81 FR 8775 - 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, ISE Mercury, LLC Financial Industry Regulatory Authority, Inc., the New York Stock Exchange LLC, 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 Sales Practice Matters
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 34 (February 22, 2016)
Federal Register Volume 81, Issue 34 (February 22, 2016)
| Page Range | 8775-8781 | |
| FR Document | 2016-03533 |
[Federal Register Volume 81, Number 34 (Monday, February 22, 2016)] [Notices] [Pages 8775-8781] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-03533] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77148; File No. S7-966] 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, ISE Mercury, LLC Financial Industry Regulatory Authority, Inc., the New York Stock Exchange LLC, 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 Sales Practice Matters February 16, 2016. 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 February 3, 2016, 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''), ISE Mercury, LLC (``ISE Mercury'') Financial Industry Regulatory Authority, Inc. (``FINRA''), the New York Stock Exchange LLC (``NYSE''), 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. --------------------------------------------------------------------------- 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 [[Page 8776]] 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 September 8, 1983, the Commission approved the SRO participants' plan for allocating regulatory responsibilities pursuant to Rule 17d- 2.\11\ On May 23, 2000, the Commission approved an amendment to the plan that added the ISE as a participant.\12\ On November 8, 2002, the Commission approved another amendment that replaced the original plan in its entirety and, among other things, allocated regulatory responsibilities among all the participants in a more equitable manner.\13\ On February 5, 2004, the parties submitted an amendment to the plan, primarily to include the BSE, which was establishing a new options trading facility to be known as BOX, as an SRO participant.\14\ On December 5, 2007, the parties submitted an amendment to the plan to, among other things, provide that the National Association of Securities Dealers (``NASD'') (n/k/a FINRA) and NYSE are Designated Options Examining Authorities under the plan.\15\ On June 5, 2008, the parties submitted an amendment to the plan primarily to remove the NYSE as a Designated Options Examining Authority, leaving FINRA as the sole Designated Options Examining Authority for all common members that are members of FINRA.\16\ On February 9, 2010, the parties submitted a proposed 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, the Boston Stock Exchange, Inc., to the NASDAQ OMX BX, Inc. and the Philadelphia Stock Exchange, Inc. to the NASDAQ OMX PHLX, Inc.\17\ On May 22, 2012, the parties submitted a proposed amendment to add BOX as an SRO participant, and to amend Section XIII of the plan to set forth a revised procedure for adding new participants to the plan.\18\ On November 20, 2012, the parties submitted a proposed amendment to add MIAX as an SRO participant, and to change the name of NYSE Amex LLC to NYSE MKT LLC.\19\ On June 21, 2013, the parties submitted a proposed amendment to add Topaz Exchange LLC as an SRO participant.\20\ On October 9, 2015, the parties submitted a proposed amendment to add EDGX as an SRO participant and to change the name of Topaz Exchange, LLC to ISE Gemini, LLC.\21\ --------------------------------------------------------------------------- \11\ See Securities Exchange Act Release No. 20158 (September 8, 1983), 48 FR 41256 (September 14, 1983). \12\ See Securities Exchange Act Release No. 42816 (May 23, 2000), 65 FR 34759 (May 31, 2000). \13\ See Securities Exchange Act Release No. 46800 (November 8, 2002), 67 FR 69774 (November 19, 2002). \14\ See Securities Exchange Act Release No. 49197 (February 5, 2004), 69 FR 7046 (February 12, 2004). \15\ See Securities Exchange Act Release No. 55532 (March 26, 2007), 72 FR 15729 (April 2, 2007). \16\ See Securities Exchange Act Release No. 57987 (June 18, 2008), 73 FR 36156 (June 25, 2008). \17\ See Securities Exchange Act Release No. 61589 (February 25, 2012), 75 FR 9976 (March 4, 2010). \18\ See Securities Exchange Act Release No. 66974 (May 11, 2012), 77 FR 29705 (May 18, 2012). \19\ See Securities Exchange Act Release No. 68363 (December 5, 2012), 77 FR 73711 (December 11, 2012). \20\ See Securities Exchange Act Release No. 70051 (July 26, 2013), 78 FR 46644 (August 1, 2013). \21\ See Securities Exchange Act Release No. 76309 (October 29, 2015), 80 FR 68361 (November 4, 2015). --------------------------------------------------------------------------- The plan reduces regulatory duplication for a large number of firms currently members of two or more of the SRO participants by allocating regulatory responsibility for certain options-related sales practice matters to one of the SRO participants. Generally, under the plan, the SRO participant responsible for conducting options-related sales practice examinations of a firm, and investigating options-related customer complaints and terminations for cause of associated persons of that firm, is known as the firm's ``Designated Options Examining Authority'' (``DOEA''). Pursuant to the plan, any other SRO of which the firm is a member is relieved of these responsibilities during the period in which the firm is assigned to another SRO acting as that firm's DOEA. III. Proposed Amendment to the Plan On February 3, 2016, the Parties submitted a proposed amendment to the Plan. The primary purpose of the amendment is to add ISE Mercury, and remove the NYSE, as a Participant to the Plan. The text of the proposed amended 17d-2 plan is as follows (additions are italicized; deletions are [bracketed]): * * * * * Agreement by and among BATS Exchange, Inc., BOX Options Exchange, LLC, the Chicago Board Options Exchange, Incorporated, C2 Options Exchange, Incorporated, the International Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc., Miami International Securities Exchange, LLC, [the New York Stock Exchange LLC,] the NYSE MKT LLC, the NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., the NASDAQ OMX PHLX LLC, ISE Gemini, LLC, [and] EDGX Exchange, Inc. and ISE Mercury, LLC, Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934. This agreement (``Agreement''), by and among BATS Exchange, Inc., BOX Options Exchange, LLC, the Chicago Board Options Exchange, Incorporated, C2 Options Exchange, Incorporated, the International Securities Exchange, LLC, Financial Industry Regulatory Authority, Inc. (``FINRA''), Miami International Securities Exchange, LLC, The NASDAQ Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc., [the New