80 FR 68354 - Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among NYSE MKT LLC, BATS Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, the Chicago Board Options Exchange, Incorporated, the EDGX Exchange, Inc., the International Securities Exchange LLC, ISE Gemini, LLC, Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., the NASDAQ OMX PHLX, Inc., and Miami International Securities Exchange, LLC Concerning Options-Related Market Surveillance
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 213 (November 4, 2015)
Federal Register Volume 80, Issue 213 (November 4, 2015)
| Page Range | 68354-68361 | |
| FR Document | 2015-28067 |
[Federal Register Volume 80, Number 213 (Wednesday, November 4, 2015)] [Notices] [Pages 68354-68361] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-28067] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76310; File No. 4-551] Program for Allocation of Regulatory Responsibilities Pursuant to Rule 17d-2; Notice of Filing and Order Approving and Declaring Effective an Amendment to the Plan for the Allocation of Regulatory Responsibilities Among NYSE MKT LLC, BATS Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, the Chicago Board Options Exchange, Incorporated, the EDGX Exchange, Inc., the International Securities Exchange LLC, ISE Gemini, LLC, Financial Industry Regulatory Authority, Inc., NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., the NASDAQ OMX PHLX, Inc., and Miami International Securities Exchange, LLC Concerning Options-Related Market Surveillance October 29, 2015. 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 October 27, 2015, pursuant to Rule 17d-2 of the Act,\2\ by NYSE MKT LLC (``MKT''), BATS Exchange, Inc., (``BATS''), the BOX Options Exchange LLC (``BOX''), C2 Options Exchange, Incorporated (``C2''), the Chicago Board Options Exchange, Incorporated (``CBOE''), the EDGX Exchange, Inc. (``EDGX'') the International Securities Exchange LLC (``ISE''), ISE Gemini, LLC (``Gemini''), Financial Industry Regulatory Authority, Inc. (``FINRA''), NYSE Arca, Inc. (``Arca''), The NASDAQ Stock Market LLC (``Nasdaq''), NASDAQ OMX BX, Inc. (``BX''), NASDAQ OMX PHLX, Inc. (``PHLX''), and Miami International Securities Exchange (``MIAX'') (collectively, ``Participating Organizations'' or ``parties''). --------------------------------------------------------------------------- \1\ 15 U.S.C. 78q(d). \2\ 17 CFR 240.17d-2. --------------------------------------------------------------------------- [[Page 68355]] I. Introduction Section 19(g)(1) of the Act,\3\ among other things, requires every self-regulatory organization (``SRO'') registered as either a national securities exchange or national securities association to examine for, and enforce compliance by, its members and persons associated with its members with the Act, the rules and regulations thereunder, and the SRO's own rules, unless the SRO is relieved of this responsibility pursuant to Section 17(d) \4\ or Section 19(g)(2) \5\ of the Act. Without this relief, the statutory obligation of each individual SRO could result in a pattern of multiple examinations of broker-dealers that maintain memberships in more than one SRO (``common members''). Such regulatory duplication would add unnecessary expenses for common members and their SROs. --------------------------------------------------------------------------- \3\ 15 U.S.C. 78s(g)(1). \4\ 15 U.S.C. 78q(d). \5\ 15 U.S.C. 78s(g)(2). --------------------------------------------------------------------------- Section 17(d)(1) of the Act \6\ was intended, in part, to eliminate unnecessary multiple examinations and regulatory duplication.\7\ With respect to a common member, Section 17(d)(1) authorizes the Commission, by rule or order, to relieve an SRO of the responsibility to receive regulatory reports, to examine for and enforce compliance with applicable statutes, rules, and regulations, or to perform other specified regulatory functions. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78q(d)(1). \7\ See Securities Act Amendments of 1975, Report of the Senate Committee on Banking, Housing, and Urban Affairs to Accompany S. 249, S. Rep. No. 94-75, 94th Cong., 1st Session 32 (1975). --------------------------------------------------------------------------- To implement Section 17(d)(1), the Commission adopted two rules: Rule 17d-1 and Rule 17d-2 under the Act.\8\ Rule 17d-1 authorizes the Commission to name a single SRO as the designated examining authority (``DEA'') to examine common members for compliance with the financial responsibility requirements imposed by the Act, or by Commission or SRO rules.\9\ When an SRO has been named as a common member's DEA, all other SROs to which the common member belongs are relieved of the responsibility to examine the firm for compliance with the applicable financial responsibility rules. On its face, Rule 17d-1 deals only with an SRO's obligations to enforce member compliance with financial responsibility requirements. Rule 17d-1 does not relieve an SRO from its obligation to examine a common member for compliance with its own rules and provisions of the federal securities laws governing matters other than financial responsibility, including sales practices and trading activities and practices. --------------------------------------------------------------------------- \8\ 17 CFR 240.17d-1 and 17 CFR 240.17d-2, respectively. \9\ See Securities Exchange Act Release No. 12352 (April 20, 1976), 41 FR 18808 (May 7, 1976). --------------------------------------------------------------------------- To address regulatory duplication in these and other areas, the Commission adopted Rule 17d-2 under the Act.\10\ Rule 17d-2 permits SROs to propose joint plans for the allocation of regulatory responsibilities with respect to their common members. Under paragraph (c) of Rule 17d-2, the Commission may declare such a plan effective if, after providing for notice and 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 December 11, 2007, the Commission declared effective the Participating Organizations' Plan for allocating regulatory responsibilities pursuant to Rule 17d-2.\11\ On April 11, 2008, the Commission approved an amendment to the Plan to include NASDAQ as a participant.\12\ On October 9, 2008, the Commission approved an amendment to the Plan to clarify that the term Regulatory Responsibility for options position limits includes the examination responsibilities for the delta hedging exemption.\13\ On February 25, 2010, the Commission approved an amendment to the Plan to add BATS and C2 as SRO participants and to reflect the name changes of the American Stock Exchange LLC to the NYSE Amex LLC, and the Boston Stock Exchange, Inc. to the NASDAQ OMX BX, Inc.\14\ On May 11, 2012, the Commission approved an amendment to the Plan to add BOX as a participant to the Plan.\15\ On December 5, 2012, the Commission approved an amendment to the Plan to add MIAX as a participant to the Plan.\16\ On July 23, 2013, the Commission approved an amendment to the Plan to add Topaz Exchange, LLC as a Participant to the Plan.\17\ --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 56941 (December 11, 2007), 72 FR 71723 (December 18, 2007) (File No. 4-551). \12\ See Securities Exchange Act Release No. 57649 (April 11, 2008), 73 FR 20976 (April 17, 2008) (File No. 4-551). \13\ See Securities Exchange Act Release No. 58765 (October 9, 2008), 73 FR 62344 (October 20, 2008) (File No. 4-551). \14\ See Securities Exchange Act Release No. 61588 (February 25, 2010), 75 FR 9970 (March 4, 2010) (File No. 4-551). \15\ See Securities Exchange Act Release No. 66975 (May 11, 2012), 77 FR 29712 (May 18, 2010) (File No. 4-551). \16\ See Securities Exchange Act Release No. 68362 (December 5, 2012), 77 FR 73719 (December 11, 2012) (File No. 4-551). \17\ See Securities Exchange Act Release No. 70052 (July 26, 2013), 78 FR 46665 (August 1, 2013) (File No. 4-551). --------------------------------------------------------------------------- The Plan is designed to reduce regulatory duplication for common members by allocating regulatory responsibility for certain options- related market surveillance matters among the Participating Organizations. Generally, under the Plan, a Participating Organization will serve as the Designated Options Surveillance Regulator (``DOSR'') for each common member assigned to it and will assume regulatory responsibility with respect to that common member's compliance with applicable common rules for certain accounts. When an SRO has been named as a common member's DOSR, all other SROs to which the common member belongs will be relieved of regulatory responsibility for that common member, pursuant to the terms of the Plan, with respect to the applicable common rules specified in Exhibit A to the Plan. III. Proposed Amendment to the Plan On October 27, 2015, the parties submitted a proposed amendment to the Plan. The primary purpose of the amendment is to add EDGX as a Participant to the Plan and to change the name of Topaz Exchange, LLC to ISE Gemini, LLC. The text of the proposed amended 17d-2 plan is as follows (additions are italicized; deletions are [bracketed]): * * * * * AGREEMENT BY AND AMONG NYSE MKT LLC, BATS EXCHANGE, INC., EDGX EXCHANGE INC., BOX OPTIONS EXCHANGE LLC, NASDAQ OMX BX, INC., C2 OPTIONS EXCHANGE, INCORPORATED, THE CHICAGO BOARD OPTIONS EXCHANGE, INCORPORATED, THE INTERNATIONAL SECURITIES EXCHANGE LLC, ISE GEMINI, LLC, FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., NYSE ARCA, INC., THE NASDAQ STOCK MARKET LLC, NASDAQ OMX PHLX, INC., AND MIAMI INTERNATIONAL SECURITIES [[Page 68356]] EXCHANGE, LLC [AND TOPAZ EXCHANGE, LLC] PURSUANT TO RULE 17d-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934 This agreement (this ``Agreement''), by and among NYSE MKT LLC (``MKT''), BATS Exchange, Inc., (``BATS''), the EDGX Exchange, Inc (``EDGX''), the C2 Options Exchange, Incorporated (``C2''), the Chicago Board Options Exchange, Incorporated (``CBOE''), the International Securities Exchange LLC (``ISE''), Financial Industry Regulatory Authority, Inc. (``FINRA''), NYSE Arca, Inc. (``Arca''), The NASDAQ Stock Market LLC (``Nasdaq''), BOX Options Exchange LLC (``BOX''), NASDAQ OMX BX, Inc. (``BX''), NASDAQ OMX PHLX, Inc. (``PHLX''), Miami International Securities Exchange, LLC (``MIAX'') and [Topaz Exchange] ISE Gemini, LLC (``[Topaz] Gemini'') is made this 10th day of October 2007, and as amended the 31st day of March 2008, the 1st day of October 2008, the 3rd day of February 2010, the 25th day of April 2012, and the 19th day of November 2012, and the 30th day of May 2013, and the 16th day of October 2015 pursuant to Section 17(d) of the Securities Exchange Act of 1934, as amended (the ``Exchange Act''), and Rule 17d-2 thereunder (``Rule 17d-2''), which allows for a joint plan among self- regulatory organizations (``SROs'') to allocate regulatory obligations with respect to brokers or dealers that are members of two or more of the parties to this Agreement (``Common Members''). MKT, BATS, C2, CBOE, EDGX, ISE Gemini, ISE, FINRA, Arca, Nasdaq, BOX, BX, PHLX, and MIAX [and Topaz] are collectively referred to herein as the ``Participants'' and individually, each a ``Participant.'' This Agreement shall be administered by a committee known as the Options Surveillance Group (the ``OSG'' or ``Group''), as described in Section V hereof. Unless defined in this Agreement or the context otherwise requires, the terms used herein shall have the meanings assigned thereto by the Exchange Act and the rules and regulations thereunder. Whereas, the Participants desire to eliminate regulatory duplication with respect to SRO market surveillance of Common Member \1\ activities with regard to certain common rules relating to listed options (``Options''); and Whereas, for this purpose, the Participants desire to execute and file this Agreement with the Securities and Exchange Commission (the ``SEC'' or ``Commission'') pursuant to Rule 17d-2. Now, therefore, in consideration of the mutual covenants contained in this Agreement, the Participants agree as follows: --------------------------------------------------------------------------- \1\ In the case of the BX and BOX, members are those persons who are Options Participants (as defined in the BOX Options Exchange LLC Rules and NASDAQ OMX BX, Inc. Rules). --------------------------------------------------------------------------- I. Except as otherwise provided in this Agreement, each Participant shall assume Regulatory Responsibility (as defined below) for the Common Members that are allocated or assigned to such Participant in accordance with the terms of this Agreement and shall be relieved of its Regulatory Responsibility as to the remaining Common Members. For purposes of this Agreement, a Participant shall be considered to be the Designated Options Surveillance Regulator (``DOSR'') for each Common Member that is allocated to it in accordance with Section VII. II. As used in this Agreement, the term ``Regulatory Responsibility'' shall mean surveillance, investigation and enforcement responsibilities relating to compliance by the Common Members with such Options rules of the Participants as the Participants shall determine are substantially similar and shall approve from time to time, insofar as such rules relate to market surveillance (collectively, the ``Common Rules''). For the purposes of this Agreement the list of Common Rules is attached as Exhibit A hereto, which may only be amended upon unanimous written agreement by the Participants. The DOSR assigned to each Common Member shall assume Regulatory Responsibility with regard to that Common Member's compliance with the applicable Common Rules for certain accounts.