Transmission
Requirements].
[Equity 5, Section 6. Violation of Order Audit
Trail System Rules].
General 9, Section 1(a). Standards of Commercial Honor and Principles of Trade.
General 9, Section 1(b). Prohibition Against
Trading Ahead of Customer Orders.
General 9, Section 1(c). Front Running Policy
General 9, Section 1(d). Trading Ahead of
Research Reports.
General 9, Section 1(e). Anti-Intimidation/Coordination.
General 9, Section 1(f). Confirmation of Callable Common Stock.
General 9, Section 1(h). Interfering With the
Transfer of Customer Accounts in the Context of Employment Disputes.
General 9, Section 1(g). Use of Manipulative,
Deceptive or Other Fraudulent Devices.
General 9, Section 2. Customers’ Securities
or Funds.
General 9, Section 3. Communications with the
Public.
General 9, Section 5. Telemarketing .................
General 9, Section 6. Forwarding of Proxy and
Other Issuer-Related Materials.
General 9, Section 7(a). Disclosure of Financial
Condition.
General 9, Section 7(b). Disclosure of Control
Relationship with Issuer.
General 9, Section 7(c). Disclosure of Participation or Interest in Primary or Secondary Distribution.
General 9, Section 8. SIPC Information .............
General 9, Section 9. Fairness Opinions ...........
General 9, Section 10 Recommendations to
Customers (Suitability).
General 9, Section 3. Communications with
the Public.
General 9, Section 5. Telemarketing ...............
General 9, Section 6. Forwarding of Proxy
and Other Issuer-Related Materials.
General 9, Section 7(a). Disclosure of Financial Condition.
General 9, Section 7(b). Disclosure of Control
Relationship with Issuer.
General 9, Section 7(c). Disclosure of Participation or Interest in Primary or Secondary
Distribution.
General 9, Section 8. SIPC Information ..........
General 9, Section 9. Fairness Opinions ........
General 9, Section 10. Recommendations to
Customers (Suitability).
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FINRA Bylaws Article III, Sec. 1.
3110(a)(3) Supervision and SM .01 and .02
Supervision* and FINRA By-Laws Article IV,
Sec. 8.
1122. Filing of Misleading Information as to
Membership or Registration; FINRA Bylaws
Article IV, [s]Sec. 1(c) of the By-Laws.
1210. Registration Requirements.
1220. Registration Categories.
1220.06. Eliminated Registration Categories.
1230. Associated Persons Exempt from Registration.
1240. Continuing Education Requirements.
1010. Electronic Filing Requirements for Uniform Forms and FINRA Bylaws Article V,
Section 2.
[7410. Definitions].
[7420. Applicability].
[7430. Synchronization of Member Business
Clocks].
[7440. Recording of Order Information].
[7450. Order Data Transmission Requirements].
[7460. Violation of Order Audit Trail System
Rules].
2010. Standards of Commercial Honor and
Principles of Trade.*
5320. Prohibition Against Trading Ahead of
Customer Orders.**
5270. Front Running of Block Transactions.**
5280. Trading Ahead of Research Reports.**
5240. Anti-Intimidation/Coordination.
2232. Customer Confirmations.
2140. Interfering With the Transfer of Customer Accounts in the Context of Employment Disputes.
2020. Use of Manipulative, Deceptive or
Other Fraudulent Devices.*
2150. Improper Use of Customers’ Securities
or Funds; Prohibition Against Guarantees
and Sharing in Accounts.
2210. Communications with the Public.
3230. Telemarketing.
2251. Processing and Forwarding of Proxy
and Other Issuer-Related Materials.
2261. Disclosure of Financial Condition.
2262. Disclosure of Control Relationship with
Issuer.’
2269. Disclosure of Participation or Interest in
Primary or Secondary Distribution.
2266. SIPC Information.
5150. Fairness Opinions.
2111. Suitability.
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ddrumheller on DSK120RN23PROD with NOTICES1
BX rule
FINRA rule(s), exchange action provision(s),
or SEA rule(s)
Nasdaq rule
General 9, Section 11. Best Execution and
Interpositioning.
General 9, Section 12. Customer Account
Statements.
General 9, Section 13. Margin Disclosure Statement.
General 9, Section 14. Approval Procedures for
Day-Trading Accounts.
General 9, Section 11. Best Execution and
Interpositioning.
General 9, Section 12. Customer Account
Statements.
General 9, Section 13. Margin Disclosure
Statement.
General 9, Section 14. Approval Procedures
for Day-Trading Accounts.
General 9, Section 15. Borrowing From or
Lending to Customers.
General 9, Section 16. Charges for Services
Performed.
General 9, Section 18. Payments for Market
Making.
General 9, Section 19. Discretionary Accounts
General 9, Section 20. Supervision ...................
General 9, Section 21(a). Supervisory Control
System, Annual Certification of Compliance
and Supervisory Processes.
General 9, Section 21(c). Supervisory Control
System, Annual Certification of Compliance
and Supervisory Processes.
General 9, Section 23. Outside Business Activities of an Associated Person.
General 9, Section 24. Private Securities Transactions of an Associated Person.
General 9, Section 25. Transactions for or by
Associated Persons.
General 9, Section 26. Influencing or Rewarding Employees of Others.
General 9, Section 27. Reporting Requirements #.
General 9, Section 28. Disclosure to Associated
Persons When Signing Form U–4.
General 9, Section 15. Borrowing From or
Lending to Customers.
General 9, Section 16. Charges for Services
Performed.
General 9, Section 18. Payments for Market
Making.
General 9, Section 19. Discretionary Accounts
General 9, Section 20. Supervision .................
General 9, Section 21(a). Supervisory Control
System, Annual Certification of Compliance
and Supervisory Processes.
General 9, Section 21(c). Supervisory Control
System, Annual Certification of Compliance
and Supervisory Processes.
General 9, Section 23. Outside Business Activities of an Associated Person.
General 9, Section 24. Private Securities
Transactions of an Associated Person.
General 9, Section 25. Transactions for or by
Associated Persons.
General 9, Section 26. Influencing or Rewarding Employees of Others.
General 9, Section 27. Reporting Requirements #.
General 9, Section 28. Disclosure to Associated Persons When Signing Form U–4.
General 9, Section 30. Books and Records,
Section 43. General Requirements.
General 9, Section 31. Use of Information Obtained in Fiduciary Capacity.
General 9, Section 37. Anti-Money Laundering
Compliance Program.
General 9, Section 39. Fidelity Bonds ...............
[General 9, Section 30. Books and Records, (d)
Record of Written Complaints; (e) ‘‘Complaint’’ Defined] General 9, Section 44.
Records of Written Customer Complaints.
[General 9, Section 30. Books and Records, (b)
Customer Account Information] General 9,
Section 45. Customer Account Information.
[General 9, Section 30. Books and Records, (g)
Negotiable Instruments Drawn From A Customer’s Account] General 9, Section 46. Authorization Records for Negotiable Instruments Drawn From a Customer’s Account.
[General 9, Section 30. Books and Records, (j)
Changes in Account Name or Designation]
General 9, Section 47. Approval and Documentation of Changes in Account Name or
Designation.
General 9, Section 49. Payments Involving
Publications that Influence the Market Price
of a Security.
General 9, Section 50. Foreign Members # ........
General 9, Section 51. Research Analysts ........
General 9, Section 30. Books and Records,
Section 43. General Requirements.
General 9, Section 31. Use of Information Obtained in Fiduciary Capacity.
General 9, Section 37. Anti-Money Laundering Compliance Program.
General 9, Section 39. Fidelity Bonds .............
General 9, Section 44. Records of Written
Customer Complaints.
General 9, Section 71. Custodian of Books and
Records.
Equity 2, Section 5(e). Locked and Crossed
Markets.
Equity 9, Section 1 Adjustment of Open Orders
General 9, Section 71. Custodian of Books
and Records.
Equity 2, Section 5(e). Locked and Crossed
Markets.
Equity 9, Section 1. Adjustment of Open Orders.
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58825
5310. Best Execution and Interpositioning.**
2231. Customer Account Statements.
2264. Margin Disclosure Statement.
2130. Approval Procedures for Day-Trading
Accounts and Rule 2270 Day-Trading Risk
Disclosure Statement.
3240. Borrowing From or Lending to Customers.
2122. Charges for Services Performed.
5250. Payments for Market Making.
3260. Discretionary Accounts.
3110. Supervision.
3120. Supervisory Control System.
3130. Annual Certification of Compliance and
Supervisory Processes.
3270. Outside Business Activities of an Associated Person.
3280. Private Securities Transactions of an
Associated Person.
3210. Accounts at Other Broker-Dealers and
Financial Institutions.
3220. Influencing or Rewarding Employees of
Others.
4530. Reporting Requirements.
2263. Arbitration Disclosure to Associated
Persons When Signing or Acknowledging
Form U–4.
4511. General Requirements.
2060. Use of Information Obtained in Fiduciary Capacity.
3310. Anti-Money Laundering Compliance
Program.
4360. Fidelity Bonds.
4513. Records of Written Customer Complaints.
General 9, Section 45. Customer Account Information.
4512. Customer Account Information.
General 9, Section 46. Authorization Records
for Negotiable Instruments Drawn From a
Customer’s Account.
4514. Authorization Records for Negotiable
Instruments Drawn From a Customer’s Account.
General 9, Section 47. Approval and Documentation of Changes in Account Name or
Designation.
4515. Approval and Documentation of
Changes in Account Name or Designation.
General 9, Section
Publications that
of a Security.
General 9, Section
General 9, Section
49. Payments Involving
Influence the Market Price
5230. Payments Involving Publications that Influence the Market Price of a Security.
50. Foreign Members # .....
51. Research Analyst .......
1021. Foreign Members.
2241. Research Analysts and Research Reports.
4570. Custodian of Books and Record, (a)
Designation of Custodian.