York Stock Exchange LLC (``NYSE''),] the NYSE MKT LLC, the NYSE Arca, Inc., the NASDAQ OMX PHLX LLC, ISE Gemini, LLC, and EDGX Exchange, Inc., hereinafter collectively referred to as the Participants, is made this [8th]2nd day of [October]February, 201[5]6, pursuant to the provisions of Rule 17d-2 under the Securities Exchange Act of 1934 (the ``Exchange Act''), which allows for plans among self-regulatory organizations to allocate regulatory responsibility. This Agreement shall be administered by a committee known as the Options Self-Regulatory Council (the ``Council''). This Agreement amends and restates the agreement entered into among the Participants on [June 21, 2013]October 8, 2015, entitled ``Agreement by and among BATS Exchange, Inc., BOX Options Exchange, LLC, the Chicago Board Options Exchange, Incorporated, C2 Options Exchange, Incorporated, the International Securities Exchange, LLC, [[Page 8777]] Financial Industry Regulatory Authority, Inc., Miami International Securities Exchange, LLC, the New York Stock Exchange LLC, NYSE MKT LLC, the NYSE Arca, Inc., the NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., the NASDAQ OMX PHLX, Inc., ISE Gemini, LLC and [Topaz Exchange, LLC]EDGX Exchange, Inc., Pursuant to Rule 17d-2 under the Securities Exchange Act of 1934.'' WHEREAS, the Participants are desirous of allocating regulatory responsibilities with respect to broker-dealers, and persons associated therewith, that are members \1\ of more than one Participant (the ``Common Members'') and conduct a public business for compliance with Common Rules (as hereinafter defined) relating to the conduct by broker-dealers of accounts for listed options, index warrants, currency index warrants and currency warrants (collectively, ``Covered Securities''); and WHEREAS, the Participants are desirous of executing a plan for this purpose pursuant to the provisions of Rule 17d-2 and filing such plan with the Securities and Exchange Commission (``SEC'' or the ``Commission'') for its approval; --------------------------------------------------------------------------- \1\ In the case of BOX Options Exchange, LLC (``BOX''), NASDAQ OMX BX, Inc. (``BX'') and NASDAQ members are those persons who are options participants (as defined in the BOX, BX and NASDAQ Options Market Rules). --------------------------------------------------------------------------- Now, therefore, in consideration of the mutual covenants contained hereafter, the Participants agree as follows: I. As used herein the term Designated Options Examining Authority (``DOEA'') shall mean: (1) FINRA insofar as it shall perform Regulatory Responsibility (as hereinafter defined) for its broker-dealer members that also are members of another Participant or (2) the Designated Examination Authority (``DEA'') pursuant to SEC Rule 17d-1 under the Securities Exchange Act (``Rule 17d-1'') for a broker-dealer that is a member of a more than one Participant (but not a member of FINRA). II. As used herein, the term ``Regulatory Responsibility'' shall mean the examination and enforcement responsibilities relating to compliance by Common Members with the rules of the applicable Participant that are substantially similar to the rules of the other Participants (the ``Common Rules''), insofar as they apply to the conduct of accounts for Covered Securities. A list of the current Common Rules of each Participant applicable to the conduct of accounts for Covered Securities is attached hereto as Exhibit A. Each year within 30 days of the anniversary date of the commencement of operation of this Agreement, each Participant shall submit in writing to FINRA and each DEA performing as a DOEA for any members of such Participant any revisions to Exhibit A reflecting changes in the rules of the Participant, and confirm that all other rules of the Participant listed in Exhibit A continue to meet the definition of Common Rules as defined in this Agreement. Within 30 days from the date that FINRA and each DEA performing as a DOEA has received revisions and/or confirmation that no change has been made to Exhibit A from all Participants, FINRA and each DEA performing as a DOEA shall confirm in writing to each Participant whether the rules listed in any updated Exhibit A are Common Rules as defined in this Agreement. Notwithstanding anything herein to the contrary, it is explicitly understood that the term ``Regulatory Responsibility'' does not include, and each of the Participants shall (unless allocated pursuant to Rule 17d-2 otherwise than under this Agreement) retain full responsibility for, each of the following: (a) Surveillance and enforcement with respect to trading activities or practices involving its own marketplace, including without limitation its rules relating to the rights and obligations of specialists and other market makers; (b) Registration pursuant to its applicable rules of associated persons; (c) Discharge of its duties and obligations as a DEA; and (d) Evaluation of advertising, responsibility for which shall remain with the Participant to which a Common Member submits same for approval. III. Apparent violations of another Participant's rules discovered by a DOEA, but which rules are not within the scope of the discovering DOEA's Regulatory Responsibility, shall be referred to the relevant Participant for such action as the Participant to which such matter has been referred deems appropriate. Notwithstanding the foregoing, nothing contained herein shall preclude a DOEA in its discretion from requesting that another Participant conduct an enforcement proceeding on a matter for which the requesting DOEA has Regulatory Responsibility. If such other Participants agree, the Regulatory Responsibility in such case shall be deemed transferred to the accepting Participant and confirmed in writing by the Participants involved. Each Participant agrees, upon request, to make available promptly all relevant files, records and/or witnesses necessary to assist another Participant in an investigation or enforcement proceeding. IV. The Council shall be composed of one representative designated by each of the Participants. Each Participant shall also designate one or more persons as its alternate representative(s). In the absence of the representative of a Participant, such alternate representative shall have the same powers, duties and responsibilities as the representative. Each Participant may, at any time, by notice to the then Chair of the Council, replace its representative and/or its alternate representative on such Council. A majority of the Council shall constitute a quorum and, unless specifically otherwise required, the affirmative vote of a majority of the Council members present (in person, by telephone or by written consent) shall be necessary to constitute