\2\ A DOSR may perform its Regulatory Responsibility or enter an agreement to transfer or assign such responsibilities to a national securities exchange registered with the SEC under Section 6(a) of the Exchange Act or a national securities association registered with the SEC under Section 15A of the Exchange Act. A DOSR may not transfer or assign its Regulatory Responsibility to an association registered for the limited purpose of regulating the activities of members who are registered as brokers or dealers in security futures products. --------------------------------------------------------------------------- \2\ Certain accounts shall include customer (``C'' as classified by the Options Clearing Corporation (``OCC'')) and firm (``F'' as classified by OCC) accounts, as well as other accounts, such as market maker accounts as the Participants shall, from time to time, identify as appropriate to review. --------------------------------------------------------------------------- The term ``Regulatory Responsibility'' does not include, and each Participant shall retain full responsibility with respect to: (a) Surveillance, investigative and enforcement responsibilities other than those included in the definition of Regulatory Responsibility; (b) any aspects of the rules of a Participant that are not substantially similar to the Common Rules or that are allocated for a separate surveillance purpose under any other agreement made pursuant to Rule 17d-2. Any such aspects of a Common Rule will be noted as excluded on Exhibit A. With respect to options position limits, the term Regulatory Responsibility shall include examination responsibilities for the delta hedging exemption. Specifically, the Participants intend that FINRA will conduct examinations for delta hedging for all Common Members that are members of FINRA notwithstanding the fact that FINRA's position limit rule is, in some cases, limited to only firms that are not members of an options exchange (i.e., access members). In such cases, FINRA's examinations for delta hedging options position limit violations will be for the identical or substantively similar position limit rule(s) of the other Participant(s). Examinations for delta hedging for Common Members that are non-FINRA members will be conducted by the same Participant conducting position limit surveillance. The allocation of Common Members to DOSRs for surveillance of compliance with options position limits and other agreed to Common Rules is provided in Exhibit B. The allocation of Common Members to DOSRs for examinations of the delta hedging exemption under the options position limits rules is provided in Exhibit C. III. Each year within 30 days of the anniversary date of the commencement of operation of this Agreement, or more frequently if required by changes in the rules of a Participant, each Participant shall submit to the other Participants, through the Chair of the OSG, an updated list of Common Rules for review. This updated list may add Common Rules to Exhibit A, shall delete from Exhibit A rules of that Participant that are no longer identical or substantially similar to the Common Rules, and shall confirm that the remaining rules of the Participant included on Exhibit A continue to be identically or substantially similar to the Common Rules. Within 30 days from the date that each Participant has received revisions to Exhibit A from the Chair of the OSG, each Participant shall confirm in writing to the Chair of the OSG whether that Participant's rules listed in Exhibit A are Common Rules. IV. Apparent violation of another Participant's rules discovered by a DOSR, but which rules are not within the scope of the discovering DOSR's [[Page 68357]] Regulatory Responsibility, shall be referred to the relevant Participant for such action as is deemed appropriate by that Participant. Notwithstanding the foregoing, nothing contained herein shall preclude a DOSR in its discretion from requesting that another Participant conduct an investigative or enforcement proceeding (``Proceeding'') on a matter for which the requesting DOSR has Regulatory Responsibility. If such other Participant agrees, the Regulatory Responsibility in such case shall be deemed transferred to the accepting Participant and confirmed in writing by the Participants involved. Additionally, nothing in this Agreement shall prevent another Participant on whose market potential violative activity took place from conducting its own Proceeding on a matter. The Participant conducting the Proceeding shall advise the assigned DOSR. Each Participant agrees, upon request, to make available promptly all relevant files, records and/or witnesses necessary to assist another Participant in a Proceeding. V. The OSG shall be composed of one representative designated by each of the Participants (a ``Representative''). Each Participant shall also designate one or more persons as its alternate representative(s) (an ``Alternate Representative''). In the absence of the Representative, the Alternate Representative shall assume the powers, duties and responsibilities of the Representative. Each Participant may at any time replace its Representative and/or its Alternate Representative to the Group.\3\ A majority of the OSG shall constitute a quorum and, unless otherwise required, the affirmative vote of a majority of the Representatives present (in person, by telephone or by written consent) shall be necessary to constitute action by the Group. --------------------------------------------------------------------------- \3\ A Participant must give notice to the Chair of the Group of such a change. --------------------------------------------------------------------------- The Group will have a Chair, Vice Chair and Secretary. A different Participant will assume each position on a rotating basis for a one- year term. In the event that a Participant replaces a Representative who is acting as Chair, Vice Chair or Secretary, the newly appointed Representative shall assume the position of Chair, Vice Chair, or Secretary (as applicable) vacated by the Participant's former Representative. In the event a Participant cannot fulfill its duties as Chair, the Participant serving as Vice Chair shall substitute for the Chair and complete the subject unfulfilled term. All notices and other communications for the OSG are to be sent in care of the Chair and, as appropriate, to each Representative. VI. The OSG shall determine the times and locations of Group meetings, provided that the Chair, acting alone, may also call a meeting of the Group in the event the Chair determines that there is good cause to do so. To the extent reasonably possible, notice of any meeting shall be given at least ten business days prior to the meeting date. Representatives shall always be given the option of participating in any meeting telephonically at their own expense rather than in person. VII. No less frequently than every two years, in such manner as the Group deems appropriate, the OSG shall allocate Common Members that conduct an Options business among the Participants (``Allocation''), and the Participant to which a Common Member is allocated will serve as the DOSR for that Common Member. Any Allocation shall be based on the following principles, except to the extent all affected Participants consent to one or more different principles: (a) The OSG may not allocate a Common Member to a Participant unless the Common Member is a member of that Participant. (b) To the extent practicable, Common Members that conduct an Options business shall be allocated among the Participants of which they are members in such manner as to equalize as nearly as possible the allocation among such Participants, provided that no Common Members shall be allocated to FINRA. For example, if sixteen Common Members that conduct an Options business are members only of three Participants, none of which is FINRA, those Common Members shall be allocated among the three Participants such that no Participant is allocated more than six such members and no Participant is allocated less than five such members. If, in the previous example, one of the three Participants is FINRA, the sixteen Common Members would be allocated evenly between the remaining Participants, so that the two non-FINRA Participants would be allocated eight Common Members each. (c) To the extent practicable, Allocation shall take into account the amount of Options activity conducted by each Common Member in order to most evenly divide the Common Members with the largest amount of activity among the Participants of which they are members. Allocation will also take into account similar allocations pursuant to other plans or agreements to which the Common Members are party to maintain consistency in oversight of the Common Members.\4\ --------------------------------------------------------------------------- \4\ For example, if one Participant was allocated a Common Member by another regulatory group that Participant would be assigned to be the DOSR of that Common Member, unless there is good cause not to make that assignment. --------------------------------------------------------------------------- (d) To the extent practicable, Allocation of Common Members to Participants will be rotated among the applicable Participants such that a Common Member shall not be allocated to a Participant to which that Common Member was allocated within the previous two years. The assignment of DOSRs pursuant to the Allocation is attached as Exhibit B hereto, and will be updated from time to time to reflect Common Member Allocation changes. (e) The Group may reallocate Common Members from time-to-time, as it deems appropriate. (f) Whenever a Common Member ceases to be a member of its DOSR, the DOSR shall promptly inform the Group, which shall review the matter and allocate the Common Member to another Participant. (g) A DOSR may request that a Common Member to which it is assigned be reallocated to another Participant by giving 30 days written notice to the Chair of the OSG. The Group, in its discretion, may approve such request and reallocate the Common Member to another Participant. (h) All determinations by the Group with respect to Allocation shall be made by the affirmative vote of a majority of the Participants that, at the time of such determination, share the applicable Common Member being allocated; a Participant shall not be entitled to vote on any Allocation relating to a Common Member unless the Common Member is a member of such Participant. VIII. Each DOSR shall conduct routine surveillance reviews to detect violations of the applicable Common Rules by each Common Member allocated to it with a frequency (daily, weekly, monthly, quarterly, semi-annually or annually as noted on Exhibit A) not less than that determined by the Group. The other