FINRA Rule 6240. Prohibition from Locking or
Crossing Quotations in NMS Stocks.**
5330. Adjustment of Orders.
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FINRA rule(s), exchange action provision(s),
or SEA rule(s)
BX rule
Nasdaq rule
Equity 9, Section 3. Publication of Transactions
and Quotations.
Equity 9, Section 10. Prompt Receipt and Delivery of Securities.
Equity 9, Section 11. Order Entry and Execution Practices #.
Equity 10, Section 1. Direct Participation Programs.
Equity 10, Section 2. Investment Company Securities.
[2841. General] Equity 10, Section 3(a) Trading
in Index Warrants, Currency Index Warrants,
and Currency Warrants.
Equity 10, Section 4 Position Limits; 5 Exercise
Limits; and 7 Liquidation of Index Warrant
Positions.
Options 6E, Section 1. Maintenance, Retention
and Furnishing of Books, Records and Other
Information #.
Options 9, Section 9. Prevention of the Misuse
of Material Nonpublic Information #.
Options 9, Section 10. Disciplinary Action by
Other Organizations #.
Equity 9, Section 3. Publication of Transactions and Quotations.
Equity 9, Section 10. Prompt Receipt and Delivery of Securities.
Equity 9, Section 11. Order Entry and Execution Practices #.
Equity 10, Section 1. Direct Participation Programs.
Equity 10, Section 2. Investment Company
Securities.
Equity 10, Section 3(a). [General] Trading in
Index Warrants, Currency Index Warrants,
and Currency Warrants.
Equity 10, Section 4 Position Limits; 5 Exercise Limits; and 7 Liquidation of Index Warrant Positions.
Options 6E, Section 1. Maintenance, Retention and Furnishing of Books, Records and
Other Information #.
Options 9, Section 9. Prevention of the Misuse of Material Nonpublic Information #.
Options 9, Section 10. Disciplinary Action by
Other Organizations #.
Options 10, Section 12. Statements of Financial
Condition to Public Customers.
Options 10, Section 19. Transfer of Accounts ...
Options 10 Section 23. Telephone Solicitation ..
Equity 9, Section 15. Suitability ..........................
Equity 9, Section 16. Discretionary Accounts ....
Equity 9, Section 17. Supervision of Accounts ..
Equity 9, Section 18. Customer Complaints ......
Equity 9, Section 19. Communications with the
Public and Customers Concerning Index
Warrants, Currency Index Warrants, and Currency Warrants.
Equity 9, Section 20. Maintenance of Records ..
Options 10, Section 12. Statements of Financial Condition to Public Customers.
Options 10, Section 19. Transfer of Accounts
Options 10 Section 23. Telephone Solicitation
N/A ...................................................................
N/A ...................................................................
N/A ...................................................................
N/A ...................................................................
N/A ...................................................................
N/A ...................................................................
5210. Publication of Transactions and
Quotations.
11860(a)(4)(A). Purchases.
5290. Order Entry and Execution Practices.
2310. Direct Participation Programs.
2341. Investment Company Securities.
2351(a). General Provisions Applicable to
Trading in Index Warrants, Currency Index
Warrants and Currency Warrants.
2357. Position and Exercise Limits; Liquidations.
4511(a). General Requirements.
Section 15(g) of the Securities Exchange Act
of 1934, and 3110(b)(1), (d). Supervision.
4530(a)(1)(A) and (2). Reporting Requirements; FINRA By-Laws, Article V, Section
2(c); and FINRA By-Laws, Article V, Section 3.
SEA Rule 17a–5 [of the Securities Exchange
Act of 1934].
11870. Customer Account Transfer Contracts.
3230. Telemarketing.
2353. Suitability.
2354. Discretionary Accounts.
2355. Supervision of Accounts.
2356. Customer Complaints.
2357. Communications with the Public and
Customers Concerning Index Warrants,
Currency Index Warrants and Currency
Warrants.
2358. Maintenance of Records.
1 FINRA shall only have Regulatory Responsibilities regarding BX General 4, Section 1220 to the extent that BX recognizes the same categories of limited principal and representative registration as the BX Rule, by incorporating Nasdaq General 4, Section 1220, does not recognize
registration related to investment banking, research, government securities, investment company and variable contracts products, direct participation programs, private securities offerings, and operations professional.
2 FINRA shall only have Regulatory Responsibilities regarding Nasdaq General 4, Section 1220 to the extent that Nasdaq recognizes the same
categories of limited principal and representative registration as Nasdaq General 4, Section 1220, does not recognize registration related to investment banking, research, government securities, investment company and variable contracts products, direct participation programs, private
securities offerings, and operations professional.
3 FINRA Rule 1240.01 allows for eligible persons to make their election to participate in the continuing education program under Rule 1240(c)
either (1) between January 31, 2022, and March 15, 2022; or (2) between March 15, 2023, and December 31, 2023. In contrast, Supplementary
Material .01 of Nasdaq and BX General 4, Section 1, Rule 1240 allows for eligible persons to make their election to participate in the continuing
education program under Nasdaq and BX General 4, Section 1(c) either (1) by March 15, 2022, or (2) between July 6, 2023, and December 31,
2023. Therefore, FINRA will not accept Regulatory Responsibilities for elections made under Supplementary Material .01 of Nasdaq or BX General 4, Section 1, Rule 1240 between March 16, 2023, and July 5, 2023.
The following provisions are covered by the Agreement between the Parties:
• SEC ’34 Act Section 28(e)—Effect on Existing Law
• [SEC ’34 Act] SEA Rule 10b–10—Confirmation of Transactions
• SEA Rule 200 of Regulation SHO—Definition of Short Sales and Marking Requirements**
• SEA Rule 201 of Regulation SHO—Circuit Breaker**
• [SEC ’34 Act] SEA Rule 203 of Regulation SHO—Borrowing and Delivery Requirements
• SEA Rule 204 of Regulation SHO—Close-Out Requirements**
• 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**
• [SEC ’34 Act] SEA Rule 606 of Regulation NMS—Disclosure of Order Routing Information**
• [SEC ’34 Act Rule 607 of Regulation NMS Customer Account Statements]
• 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*
• SEA Rule 14e–4—Prohibited Transactions in Connection with Partial Tender Offers[·]
• SEA Rule 14e–4(a)(1)(ii)(D)—Prohibited Transactions in Connection with Partial Tender Offers (with a focus on the standardized call option
provision)**
[∧ FINRA shall perform surveillance, investigation, and Enforcement Responsibilities for SEA Rule 14e–4(a)(1)(ii)(D).]
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Federal Register / Vol. 89, No. 139 / Friday, July 19, 2024 / Notices
58827
**In addition to performing examinations and Enforcement Responsibilities as provided in this Agreement for the double star rules, FINRA shall
also perform the surveillance and investigation 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 among FINRA, Nasdaq and BX.
*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 Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, Inc., Cboe
EDGA Exchange Inc., Cboe EDGX Exchange Inc., Financial Industry Regulatory Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX,
Inc., Nasdaq PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York Stock Exchange, LLC, NYSE American LLC, NYSE
Arca Inc., [and] Investors’ Exchange LLC and the Long-Term Stock Exchange, Inc. as approved by the SEC on September 23, 2020, as may be
amended from time to time.
∧ FINRA shall perform the surveillance and investigation responsibilities for these rules. The examination responsibility for these rules is covered by a separate 17d–2 Agreement by and among Cboe BZX Exchange, Inc., Cboe BYX Exchange, Inc., BOX Exchange LLC, Cboe Exchange, Inc., Cboe C2 Exchange, Inc., NYSE Chicago, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., MEMX LLC, Nasdaq ISE, LLC, Nasdaq GEMX, LLC, Nasdaq MRX, LLC, Investors Exchange LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, MIAX Emerald, LLC, The Nasdaq Stock Market LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, NYSE
National, Inc., New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc. and Long-Term Stock Exchange, Inc. as approved by the
SEC on June 10, 2020 concerning covered Regulation NMS and Consolidated Audit Trail Rules, as may be amended from time to time.
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:
ddrumheller on DSK120RN23PROD with NOTICES1
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number 4–
575 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number 4–575. This file number should
be included on the subject line if email
is used. To help the Commission
process and review your comments
more efficiently, please use only one
method. The Commission will post all
comments on the Commission’s internet
website (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
plan that are filed with the Commission,
and all written communications relating
to the proposed plan between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
plan also will be available for inspection
and copying at the principal offices of
FINRA, Nasdaq, and BX. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
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18:53 Jul 18, 2024
Jkt 262001
obscene or subject to copyright
protection. All submissions should refer
to File No. 4–575 and should be
submitted on or before August 9, 2024.
V. Discussion
The Commission finds that the
proposed Amended Plan is consistent
with the factors set forth in Section
17(d) of the Act 13 and Rule 17d–2(c)
thereunder 14 in that the proposed
Amended Plan is necessary or
appropriate in the public interest and
for the protection of investors, fosters
cooperation and coordination among
SROs, and removes impediments to and
fosters the development of the national
market system. In particular, the
Commission believes that the proposed
Amended Plan should reduce
unnecessary regulatory duplication by
allocating to FINRA certain examination
and enforcement responsibilities for
Common Members that would
otherwise be performed by both FINRA
and Nasdaq, and FINRA and BX.
Accordingly, the proposed Amended
Plan promotes efficiency by reducing
costs to Common Members.
Furthermore, because FINRA, Nasdaq,
and BX 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, FINRA, Nasdaq, and BX
have allocated regulatory responsibility
for those Nasdaq and BX rules, set forth
in the Certification, that are
substantially similar to the applicable
FINRA rules in that examination for
compliance with such provisions and
rules would not require FINRA to
develop one or more new examination
standards, modules, procedures, or
criteria in order to analyze the
application of the rule, or a Common
Member’s activity, conduct, or output in
relation to such rule. In addition, under
the Amended Plan, FINRA would
assume regulatory responsibility for
PO 00000
13 15
14 17
U.S.C. 78q(d).