action by the Council. The representative from FINRA shall serve as Chair of the Council. All notices and other communications for the Council shall be sent to it in care of the Chair or to each of the representatives. V. The Council shall determine the times and locations of Council meetings, provided that the Chair, acting alone, may also call a meeting of the Council 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 thereto. Notwithstanding anything herein to the contrary, representatives shall always be given the option of participating in any meeting telephonically at their own expense rather than in person. VI. FINRA shall have Regulatory Responsibility for all Common Members that are members of FINRA. For the purpose of fulfilling the Participants' Regulatory Responsibilities for Common Members that are not members of FINRA, the Participant that is the DEA shall serve as the DOEA. All Participants shall promptly notify the DOEAs no later than the next scheduled meeting of any change in membership of Common Members. A DOEA may request that a Common Member that is allocated to it be reallocated to another DOEA by giving thirty days written notice thereof. The DOEAs in their discretion may approve such request and reallocate such Common Member to another DOEA. VII. Each DOEA shall conduct an examination of each Common Member. The Participants agree that, upon request, relevant information in their respective files relative to a Common Member will be made available to the applicable DOEA. At each meeting of the Council, each DOEA shall be [[Page 8778]] prepared to report on the status of its examination program for the previous quarter and any period prior thereto that has not previously been reported to the Council. VIII. Each DOEA will promptly furnish a copy of the Examination report, relating to Covered Securities, of any examination made pursuant to the provisions of this Agreement to each other Participant of which the Common Member examined is a member. IX. Each DOEA's Regulatory Responsibility shall for each Common Member allocated to it include investigations into terminations ``for cause'' of associated persons relating to Covered Securities, unless such termination is related solely to another Participant's market. In the latter instance, that Participant to whose market the termination for cause relates shall discharge Regulatory Responsibility with respect to such termination for cause. In connection with a DOEA's examination, investigation and/or enforcement proceeding regarding a Covered Security-related termination for cause, the other Participants of which the Common Member is a member shall furnish, upon request, copies of all pertinent materials related thereto in their possession. As used in this Section, ``for cause'' shall include, without limitation, terminations characterized on Form U5 under the label ``Permitted to Resign,'' ``Discharge'' or ``Other.'' X. Each DOEA shall discharge the Regulatory Responsibility for each Common Member allocated to it relative to a Covered Securities-related customer complaint \2\ unless such complaint is uniquely related to another Participant's market. In the latter instance, the DOEA shall forward the matter to that Participant to whose market the matter relates, and the latter shall discharge Regulatory Responsibility with respect thereto. If a Participant receives a customer complaint for a Common Member related to a Covered Security for which the Participant is not the DOEA, the Participant shall promptly forward a copy of such complaint to the DOEA. --------------------------------------------------------------------------- \2\ For purposes of complaints, they can be reported pursuant to Form U4, Form U5 or RE-3 and any amendments thereto. --------------------------------------------------------------------------- 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, or by a comparable means of electronic communication to each Participant entitled to receipt thereof, to the attention of the Participant's representative on the Council at the Participant's then principal office or by email at such address as the representative shall have filed in writing with the Chair. XII. The Participants shall notify the Common Members of this Agreement by means of a uniform joint notice approved by the Council. XIII. This Agreement may be amended to add a new Participant provided that such Participant does not assume Regulatory Responsibility, solely by an amendment by FINRA and such new Participant. All other Participants expressly consent to allow FINRA to add new Participants to this Agreement as provided above. FINRA will promptly notify all Participants of any such amendments to add new Participants. All other amendments to this Agreement must be approved in writing by each Participant. All amendments, including adding a new Participant, must be filed with and approved by the SEC before they become effective. XIV. Any of the Participants may manifest its intention to cancel its participation in this Agreement at any time by giving the Council written notice thereof at least 90 days prior to the effective date of such cancellation. Upon receipt of such notice the Council shall allocate, in accordance with the provisions of this Agreement, any Common Members for which the petitioning party was the DOEA. Until such time as the Council has completed the reallocation described above; the petitioning Participant shall retain all its rights, privileges, duties and obligations hereunder. XV. 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, provided that in the event a notice of cancellation is received from a Participant that, assuming the effectiveness thereof, would result in there being just one remaining member of the Council, notice to the Commission of termination of this Agreement shall be given promptly upon the receipt of such notice of cancellation, which termination shall be effective upon the effectiveness of the cancellation that triggered the notice of termination to the Commission. XVI. No Participant nor the Council 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 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 their respective directors, governors, officers, employees or representatives. No warranties, express or implied, are made by any or all of the Participants or the Council with respect to any Regulatory Responsibility to be performed by each of them hereunder. XVII. Pursuant to Section 17(d)(1)(A) of the Securities Exchange Act of 1934 and Rule 17d-2 promulgated pursuant thereto, the Participants join in requesting the Securities and Exchange Commission, upon its approval of this Agreement or any part thereof, to relieve those Participants which are from time to time participants in this Agreement which are