Participants agree that, upon request, relevant information in their respective files relative to a Common Member will be made available to the applicable DOSR. In addition, each Participant shall provide, to the extent not otherwise already provided, information pertaining to its surveillance program that would be relevant to FINRA or the Participant(s) conducting routine examinations for the delta hedging exemption. At each meeting of the OSG, each Participant shall be prepared to report on the status of its surveillance program [[Page 68358]] for the previous quarter and any period prior thereto that has not previously been reported to the Group. In the event a DOSR believes it will not be able to complete its Regulatory Responsibility for its allocated Common Members, it will so advise the Group in writing promptly. The Group will undertake to remedy this situation by reallocating the subject Common Members among the remaining Participants. In such instance, the Group may determine to impose a regulatory fee for services provided to the DOSR that was unable to fulfill its Regulatory Responsibility. IX. Each Participant will, upon request, promptly furnish a copy of the report or applicable portions thereof relating to any investigation made pursuant to the provisions of this Agreement to each other Participant of which the Common Member under investigation is a member. X. Each Participant will routinely populate a common database, to be accessed by the Group relating to any formal regulatory action taken during the course of a Proceeding with respect to the Common Rules concerning a Common Member. XI. Any written notice required or permitted to be given under this Agreement shall be deemed given if sent by certified mail, return receipt requested, to any Participant to the attention of that Participant's Representative, to the Participant's principal place of business or by email at such address as the Representative shall have filed in writing with the Chair. XII. The costs incurred by each Participant in discharging its Regulatory Responsibility under this Agreement are not reimbursable. However, any of the Participants may agree that one or more will compensate the other(s) for costs incurred. XIII. The Participants shall notify the Common Members of this Agreement by means of a uniform joint notice approved by the Group. Each Participant will notify the Common Members that have been allocated to it that such Participant will serve as DOSR for that Common Member. XIV. This Agreement shall be effective upon approval of the Commission. This Agreement may only be amended in writing duly approved by each Participant. All amendments to this Agreement, excluding changes to Exhibits A, B and C, must be filed with and approved by the Commission. XV. Any Participant may manifest its intention to cancel its participation in this Agreement at any time upon providing written notice to (i) the Group six months prior to the date of such cancellation, or such other period as all the Participants may agree, and (ii) the Commission. Upon receipt of the notice the Group shall allocate, in accordance with the provisions of this Agreement, those Common Members for which the canceling Participant was the DOSR. The canceling Participant shall retain its Regulatory Responsibility and other rights, privileges and duties pursuant to this Agreement until the Group has completed the reallocation as described above, and the Commission has approved the cancellation. XVI. The cancellation of its participation in this Agreement by any Participant shall not terminate this Agreement as to the remaining Participants. This Agreement will only terminate following notice to the Commission, in writing, by the then Participants that they intend to terminate the Agreement and the expiration of the applicable notice period. Such notice shall be given at least six months prior to the intended date of termination, or such other period as all the Participants may agree. Such termination will become effective upon Commission approval. XVII. Participation in the Group shall be strictly limited to the Participants and no other party shall have any right to attend or otherwise participate in the Group except with the unanimous approval of all Participants. Notwithstanding the foregoing, any national securities exchange registered with the SEC under Section 6(a) of the Act or any national securities association registered with the SEC under section 15A of the Act may become a Participant to this Agreement provided that: (i) Such applicant has adopted rules substantially similar to the Common Rules, and received approval thereof from the SEC; (ii) such applicant has provided each Participant with a signed statement whereby the applicant agrees to be bound by the terms of this Agreement to the same effect as though it had originally signed this Agreement and (iii) an amended agreement reflecting the addition of such applicant as a Participant has been filed with and approved by the Commission. XVIII. This Agreement is wholly separate from the multiparty Agreement made pursuant to Rule 17d-2 by and among the NYSE MKT LLC, the BATS Exchange, Inc., the Boston Stock Exchange, Inc., the C2 Options Exchange, the Chicago Board Options Exchange, Inc., the International Securities Exchange, LLC, Financial Industry Regulatory Authority, The NASDAQ Stock Market LLC, Inc., the New York Stock Exchange, LLC, the NYSE Arca, Inc., the Philadelphia Stock Exchange, Inc., Miami International Securities Exchange, LLC and the Topaz Exchange, LLC involving the allocation of regulatory responsibilities with respect to common members for compliance with common rules relating to the conduct by broker-dealers of accounts for listed options or index warrants entered into on [November 19, 2012] June 21, 2013, and as may be amended from time to time. Limitation of Liability No Participant nor the Group nor any of their respective directors, governors, officers, employees or representatives shall be liable to any other Participant in 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 Responsibility as provided hereby or for the failure to provide any such Regulatory Responsibility, except with respect to such liability, loss or damages as shall have been suffered by one or more of the Participants and caused by the willful misconduct of one or more of the other Participants or its respective directors, governors, officers, employees or representatives. No warranties, express or implied, are made by the Participants, individually or as a group, or by the OSG with respect to any Regulatory Responsibility to be performed hereunder. Relief From Responsibility Pursuant to Section 17(d)(1)(A) of the Exchange Act and Rule 17d-2, the Participants join in requesting the Commission, upon its approval of this Agreement or any part thereof, to relieve the Participants that are party to this Agreement and are not the DOSR as to a Common Member of any and all Regulatory Responsibility with respect to the matters allocated to the DOSR. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. In Witness Whereof, the Participants hereto have executed this Agreement as of the date and year first above written. * * * * * Exhibit A Options Surveillance Group 17d-2 Agreement COMMON RULES as of [July 1, 2013] September 1, 2015 [[Page 68359]] Violation I--Expiring Exercise Declarations (EED)--For Listed and FLEX Equity Options [Expiring: The Third Saturday Following the Third Friday of a Month, Quarterly, AND for Listed FLEX Options.] ---------------------------------------------------------------------------------------------------------------- SRO Description of rule Exchange rule No. Frequency of review ---------------------------------------------------------------------------------------------------------------- BATS..................... Exercise of Options Rule 23.1.............. At Expiration. Contracts. BOX...................... Exercise of Options Rule 9000.............. At Expiration. Contracts. C2....................... Exercise of Options Rule 11.1.............. At Expiration. Contracts. CBOE..................... Exercise of Options Rule 11.1.............. At Expiration. Contracts. EDGX..................... Exercise of Options Rule 23.1.............. At Expiration. Contracts. FINRA.................... Exercise of Options Rule 2360(b)(23)....... At Expiration. Contracts. ISE...................... Exercise of Options Rule 1100.............. At Expiration. Contracts. ISE Gemini [Topaz]....... Exercise of Options Rule 1100.............. At Expiration. Contracts. MIAX..................... Exercise of Options Rule 700............... At Expiration. Contracts. Nasdaq................... Exercise of Options Ch. VIII, Sect.1....... At Expiration. Contracts. Nasdaq OMX BX............ Exercise of Options Ch. VII, Sect.1........ At Expiration. Contracts. Nasdaq OMX PHLX.......... Exercise of Equity Options Rule 1042.............. At Expiration. Contracts. NYSE Arca................ Exercise of Options Rule 6.24.............. At Expiration. Contracts. NYSE MKT................. Exercise of Options Rule 980............... At Expiration. Contracts. ---------------------------------------------------------------------------------------------------------------- Violation II--Position Limits (PL)--For Listed Equity Options [Expiring: The Third Saturday Following the Third Friday of a Month, Quarterly] ---------------------------------------------------------------------------------------------------------------- Description of rule (For SRO review as they apply to PL) Exchange rule No. Frequency of review ---------------------------------------------------------------------------------------------------------------- BATS..................... Position Limits............. Rule 18.7.............. Daily. Exemptions from Position.... Rule 18.8.............. As Needed. Liquidation Positions....... Rule 18.11............. As Needed. BOX...................... Position Limits............. Rule 3120.............. Daily. Exemptions from Position Rule 3130.............. As Needed. Limits. Liquidation Positions....... Rule 3160.............. As Needed. C2....................... Position Limits............. Rule 4.11.............. Daily. Liquidation of Positions.... Rule 4.14.............. As Needed. CBOE..................... Position Limits............. Rule 4.11.............. Daily. Liquidation of Positions.... Rule 4.14.............. As Needed. EDGX..................... Position Limits............. Rule 18.7.............. Daily. Exemptions from Position.... Rule 18.8.............. As Needed. Liquidation Positions....... Rule 18.11............. As Needed. FINRA.................... Position Limits............. Rule 2860(b)(3)........ Daily. Liquidation of Positions and Rule 2860(b)(6)........ As Needed. Restrictions on Access. ISE...................... Position Limits............. Rule 412............... Daily. Exemptions from Position Rule 413............... As Needed. Limits. Liquidating Positions....... Rule 416............... As Needed. ISE Gemini [Topaz]....... Position Limits............. Rule 412............... Daily. Exemptions from Position Rule 413............... As Needed. Limits. Liquidating Positions....... Rule 416............... As Needed. MIAX..................... Position Limits............. Rule 307............... Daily. Exemptions from Position Rule 308............... As Needed. Limits. Liquidating Positions....... Rule 311............... As Needed. Nasdaq................... Position Limits............. Ch. III, Sect. 7....... Daily. Exemptions from Position Ch. III, Sect. 8....... As Needed. Limits. Liquidating Positions....... Ch. III, Sect. 11...... As Needed. Nasdaq OMX BX............ Position Limits............. Ch. III, Sect. 7....... Daily. Exemptions from Position Ch. III, Sect. 8....... As Needed. Limits. Liquidating Positions....... Ch. III, Sect. 11...... As Needed. Nasdaq OMX PHLX.......... Position Limits............. Rule 1001.............. Daily. Liquidation of Position..... Rule 1004.............. As Needed. NYSE Arca................ Position Limits............. Rule 6.8............... Daily. Liquidation of Position..... Rule 6.7............... As Needed. NYSE MKT................. Position Limits............. Rule 904............... Daily. Liquidating Positions....... Rule 907............... As Needed. ---------------------------------------------------------------------------------------------------------------- [[Page 68360]] Violation III--Large Options Position Report (LOPR)--For Listed and FLEX Equity Options and ETF Options ---------------------------------------------------------------------------------------------------------------- Description of rule (For SRO review as they apply to Exchange rule No. Frequency of review LOPR) ---------------------------------------------------------------------------------------------------------------- BATS..................... Reports Related to Position Rule 18.10............. Yearly. Limits. BOX...................... Reports Related to Position Rule 3150.............. Yearly. Limits. C2....................... Reports Related to Position Rule 4.13(a)........... Yearly. Limits. Reports Related to Position Rule 4.13(b)........... Yearly. Limits. Reports Related to Position Rule 4.13(d)........... Yearly. Limits. CBOE..................... Reports Related to Position Rule 4.13(a)........... Yearly. Limits. Reports Related to Position Rule 4.13(b)........... Yearly. Limits. Reports Related to Position Rule 4.13(d)........... Yearly. Limits. EDGX..................... Reports Related to Position Rule 18.10............. Yearly. Limits. FINRA.................... Options..................... Rule 2360(b)(5)........ Yearly. ISE...................... Reports Related to Position Rule 415............... Yearly. Limits. ISE Gemini [Topaz]....... Reports Related to Position Rule 415............... Yearly. Limits. MIAX..................... Reports Related to Position Rule 310............... Yearly. Limits. Nasdaq................... Reports Related to Position Ch. III, Sect. 10...... Yearly. Limits. Nasdaq OMX BX............ Reports Related to Position Ch. III, Sect. 10...... Yearly. Limits. Nasdaq OMX PHLX.......... Reporting of Options Rule 1003.............. Yearly. Positions. NYSE Arca................ Reporting of Options Rule 6.6............... Yearly. Positions. NYSE MKT................. Reporting of Options Rule 906............... Yearly. Positions. ---------------------------------------------------------------------------------------------------------------- Violation IV--Options Clearing Corporation (OCC) Adjustment Process ---------------------------------------------------------------------------------------------------------------- Description of rule (as they apply to OCC adjustments/by- SRO laws Article V, Section 1 Exchange rule No. Frequency of review .01(a) and .02)) ---------------------------------------------------------------------------------------------------------------- BATS..................... Adherence to Law............ Rule 18.1.............. Yearly. BOX...................... Adherence to Law............ Rule 3010.............. Yearly. C2....................... Adherence to Law............ Rule 4.2............... Yearly. CBOE..................... Adherence to Law............ Rule 4.2............... Yearly. EDGX..................... Adherence to Law............ Rule 18.1.............. Yearly. FINRA.................... Violation of By-Laws and Rule 2360(b)(21)....... Yearly. Rules of FINRA or The OCC. ISE...................... Adherence to Law............ Rule 401............... Yearly. ISE Gemini [Topaz]....... Adherence to Law............ Rule 401............... Yearly. MIAX..................... Adherence to Law............ Rule 300............... Yearly. Nasdaq................... Adherence to Law............ Ch. III, Sect. 1....... Yearly. Nasdaq OMX BX............ Adherence to Law............ Ch. III, Sect. 1....... Yearly. Nasdaq OMX PHLX.......... Violation of By-Laws And Rule 1050.............. Yearly. Rules Of OCC. NYSE Arca................ Adherence to Law and Good Rule 11.1.............. Yearly. Business Practice. NYSE MKT................. Business Conduct............ Rule 16................ Yearly. ---------------------------------------------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number 4-551 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 4-551. 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 Web site (http://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 Web site 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 MKT, BATS, C2, CBOE, EDGX, Gemini, ISE, FINRA, Arca, NASDAQ, BOX, BX, Phlx, and MIAX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number 4-551 and should be submitted on or before November 25, 2015. [[Page 68361]] V. Discussion The Commission continues to believe that the Plan, as proposed to be amended, is an achievement in cooperation among the SRO participants. The Plan, as amended, will reduce unnecessary regulatory duplication by allocating to the designated SRO the responsibility for certain options-related market surveillance matters that would otherwise be performed by multiple SROs. The Plan promotes efficiency by reducing costs to firms that are members of more than one of the SRO participants. In addition, because the SRO participants coordinate their regulatory functions in accordance with the Plan, the Plan promotes, and will continue to promote, investor protection. Under paragraph (c) of Rule 17d-2, the Commission may, after appropriate notice and comment, declare a plan, or any part of a plan, effective. In this instance, the Commission believes that appropriate notice and comment can take place after the proposed amendment is effective. The primary purpose of the amendment is to add EDGX as a Participant to the Plan and to change the name of Topaz Exchange, LLC to ISE Gemini, LLC. By declaring it effective today, the amended Plan can become effective and be implemented without undue delay.\17\ In addition, the Commission notes that the prior version of this Plan was published for comment, and the Commission did not receive any comments thereon.\18\ Finally, the Commission does not believe that the amendment to the Plan raises any new regulatory issues that the Commission has not previously considered. --------------------------------------------------------------------------- \17\ On August 7, 2015, the Commission approved EDGX's rules governing options trading on the EDGX Options Market. See Securities Exchange Act Release No. 75650, 80 FR 48600 (August 13, 2015). \18\ See supra note 17 (citing to Securities Exchange Act Release No. 70052). --------------------------------------------------------------------------- VI. Conclusion This order gives effect to the amended Plan submitted to the Commission that is contained in File No. 4-551. It is therefore ordered, pursuant to Section 17(d) of the Act, that the Plan, as amended by and between MKT, BATS, C2, CBOE, EDGX, Gemini, ISE, FINRA, Arca, NASDAQ, BOX, BX, Phlx, and MIAX, filed with the Commission pursuant to Rule 17d-2 on October 27, 2015 is hereby approved and declared effective. It is further ordered that those SRO participants that are not the DOSR as to a particular common member are relieved of those regulatory responsibilities allocated to the common member's DOSR under the amended Plan to the extent of such allocation. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(34). --------------------------------------------------------------------------- Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-28067 Filed 11-3-15; 8:45 am] BILLING CODE 8011-01-P
![68354 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices
that Members relying on Rule 11a2–2(T) • Send an email to rule-comments@ For the Commission, by the Division of
for transactions effected through the sec.gov. Please include File Number SR– Trading and Markets, pursuant to delegated
PRISM must comply with this condition BX–2015–032 on the subject line. authority.67
of the Rule and that the Exchange will Robert W. Errett,
enforce this requirement pursuant to its Paper Comments Deputy Secretary.
obligations under Section 6(b)(1) of the • Send paper comments in triplicate [FR Doc. 2015–28024 Filed 11–3–15; 8:45 am]
Act to enforce compliance with federal to Secretary, Securities and Exchange BILLING CODE 8011–01–P
securities laws.65
Commission, 100 F Street NE.,
VI. Accelerated Approval of Proposal, Washington, DC 20549–1090. SECURITIES AND EXCHANGE
as Modified by Amendment No. 2 COMMISSION
All submissions should refer to File
The Commission finds good cause, Number SR–BX–2015–032. This file
number should be included on the [Release No. 34–76310; File No. 4–551]
pursuant to Section 19(b)(2) of the
Exchange Act, to approve the proposal, subject line if email is used. To help the
Program for Allocation of Regulatory
as modified by Amendment Nos. 1 and Commission process and review your Responsibilities Pursuant to Rule
2, prior to the 30th day after publication comments more efficiently, please use 17d–2; Notice of Filing and Order
of Amendment No. 2 in the Federal only one method. The Commission will Approving and Declaring Effective an
Register. In Amendment No. 2, BX post all comments on the Commission’s Amendment to the Plan for the
revised the original proposal, which had Internet Web site (http://www.sec.gov/ Allocation of Regulatory
been previously amended by rules/sro.shtml). Responsibilities Among NYSE MKT
Amendment No. 1 before it was LLC, BATS Exchange, Inc., BOX
Copies of the submission, all
published in the Federal Register, to Options Exchange LLC, C2 Options
subsequent amendments, all written
make the changes discussed in detail Exchange, Incorporated, the Chicago
above. Notably, in Amendment No. 2, statements with respect to the proposed
rule change that are filed with the Board Options Exchange,
BX represents that Price Improving and Incorporated, the EDGX Exchange,
Post-Only Order types will be removed Commission, and all written
communications relating to the Inc., the International Securities
from its Rules before BX implements the Exchange LLC, ISE Gemini, LLC,
PRISM Auction mechanism. BX also proposed rule change between the
Commission and any person, other than Financial Industry Regulatory
made changes to clarify and add detail Authority, Inc., NYSE Arca, Inc., The
to the rule text. The Commission those that may be withheld from the
NASDAQ Stock Market LLC, NASDAQ
believes that Amendment No. 2 does not public in accordance with the
OMX BX, Inc., the NASDAQ OMX PHLX,
raise any novel regulatory issues and provisions of 5 U.S.C. 552, will be
Inc., and Miami International Securities
instead provides additional clarity in available for Web site viewing and
Exchange, LLC Concerning Options-
the rule text, which is consistent with printing in the Commission’s Public Related Market Surveillance
BX’s original proposal, as modified by Reference Room, 100 F Street NE.,
Amendment No. 1, and supports BX’s Washington, DC 20549–1090, on official October 29, 2015.
analysis of how its proposal is business days between the hours of Notice is hereby given that the
consistent with the Act, thus facilitating 10:00 a.m. and 3:00 p.m. Copies of the Securities and Exchange Commission
the Commission’s ability to make the filing also will be available for (‘‘Commission’’) has issued an Order,
findings set forth above to approve the inspection and copying at the principal pursuant to Section 17(d) of the
proposal. Accordingly, the Commission office of the Exchange. All comments Securities Exchange Act of 1934
finds that good cause exists to approve received will be posted without change; (‘‘Act’’),1 approving and declaring
the proposal, as modified by the Commission does not edit personal effective an amendment to the plan for
Amendment No. 2, on an accelerated identifying information from allocating regulatory responsibility
basis. submissions. You should submit only (‘‘Plan’’) filed on October 27, 2015,
VII. Solicitation of Comments information that you wish to make pursuant to Rule 17d–2 of the Act,2 by
available publicly. All submissions NYSE MKT LLC (‘‘MKT’’), BATS
Interested persons are invited to Exchange, Inc., (‘‘BATS’’), the BOX
should refer to File Number SR–BX–
submit written data, views, and Options Exchange LLC (‘‘BOX’’), C2
2015–032 and should be submitted on
arguments concerning the foregoing, Options Exchange, Incorporated (‘‘C2’’),
or before November 25, 2015.