CFR 240.17d–2(c).
Frm 00125
Fmt 4703
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,
Nasdaq and BX will review the
Certification at least annually, or more
frequently if required by changes in
either the rules of Nasdaq, BX or FINRA,
and, if necessary, submit to FINRA an
updated list of Common Rules to add
Nasdaq or BX rules not included on the
then-current list of Common Rules that
are substantially similar to FINRA rules;
delete Nasdaq or BX 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
Nasdaq and BX rules that qualify as
common rules.15 FINRA will then
confirm in writing whether the rules
listed in any updated list are Common
Rules as defined in the Amended Plan.
The Commission believes that these
provisions are designed to provide for
continuing communication between the
Parties to ensure the continued accuracy
of the scope of the proposed allocation
of regulatory responsibility.
The Commission is hereby declaring
effective an Amended Plan that, among
other things, allocates regulatory
responsibility to FINRA for the
oversight and enforcement of all Nasdaq
and BX rules that are substantially
similar to the rules of FINRA for
Common Members of BX and FINRA,
and Nasdaq and FINRA. Therefore,
modifications to the Certification need
not be filed with the Commission as an
amendment to the Amended Plan,
provided that the Parties are only
adding to, deleting from, or confirming
changes to Nasdaq or BX rules in the
Certification in conformance with the
definition of Common Rules provided in
the Amended Plan. However, should the
15 See
Sfmt 4703
E:\FR\FM\19JYN1.SGM
paragraph 2 of the Amended Plan.
19JYN1
58828
Federal Register / Vol. 89, No. 139 / Friday, July 19, 2024 / Notices
Parties decide to add a Nasdaq or BX
rule to the Certification that is not
substantially similar to a FINRA rule;
delete a Nasdaq or BX rule from the
Certification that is substantially similar
to a FINRA rule; or leave in the
Certification a Nasdaq or BX rule that is
no longer substantially similar to a
FINRA rule, then such a change would
constitute an amendment to the
Amended Plan, which must be filed
with the Commission pursuant to Rule
17d–2 under the Act.16
Under paragraph (c) of Rule 17d–2,
the Commission may, after appropriate
notice and comment, declare a plan, or
any part of a plan, effective. In this
instance, the Commission believes that
appropriate notice and comment can
take place after the proposed
amendment is effective. The primary
purpose of the Amended Plan is to: (i)
update the list of Common Rules; (ii)
add surveillance and investigation
coverage for certain Common Rules
specified in Exhibit 1 to the Amended
Plan; (iii) reflect that, for Router
Members, FINRA will retain regulatory
responsibility for Nasdaq and BX rules
that are not Common Rules; and (iv)
reflect that FINRA will not make
referrals to Nasdaq and BX for apparent
violations of any Nasdaq or BX Rules by
any Router Member. By declaring it
effective today, the Amended Plan can
become effective and be implemented
without undue delay. The Commission
notes that the prior version of this plan
immediately prior to this proposed
amendment was published for comment
and the Commission did not receive any
comments thereon.17 Furthermore, the
Commission does not believe that the
amendment to the plan raises any new
regulatory issues that the Commission
has not previously considered.
VI. Conclusion
ddrumheller on DSK120RN23PROD with NOTICES1
This order gives effect to the
Amended Plan filed with the
Commission in File No. 4–575. The
Parties shall notify all members affected
by the Amended Plan of their rights and
obligations under the Amended Plan.
It is therefore ordered, pursuant to
Section 17(d) of the Act, that the
Amended Plan in File No. 4–575,
between the FINRA, BX, and Nasdaq,
filed pursuant to Rule 17d–2 under the
Act, hereby is approved and declared
effective.
It is further ordered that BX and
Nasdaq are relieved of those
responsibilities allocated to FINRA
under the Amended Plan in File No. 4–
575.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–15910 Filed 7–18–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100537; File No. SR–
NYSEARCA–2024–05]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on Proceedings To Determine Whether
To Approve or Disapprove a Proposed
Rule Change To List and Trade Shares
of the COtwo Advisors Physical
European Carbon Allowance Trust
Under NYSE Arca Rule 8.201–E
(Commodity-Based Trust Shares)
July 15, 2024.
On January 10, 2024, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) 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 list and trade shares of the
COtwo Advisors Physical European
Carbon Allowance Trust under NYSE
Arca Rule 8.201–E. The proposed rule
change was published for comment in
the Federal Register on January 26,
2024.3
On March 4, 2024, pursuant to
Section 19(b)(2) of the Act,4 the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to disapprove the
proposed rule change.5 On April 25,
2024, the Commission instituted
proceedings pursuant to Section
18 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 No. 99409
(January 22, 2024), 89 FR 5273. Comments on the
proposed rule change are available at: https://
www.sec.gov/comments/sr-nysearca-2024-05/
srnysearca202405.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 99668,
89 FR 16808 (March 8, 2024).
1 15
16 The addition to or deletion from the
Certification of any federal securities laws, rules,
and regulations for which FINRA would bear
responsibility under the Amended Plan for
examining, and enforcing compliance by, Common
Members, also would constitute an amendment to
the Amended Plan.
17 See supra note 12 (citing to Securities
Exchange Act Release No. 93114).
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19(b)(2)(B) of the Act 6 to determine
whether to approve or disapprove the
proposed rule change.7
Section 19(b)(2) of the Act 8 provides
that, after initiating disapproval
proceedings, the Commission shall issue
an order approving or disapproving the
proposed rule change not later than 180
days after the date of publication of
notice of filing of the proposed rule
change. The Commission may extend
the period for issuing an order
approving or disapproving the proposed
rule change, however, by not more than
60 days if the Commission determines
that a longer period is appropriate and
publishes the reasons for such
determination. The proposed rule
change was published for notice and
comment in the Federal Register on
January 26, 2024. July 24, 2024 is 180
days from that date, and September 22,
2024 is 240 days from that date.
The Commission finds it appropriate
to designate a longer period within
which to issue an order approving or
disapproving the proposed rule change
so that it has sufficient time to consider
the proposed rule change. Accordingly,
the Commission, pursuant to Section
19(b)(2) of the Act,9 designates
September 22, 2024 as the date by
which the Commission shall either
approve or disapprove the proposed
rule change (File No. SR–NYSEARCA–
2024–05).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–15906 Filed 7–18–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–360, OMB Control No.
3235–0409]
Proposed Collection; Comment
Request; Extension: Rule 17Ad–15
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
6 15
U.S.C. 78s(b)(2)(B).
Securities Exchange Act Release No.
100029, 89 FR 35289 (May 1, 2024).
8 15 U.S.C. 78s(b)(2).
9 Id.
10 17 CFR 200.30–3(a)(57).
7 See
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]]>Agencies
[Federal Register Volume 89, Number 139 (Friday, July 19, 2024)]
[Notices]
[Pages 58819-58828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15910]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100536; File No. 4-575]
Program for Allocation of Regulatory Responsibilities Pursuant to
Rule 17d-2; Notice of Filing and Order Approving and Declaring
Effective an Amended Plan for the Allocation of Regulatory
Responsibilities Between the Financial Industry Regulatory Authority,
Inc., The Nasdaq Stock Market LLC, and Nasdaq BX, Inc.
July 15, 2024.
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 July 1, 2024, pursuant to Rule 17d-2
of the Act,\2\ by the Financial Industry Regulatory Authority, Inc.
(``FINRA''), The Nasdaq Stock Market LLC (``Nasdaq''), and Nasdaq BX,
Inc. (``BX'') (collectively, ``Participating Organizations'' or
``parties''). This Agreement amends and restates the agreement entered
into between FINRA, Nasdaq, and BX approved by the SEC on September 23,
2021, entitled ``Agreement Among Financial Industry Regulatory
Authority, Inc., The Nasdaq Stock Market LLC and Nasdaq BX, Inc.
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,
[[Page 58820]]
unless the SRO is relieved of this responsibility pursuant to Section
17(d) \4\ or Section 19(g)(2) \5\ of the Act. Without this relief, the
statutory obligation of each individual SRO could result in a pattern
of multiple examinations of broker-dealers that maintain memberships in
more than one SRO (``common members''). Such regulatory duplication
would add unnecessary expenses for common members and their SROs.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78s(g)(1).
\4\ 15 U.S.C. 78q(d).
\5\ 15 U.S.C. 78s(g)(2).
---------------------------------------------------------------------------
Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate
unnecessary multiple examinations and regulatory duplication.\7\ With
respect to a common member, Section 17(d)(1) authorizes the Commission,
by rule or order, to relieve an SRO of the responsibility to receive
regulatory reports, to examine for and enforce compliance with
applicable statutes, rules, and regulations, or to perform other
specified regulatory functions.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78q(d)(1).
\7\ See Securities Act Amendments of 1975, Report of the Senate
Committee on Banking, Housing, and Urban Affairs to Accompany S.
249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975).
---------------------------------------------------------------------------
To implement Section 17(d)(1), the Commission adopted two rules:
Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the
Commission to name a single SRO as the designated examining authority
(``DEA'') to examine common members for compliance with the financial
responsibility requirements imposed by the Act, or by Commission or SRO
rules.\9\ When an SRO has been named as a common member's DEA, all
other SROs to which the common member belongs are relieved of the
responsibility to examine the firm for compliance with the applicable
financial responsibility rules. On its face, Rule 17d-1 deals only with
an SRO's obligations to enforce member compliance with financial
responsibility requirements. Rule 17d-1 does not relieve an SRO from
its obligation to examine a common member for compliance with its own
rules and provisions of the federal securities laws governing matters
other than financial responsibility, including sales practices and
trading activities and practices.
---------------------------------------------------------------------------
\8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively.
\9\ See Securities Exchange Act Release No. 12352 (April 20,
1976), 41 FR 18808 (May 7, 1976).