not the DOEA as to a Common Member of any and all Regulatory Responsibility with respect to the matters allocated to the DOEA. * * * * * REVISED [October 8, 2015] February 2, 2016 EXHIBIT A RULES ENFORCED UNDER 17d-2 AGREEMENT Pursuant to Section II of the Agreement by and among BATS Exchange, Inc. (``BATS''), BOX Options Exchange, LLC (``BOX''), the Chicago Board Options Exchange, Incorporated (``CBOE''), C2 Options Exchange, Incorporated (``C2''), the International Securities Exchange, LLC (``ISE''), Financial Industry Regulatory Authority, Inc. (``FINRA''), Miami International Securities Exchange, LLC (``MIAX''), The NASDAQ Stock Market LLC (``NASDAQ''), NASDAQ OMX BX, Inc. (``BX''), [the New York Stock Exchange LLC (``NYSE''),] the NYSE MKT LLC (``NYSE MKT''), the NYSE Arca, Inc. (``NYSE ARCA''), the NASDAQ OMX PHLX LLC (``PHLX''), ISE Gemini, LLC (``ISE Gemini''), [and] EDGX Exchange, Inc. (``EDGX'') and ISE Mercury, LLC (``ISE Mercury'') pursuant to Rule 17d- 2 under the Securities Exchange Act of 1934 dated [October 8, 2016] February 2, 2016 (the [[Page 8779]] ``Agreement''), a revised list of the current Common Rules of each Participant, as compared to those of FINRA, applicable to the conduct of accounts for Covered Securities is set forth in this Exhibit A. OPENING OF ACCOUNTS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 411, 921 and 1101. BATS................................ Rule 26.2. BOX................................. Rule 4020. CBOE................................ Rule 9.7. C2*................................. CBOE Rule 9.7. EDGX................................ Rule 26.2. ISE................................. Rule 608. FINRA............................... Rules 2360(b)(16) and 2352. MIAX................................ Rule 1307. [NYSE............................... N/A]. ISE Gemini.......................... Rule 608. ISE Mercury......................... Rule 608. PHLX................................ Rule 1024(b) and (c)\1\. NYSE ARCA........................... Options Rules 9.2(a) and 9.18(b) and Equities Rules 9.18(b) and 8.4. BX.................................. Chapter XI, Section 7. NASDAQ.............................. Chapter XI, Section 7. ------------------------------------------------------------------------ \1\ FINRA shall not have any Regulatory Responsibility regarding foreign currency option requirements specified in any of the PHLX rules in this Exhibit A. SUPERVISION ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 411, 922 and 1104. BATS................................ Rule 26.3. BOX................................. Rule 4030. CBOE................................ Rule 9.8.\2\ C2.................................. CBOE Rule 9.8.\2\ EDGX................................ Rule 26.3. ISE................................. Rule 609. FINRA............................... Rules 2360(b)(20), 2360(b)(17)(B), 2360(b)(16)(E), 2355 and 2358. MIAX................................ Rule1308. ISE Gemini.......................... Rule 609. ISE Mercury......................... Rule 609. [NYSE............................... N/A]. PHLX................................ Rule 1025. NYSE ARCA........................... Options Rules 9.2(b) and 9.18(d)(2)(G) and Equities Rules 9.18(d)(2)(G) and 8.7. BX.................................. Chapter XI, Section 8. NASDAQ.............................. Chapter XI, Section 8. ------------------------------------------------------------------------ \2\ FINRA shall not have any Regulatory Responsibility regarding receipt of written reports by April 1 of each year pursuant to CBOE Rule 9.8(g). SUITABILITY ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 923 and 1102. BATS................................ Rule 26.4. BOX................................. Rule 4040. CBOE................................ Rule 9.9. C2.................................. CBOE Rule 9.9. EDGX................................ Rule 26.4. ISE................................. Rule 610. FINRA............................... Rule 2360(b)(19) and 2353. MIAX................................ Rule 1309. ISE Gemini.......................... Rule 610. ISE Mercury......................... Rule 610. [NYSE............................... N/A]. PHLX................................ Rule 1026. NYSE ARCA........................... Options Rule 9.18(c) and Equities Rules 9.18(c) and 8.5. BX.................................. Chapter XI, Section 9. NASDAQ.............................. Chapter XI, Section 9. ------------------------------------------------------------------------ DISCRETIONARY ACCOUNTS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 421, 924 and 1103. BATS................................ Rule 26.5.\3\ BOX................................. Rule 4050. CBOE................................ Rule 9.10. C2.................................. CBOE Rule 9.10. EDGX................................ Rule 26.5.\3\ ISE................................. Rule 611. FINRA............................... Rules 2360(b)(18) and 2354. MIAX................................ Rule 1310. ISE Gemini.......................... Rule 611. ISE Mercury......................... Rule 611. [NYSE............................... N/A]. PHLX................................ Rule 1027. NYSE ARCA........................... Options Rule 9.18(e) and Equities Rules 9.18(e) and 8.6. BX.................................. Chapter XI, Section 10. NASDAQ.............................. Chapter XI, Section 10. ------------------------------------------------------------------------ \3\ FINRA shall not have any Regulatory Responsibility to enforce this rule as to time and price discretion in institutional accounts. CUSTOMER COMMUNICATIONS (ADVERTISING) ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 991 and 1106. BATS................................ Rule 26.16. BOX................................. Rule 4170. CBOE................................ Rule 9.21. C2.................................. CBOE Rule 9.21. EDGX................................ Rule 26.16. ISE................................. Rule 623. FINRA............................... Rules 2220 and 2357. MIAX................................ Rule 1322. ISE Gemini.......................... Rule 623. ISE Mercury......................... Rule 623. [NYSE............................... N/A]. PHLX................................ N/A. NYSE ARCA........................... Options Rules 9.21(a) and 9.21(b). BX.................................. Chapter XI, Section 22. NASDAQ.............................. Chapter XI, Section 22. ------------------------------------------------------------------------ CUSTOMER COMPLAINTS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 932 and 1105. BATS................................ Rule 26.17. BOX................................. Rule 4190. CBOE................................ Rule 9.23. C2.................................. CBOE Rule 9.23. EDGX................................ Rule 26.17. ISE................................. Rule 625. FINRA............................... FINRA Rules 2360(b)(17)(A) and 2356. MIAX................................ Rule 1324. ISE Gemini.......................... Rule 625. ISE Mercury......................... Rule 625. [NYSE............................... N/A]. PHLX................................ Rule [1070]1028. NYSE ARCA........................... Options Rule 9.18(I) and Equities Rules 9.18(l) and 8.8. BX.................................. Chapter XI, Section 24. NASDAQ.............................. Chapter XI, Section 24. ------------------------------------------------------------------------ CUSTOMER STATEMENTS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 419 and 930. BATS................................ Rule 26.7. BOX................................. Rule 4070. CBOE................................ Rule 9.12. C2.................................. CBOE Rule 9.12. EDGX................................ Rule 26.7. ISE................................. Rules 613. FINRA............................... Rule 2360(b)(15). MIAX................................ Rule 1312. ISE Gemini.......................... Rule 613. ISE Mercury......................... Rule 613. [NYSE............................... N/A]. PHLX................................ Rule 1032. NYSE ARCA........................... Options Rule 9.18(j) and Equities Rule 9.18(j). BX.................................. Chapter XI, Sections 12. NASDAQ.............................. Chapter XI, Section 12. ------------------------------------------------------------------------ CONFIRMATIONS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rule 925. BATS................................ Rule 26.6. BOX................................. Rule 4060. CBOE................................ Rule 9.11. C2.................................. CBOE Rule 9.11. EDGX................................ Rule 26.6. ISE................................. Rule 612. FINRA............................... Rule 2360(b)(12). MIAX................................ Rule 1311. ISE Gemini.......................... Rule 612. ISE Mercury......................... Rule 612. [NYSE............................... N/A]. PHLX................................ Rule 1028. NYSE ARCA........................... Options Rule 9.18(f) and Equities Rule 9.18(j). BX.................................. Chapter XI, Section 11. NASDAQ.............................. Chapter XI, Section 11. ------------------------------------------------------------------------ ALLOCATION OF EXERCISE ASSIGNMENT NOTICES ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rule 981. BATS................................ Rule 23.2. BOX................................. Rule 9010. CBOE................................ Rule 11.2. C2.................................. CBOE Rule 11.2. EDGX................................ Rule 23.2. ISE................................. Rule 1101. FINRA............................... Rule 2360(b)(23)(C). MIAX................................ Rule 701. ISE Gemini.......................... Rule 1101. ISE Mercury......................... Rule 1101. [NYSE............................... N/A]. PHLX................................ Rule 1043. NYSE ARCA........................... Options Rule 6.25(a). BX.................................. Chapter VIII, Section 2. NASDAQ.............................. Chapter VIII, Section 2. ------------------------------------------------------------------------ DISCLOSURE DOCUMENTS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rules 921 and 926. BATS................................ Rule 26.10. BOX................................. Rule 4100. CBOE................................ Rule 9.15. C2.................................. CBOE Rule 9.15. EDGX................................ Rule 26.10. ISE................................. Rule 616. FINRA............................... Rule 2360(b)(11). MIAX................................ Rule 1315. ISE Gemini.......................... Rule 616. [[Page 8780]] ISE Mercury......................... Rule 616. [NYSE............................... N/A]. PHLX................................ Rule 1024(b)(v), 1029. NYSE ARCA........................... Options Rule 9.18(g) and Equities Rule 9.18(g). BX.................................. Chapter XI, Section 15. NASDAQ.............................. Chapter XI, Section 15. ------------------------------------------------------------------------ BRANCH OFFICES OF MEMBER ORGANIZATIONS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rule 922(d).\4\ BOX................................. Rule 4010(b). CBOE................................ Rule 9.6. C2.................................. CBOE Rule 9.6. ISE................................. Rule 607. FINRA............................... Rules 2360(b)(20)(B) and 2355. MIAX................................ Rule 1306. ISE Gemini.......................... Rule 607. ISE Mercury......................... Rule 607. [NYSE............................... N/A]. PHLX................................ N/A. NYSE ARCA........................... Options Rule 9.18(m) and Equities Rule 9.18(m). BX.................................. Chapter XI, Section 6. NASDAQ.............................. Chapter XI, Section 6. ------------------------------------------------------------------------ \4\ FINRA shall only have Regulatory Responsibility for the first paragraph and shall not have any Regulatory Responsibility regarding the requirements for debt options. PROHIBITION AGAINST GUARANTEES ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rule 390. BATS................................ Rule 26.13. BOX................................. Rule 4130. CBOE................................ Rule 9.18. C2.................................. CBOE Rule 9.18. EDGX................................ Rule 26.13. ISE................................. Rules 619. FINRA............................... Rule 2150(b). MIAX................................ Rule 1318. ISE Gemini.......................... Rule 619. ISE Mercury......................... Rule 619. [NYSE............................... Rule 2150(b)]. PHLX................................ Rule 777. NYSE ARCA........................... Options Rule 9.1(e). BX.................................. Chapter XI, Sections 18 and 19. NASDAQ.............................. Chapter XI, Sections 18 and 19. ------------------------------------------------------------------------ SHARING IN ACCOUNTS ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rule 390. BATS................................ Rule 26.14.\6\ BOX................................. Rule 4140. CBOE................................ Rule 9.18(b). C2.................................. CBOE Rule 9.18(b). EDGX................................ Rule 26.14.\6\ ISE................................. Rule 620.\5\ FINRA............................... Rule 2150(c). MIAX................................ Rule 1319. ISE Gemini.......................... Rule 620.\5\ ISE Mercury......................... Rule 620.\5\ [NYSE............................... Rules 2150(c)]. PHLX................................ N/A. NYSE ARCA........................... Options Rule 9.1(f). BX.................................. Chapter XI, Section 19.\6\ NASDAQ.............................. Chapter XI, Section 19.\6\ ------------------------------------------------------------------------ \5\ FINRA shall not have any Regulatory Responsibility regarding ISE's, [and] ISE Gemini's and ISE Mercury's requirements to the extent its rule does not contain an exception to permit sharing in the profits and losses of an account. \6\ FINRA shall not have any Regulatory Responsibility regarding NASDAQ's, BX's, BATS's, and EDGX's requirements to the extent such rules do not contain an exception addressing immediate family. REGISTRATION OF ROP ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rule 920. BATS................................ Rule 17.2(g)(1), (2), (6) and (7). BOX................................. Rule 2020(c)(1), (e)(1) and IM- 2040-4 and IM-2040-5(b). CBOE................................ Rule 9.2. C2.................................. CBOE Rule 9.2. EDGX................................ Rule 17.2(g)(1), (2), (6) and (7). ISE................................. Rule 601. FINRA............................... NASD Rules 1022(f), IM-1022-1, & 1250(a)(1). MIAX................................ Rule 1301. ISE Gemini.......................... Rule 601. ISE Mercury......................... Rule 601. [NYSE............................... N/A]. PHLX................................ Rule 1024(a)(i). NYSE ARCA........................... Options Rule 9.26 and Equities Rule 9.26. BX.................................. Chapter XI, Section 2 and Chapter II, Section 2(g). NASDAQ.............................. Chapter XI, Section 2 and Chapter II, Section 2(g). ------------------------------------------------------------------------ CERTIFICATION OF REGISTERED PERSONNEL [\7\] ------------------------------------------------------------------------ ------------------------------------------------------------------------ NYSE MKT............................ Rule 920. BATS................................ Rule 2.5 Interpretation .01(c) and 11.4(e). BOX................................. IM-2040-3. CBOE................................ Rule 9.3. C2.................................. CBOE Rule 9.3. EDGX................................ Rule 2.5 Interpretation .01(c) and 11.4(e). ISE................................. Rule 602. FINRA............................... NASD Rule 1032(d). MIAX................................ Rule 1302. ISE Gemini.......................... Rule 602. ISE Mercury......................... Rule 602. [NYSE............................... N/A]. PHLX................................ Rule 1024. NYSE ARCA........................... Options Rule 9.27(a). BX.................................. Chapter XI, Section 3 and Chapter II, Section 2(h). NASDAQ.............................. Chapter XI, Section 3 and Chapter II, Section 2(h). ------------------------------------------------------------------------ [\7\ FINRA shall not have Regulatory Responsibility with regard to the Series 56 Examination under any exchange rules, as this examination is not recognized by FINRA.] 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 S7-966 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 S7-966. 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 FINRA and ISE Mercury. 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 S7-966 and should be submitted on or before March 14, 2016. V. Discussion The Commission continues to believe that the proposed plan 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 sales practice matters that would otherwise be [[Page 8781]] 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 ISE Mercury as a Participant, and remove the NYSE as a Participant, to the Plan. By declaring it effective today, the amended Plan can become effective and be implemented without undue delay.\22\ The Commission notes that the prior version of this plan immediately prior to this proposed amendment was published for comment and the Commission did not receive any comments thereon. Furthermore, the Commission does not believe that the amendment to the plan raises any new regulatory issues that the Commission has not previously considered. --------------------------------------------------------------------------- \22\ On January 29, 2016, the Commission approved ISE Mercury's application for registration as a national securities exchange. See Securities Exchange Act Release No. 76998, 81 FR 6066 (February 4, 2016). --------------------------------------------------------------------------- VI. Conclusion This order gives effect to the amended Plan submitted to the Commission that is contained in File No. S7-966. It is therefore ordered, pursuant to Section 17(d) of the Act, that the Plan, as amended, filed with the Commission pursuant to Rule 17d-2 on February 3, 2016, is hereby approved and declared effective. It is further ordered that those SRO participants that are not the DOEA as to a particular common member are relieved of those regulatory responsibilities allocated to the common member's DOEA under the amended Plan to the extent of such allocation. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\23\ --------------------------------------------------------------------------- \23\ 17 CFR 200.30-3(a)(34). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-03533 Filed 2-19-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 34 / Monday, February 22, 2016 / Notices 8775
Electronic Comments SECURITIES AND EXCHANGE registered as either a national securities
COMMISSION exchange or national securities
• Use the Commission’s Internet association to examine for, and enforce
comment form (http://www.sec.gov/ [Release No. 34–77148; File No. S7–966]
compliance by, its members and persons
rules/sro.shtml); or associated with its members with the
Program for Allocation of Regulatory
• Send an email to rule-comments@ Responsibilities Pursuant to Rule 17d– Act, the rules and regulations
sec.gov. Please include File Number SR– 2; Notice of Filing and Order thereunder, and the SRO’s own rules,
EDGX–2016–04 on the subject line. Approving and Declaring Effective an unless the SRO is relieved of this
Amendment to the Plan for the responsibility pursuant to Section
Paper Comments 17(d) 4 or Section 19(g)(2) 5 of the Act.