including whether Amendment No. 2 is the Chicago Board Options Exchange,
consistent with the Act. Comments may VIII. Conclusion Incorporated (‘‘CBOE’’), the EDGX
be submitted by any of the following Exchange, Inc. (‘‘EDGX’’) the
methods: It is therefore ordered, pursuant to International Securities Exchange LLC
Section 19(b)(2) of the Act,66 that the (‘‘ISE’’), ISE Gemini, LLC (‘‘Gemini’’),
Electronic Comments proposed rule change (SR–BX–2015– Financial Industry Regulatory
• Use the Commission’s Internet 032), as modified by Amendment Nos. Authority, Inc. (‘‘FINRA’’), NYSE Arca,
comment form (http://www.sec.gov/ 1 and 2, be and hereby is approved on Inc. (‘‘Arca’’), The NASDAQ Stock
rules/sro.shtml); or an accelerated basis, except that BX Market LLC (‘‘Nasdaq’’), NASDAQ OMX
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Chapter VI, Section 9(ii)(B)(2)–(3), BX, Inc. (‘‘BX’’), NASDAQ OMX PHLX,
account during the period covered by the statement. Section 9(ii)(D), and Section 9(vii) are Inc. (‘‘PHLX’’), and Miami International
See 17 CFR 240.11a2–2(T)(d). See also 1978 approved on a pilot basis until July 18, Securities Exchange (‘‘MIAX’’)
Release, supra note 61 (stating ‘‘[t]he contractual 2016. (collectively, ‘‘Participating
and disclosure requirements are designed to assure Organizations’’ or ‘‘parties’’).
that accounts electing to permit transaction-related
compensation do so only after deciding that such
67 17 CFR 200.30–3(a)(12).
arrangements are suitable to their interests’’).
65 See Notice, supra note 3, at 54612. See also 1 15 U.S.C. 78q(d).
Amendment No. 2, supra note 5. 66 15 U.S.C. 78s(b)(2). 2 17 CFR 240.17d–2.
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![Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices 68355
I. Introduction member for compliance with its own Commission approved an amendment to
Section 19(g)(1) of the Act,3 among rules and provisions of the federal the Plan to add BOX as a participant to
other things, requires every self- securities laws governing matters other the Plan.15 On December 5, 2012, the
regulatory organization (‘‘SRO’’) than financial responsibility, including Commission approved an amendment to
registered as either a national securities sales practices and trading activities and the Plan to add MIAX as a participant
exchange or national securities practices. to the Plan.16 On July 23, 2013, the
association to examine for, and enforce To address regulatory duplication in Commission approved an amendment to
compliance by, its members and persons these and other areas, the Commission the Plan to add Topaz Exchange, LLC as
associated with its members with the adopted Rule 17d–2 under the Act.10 a Participant to the Plan.17
Act, the rules and regulations Rule 17d–2 permits SROs to propose The Plan is designed to reduce
thereunder, and the SRO’s own rules, joint plans for the allocation of regulatory duplication for common
unless the SRO is relieved of this regulatory responsibilities with respect members by allocating regulatory
responsibility pursuant to Section to their common members. Under responsibility for certain options-related
17(d) 4 or Section 19(g)(2) 5 of the Act. paragraph (c) of Rule 17d–2, the market surveillance matters among the
Without this relief, the statutory Commission may declare such a plan Participating Organizations. Generally,
obligation of each individual SRO could effective if, after providing for notice under the Plan, a Participating
result in a pattern of multiple and comment, it determines that the Organization will serve as the
examinations of broker-dealers that plan is necessary or appropriate in the Designated Options Surveillance
maintain memberships in more than one public interest and for the protection of Regulator (‘‘DOSR’’) for each common
SRO (‘‘common members’’). Such investors, to foster cooperation and member assigned to it and will assume
regulatory duplication would add coordination among the SROs, to regulatory responsibility with respect to
unnecessary expenses for common remove impediments to, and foster the that common member’s compliance
members and their SROs. development of, a national market with applicable common rules for
Section 17(d)(1) of the Act 6 was system and a national clearance and certain accounts. When an SRO has
intended, in part, to eliminate settlement system, and is in conformity been named as a common member’s
unnecessary multiple examinations and with the factors set forth in Section DOSR, all other SROs to which the
regulatory duplication.7 With respect to 17(d) of the Act. Commission approval common member belongs will be
a common member, Section 17(d)(1) of a plan filed pursuant to Rule 17d–2 relieved of regulatory responsibility for
authorizes the Commission, by rule or relieves an SRO of those regulatory that common member, pursuant to the
order, to relieve an SRO of the responsibilities allocated by the plan to terms of the Plan, with respect to the
responsibility to receive regulatory another SRO. applicable common rules specified in
reports, to examine for and enforce Exhibit A to the Plan.
II. The Plan
compliance with applicable statutes, III. Proposed Amendment to the Plan
rules, and regulations, or to perform On December 11, 2007, the
other specified regulatory functions. Commission declared effective the On October 27, 2015, the parties
To implement Section 17(d)(1), the Participating Organizations’ Plan for submitted a proposed amendment to the
Commission adopted two rules: Rule allocating regulatory responsibilities Plan. The primary purpose of the
17d–1 and Rule 17d–2 under the Act.8 pursuant to Rule 17d–2.11 On April 11, amendment is to add EDGX as a
Rule 17d–1 authorizes the Commission 2008, the Commission approved an Participant to the Plan and to change the
to name a single SRO as the designated amendment to the Plan to include name of Topaz Exchange, LLC to ISE
examining authority (‘‘DEA’’) to NASDAQ as a participant.12 On October Gemini, LLC. The text of the proposed
examine common members for 9, 2008, the Commission approved an amended 17d–2 plan is as follows
compliance with the financial amendment to the Plan to clarify that (additions are italicized; deletions are
responsibility requirements imposed by the term Regulatory Responsibility for [bracketed]):
the Act, or by Commission or SRO options position limits includes the * * * * *
rules.9 When an SRO has been named as examination responsibilities for the AGREEMENT BY AND AMONG NYSE
a common member’s DEA, all other delta hedging exemption.13 On February MKT LLC, BATS EXCHANGE, INC.,
SROs to which the common member 25, 2010, the Commission approved an EDGX EXCHANGE INC., BOX OPTIONS
belongs are relieved of the responsibility amendment to the Plan to add BATS EXCHANGE LLC, NASDAQ OMX BX,
to examine the firm for compliance with and C2 as SRO participants and to INC., C2 OPTIONS EXCHANGE,
the applicable financial responsibility reflect the name changes of the INCORPORATED, THE CHICAGO
rules. On its face, Rule 17d–1 deals only American Stock Exchange LLC to the BOARD OPTIONS EXCHANGE,
with an SRO’s obligations to enforce NYSE Amex LLC, and the Boston Stock INCORPORATED, THE
member compliance with financial Exchange, Inc. to the NASDAQ OMX INTERNATIONAL SECURITIES
responsibility requirements. Rule 17d–1 BX, Inc.14 On May 11, 2012, the EXCHANGE LLC, ISE GEMINI, LLC,
does not relieve an SRO from its FINANCIAL INDUSTRY REGULATORY
obligation to examine a common 10 See Securities Exchange Act Release No. 12935
AUTHORITY, INC., NYSE ARCA, INC.,
(October 28, 1976), 41 FR 49091 (November 8, THE NASDAQ STOCK MARKET LLC,
1976).
3 15 U.S.C. 78s(g)(1). 11 See Securities Exchange Act Release No. 56941
NASDAQ OMX PHLX, INC., AND
4 15 U.S.C. 78q(d). (December 11, 2007), 72 FR 71723 (December 18, MIAMI INTERNATIONAL SECURITIES
asabaliauskas on DSK5VPTVN1PROD with NOTICES
5 15 U.S.C. 78s(g)(2).
2007) (File No. 4–551).
6 15 U.S.C. 78q(d)(1). 12 See Securities Exchange Act Release No. 57649 15 See Securities Exchange Act Release No. 66975
7 See Securities Act Amendments of 1975, Report (April 11, 2008), 73 FR 20976 (April 17, 2008) (File (May 11, 2012), 77 FR 29712 (May 18, 2010) (File
of the Senate Committee on Banking, Housing, and No. 4–551). No. 4–551).
Urban Affairs to Accompany S. 249, S. Rep. No. 94– 13 See Securities Exchange Act Release No. 58765 16 See Securities Exchange Act Release No. 68362
75, 94th Cong., 1st Session 32 (1975). (October 9, 2008), 73 FR 62344 (October 20, 2008) (December 5, 2012), 77 FR 73719 (December 11,
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2, (File No. 4–551). 2012) (File No. 4–551).
respectively. 14 See Securities Exchange Act Release No. 61588 17 See Securities Exchange Act Release No. 70052
9 See Securities Exchange Act Release No. 12352 (February 25, 2010), 75 FR 9970 (March 4, 2010) (July 26, 2013), 78 FR 46665 (August 1, 2013) (File
(April 20, 1976), 41 FR 18808 (May 7, 1976). (File No. 4–551). No. 4–551).
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![68356 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices
EXCHANGE, LLC [AND TOPAZ Exchange Commission (the ‘‘SEC’’ or those included in the definition of
EXCHANGE, LLC] PURSUANT TO ‘‘Commission’’) pursuant to Rule 17d–2. Regulatory Responsibility;
RULE 17d–2 UNDER THE SECURITIES Now, therefore, in consideration of (b) any aspects of the rules of a
EXCHANGE ACT OF 1934 the mutual covenants contained in this Participant that are not substantially
This agreement (this ‘‘Agreement’’), Agreement, the Participants agree as similar to the Common Rules or that are
by and among NYSE MKT LLC follows: allocated for a separate surveillance
(‘‘MKT’’), BATS Exchange, Inc., I. Except as otherwise provided in this purpose under any other agreement
(‘‘BATS’’), the EDGX Exchange, Inc Agreement, each Participant shall made pursuant to Rule 17d–2. Any such
(‘‘EDGX’’), the C2 Options Exchange, assume Regulatory Responsibility (as aspects of a Common Rule will be noted
Incorporated (‘‘C2’’), the Chicago Board defined below) for the Common as excluded on Exhibit A.