---------------------------------------------------------------------------
To address regulatory duplication in these and other areas, the
Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits
SROs to propose joint plans for the allocation of regulatory
responsibilities with respect to their common members. Under paragraph
(c) of Rule 17d-2, the Commission may declare such a plan effective if,
after providing for appropriate notice and opportunity for comment, it
determines that the plan is necessary or appropriate in the public
interest and for the protection of investors, to foster cooperation and
coordination among the SROs, to remove impediments to, and foster the
development of, a national market system and a national clearance and
settlement system, and is in conformity with the factors set forth in
Section 17(d) of the Act. Commission approval of a plan filed pursuant
to Rule 17d-2 relieves an SRO of those regulatory responsibilities
allocated by the plan to another SRO.
---------------------------------------------------------------------------
\10\ See Securities Exchange Act Release No. 12935 (October 28,
1976), 41 FR 49091 (November 8, 1976).
---------------------------------------------------------------------------
II. The Plan
On January 8, 2009, the Commission declared effective the Plan
entered into between FINRA and the Boston Stock Exchange, Incorporated
(n/k/a Nasdaq BX, Inc. (``BX'')) for allocating regulatory
responsibility pursuant to Rule 17d-2.\11\ The Plan is intended to
reduce regulatory duplication for firms that are common members of
FINRA and BX by allocating regulatory responsibility with respect to
certain applicable laws, rules, and regulations that are common among
them. Included in the Plan is an exhibit that lists every BX rule for
which FINRA bears responsibility under the Plan for overseeing and
enforcing with respect to BX members that are also members of FINRA and
the associated persons therewith (``Certification''). On September 23,
2021, the Commission declared effective an amendment to the Plan to
allocate surveillance, investigation, and enforcement responsibilities
for Rule 14e-4 under the Act, to reflect the name change of Boston
Stock Exchange, Incorporated to Nasdaq BX, Inc., and to add Nasdaq as a
Participant to the Plan.\12\
---------------------------------------------------------------------------
\11\ See Securities Exchange Act Release No. 59218 (January 8,
2009), 74 FR 2143 (January 14, 2009).
\12\ See Securities Exchange Act Release No. 93114 (September
23, 2021), 86 FR 53996 (September 29, 2021).
---------------------------------------------------------------------------
III. Proposed Amendment to the Plan
On July 1, 2024, the parties submitted a proposed amendment to the
Plan (``Amended Plan''). The primary purpose of the Amended Plan is to:
(i) update the list of Common Rules; (ii) add surveillance and
investigation coverage for certain Common Rules specified in Exhibit 1
to the Amended Plan; (iii) to reflect that, for Router Members, FINRA
will retain regulatory responsibility for Nasdaq and BX rules that are
not Common Rules; and (iv) to reflect that FINRA will not make
referrals to Nasdaq and BX for apparent violations of any Nasdaq or BX
Rules by any Router Member. The text of the proposed Amended Plan is as
follows (additions are in italics; deletions are [bracketed]):
* * * * *
AGREEMENT AMONG FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., THE
NASDAQ STOCK MARKET LLC AND NASDAQ BX, INC. PURSUANT TO RULE 17d-2
UNDER THE SECURITIES EXCHANGE ACT OF 1934
This Agreement, by and among the Financial Industry Regulatory
Authority, Inc. (``FINRA''), The Nasdaq Stock Market LLC (``Nasdaq'')
and Nasdaq BX, Inc. (``BX''), is made this [30th]1st day of [August,
2021] July, 2024 (the ``Agreement''), pursuant to Section 17(d) of the
Securities Exchange Act of 1934 (the ``Exchange Act'') and Rule 17d-2
thereunder, which permits agreements between self-regulatory
organizations to allocate regulatory responsibility to eliminate
regulatory duplication. FINRA, Nasdaq and BX may be referred to
individually as a ``party'' and together as the ``parties.''
This Agreement amends and restates the agreement entered into
between FINRA, Nasdaq and BX approved by the SEC on September 23, 2021
[on December 5, 2008], entitled ``Agreement [between] among Financial
Industry Regulatory Authority, Inc., The Nasdaq Stock Market LLC and
[Boston Stock Exchange, Incorporated] Nasdaq BX, Inc. pursuant to Rule
17d-2 under the Securities Exchange Act of 1934,'' and any subsequent
amendments thereafter [and the agreement entered into between FINRA and
Nasdaq approved by the SEC on July 12, 2006, entitled ``Agreement
between the National Association of Securities Dealers, Inc. and The
Nasdaq Stock Market LLC Pursuant to Section 17(d) and Rule 17d-2,'' and
any subsequent amendments thereafter].
Whereas, FINRA, Nasdaq and BX desire to reduce duplication in the
examination, surveillance and investigation of their Common Members (as
defined herein) and in the filing and processing of certain
registration and membership records; and
Whereas, FINRA, Nasdaq and BX desire to execute an agreement
covering such subjects pursuant to the provisions of Rule 17d-2 under
the Exchange Act and to file such agreement with the U.S. Securities
and Exchange Commission
[[Page 58821]]
(the ``SEC'' or ``Commission'') for its approval.
Now, therefore, in consideration of the mutual covenants contained
hereinafter, FINRA, Nasdaq and BX hereby agree as follows:
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) ``Nasdaq Rules'', ``BX Rules'' or ``FINRA Rules'' shall mean:
(i) the rules of Nasdaq, (ii) the rules of BX, or (iii) the rules of
FINRA, respectively, as the rules of an exchange or association are
defined in Exchange Act Section 3(a)(27).
(b) ``Common Rules'' shall mean Nasdaq Rules and BX Rules that are
substantially similar to the applicable FINRA Rules and certain
provisions of the Exchange Act and SEC rules set forth on Exhibit 1 in
that examination, surveillance or investigation for compliance with
such provisions and rules would not require FINRA to develop one or
more new examination, surveillance or investigation standards, modules,
procedures, or criteria in order to analyze the application of the
provision or rule, or a Common Member's activity, conduct, or output in
relation to such provision or rule; provided, however, Common Rules
shall not include the application of the SEC, Nasdaq, BX or FINRA rules
as they pertain to violations of insider trading activities, which is
covered by a separate 17d-2 Agreement by and among Cboe BZX Exchange,
Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, Inc., Cboe EDGA
Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry Regulatory
Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq
PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York
Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., Investors
Exchange LLC and Long-Term Stock Exchange, Inc. approved by the
Commission on 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 Nasdaq or BX;
(ii) incorporation by reference of other Nasdaq or BX Rules that are
not Common Rules; (iii) exercise of discretion in a manner that differs
from FINRA's exercise of discretion including, but not limited to
exercise of exemptive authority by Nasdaq or BX; (iv) prior written
approval of Nasdaq or BX; and (v) payment of fees or fines to Nasdaq or
BX.
(c) ``Common Members'' shall mean those members of FINRA and a
member of at least one of Nasdaq or BX and the associated persons
therewith.
(d) ``Effective Date'' shall [have the meaning set forth in
paragraph 13]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,
surveillance and investigation responsibilities and Enforcement
Responsibilities relating to compliance by the Common Members with the
Common Rules and the provisions of the Exchange Act and the rules and
regulations thereunder, and other applicable laws, rules and
regulations, each as set forth on Exhibit 1 attached hereto. [The term
``Regulatory Responsibilities'' shall also include the surveillance,
investigation and Enforcement Responsibilities relating to compliance
by Common Members with Rule 14e-4 of the Securities Exchange Act
(``Rule 14e-4''), with a focus on the standardized call option
provision of Rule 14e-4(a)(1)(ii)(D).]
2. Regulatory Responsibilities. FINRA shall assume Regulatory
Responsibilities for Common Members. Attached as Exhibit 1 to this
Agreement and made part hereof, Nasdaq and BX furnished FINRA with a
current list of Common Rules and certified to FINRA that such rules
that are Nasdaq Rules and BX Rules are substantially similar to the
corresponding FINRA Rules (the ``Certification''). FINRA hereby agrees
that the rules listed in the Certification are Common Rules as defined
in this Agreement. Each year following the Effective Date of this
Agreement, or more frequently if required by changes in either the
rules of Nasdaq, BX or FINRA, Nasdaq and BX shall submit an updated
list of Common Rules to FINRA for review which shall add Nasdaq Rules
and BX Rules not included in the current list of Common Rules that
qualify as Common Rules as defined in this Agreement; delete Nasdaq
Rules and BX Rules included in the current list of Common Rules that no
longer qualify as Common Rules as defined in this Agreement; and
confirm that the remaining rules on the current list of Common Rules
continue to be Nasdaq Rules and BX Rules that qualify as Common Rules
as defined in this Agreement. Within 30 days of receipt of such updated
list, FINRA shall confirm in writing whether the rules listed in any
updated list are Common Rules, as defined in this Agreement.
Notwithstanding anything herein to the contrary, it is explicitly
understood that the term ``Regulatory Responsibilities'' does not
include, and Nasdaq and BX shall retain full responsibility for (unless
otherwise addressed by separate agreement or rule) (collectively, the
``Retained Responsibilities'') the following:
(a) surveillance, examination, investigation and enforcement with
respect to trading activities or practices involving Nasdaq's or BX's
own marketplaces;
(b) registration pursuant to Nasdaq's or BX's applicable rules of
associated persons (i.e., registration rules that are not Common
Rules);
(c) discharge of Nasdaq's or BX's duties and obligations as a
Designated Examining Authority pursuant to Rule 17d-1 under the
Exchange Act; and
(d) any Nasdaq Rules and BX Rules that are not Common Rules, except
for Nasdaq Rules and BX Rules for any Nasdaq member or BX member that
operates as a facility (as defined in Section 3(a)(2) of the Exchange
Act), acts as an outbound router for Nasdaq or BX, and is a member of
FINRA (``Router Member'') as provided in paragraph 5. As of the date of
this Agreement, the only Router Member is Nasdaq Execution Services,
LLC.