Allocation of Regulatory
Without this relief, the statutory
• Send paper comments in triplicate Responsibilities Among NYSE MKT
LLC, BATS Exchange, Inc., BOX obligation of each individual SRO could
to Secretary, Securities and Exchange
Options Exchange LLC, C2 Options result in a pattern of multiple
Commission, 100 F Street NE., examinations of broker-dealers that
Washington, DC 20549–1090. Exchange, Incorporated, the Chicago
Board Options Exchange, maintain memberships in more than one
All submissions should refer to File Incorporated, the EDGX Exchange, SRO (‘‘common members’’). Such
Number SR–EDGX–2016–04. This file Inc., the International Securities regulatory duplication would add
number should be included on the Exchange LLC, ISE Gemini, LLC, ISE unnecessary expenses for common
subject line if email is used. To help the Mercury, LLC Financial Industry members and their SROs.
Commission process and review your Regulatory Authority, Inc., the New Section 17(d)(1) of the Act 6 was
comments more efficiently, please use York Stock Exchange LLC, NYSE Arca, intended, in part, to eliminate
only one method. The Commission will Inc., The NASDAQ Stock Market LLC, unnecessary multiple examinations and
post all comments on the Commission’s NASDAQ OMX BX, Inc., the NASDAQ regulatory duplication.7 With respect to
Internet Web site (http://www.sec.gov/ OMX PHLX, Inc., and Miami a common member, Section 17(d)(1)
rules/sro.shtml). Copies of the International Securities Exchange, LLC authorizes the Commission, by rule or
submission, all subsequent Concerning Options-Related Sales order, to relieve an SRO of the
Practice Matters responsibility to receive regulatory
amendments, all written statements
with respect to the proposed rule February 16, 2016. reports, to examine for and enforce
change that are filed with the Notice is hereby given that the compliance with applicable statutes,
Commission, and all written Securities and Exchange Commission rules, and regulations, or to perform
communications relating to the (‘‘Commission’’) has issued an Order, other specified regulatory functions.
proposed rule change between the pursuant to Section 17(d) of the To implement Section 17(d)(1), the
Commission and any person, other than Securities Exchange Act of 1934 Commission adopted two rules: Rule
those that may be withheld from the (‘‘Act’’),1 approving and declaring 17d–1 and Rule 17d–2 under the Act.8
public in accordance with the effective an amendment to the plan for Rule 17d–1 authorizes the Commission
provisions of 5 U.S.C. 552, will be allocating regulatory responsibility to name a single SRO as the designated
available for Web site viewing and (‘‘Plan’’) filed on February 3, 2016, examining authority (‘‘DEA’’) to
printing in the Commission’s Public pursuant to Rule 17d–2 of the Act,2 by examine common members for
NYSE MKT LLC (‘‘MKT’’), BATS compliance with the financial
Reference Room, 100 F Street NE.,
Exchange, Inc., (‘‘BATS’’), the BOX responsibility requirements imposed by
Washington, DC 20549, on official
Options Exchange LLC (‘‘BOX’’), C2 the Act, or by Commission or SRO
business days between the hours of rules.9 When an SRO has been named as
Options Exchange, Incorporated (‘‘C2’’),
10:00 a.m. and 3:00 p.m. Copies of the a common member’s DEA, all other
the Chicago Board Options Exchange,
filing will also be available for Incorporated (‘‘CBOE’’), the EDGX SROs to which the common member
inspection and copying at the principal Exchange, Inc. (‘‘EDGX’’) the belongs are relieved of the responsibility
office of the Exchange. All comments International Securities Exchange LLC to examine the firm for compliance with
received will be posted without change; (‘‘ISE’’), ISE Gemini, LLC (‘‘Gemini’’), the applicable financial responsibility
the Commission does not edit personal ISE Mercury, LLC (‘‘ISE Mercury’’) rules. On its face, Rule 17d–1 deals only
identifying information from Financial Industry Regulatory with an SRO’s obligations to enforce
submissions. You should submit only Authority, Inc. (‘‘FINRA’’), the New member compliance with financial
information that you wish to make York Stock Exchange LLC (‘‘NYSE’’), responsibility requirements. Rule 17d–1
available publicly. All submissions NYSE Arca, Inc. (‘‘Arca’’), The does not relieve an SRO from its
should refer to File Number SR–EDGX– NASDAQ Stock Market LLC (‘‘Nasdaq’’), obligation to examine a common
2016–04 and should be submitted on or NASDAQ OMX BX, Inc. (‘‘BX’’), member for compliance with its own
before March 14, 2016. NASDAQ OMX PHLX, Inc. (‘‘PHLX’’), rules and provisions of the federal
For the Commission, by the Division of and Miami International Securities securities laws governing matters other
Trading and Markets, pursuant to delegated Exchange (‘‘MIAX’’) (collectively, than financial responsibility, including
authority.24 ‘‘Participating Organizations’’ or
‘‘parties’’). 4 15 U.S.C. 78q(d).