Options Exchange, Incorporated Members that are allocated or assigned With respect to options position
(‘‘CBOE’’), the International Securities to such Participant in accordance with limits, the term Regulatory
Exchange LLC (‘‘ISE’’), Financial the terms of this Agreement and shall be Responsibility shall include
Industry Regulatory Authority, Inc. relieved of its Regulatory Responsibility examination responsibilities for the
(‘‘FINRA’’), NYSE Arca, Inc. (‘‘Arca’’), as to the remaining Common Members. delta hedging exemption. Specifically,
The NASDAQ Stock Market LLC For purposes of this Agreement, a the Participants intend that FINRA will
(‘‘Nasdaq’’), BOX Options Exchange LLC Participant shall be considered to be the conduct examinations for delta hedging
(‘‘BOX’’), NASDAQ OMX BX, Inc. Designated Options Surveillance for all Common Members that are
(‘‘BX’’), NASDAQ OMX PHLX, Inc. Regulator (‘‘DOSR’’) for each Common members of FINRA notwithstanding the
(‘‘PHLX’’), Miami International Member that is allocated to it in fact that FINRA’s position limit rule is,
Securities Exchange, LLC (‘‘MIAX’’) and accordance with Section VII. in some cases, limited to only firms that
[Topaz Exchange] ISE Gemini, LLC II. As used in this Agreement, the are not members of an options exchange
(‘‘[Topaz] Gemini’’) is made this 10th term ‘‘Regulatory Responsibility’’ shall (i.e., access members). In such cases,
day of October 2007, and as amended mean surveillance, investigation and FINRA’s examinations for delta hedging
enforcement responsibilities relating to options position limit violations will be
the 31st day of March 2008, the 1st day
compliance by the Common Members for the identical or substantively similar
of October 2008, the 3rd day of February
with such Options rules of the position limit rule(s) of the other
2010, the 25th day of April 2012, and
Participants as the Participants shall Participant(s). Examinations for delta
the 19th day of November 2012, and the
determine are substantially similar and hedging for Common Members that are
30th day of May 2013, and the 16th day
shall approve from time to time, insofar non-FINRA members will be conducted
of October 2015 pursuant to Section
as such rules relate to market by the same Participant conducting
17(d) of the Securities Exchange Act of
surveillance (collectively, the ‘‘Common position limit surveillance. The
1934, as amended (the ‘‘Exchange Act’’),
Rules’’). For the purposes of this allocation of Common Members to
and Rule 17d–2 thereunder (‘‘Rule 17d–
Agreement the list of Common Rules is DOSRs for surveillance of compliance
2’’), which allows for a joint plan among attached as Exhibit A hereto, which may with options position limits and other
self-regulatory organizations (‘‘SROs’’) only be amended upon unanimous agreed to Common Rules is provided in
to allocate regulatory obligations with written agreement by the Participants. Exhibit B. The allocation of Common
respect to brokers or dealers that are The DOSR assigned to each Common Members to DOSRs for examinations of
members of two or more of the parties Member shall assume Regulatory the delta hedging exemption under the
to this Agreement (‘‘Common Responsibility with regard to that options position limits rules is provided
Members’’). MKT, BATS, C2, CBOE, Common Member’s compliance with the in Exhibit C.
EDGX, ISE Gemini, ISE, FINRA, Arca, applicable Common Rules for certain III. Each year within 30 days of the
Nasdaq, BOX, BX, PHLX, and MIAX accounts.2 A DOSR may perform its anniversary date of the commencement
[and Topaz] are collectively referred to Regulatory Responsibility or enter an of operation of this Agreement, or more
herein as the ‘‘Participants’’ and agreement to transfer or assign such frequently if required by changes in the
individually, each a ‘‘Participant.’’ This responsibilities to a national securities rules of a Participant, each Participant
Agreement shall be administered by a exchange registered with the SEC under shall submit to the other Participants,
committee known as the Options Section 6(a) of the Exchange Act or a through the Chair of the OSG, an
Surveillance Group (the ‘‘OSG’’ or national securities association registered updated list of Common Rules for
‘‘Group’’), as described in Section V with the SEC under Section 15A of the review. This updated list may add
hereof. Unless defined in this Exchange Act. A DOSR may not transfer Common Rules to Exhibit A, shall delete
Agreement or the context otherwise or assign its Regulatory Responsibility from Exhibit A rules of that Participant
requires, the terms used herein shall to an association registered for the that are no longer identical or
have the meanings assigned thereto by limited purpose of regulating the substantially similar to the Common
the Exchange Act and the rules and activities of members who are registered Rules, and shall confirm that the
regulations thereunder. as brokers or dealers in security futures remaining rules of the Participant
Whereas, the Participants desire to included on Exhibit A continue to be
products.
eliminate regulatory duplication with The term ‘‘Regulatory Responsibility’’ identically or substantially similar to
respect to SRO market surveillance of does not include, and each Participant the Common Rules. Within 30 days
Common Member 1 activities with shall retain full responsibility with from the date that each Participant has
regard to certain common rules relating received revisions to Exhibit A from the
asabaliauskas on DSK5VPTVN1PROD with NOTICES
respect to:
to listed options (‘‘Options’’); and (a) Surveillance, investigative and Chair of the OSG, each Participant shall
Whereas, for this purpose, the enforcement responsibilities other than confirm in writing to the Chair of the
Participants desire to execute and file OSG whether that Participant’s rules
this Agreement with the Securities and 2 Certain accounts shall include customer (‘‘C’’ as
listed in Exhibit A are Common Rules.
classified by the Options Clearing Corporation IV. Apparent violation of another
1 In the case of the BX and BOX, members are (‘‘OCC’’)) and firm (‘‘F’’ as classified by OCC)
those persons who are Options Participants (as accounts, as well as other accounts, such as market
Participant’s rules discovered by a
defined in the BOX Options Exchange LLC Rules maker accounts as the Participants shall, from time DOSR, but which rules are not within
and NASDAQ OMX BX, Inc. Rules). to time, identify as appropriate to review. the scope of the discovering DOSR’s
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![68358 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices
for the previous quarter and any period six months prior to the date of such NASDAQ Stock Market LLC, Inc., the
prior thereto that has not previously cancellation, or such other period as all New York Stock Exchange, LLC, the
been reported to the Group. In the event the Participants may agree, and (ii) the NYSE Arca, Inc., the Philadelphia Stock
a DOSR believes it will not be able to Commission. Upon receipt of the notice Exchange, Inc., Miami International
complete its Regulatory Responsibility the Group shall allocate, in accordance Securities Exchange, LLC and the Topaz
for its allocated Common Members, it with the provisions of this Agreement, Exchange, LLC involving the allocation
will so advise the Group in writing those Common Members for which the of regulatory responsibilities with
promptly. The Group will undertake to canceling Participant was the DOSR. respect to common members for
remedy this situation by reallocating the The canceling Participant shall retain its compliance with common rules relating
subject Common Members among the Regulatory Responsibility and other to the conduct by broker-dealers of
remaining Participants. In such rights, privileges and duties pursuant to accounts for listed options or index
instance, the Group may determine to this Agreement until the Group has warrants entered into on [November 19,
impose a regulatory fee for services completed the reallocation as described 2012] June 21, 2013, and as may be
provided to the DOSR that was unable above, and the Commission has amended from time to time.
to fulfill its Regulatory Responsibility. approved the cancellation.
IX. Each Participant will, upon XVI. The cancellation of its Limitation of Liability
request, promptly furnish a copy of the participation in this Agreement by any No Participant nor the Group nor any
report or applicable portions thereof Participant shall not terminate this of their respective directors, governors,
relating to any investigation made Agreement as to the remaining officers, employees or representatives
pursuant to the provisions of this Participants. This Agreement will only shall be liable to any other Participant
Agreement to each other Participant of terminate following notice to the in this Agreement for any liability, loss
which the Common Member under Commission, in writing, by the then or damage resulting from or claimed to
investigation is a member. Participants that they intend to have resulted from any delays,
X. Each Participant will routinely terminate the Agreement and the inaccuracies, errors or omissions with
populate a common database, to be expiration of the applicable notice respect to the provision of Regulatory
accessed by the Group relating to any period. Such notice shall be given at Responsibility as provided hereby or for
formal regulatory action taken during least six months prior to the intended the failure to provide any such
the course of a Proceeding with respect date of termination, or such other period Regulatory Responsibility, except with
to the Common Rules concerning a as all the Participants may agree. Such respect to such liability, loss or damages
Common Member. termination will become effective upon as shall have been suffered by one or
XI. Any written notice required or Commission approval. more of the Participants and caused by
permitted to be given under this XVII. Participation in the Group shall the willful misconduct of one or more
Agreement shall be deemed given if sent be strictly limited to the Participants of the other Participants or its respective
by certified mail, return receipt and no other party shall have any right directors, governors, officers, employees
requested, to any Participant to the to attend or otherwise participate in the or representatives. No warranties,
attention of that Participant’s Group except with the unanimous express or implied, are made by the
Representative, to the Participant’s approval of all Participants. Participants, individually or as a group,
principal place of business or by email Notwithstanding the foregoing, any or by the OSG with respect to any
at such address as the Representative national securities exchange registered Regulatory Responsibility to be
shall have filed in writing with the with the SEC under Section 6(a) of the performed hereunder.