3. No Charge. There shall be no charge to Nasdaq and BX by FINRA
for performing the Regulatory Responsibilities under this Agreement
except as hereinafter provided. FINRA shall provide Nasdaq and BX with
ninety (90) days advance written notice in the event FINRA decides to
impose any charges to Nasdaq and BX for performing the Regulatory
Responsibilities under this Agreement. If FINRA determines to impose a
charge, Nasdaq and BX shall have the right at the time of the
imposition of such charge to terminate this Agreement; provided,
however, that FINRA's Regulatory Responsibilities under this Agreement
shall continue until the Commission approves the termination of this
Agreement.
4. [Reassignment of Regulatory Responsibilities] Applicability of
Certain Laws, Rules, Regulations or
[[Page 58822]]
Orders. Notwithstanding any provision hereof, this Agreement shall be
subject to any statute, or any rule or order of the Commission
[reassigning Regulatory Responsibilities between self-regulatory
organizations]. To the extent such [action] statute, rule or order is
inconsistent with this Agreement, the statue, rule or order [such
action] 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.
5. Notification of Violations.
(a) In the event that FINRA becomes aware of apparent violations of
any Nasdaq Rules or BX Rules, which are not listed as Common Rules,
discovered pursuant to the performance of the Regulatory
Responsibilities assumed hereunder, FINRA shall notify Nasdaq and BX of
those apparent violations for such response as Nasdaq and BX deem[s]
appropriate. With respect to apparent violations of any Nasdaq Rules or
BX Rules by any Router Member, FINRA shall not make referrals to Nasdaq
and BX pursuant to this paragraph 5. Such apparent violations shall be
processed by, and enforcement proceedings in respect thereto will be
conducted by, FINRA as provided in this Agreement.
(b) In the event that Nasdaq or BX becomes aware of apparent
violations of any Common Rules, discovered pursuant to the performance
of the Retained Responsibilities, Nasdaq and BX shall notify FINRA of
those apparent violations and such matters shall be handled by FINRA
[as provided] consistent with the provisions in this Agreement. [Each
party agrees to make available promptly all files, records and
witnesses necessary to assist the other in its investigation or
proceedings.]
(c) Apparent violations of Common Rules[, FINRA Rules, federal
securities laws, and rules and regulations thereunder,] shall be
processed by, and enforcement proceedings in respect thereto shall be
conducted by FINRA as provided hereinbefore; provided, however, that in
the event a Common Member is the subject of an investigation relating
to a transaction on Nasdaq or BX, Nasdaq and BX, at each party's
discretion, may 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.
6. Continued Assistance.
(a) FINRA shall make available to Nasdaq and BX all information
obtained by FINRA in the performance by it of the Regulatory
Responsibilities hereunder with respect to the Common Members subject
to this Agreement. In particular, and not in limitation of the
foregoing, FINRA shall furnish Nasdaq and BX any information it obtains
about Common Members which reflects adversely on their financial
condition. Nasdaq and BX shall make available to FINRA any information
coming to their attention that reflects adversely on the financial
condition of Common Members or indicates possible violations of
applicable laws, rules or regulations by such firms.
(b) The parties agree that documents or information shared shall be
held in confidence, and used only for the purposes of carrying out
their respective regulatory obligations. Neither party shall assert
regulatory or other privileges as against the other with respect to
documents or information that is required to be shared pursuant to this
Agreement.
(c) The sharing of documents or information between the parties
pursuant to this Agreement shall not be deemed a waiver as against
third parties of regulatory or other privileges relating to the
discovery of documents or information.
7. Common Member Applications.
(a) Common Members subject to this Agreement shall be required to
submit, and FINRA shall be responsible for processing and acting upon
all applications submitted on behalf of allied persons, partners,
officers, registered personnel and any other person required to be
approved by the rules of Nasdaq, BX and FINRA or associated with Common
Members thereof. Upon request, FINRA shall advise Nasdaq and BX of any
changes of allied members, partners, officers, registered personnel and
other persons required to be approved by the rules of Nasdaq, BX and
FINRA.
(b) Common Members shall be required to send to FINRA all letters,
termination notices or other material respecting the individuals listed
in paragraph 7(a).
(c) When as a result of processing such submissions FINRA becomes
aware of a statutory disqualification as defined in the Exchange Act
with respect to a Common Member, FINRA shall determine pursuant to
Sections 15A(g) and/or Section 6(c) of the Exchange Act the
acceptability or continued applicability of the person to whom such
disqualification applies and keep Nasdaq and BX advised of its actions
in this regard for such subsequent proceedings as Nasdaq and BX may
initiate.
(d) Notwithstanding the foregoing, FINRA shall not review the
membership application, reports, filings, fingerprint cards, notices,
or other writings filed to determine if such documentation submitted by
a broker or dealer, or a person associated therewith or other persons
required to register or qualify by examination meets the Nasdaq or BX
requirements for general membership or for specified categories of
membership or participation in Nasdaq or BX, such as Equities Market
Maker, Equities ECN, Order Entry Firm, or any similar type of Nasdaq or
BX membership or participation that is created after this Agreement is
executed. FINRA shall not review applications or other documentation
filed to request a change in the rights or status described in this
paragraph 7(d), including termination or limitation on activities, of a
member or a participant of Nasdaq or BX, or a person associated with,
or requesting association with, a member or participant of Nasdaq or
BX.
8. Branch Office Information. FINRA shall also be responsible for
processing and, if required, acting upon all requests for the opening,
address changes, and terminations of branch offices by Common Members
and any other applications required of Common Members with respect to
the Common Rules as they may be amended from time to time. Upon
request, FINRA shall advise Nasdaq and BX of the opening, address
change and termination of branch and main offices of Common Members and
the names of such branch office managers.
9. Customer Complaints. Nasdaq and BX shall forward to FINRA copies
of all customer complaints involving Common Members received by Nasdaq
and BX relating to FINRA's Regulatory Responsibilities under this
Agreement. It shall be FINRA's responsibility to review and take
appropriate action in respect to such complaints.
10. Advertising. FINRA shall assume responsibility to review the
advertising of Common Members subject to the Agreement, provided that
such material is filed with FINRA in accordance with FINRA's filing
procedures and is accompanied with any applicable filing fees set forth
in FINRA Rules.
11. No Restrictions on Regulatory Action. Notwithstanding anything
else herein and to the contrary, except for paragraph 5(a), [N]nothing
contained in this Agreement shall restrict or in any way encumber the
right of either FINRA, or Nasdaq or BX, [party] to conduct its own
independent or concurrent investigation, examination or enforcement
proceeding of or against Common Members of the Common Rules, as either
[party] FINRA, or
[[Page 58823]]
Nasdaq or BX, in its sole discretion, shall deem appropriate or
necessary.
12. Termination. This Agreement may be terminated by Nasdaq, BX or
FINRA at any time upon the approval of the Commission after one (1)
year's written notice to the other party, except as provided in
paragraph 3.
[13. Effective Date. This Agreement shall be effective upon
approval of the Commission.]
13[4]. Arbitration. In the event of a dispute between the parties
as to the operation of this Agreement, Nasdaq, BX and FINRA hereby
agree that any such dispute shall be settled by arbitration in
Washington, DC in accordance with the rules of the American Arbitration
Association then in effect, or such other procedures as the parties may
mutually agree upon. Judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. Each
party acknowledges that the timely and complete performance of its
obligations pursuant to this Agreement is critical to the business and
operations of the other party. In the event of a dispute between the
parties, the parties shall continue to perform their respective
obligations under this Agreement in good faith during the resolution of
such dispute unless and until this Agreement is terminated in
accordance with its provisions. Nothing in this Section 1[4]3 shall
interfere with a party's right to terminate this Agreement as set forth
herein.
14[5]. 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.
15[6]. Limitation of Liability. None of the parties nor any of
their respective directors, governors, officers or employees shall be
liable to any other party to this Agreement for any liability, loss or
damage resulting from or claimed to have resulted from any delays,
inaccuracies, errors or omissions with respect to the provision of
Regulatory Responsibilities as provided hereby or for the failure to
provide any such responsibility, except with respect to such liability,
loss or damages as shall have been suffered by any party and caused by
the willful misconduct of another party or their respective directors,
governors, officers or employees. No warranties, express or implied,
are made by any party hereto with respect to any of the
responsibilities to be performed by them hereunder.
16[7]. Relief from Responsibility. Pursuant to Sections 17(d)(1)(A)
and 19(g) of the Exchange Act and Rule 17d-2 thereunder, FINRA, Nasdaq
and BX join in requesting the Commission, upon its approval of this
Agreement or any part thereof, to relieve Nasdaq and BX of any and all
responsibilities with respect to matters allocated to FINRA pursuant to
this Agreement; provided, however, that this Agreement shall not be
effective until the Effective Date.
17[8]. 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.
18[9]. Separate Agreement. This Agreement is wholly separate from
any other 17d-2 agreement where FINRA, NASDAQ and BX are parties,
including but not limited to, (1) the multiparty Agreement made
pursuant to Rule 17d-2 of the Exchange Act among [NYSE American LLC,]
Cboe BZX Exchange, Inc., BOX Exchange, LLC, [the Cboe EDGX Exchange,
Inc., Cboe C2 Exchange, Inc.,] Cboe Exchange, Inc., Cboe C2 Exchange,
Inc., Nasdaq ISE, LLC, Financial Industry Regulatory Authority, Inc.,
[NYSE Arca, Inc., The Nasdaq Stock Market LLC, BOX Exchange LLC, Nasdaq
BX, Inc., Nasdaq PHLX LLC,] Miami International Securities Exchange,
LLC, NYSE American LLC, NYSE Arca, Inc., The Nasdaq Stock Market LLC,
Nasdaq BX, Inc., Nasdaq PHLX LLC, Nasdaq GEMX, LLC, Cboe EDGX Exchange,
Inc., Nasdaq MRX, LLC, MIAX PEARL, LLC, [and] MIAX Emerald, LLC and
MEMX LLC approved by the Commission on [February 12, 2019] October 18,
2022 concerning options related sales-practice matters [involving the
allocation of regulatory responsibilities with respect to common
members for compliance with common rules relating to the conduct by
broker-dealers of accounts for listed options, index warrants, currency
index warrants and currency warrants or] and (2) the multiparty
Agreement made pursuant to Rule 17d-2 of the Exchange Act among NYSE
American LLC, Cboe BZX Exchange, Inc., the Cboe EDGX Exchange, Inc.,
Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Nasdaq ISE, LLC, Financial
Industry Regulatory Authority, Inc., NYSE Arca, Inc., The Nasdaq Stock
Market LLC, BOX Exchange LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, Miami
International Securities Exchange, LLC, Nasdaq GEMX, LLC, Nasdaq MRX,
LLC, MIAX PEARL, LLC, [and] MIAX Emerald, LLC, and MEMX LLC approved by
the Commission on [February 11, 2019] November 23, 2022 involving
options-related market surveillance matters and such agreements as may
be amended from time to time.
19[20]. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and such
counterparts together shall constitute one and the same instrument.
Exhibit 1
NASDAQ and BX Rules Certification for 17d-2 Agreement With FINRA
The Nasdaq Stock Market LLC (``Nasdaq'') and Nasdaq BX, Inc.
(``BX'') hereby certify that the requirements contained in the Nasdaq
and BX rules listed below are identical to, or substantially similar
to, the FINRA [r]Rules, Exchange Act provisions or SEA rules identified
(``Common Rules''). [noted below:]
# Common Rules shall not include provisions regarding (i) notice,
reporting or any other filings made directly to or from Nasdaq or BX,
(ii) incorporation by reference to other Nasdaq or BX Rules that are
not Common Rules, (iii) exercise of discretion in a manner that differs
from FINRA's exercise of discretion, including but not limited to
exercise of exemptive authority, by Nasdaq or BX, (iv) prior written
approval of Nasdaq or BX, and (v) payment of fees or fines to Nasdaq or
BX.
------------------------------------------------------------------------
FINRA rule(s),
exchange action
BX rule Nasdaq rule provision(s), or SEA
rule(s)
------------------------------------------------------------------------
General 2, Section 15. General 2, Section 4370. Business
Business Continuity Plans 15. Business Continuity Plans
and General 2, Section 16. Continuity Plans and Emergency
Emergency Contact and General 2, Contact
Information . Section 16. Information.
Emergency Contact
Information .
[[Page 58824]]
General 2, Section 10. General 2, Section 4517. Member Filing
Executive Representative; 10. Executive and Contact
General 2, Section 11. Representative; Information
Contact Information General 2, Section Requirements.
Requirements . 11. Contact
Information
Requirements .
General 3, Rule 1002(b) General 3, Rule FINRA Bylaws Article
Qualifications of Exchange 1002(b) III, Sec. 1.
Members and Associated Qualifications of
Persons; Registration of Exchange Members
Branch Offices and and Associated
Designation of Office of Persons;
Supervisory Jurisdiction . Registration of
Branch Offices and
Designation of
Office of
Supervisory
Jurisdiction .
General 3, Rule 1002(d). General 3, Rule 3110(a)(3)
Registration of Branch 1002(d). Supervision and SM
Offices and Designation of Registration of .01 and .02
Office of Supervisory Branch Offices and Supervision* and
Jurisdiction . Designation of FINRA By-Laws
Office of Article IV, Sec. 8.
Supervisory
Jurisdiction .
General 3, 1012(c)(1). Duty General 3, Rule 1122. Filing of
to Ensure the Accuracy, 1012(c)(1). Duty to Misleading
Completeness, and Current Ensure the Information as to
Nature of Membership Accuracy, Membership or
Information Filed with the Completeness, and Registration; FINRA
Exchange . Current Nature of Bylaws Article IV,
Membership [s]Sec. 1(c) of the
Information Filed By-Laws.
with the Exchange .
General 4, Section 1, 1210. General 4, Section 1210. Registration
Registration Requirements . 1, 1210. Requirements.
Registration
Requirements .
General 4, Section 1, 1220. General 4, Section 1220. Registration
Registration Categories 1, 1220. Categories.
\1\. Registration
Categories \2\[1].
General 4, Section 1, General 4, Section 1220.06. Eliminated
1220.06. Eliminated 1, 1220.06. Registration
Registration Categories \1\. Eliminated Categories.
Registration
Categories.
General 4, Section 1, Rule General 4, Section 1230. Associated
1230(1) (2)(D) Associated 1, Rule 1230(1)- Persons Exempt from
Persons Exempt from (2)(D) Associated Registration.
Registration . Persons Exempt from
Registration .
General 4, Section 1, 1240. General 4, Section 1240. Continuing
Continuing Education 1, 1240. Continuing Education
Requirements. Education Requirements.
Requirements \3\.
General 4, Section 1, 1250. General 4, Section 1010. Electronic
Electronic Filing 1, 1250. Electronic Filing Requirements
Requirements for Uniform Filing Requirements for Uniform Forms
Forms . for Uniform Forms . and FINRA Bylaws
Article V, Section
2.
[Equity 5, Section 1. [Equity 5, Section [7410. Definitions].
Definitions]. 1. Definitions].
[Equity 5, Section 2. [Equity 5, Section [7420.
Applicability]. 2. Applicability]. Applicability].
[Equity 5, Section 3. [Equity 5, Section [7430.
Synchronization of Member 3. Synchronization Synchronization of
Business Clocks]. of Member Business Member Business
Clocks]. Clocks].
[Equity 5, Section 4. [Equity 5, Section [7440. Recording of
Recording of Order 4. Recording of Order Information].
Information]. Order Information].
[Equity 5, Section 5. Order [Equity 5, Section [7450. Order Data
Data Transmission 5. Order Data Transmission
Requirements]. Transmission Requirements].
Requirements].
[Equity 5, Section 6. [Equity 5, Section [7460. Violation of
Violation of Order Audit 6. Violation of Order Audit Trail
Trail System Rules]. Order Audit Trail System Rules].
System Rules].
General 9, Section 1(a). General 9, Section 2010. Standards of
Standards of Commercial 1(a). Standards of Commercial Honor
Honor and Principles of Commercial Honor and Principles of
Trade. and Principles of Trade.*
Trade.
General 9, Section 1(b). General 9, Section 5320. Prohibition
Prohibition Against Trading 1(b). Prohibition Against Trading
Ahead of Customer Orders. Against Trading Ahead of Customer
Ahead of Customer Orders.**
Orders.
General 9, Section 1(c). General 9, Section 5270. Front Running
Front Running Policy. 1(c). Front Running of Block
Policy. Transactions.**
General 9, Section 1(d). General 9, Section 5280. Trading Ahead
Trading Ahead of Research 1(d). Trading Ahead of Research
Reports. of Research Reports. Reports.**
General 9, Section 1(e). General 9, Section 5240. Anti-
Anti-Intimidation/ 1(e). Anti- Intimidation/
Coordination. Intimidation/ Coordination.
Coordination.
General 9, Section 1(f). General 9, Section 2232. Customer
Confirmation of Callable 1(f). Confirmation Confirmations.
Common Stock. of Callable Common
Stock.
General 9, Section 1(g). General 9, Section 2140. Interfering
Interfering With the 1(h). Interfering With the Transfer
Transfer of Customer With the Transfer of Customer
Accounts in the Context of of Customer Accounts in the
Employment Disputes. Accounts in the Context of
Context of Employment
Employment Disputes. Disputes.
General 9, Section 1[(i)] General 9, Section 2020. Use of
(h). Use of Manipulative, 1(g). Use of Manipulative,
Deceptive or Other Manipulative, Deceptive or Other
Fraudulent Devices. Deceptive or Other Fraudulent
Fraudulent Devices. Devices.*
General 9, Section 2. General 9, Section 2150. Improper Use
Customers' Securities or 2. Customers' of Customers'
Funds. Securities or Funds. Securities or
Funds; Prohibition
Against Guarantees
and Sharing in
Accounts.
General 9, Section 3. General 9, Section 2210. Communications
Communications with the 3. Communications with the Public.
Public. with the Public.
General 9, Section 5. General 9, Section 3230. Telemarketing.
Telemarketing. 5. Telemarketing.
General 9, Section 6. General 9, Section 2251. Processing and
Forwarding of Proxy and 6. Forwarding of Forwarding of Proxy
Other Issuer-Related Proxy and Other and Other Issuer-
Materials. Issuer-Related Related Materials.
Materials.
General 9, Section 7(a). General 9, Section 2261. Disclosure of
Disclosure of Financial 7(a). Disclosure of Financial
Condition. Financial Condition. Condition.
General 9, Section 7(b). General 9, Section 2262. Disclosure of
Disclosure of Control 7(b). Disclosure of Control
Relationship with Issuer. Control Relationship with
Relationship with Issuer.'
Issuer.
General 9, Section 7(c). General 9, Section 2269. Disclosure of
Disclosure of Participation 7(c). Disclosure of Participation or
or Interest in Primary or Participation or Interest in Primary
Secondary Distribution. Interest in Primary or Secondary
or Secondary Distribution.
Distribution.
General 9, Section 8. SIPC General 9, Section 2266. SIPC
Information. 8. SIPC Information. Information.
General 9, Section 9. General 9, Section 5150. Fairness
Fairness Opinions. 9. Fairness Opinions.
Opinions.
General 9, Section 10 General 9, Section 2111. Suitability.
Recommendations to 10. Recommendations
Customers (Suitability). to Customers
(Suitability).
[[Page 58825]]
General 9, Section 11. Best General 9, Section 5310. Best Execution
Execution and 11. Best Execution and
Interpositioning. and Interpositioning.**
Interpositioning.