Chair. Act or any national securities
XII. The costs incurred by each association registered with the SEC Relief From Responsibility
Participant in discharging its Regulatory under section 15A of the Act may Pursuant to Section 17(d)(1)(A) of the
Responsibility under this Agreement are become a Participant to this Agreement Exchange Act and Rule 17d–2, the
not reimbursable. However, any of the provided that: (i) Such applicant has Participants join in requesting the
Participants may agree that one or more adopted rules substantially similar to Commission, upon its approval of this
will compensate the other(s) for costs the Common Rules, and received Agreement or any part thereof, to relieve
incurred. approval thereof from the SEC; (ii) such the Participants that are party to this
XIII. The Participants shall notify the applicant has provided each Participant Agreement and are not the DOSR as to
Common Members of this Agreement by with a signed statement whereby the a Common Member of any and all
means of a uniform joint notice applicant agrees to be bound by the Regulatory Responsibility with respect
approved by the Group. Each terms of this Agreement to the same to the matters allocated to the DOSR.
Participant will notify the Common effect as though it had originally signed
This Agreement may be executed in
Members that have been allocated to it this Agreement and (iii) an amended
any number of counterparts, each of
that such Participant will serve as DOSR agreement reflecting the addition of
which shall be deemed to be an original,
for that Common Member. such applicant as a Participant has been
but all such counterparts shall together
XIV. This Agreement shall be effective filed with and approved by the
constitute one and the same Agreement.
upon approval of the Commission. This Commission.
Agreement may only be amended in XVIII. This Agreement is wholly In Witness Whereof, the Participants
writing duly approved by each separate from the multiparty Agreement hereto have executed this Agreement as
of the date and year first above written.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Participant. All amendments to this made pursuant to Rule 17d–2 by and
Agreement, excluding changes to among the NYSE MKT LLC, the BATS * * * * *
Exhibits A, B and C, must be filed with Exchange, Inc., the Boston Stock Exhibit A
and approved by the Commission. Exchange, Inc., the C2 Options
XV. Any Participant may manifest its Exchange, the Chicago Board Options Options Surveillance Group 17d–2
intention to cancel its participation in Exchange, Inc., the International Agreement
this Agreement at any time upon Securities Exchange, LLC, Financial COMMON RULES as of [July 1, 2013]
providing written notice to (i) the Group Industry Regulatory Authority, The September 1, 2015
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![Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices 68359
VIOLATION I—EXPIRING EXERCISE DECLARATIONS (EED)—FOR LISTED AND FLEX EQUITY OPTIONS [EXPIRING: THE
THIRD SATURDAY FOLLOWING THE THIRD FRIDAY OF A MONTH, QUARTERLY, AND FOR LISTED FLEX OPTIONS.]
Frequency of re-
SRO Description of rule Exchange rule No. view
BATS ............ Exercise of Options Contracts ................................................................ Rule 23.1 ........................................ At Expiration.
BOX .............. Exercise of Options Contracts ................................................................ Rule 9000 ....................................... At Expiration.
C2 ................. Exercise of Options Contracts ................................................................ Rule 11.1 ........................................ At Expiration.
CBOE ........... Exercise of Options Contracts ................................................................ Rule 11.1 ........................................ At Expiration.
EDGX ........... Exercise of Options Contracts ................................................................ Rule 23.1 ........................................ At Expiration.
FINRA ........... Exercise of Options Contracts ................................................................ Rule 2360(b)(23) ............................ At Expiration.
ISE ................ Exercise of Options Contracts ................................................................ Rule 1100 ....................................... At Expiration.
ISE Gemini Exercise of Options Contracts ................................................................ Rule 1100 ....................................... At Expiration.
[Topaz].
MIAX ............. Exercise of Options Contracts ................................................................ Rule 700 ......................................... At Expiration.
Nasdaq ......... Exercise of Options Contracts ................................................................ Ch. VIII, Sect.1 ............................... At Expiration.
Nasdaq OMX Exercise of Options Contracts ................................................................ Ch. VII, Sect.1 ................................ At Expiration.
BX.
Nasdaq OMX Exercise of Equity Options Contracts .................................................... Rule 1042 ....................................... At Expiration.
PHLX.
NYSE Arca ... Exercise of Options Contracts ................................................................ Rule 6.24 ........................................ At Expiration.
NYSE MKT ... Exercise of Options Contracts ................................................................ Rule 980 ......................................... At Expiration.
VIOLATION II—POSITION LIMITS (PL)—FOR LISTED EQUITY OPTIONS [EXPIRING: THE THIRD SATURDAY FOLLOWING THE
THIRD FRIDAY OF A MONTH, QUARTERLY]
Frequency of re-
SRO Description of rule (For review as they apply to PL) Exchange rule No. view
BATS ............ Position Limits ........................................................................................ Rule 18.7 ........................................ Daily.
Exemptions from Position ....................................................................... Rule 18.8 ........................................ As Needed.
Liquidation Positions ............................................................................... Rule 18.11 ...................................... As Needed.
BOX .............. Position Limits ........................................................................................ Rule 3120 ....................................... Daily.
Exemptions from Position Limits ............................................................ Rule 3130 ....................................... As Needed.
Liquidation Positions ............................................................................... Rule 3160 ....................................... As Needed.
C2 ................. Position Limits ........................................................................................ Rule 4.11 ........................................ Daily.
Liquidation of Positions .......................................................................... Rule 4.14 ........................................ As Needed.
CBOE ........... Position Limits ........................................................................................ Rule 4.11 ........................................ Daily.
Liquidation of Positions .......................................................................... Rule 4.14 ........................................ As Needed.
EDGX ........... Position Limits ........................................................................................ Rule 18.7 ........................................ Daily.
Exemptions from Position ....................................................................... Rule 18.8 ........................................ As Needed.
Liquidation Positions ............................................................................... Rule 18.11 ...................................... As Needed.
FINRA ........... Position Limits ........................................................................................ Rule 2860(b)(3) .............................. Daily.
Liquidation of Positions and Restrictions on Access ............................. Rule 2860(b)(6) .............................. As Needed.
ISE ................ Position Limits ........................................................................................ Rule 412 ......................................... Daily.
Exemptions from Position Limits ............................................................ Rule 413 ......................................... As Needed.
Liquidating Positions ............................................................................... Rule 416 ......................................... As Needed.
ISE Gemini Position Limits ........................................................................................ Rule 412 ......................................... Daily.
[Topaz].
Exemptions from Position Limits ............................................................ Rule 413 ......................................... As Needed.
Liquidating Positions ............................................................................... Rule 416 ......................................... As Needed.
MIAX ............. Position Limits ........................................................................................ Rule 307 ......................................... Daily.
Exemptions from Position Limits ............................................................ Rule 308 ......................................... As Needed.
Liquidating Positions ............................................................................... Rule 311 ......................................... As Needed.
Nasdaq ......... Position Limits ........................................................................................ Ch. III, Sect. 7 ................................ Daily.
Exemptions from Position Limits ............................................................ Ch. III, Sect. 8 ................................ As Needed.
Liquidating Positions ............................................................................... Ch. III, Sect. 11 .............................. As Needed.
Nasdaq OMX Position Limits ........................................................................................ Ch. III, Sect. 7 ................................ Daily.
BX.
Exemptions from Position Limits ............................................................ Ch. III, Sect. 8 ................................ As Needed.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Liquidating Positions ............................................................................... Ch. III, Sect. 11 .............................. As Needed.
Nasdaq OMX Position Limits ........................................................................................ Rule 1001 ....................................... Daily.
PHLX.
Liquidation of Position ............................................................................ Rule 1004 ....................................... As Needed.
NYSE Arca ... Position Limits ........................................................................................ Rule 6.8 .......................................... Daily.
Liquidation of Position ............................................................................ Rule 6.7 .......................................... As Needed.
NYSE MKT ... Position Limits ........................................................................................ Rule 904 ......................................... Daily.
Liquidating Positions ............................................................................... Rule 907 ......................................... As Needed.
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![68360 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices
VIOLATION III—LARGE OPTIONS POSITION REPORT (LOPR)—FOR LISTED and FLEX EQUITY OPTIONS AND ETF OPTIONS
Description of rule Frequency of re-
SRO Exchange rule No.
(For review as they apply to LOPR) view
BATS ............ Reports Related to Position Limits ......................................................... Rule 18.10 ...................................... Yearly.
BOX .............. Reports Related to Position Limits ......................................................... Rule 3150 ....................................... Yearly.
C2 ................. Reports Related to Position Limits ......................................................... Rule 4.13(a) ................................... Yearly.
Reports Related to Position Limits ......................................................... Rule 4.13(b) ................................... Yearly.
Reports Related to Position Limits ......................................................... Rule 4.13(d) ................................... Yearly.
CBOE ........... Reports Related to Position Limits ......................................................... Rule 4.13(a) ................................... Yearly.
Reports Related to Position Limits ......................................................... Rule 4.13(b) ................................... Yearly.
Reports Related to Position Limits ......................................................... Rule 4.13(d) ................................... Yearly.
EDGX ........... Reports Related to Position Limits ......................................................... Rule 18.10 ...................................... Yearly.
FINRA ........... Options ................................................................................................... Rule 2360(b)(5) .............................. Yearly.
ISE ................ Reports Related to Position Limits ......................................................... Rule 415 ......................................... Yearly.
ISE Gemini Reports Related to Position Limits ......................................................... Rule 415 ......................................... Yearly.
[Topaz].
MIAX ............. Reports Related to Position Limits ......................................................... Rule 310 ......................................... Yearly.
Nasdaq ......... Reports Related to Position Limits ......................................................... Ch. III, Sect. 10 .............................. Yearly.
Nasdaq OMX Reports Related to Position Limits ......................................................... Ch. III, Sect. 10 .............................. Yearly.
BX.
Nasdaq OMX Reporting of Options Positions ............................................................... Rule 1003 ....................................... Yearly.
PHLX.
NYSE Arca ... Reporting of Options Positions ............................................................... Rule 6.6 .......................................... Yearly.
NYSE MKT ... Reporting of Options Positions ............................................................... Rule 906 ......................................... Yearly.
VIOLATION IV—OPTIONS CLEARING CORPORATION (OCC) ADJUSTMENT PROCESS
Description of rule (as they apply to OCC adjustments/by-laws Article Frequency of
SRO Exchange rule No.
V, Section 1 .01(a) and .02)) review
BATS ............ Adherence to Law .................................................................................. Rule 18.1 ........................................ Yearly.
BOX .............. Adherence to Law .................................................................................. Rule 3010 ....................................... Yearly.