General 9, Section 12. General 9, Section 2231. Customer
Customer Account Statements. 12. Customer Account Statements.
Account Statements.
General 9, Section 13. General 9, Section 2264. Margin
Margin Disclosure Statement. 13. Margin Disclosure
Disclosure Statement.
Statement.
General 9, Section 14. General 9, Section 2130. Approval
Approval Procedures for Day- 14. Approval Procedures for Day-
Trading Accounts. Procedures for Day- Trading Accounts
Trading Accounts. and Rule 2270 Day-
Trading Risk
Disclosure
Statement.
General 9, Section 15. General 9, Section 3240. Borrowing From
Borrowing From or Lending 15. Borrowing From or Lending to
to Customers. or Lending to Customers.
Customers.
General 9, Section 16. General 9, Section 2122. Charges for
Charges for Services 16. Charges for Services Performed.
Performed. Services Performed.
General 9, Section 18. General 9, Section 5250. Payments for
Payments for Market Making. 18. Payments for Market Making.
Market Making.
General 9, Section 19. General 9, Section 3260. Discretionary
Discretionary Accounts. 19. Discretionary Accounts.
Accounts.
General 9, Section 20. General 9, Section 3110. Supervision.
Supervision. 20. Supervision.
General 9, Section 21(a). General 9, Section 3120. Supervisory
Supervisory Control System, 21(a). Supervisory Control System.
Annual Certification of Control System,
Compliance and Supervisory Annual
Processes. Certification of
Compliance and
Supervisory
Processes.
General 9, Section 21(c). General 9, Section 3130. Annual
Supervisory Control System, 21(c). Supervisory Certification of
Annual Certification of Control System, Compliance and
Compliance and Supervisory Annual Supervisory
Processes. Certification of Processes.
Compliance and
Supervisory
Processes.
General 9, Section 23. General 9, Section 3270. Outside
Outside Business Activities 23. Outside Business Activities
of an Associated Person. Business Activities of an Associated
of an Associated Person.
Person.
General 9, Section 24. General 9, Section 3280. Private
Private Securities 24. Private Securities
Transactions of an Securities Transactions of an
Associated Person. Transactions of an Associated Person.
Associated Person.
General 9, Section 25. General 9, Section 3210. Accounts at
Transactions for or by 25. Transactions Other Broker-
Associated Persons. for or by Dealers and
Associated Persons. Financial
Institutions.
General 9, Section 26. General 9, Section 3220. Influencing or
Influencing or Rewarding 26. Influencing or Rewarding Employees
Employees of Others. Rewarding Employees of Others.
of Others.
General 9, Section 27. General 9, Section 4530. Reporting
Reporting Requirements . 27. Reporting Requirements.
Requirements .
General 9, Section 28. General 9, Section 2263. Arbitration
Disclosure to Associated 28. Disclosure to Disclosure to
Persons When Signing Form U- Associated Persons Associated Persons
4. When Signing Form U- When Signing or
4. Acknowledging Form
U-4.
General 9, Section 30. Books General 9, Section 4511. General
and Records, Section 43. 30. Books and Requirements.
General Requirements. Records, Section
43. General
Requirements.
General 9, Section 31. Use General 9, Section 2060. Use of
of Information Obtained in 31. Use of Information
Fiduciary Capacity. Information Obtained in
Obtained in Fiduciary Capacity.
Fiduciary Capacity.
General 9, Section 37. Anti- General 9, Section 3310. Anti-Money
Money Laundering Compliance 37. Anti-Money Laundering
Program. Laundering Compliance Program.
Compliance Program.
General 9, Section 39. General 9, Section 4360. Fidelity
Fidelity Bonds. 39. Fidelity Bonds. Bonds.
[General 9, Section 30. General 9, Section 4513. Records of
Books and Records, (d) 44. Records of Written Customer
Record of Written Written Customer Complaints.
Complaints; (e) Complaints.
``Complaint'' Defined]
General 9, Section 44.
Records of Written Customer
Complaints.
[General 9, Section 30. General 9, Section 4512. Customer
Books and Records, (b) 45. Customer Account
Customer Account Account Information. Information.
Information] General 9,
Section 45. Customer
Account Information.
[General 9, Section 30. General 9, Section 4514. Authorization
Books and Records, (g) 46. Authorization Records for
Negotiable Instruments Records for Negotiable
Drawn From A Customer's Negotiable Instruments Drawn
Account] General 9, Section Instruments Drawn From a Customer's
46. Authorization Records From a Customer's Account.
for Negotiable Instruments Account.
Drawn From a Customer's
Account.
[General 9, Section 30. General 9, Section 4515. Approval and
Books and Records, (j) 47. Approval and Documentation of
Changes in Account Name or Documentation of Changes in Account
Designation] General 9, Changes in Account Name or
Section 47. Approval and Name or Designation. Designation.
Documentation of Changes in
Account Name or Designation.
General 9, Section 49. General 9, Section 5230. Payments
Payments Involving 49. Payments Involving
Publications that Influence Involving Publications that
the Market Price of a Publications that Influence the
Security. Influence the Market Price of a
Market Price of a Security.
Security.
General 9, Section 50. General 9, Section 1021. Foreign
Foreign Members . 50. Foreign Members Members.
.
General 9, Section 51. General 9, Section 2241. Research
Research Analysts. 51. Research Analysts and
Analyst. Research Reports.
General 9, Section 71. General 9, Section 4570. Custodian of
Custodian of Books and 71. Custodian of Books and Record,
Records. Books and Records. (a) Designation of
Custodian.
Equity 2, Section 5(e). Equity 2, Section FINRA Rule 6240.
Locked and Crossed Markets. 5(e). Locked and Prohibition from
Crossed Markets. Locking or Crossing
Quotations in NMS
Stocks.**
Equity 9, Section 1 Equity 9, Section 1. 5330. Adjustment of
Adjustment of Open Orders. Adjustment of Open Orders.
Orders.
[[Page 58826]]
Equity 9, Section 3. Equity 9, Section 3. 5210. Publication of
Publication of Transactions Publication of Transactions and
and Quotations. Transactions and Quotations.
Quotations.
Equity 9, Section 10. Prompt Equity 9, Section 11860(a)(4)(A).
Receipt and Delivery of 10. Prompt Receipt Purchases.
Securities. and Delivery of
Securities.
Equity 9, Section 11. Order Equity 9, Section 5290. Order Entry
Entry and Execution 11. Order Entry and and Execution
Practices . Execution Practices Practices.
.
Equity 10, Section 1. Direct Equity 10, Section 2310. Direct
Participation Programs. 1. Direct Participation
Participation Programs.
Programs.
Equity 10, Section 2. Equity 10, Section 2341. Investment
Investment Company 2. Investment Company Securities.
Securities. Company Securities.
[2841. General] Equity 10, Equity 10, Section 2351(a). General
Section 3(a) Trading in 3(a). [General] Provisions
Index Warrants, Currency Trading in Index Applicable to
Index Warrants, and Warrants, Currency Trading in Index
Currency Warrants. Index Warrants, and Warrants, Currency
Currency Warrants. Index Warrants and
Currency Warrants.
Equity 10, Section 4 Equity 10, Section 4 2357. Position and
Position Limits; 5 Exercise Position Limits; 5 Exercise Limits;
Limits; and 7 Liquidation Exercise Limits; Liquidations.
of Index Warrant Positions. and 7 Liquidation
of Index Warrant
Positions.
Options 6E, Section 1. Options 6E, Section 4511(a). General
Maintenance, Retention and 1. Maintenance, Requirements.
Furnishing of Books, Retention and
Records and Other Furnishing of
Information . Books, Records and
Other Information .
Options 9, Section 9. Options 9, Section Section 15(g) of the
Prevention of the Misuse of 9. Prevention of Securities Exchange
Material Nonpublic the Misuse of Act of 1934, and
Information . Material Nonpublic 3110(b)(1), (d).
Information . Supervision.
Options 9, Section 10. Options 9, Section 4530(a)(1)(A) and
Disciplinary Action by 10. Disciplinary (2). Reporting
Other Organizations . Action by Other Requirements; FINRA
Organizations . By-Laws, Article V,
Section 2(c); and
FINRA By-Laws,
Article V, Section
3.
Options 10, Section 12. Options 10, Section SEA Rule 17a-5 [of
Statements of Financial 12. Statements of the Securities
Condition to Public Financial Condition Exchange Act of
Customers. to Public Customers. 1934].
Options 10, Section 19. Options 10, Section 11870. Customer
Transfer of Accounts. 19. Transfer of Account Transfer
Accounts. Contracts.
Options 10 Section 23. Options 10 Section 3230. Telemarketing.
Telephone Solicitation. 23. Telephone
Solicitation.
Equity 9, Section 15. N/A................. 2353. Suitability.
Suitability.
Equity 9, Section 16. N/A................. 2354. Discretionary
Discretionary Accounts. Accounts.
Equity 9, Section 17. N/A................. 2355. Supervision of
Supervision of Accounts. Accounts.
Equity 9, Section 18. N/A................. 2356. Customer
Customer Complaints. Complaints.
Equity 9, Section 19. N/A................. 2357. Communications
Communications with the with the Public and
Public and Customers Customers
Concerning Index Warrants, Concerning Index
Currency Index Warrants, Warrants, Currency
and Currency Warrants. Index Warrants and
Currency Warrants.
Equity 9, Section 20. N/A................. 2358. Maintenance of
Maintenance of Records. Records.
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\1\ FINRA shall only have Regulatory Responsibilities regarding BX
General 4, Section 1220 to the extent that BX recognizes the same
categories of limited principal and representative registration as the
BX Rule, by incorporating Nasdaq General 4, Section 1220, does not
recognize registration related to investment banking, research,
government securities, investment company and variable contracts
products, direct participation programs, private securities offerings,
and operations professional.
\2\ FINRA shall only have Regulatory Responsibilities regarding Nasdaq
General 4, Section 1220 to the extent that Nasdaq recognizes the same
categories of limited principal and representative registration as
Nasdaq General 4, Section 1220, does not recognize registration
related to investment banking, research, government securities,
investment company and variable contracts products, direct
participation programs, private securities offerings, and operations
professional.
\3\ FINRA Rule 1240.01 allows for eligible persons to make their
election to participate in the continuing education program under Rule
1240(c) either (1) between January 31, 2022, and March 15, 2022; or
(2) between March 15, 2023, and December 31, 2023. In contrast,
Supplementary Material .01 of Nasdaq and BX General 4, Section 1, Rule
1240 allows for eligible persons to make their election to participate
in the continuing education program under Nasdaq and BX General 4,
Section 1(c) either (1) by March 15, 2022, or (2) between July 6,
2023, and December 31, 2023. Therefore, FINRA will not accept
Regulatory Responsibilities for elections made under Supplementary
Material .01 of Nasdaq or BX General 4, Section 1, Rule 1240 between
March 16, 2023, and July 5, 2023.
The following provisions are covered by the Agreement between the
Parties:
SEC '34 Act Section 28(e)--Effect on Existing Law
[SEC '34 Act] SEA Rule 10b-10--Confirmation of Transactions
SEA Rule 200 of Regulation SHO--Definition of Short Sales and
Marking Requirements**
SEA Rule 201 of Regulation SHO--Circuit Breaker**
[SEC '34 Act] SEA Rule 203 of Regulation SHO--Borrowing and
Delivery Requirements
SEA Rule 204 of Regulation SHO--Close-Out Requirements**
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**
[SEC '34 Act] SEA Rule 606 of Regulation NMS--Disclosure of
Order Routing Information**
[SEC '34 Act Rule 607 of Regulation NMS Customer Account
Statements]
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*
SEA Rule 14e-4--Prohibited Transactions in Connection with
Partial Tender Offers[\-\]
SEA Rule 14e-4(a)(1)(ii)(D)--Prohibited Transactions in
Connection with Partial Tender Offers (with a focus on the
standardized call option provision)**
[[caret] FINRA shall perform surveillance, investigation, and
Enforcement Responsibilities for SEA Rule 14e-4(a)(1)(ii)(D).]
[[Page 58827]]
**In addition to performing examinations and Enforcement
Responsibilities as provided in this Agreement for the double star
rules, FINRA shall also perform the surveillance and investigation
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 among FINRA, Nasdaq and BX.
*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 Cboe BZX Exchange,
Inc., Cboe BYX Exchange, Inc., Chicago Stock Exchange, Inc., Cboe EDGA
Exchange Inc., Cboe EDGX Exchange Inc., Financial Industry Regulatory
Authority, Inc., MEMX, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq
PHLX LLC, The Nasdaq Stock Market LLC, NYSE National, Inc., New York
Stock Exchange, LLC, NYSE American LLC, NYSE Arca Inc., [and]
Investors' Exchange LLC and the Long-Term Stock Exchange, Inc. as
approved by the SEC on September 23, 2020, as may be amended from time
to time.
[caret] FINRA shall perform the surveillance and investigation
responsibilities for these rules. The examination responsibility for
these rules is covered by a separate 17d-2 Agreement by and among Cboe
BZX Exchange, Inc., Cboe BYX Exchange, Inc., BOX Exchange LLC, Cboe
Exchange, Inc., Cboe C2 Exchange, Inc., NYSE Chicago, Inc., Cboe EDGA
Exchange, Inc., Cboe EDGX Exchange, Inc., Financial Industry
Regulatory Authority, Inc., MEMX LLC, Nasdaq ISE, LLC, Nasdaq GEMX,
LLC, Nasdaq MRX, LLC, Investors Exchange LLC, Miami International
Securities Exchange, LLC, MIAX PEARL, LLC, MIAX Emerald, LLC, The
Nasdaq Stock Market LLC, Nasdaq BX, Inc., Nasdaq PHLX LLC, NYSE
National, Inc., New York Stock Exchange LLC, NYSE American LLC, NYSE
Arca, Inc. and Long-Term Stock Exchange, Inc. as approved by the SEC
on June 10, 2020 concerning covered Regulation NMS and Consolidated
Audit Trail Rules, as may be amended from time to time.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number 4-575 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number 4-575. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed plan that are filed with the
Commission, and all written communications relating to the proposed
plan between the Commission and any person, other than those that may
be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the plan also will be available for inspection and
copying at the principal offices of FINRA, Nasdaq, and BX. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to File No. 4-575 and should be submitted on
or before August 9, 2024.
V. Discussion
The Commission finds that the proposed Amended Plan is consistent
with the factors set forth in Section 17(d) of the Act \13\ and Rule
17d-2(c) thereunder \14\ in that the proposed Amended Plan is necessary
or appropriate in the public interest and for the protection of
investors, fosters cooperation and coordination among SROs, and removes
impediments to and fosters the development of the national market
system. In particular, the Commission believes that the proposed
Amended Plan should reduce unnecessary regulatory duplication by
allocating to FINRA certain examination and enforcement
responsibilities for Common Members that would otherwise be performed
by both FINRA and Nasdaq, and FINRA and BX. Accordingly, the proposed
Amended Plan promotes efficiency by reducing costs to Common Members.
Furthermore, because FINRA, Nasdaq, and BX will coordinate their
regulatory functions in accordance with the Amended Plan, the Amended
Plan should promote investor protection.
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\13\ 15 U.S.C. 78q(d).
\14\ 17 CFR 240.17d-2(c).
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The Commission notes that, under the Amended Plan, FINRA, Nasdaq,
and BX have allocated regulatory responsibility for those Nasdaq and BX
rules, set forth in the Certification, that are substantially similar
to the applicable FINRA rules in that examination for compliance with
such provisions and rules would not require FINRA to develop one or
more new examination standards, modules, procedures, or criteria in
order to analyze the application of the rule, or a Common Member's
activity, conduct, or output in relation to such rule. In addition,
under the Amended Plan, FINRA would assume regulatory responsibility
for certain provisions of the federal securities laws and the rules and
regulations thereunder that are set forth in the Certification. The
Common Rules covered by the Amended Plan are specifically listed in the
Certification, as may be amended by the Parties from time to time.
According to the Amended Plan, Nasdaq and BX will review the
Certification at least annually, or more frequently if required by
changes in either the rules of Nasdaq, BX or FINRA, and, if necessary,
submit to FINRA an updated list of Common Rules to add Nasdaq or BX
rules not included on the then-current list of Common Rules that are
substantially similar to FINRA rules; delete Nasdaq or BX 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 Nasdaq and BX rules that qualify as
common rules.\15\ FINRA will then confirm in writing whether the rules
listed in any updated list are Common Rules as defined in the Amended
Plan. The Commission believes that these provisions are designed to
provide for continuing communication between the Parties to ensure the
continued accuracy of the scope of the proposed allocation of
regulatory responsibility.
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\15\ See paragraph 2 of the Amended Plan.
---------------------------------------------------------------------------
The Commission is hereby declaring effective an Amended Plan that,
among other things, allocates regulatory responsibility to FINRA for
the oversight and enforcement of all Nasdaq and BX rules that are
substantially similar to the rules of FINRA for Common Members of BX
and FINRA, and Nasdaq and FINRA. Therefore, modifications to the
Certification need not be filed with the Commission as an amendment to
the Amended Plan, provided that the Parties are only adding to,
deleting from, or confirming changes to Nasdaq or BX rules in the
Certification in conformance with the definition of Common Rules
provided in the Amended Plan. However, should the
[[Page 58828]]
Parties decide to add a Nasdaq or BX rule to the Certification that is
not substantially similar to a FINRA rule; delete a Nasdaq or BX rule
from the Certification that is substantially similar to a FINRA rule;
or leave in the Certification a Nasdaq or BX rule that is no longer
substantially similar to a FINRA rule, then such a change would
constitute an amendment to the Amended Plan, which must be filed with
the Commission pursuant to Rule 17d-2 under the Act.\16\
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\16\ The addition to or deletion from the Certification of any
federal securities laws, rules, and regulations for which FINRA
would bear responsibility under the Amended Plan for examining, and
enforcing compliance by, Common Members, also would constitute an
amendment to the Amended Plan.
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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 is to: (i) update
the list of Common Rules; (ii) add surveillance and investigation
coverage for certain Common Rules specified in Exhibit 1 to the Amended
Plan; (iii) reflect that, for Router Members, FINRA will retain
regulatory responsibility for Nasdaq and BX rules that are not Common
Rules; and (iv) reflect that FINRA will not make referrals to Nasdaq
and BX for apparent violations of any Nasdaq or BX Rules by any Router
Member. By declaring it effective today, the Amended Plan can become
effective and be implemented without undue delay. The Commission notes
that the prior version of this plan immediately prior to this proposed
amendment was published for comment and the Commission did not receive
any comments thereon.\17\ Furthermore, the Commission does not believe
that the amendment to the plan raises any new regulatory issues that
the Commission has not previously considered.
---------------------------------------------------------------------------
\17\ See supra note 12 (citing to Securities Exchange Act
Release No. 93114).
---------------------------------------------------------------------------
VI. Conclusion
This order gives effect to the Amended Plan filed with the
Commission in File No. 4-575. The Parties shall notify all members
affected by the Amended Plan of their rights and obligations under the
Amended Plan.
It is therefore ordered, pursuant to Section 17(d) of the Act, that
the Amended Plan in File No. 4-575, between the FINRA, BX, and Nasdaq,
filed pursuant to Rule 17d-2 under the Act, hereby is approved and
declared effective.
It is further ordered that BX and Nasdaq are relieved of those
responsibilities allocated to FINRA under the Amended Plan in File No.
4-575.
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\18\ 17 CFR 200.30-3(a)(34).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15910 Filed 7-18-24; 8:45 am]
BILLING CODE 8011-01-P