C2 ................. Adherence to Law .................................................................................. Rule 4.2 .......................................... Yearly.
CBOE ........... Adherence to Law .................................................................................. Rule 4.2 .......................................... Yearly.
EDGX ........... Adherence to Law .................................................................................. Rule 18.1 ........................................ Yearly.
FINRA ........... Violation of By-Laws and Rules of FINRA or The OCC ........................ Rule 2360(b)(21) ............................ Yearly.
ISE ................ Adherence to Law .................................................................................. Rule 401 ......................................... Yearly.
ISE Gemini Adherence to Law .................................................................................. Rule 401 ......................................... Yearly.
[Topaz].
MIAX ............. Adherence to Law .................................................................................. Rule 300 ......................................... Yearly.
Nasdaq ......... Adherence to Law .................................................................................. Ch. III, Sect. 1 ................................ Yearly.
Nasdaq OMX Adherence to Law .................................................................................. Ch. III, Sect. 1 ................................ Yearly.
BX.
Nasdaq OMX Violation of By-Laws And Rules Of OCC ............................................... Rule 1050 ....................................... Yearly.
PHLX.
NYSE Arca ... Adherence to Law and Good Business Practice ................................... Rule 11.1 ........................................ Yearly.
NYSE MKT ... Business Conduct ................................................................................... Rule 16 ........................................... Yearly.
IV. Solicitation of Comments All submissions should refer to File Reference Room, 100 F Street NE.,
Number 4–551. This file number should Washington, DC 20549, on official
Interested persons are invited to be included on the subject line if email business days between the hours of
submit written data, views, and is used. To help the Commission 10:00 a.m. and 3:00 p.m. Copies of the
arguments concerning the foregoing. process and review your comments
Comments may be submitted by any of plan also will be available for inspection
more efficiently, please use only one and copying at the principal offices of
the following methods: method. The Commission will post all MKT, BATS, C2, CBOE, EDGX, Gemini,
Electronic Comments comments on the Commission’s Internet ISE, FINRA, Arca, NASDAQ, BOX, BX,
Web site (http://www.sec.gov/rules/ Phlx, and MIAX. All comments received
• Use the Commission’s Internet sro.shtml). Copies of the submission, all
comment form (http://www.sec.gov/ will be posted without change; the
subsequent amendments, all written Commission does not edit personal
rules/sro.shtml); or statements with respect to the proposed
• Send an email to rule-comments@ identifying information from
plan that are filed with the Commission,
asabaliauskas on DSK5VPTVN1PROD with NOTICES
sec.gov. Please include File Number 4– submissions. You should submit only
and all written communications relating
551 on the subject line. to the proposed plan between the information that you wish to make
Commission and any person, other than available publicly. All submissions
Paper Comments should refer to File Number 4–551 and
those that may be withheld from the
• Send paper comments in triplicate public in accordance with the should be submitted on or before
to Secretary, Securities and Exchange provisions of 5 U.S.C. 552, will be November 25, 2015.
Commission, 100 F Street NE., available for Web site viewing and
Washington, DC 20549–1090. printing in the Commission’s Public
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![Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices 68361
V. Discussion responsibilities allocated to the common NASDAQ OMX PHLX, Inc. (‘‘PHLX’’),
The Commission continues to believe member’s DOSR under the amended and Miami International Securities
that the Plan, as proposed to be Plan to the extent of such allocation. Exchange (‘‘MIAX’’) (collectively,
amended, is an achievement in For the Commission, by the Division of ‘‘Participating Organizations’’ or
cooperation among the SRO Trading and Markets, pursuant to delegated ‘‘parties’’).
participants. The Plan, as amended, will authority.19
I. Introduction
reduce unnecessary regulatory Jill M. Peterson,
Assistant Secretary. Section 19(g)(1) of the Act,3 among
duplication by allocating to the
other things, requires every self-
designated SRO the responsibility for [FR Doc. 2015–28067 Filed 11–3–15; 8:45 am]
regulatory organization (‘‘SRO’’)
certain options-related market BILLING CODE 8011–01–P
registered as either a national securities
surveillance matters that would
exchange or national securities
otherwise be performed by multiple
SECURITIES AND EXCHANGE association to examine for, and enforce
SROs. The Plan promotes efficiency by
COMMISSION compliance by, its members and persons
reducing costs to firms that are members
associated with its members with the
of more than one of the SRO [Release No. 34–76309; File No. S7–966) Act, the rules and regulations
participants. In addition, because the
thereunder, and the SRO’s own rules,
SRO participants coordinate their Program for Allocation of Regulatory
unless the SRO is relieved of this
regulatory functions in accordance with Responsibilities Pursuant to Rule
responsibility pursuant to Section
the Plan, the Plan promotes, and will 17d–2; Notice of Filing and Order
17(d) 4 or Section 19(g)(2) 5 of the Act.
continue to promote, investor Approving and Declaring Effective an
Without this relief, the statutory
protection. Under paragraph (c) of Rule Amendment to the Plan for the
Allocation of Regulatory obligation of each individual SRO could
17d–2, the Commission may, after
Responsibilities Among NYSE MKT result in a pattern of multiple
appropriate notice and comment,
LLC, BATS Exchange, Inc., BOX examinations of broker-dealers that
declare a plan, or any part of a plan,
Options Exchange LLC, C2 Options maintain memberships in more than one
effective. In this instance, the
Exchange, Incorporated, the Chicago SRO (‘‘common members’’). Such
Commission believes that appropriate
Board Options Exchange, regulatory duplication would add
notice and comment can take place after
Incorporated, the EDGX Exchange, unnecessary expenses for common
the proposed amendment is effective.
Inc., the International Securities members and their SROs.
The primary purpose of the amendment
Exchange LLC, ISE Gemini, LLC, Section 17(d)(1) of the Act 6 was
is to add EDGX as a Participant to the
Financial Industry Regulatory intended, in part, to eliminate
Plan and to change the name of Topaz
Authority, Inc., the New York Stock unnecessary multiple examinations and
Exchange, LLC to ISE Gemini, LLC. By
Exchange LLC, NYSE Arca, Inc., The regulatory duplication.7 With respect to
declaring it effective today, the
NASDAQ Stock Market LLC, NASDAQ a common member, Section 17(d)(1)
amended Plan can become effective and
OMX BX, Inc., the NASDAQ OMX PHLX, authorizes the Commission, by rule or
be implemented without undue delay.17
Inc., and Miami International Securities order, to relieve an SRO of the
In addition, the Commission notes that
Exchange, LLC Concerning Options- responsibility to receive regulatory
the prior version of this Plan was
Related Sales Practice Matters reports, to examine for and enforce
published for comment, and the
compliance with applicable statutes,
Commission did not receive any October 29, 2015. rules, and regulations, or to perform
comments thereon.18 Finally, the Notice is hereby given that the other specified regulatory functions.
Commission does not believe that the Securities and Exchange Commission To implement Section 17(d)(1), the
amendment to the Plan raises any new (‘‘Commission’’) has issued an Order, Commission adopted two rules: Rule
regulatory issues that the Commission pursuant to Section 17(d) of the 17d–1 and Rule 17d–2 under the Act.8
has not previously considered. Securities Exchange Act of 1934 Rule 17d–1 authorizes the Commission
VI. Conclusion (‘‘Act’’),1 approving and declaring to name a single SRO as the designated
effective an amendment to the plan for examining authority (‘‘DEA’’) to
This order gives effect to the amended
allocating regulatory responsibility examine common members for
Plan submitted to the Commission that
(‘‘Plan’’) filed on October 9, 2015, compliance with the financial
is contained in File No. 4–551.
pursuant to Rule 17d–2 of the Act,2 by responsibility requirements imposed by
It is therefore ordered, pursuant to
NYSE MKT LLC (‘‘MKT’’), BATS the Act, or by Commission or SRO
Section 17(d) of the Act, that the Plan,
Exchange, Inc., (‘‘BATS’’), the BOX rules.9 When an SRO has been named as
as amended by and between MKT,
Options Exchange LLC (‘‘BOX’’), C2 a common member’s DEA, all other
BATS, C2, CBOE, EDGX, Gemini, ISE,
Options Exchange, Incorporated (‘‘C2’’), SROs to which the common member
FINRA, Arca, NASDAQ, BOX, BX, Phlx,
the Chicago Board Options Exchange, belongs are relieved of the responsibility
and MIAX, filed with the Commission Incorporated (‘‘CBOE’’), the EDGX
pursuant to Rule 17d–2 on October 27, to examine the firm for compliance with
Exchange, Inc. (‘‘EDGX’’) the the applicable financial responsibility
2015 is hereby approved and declared International Securities Exchange LLC
effective. (‘‘ISE’’), ISE Gemini, LLC (‘‘Gemini’’), 3 15 U.S.C. 78s(g)(1).
It is further ordered that those SRO Financial Industry Regulatory 4 15 U.S.C. 78q(d).
participants that are not the DOSR as to
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Authority, Inc. (‘‘FINRA’’), the New 5 15 U.S.C. 78s(g)(2).
a particular common member are York Stock Exchange LLC (‘‘NYSE’’), 6 15 U.S.C. 78q(d)(1).
relieved of those regulatory NYSE Arca, Inc. (‘‘Arca’’), The 7 See Securities Act Amendments of 1975, Report
NASDAQ Stock Market LLC (‘‘Nasdaq’’), of the Senate Committee on Banking, Housing, and
17 On August 7, 2015, the Commission approved Urban Affairs to Accompany S. 249, S. Rep. No. 94–
EDGX’s rules governing options trading on the
NASDAQ OMX BX, Inc. (‘‘BX’’), 75, 94th Cong., 1st Session 32 (1975).
EDGX Options Market. See Securities Exchange Act 8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
19 17 CFR 200.30–3(a)(34).
Release No. 75650, 80 FR 48600 (August 13, 2015). respectively.
18 See supra note 17 (citing to Securities 1 15 U.S.C. 78q(d). 9 See Securities Exchange Act Release No. 12352
Exchange Act Release No. 70052). 2 17 CFR 240.17d–2. (April 20, 1976), 41 FR 18808 (May 7, 1976).
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Document Created: 2018-03-01 11:27:58
Document Modified: 2018-03-01 11:27:58
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 68354 |
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