Brent J. Fields, 5 15 U.S.C. 78s(g)(2).
I. Introduction
mstockstill on DSK4VPTVN1PROD with NOTICES
Secretary. 6 15 U.S.C. 78q(d)(1).
[FR Doc. 2016–03529 Filed 2–19–16; 8:45 am] Section 19(g)(1) of the Act,3 among 7 See Securities Act Amendments of 1975, Report
other things, requires every self- of the Senate Committee on Banking, Housing, and
BILLING CODE 8011–01–P
Urban Affairs to Accompany S. 249, S. Rep. No. 94–
regulatory organization (‘‘SRO’’) 75, 94th Cong., 1st Session 32 (1975).
8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
1 15 U.S.C. 78q(d). respectively.
2 17 CFR 240.17d–2. 9 See Securities Exchange Act Release No. 12352
24 17 CFR 200.30–3(a)(12). 3 15 U.S.C. 78s(g)(1). (April 20, 1976), 41 FR 18808 (May 7, 1976).
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![8776 Federal Register / Vol. 81, No. 34 / Monday, February 22, 2016 / Notices
sales practices and trading activities and Authorities under the plan.15 On June 5, responsibilities during the period in
practices. 2008, the parties submitted an which the firm is assigned to another
To address regulatory duplication in amendment to the plan primarily to SRO acting as that firm’s DOEA.
these and other areas, the Commission remove the NYSE as a Designated
III. Proposed Amendment to the Plan
adopted Rule 17d–2 under the Act.10 Options Examining Authority, leaving
FINRA as the sole Designated Options On February 3, 2016, the Parties
Rule 17d–2 permits SROs to propose submitted a proposed amendment to the
joint plans for the allocation of Examining Authority for all common
members that are members of FINRA.16 Plan. The primary purpose of the
regulatory responsibilities with respect amendment is to add ISE Mercury, and
On February 9, 2010, the parties
to their common members. Under remove the NYSE, as a Participant to the
submitted a proposed amendment to the
paragraph (c) of Rule 17d–2, the Plan. The text of the proposed amended
plan to add BATS and C2 as SRO
Commission may declare such a plan 17d–2 plan is as follows (additions are
participants and to reflect the name
effective if, after providing for notice italicized; deletions are [bracketed]):
changes of the American Stock
and comment, it determines that the Exchange LLC to the NYSE Amex LLC, * * * * *
plan is necessary or appropriate in the the Boston Stock Exchange, Inc., to the
public interest and for the protection of Agreement by and among BATS
NASDAQ OMX BX, Inc. and the
investors, to foster cooperation and Exchange, Inc., BOX Options Exchange,
Philadelphia Stock Exchange, Inc. to the
coordination among the SROs, to LLC, the Chicago Board Options
NASDAQ OMX PHLX, Inc.17 On May
remove impediments to, and foster the Exchange, Incorporated, C2 Options
22, 2012, the parties submitted a
development of, a national market Exchange, Incorporated, the
proposed amendment to add BOX as an
system and a national clearance and International Securities Exchange, LLC,
SRO participant, and to amend Section
settlement system, and is in conformity Financial Industry Regulatory
XIII of the plan to set forth a revised
with the factors set forth in Section Authority, Inc., Miami International
procedure for adding new participants
17(d) of the Act. Commission approval Securities Exchange, LLC, [the New
to the plan.18 On November 20, 2012,
of a plan filed pursuant to Rule 17d–2 York Stock Exchange LLC,] the NYSE
the parties submitted a proposed
relieves an SRO of those regulatory MKT LLC, the NYSE Arca, Inc., The
amendment to add MIAX as an SRO
responsibilities allocated by the plan to NASDAQ Stock Market LLC, NASDAQ
participant, and to change the name of
another SRO. OMX BX, Inc., the NASDAQ OMX
NYSE Amex LLC to NYSE MKT LLC.19
PHLX LLC, ISE Gemini, LLC, [and]
II. The Plan On June 21, 2013, the parties submitted
EDGX Exchange, Inc. and ISE
a proposed amendment to add Topaz
Mercury, LLC, Pursuant to Rule
On September 8, 1983, the Exchange LLC as an SRO participant.20
17d–2 under the Securities Exchange
Commission approved the SRO On October 9, 2015, the parties
Act of 1934.
participants’ plan for allocating submitted a proposed amendment to
regulatory responsibilities pursuant to add EDGX as an SRO participant and to This agreement (‘‘Agreement’’), by
Rule 17d–2.11 On May 23, 2000, the change the name of Topaz Exchange, and among BATS Exchange, Inc., BOX
Commission approved an amendment to LLC to ISE Gemini, LLC.21 Options Exchange, LLC, the Chicago
the plan that added the ISE as a The plan reduces regulatory Board Options Exchange, Incorporated,
duplication for a large number of firms C2 Options Exchange, Incorporated, the
participant.12 On November 8, 2002, the
currently members of two or more of the International Securities Exchange, LLC,
Commission approved another
SRO participants by allocating Financial Industry Regulatory
amendment that replaced the original
regulatory responsibility for certain Authority, Inc. (‘‘FINRA’’), Miami
plan in its entirety and, among other
options-related sales practice matters to International Securities Exchange, LLC,
things, allocated regulatory The NASDAQ Stock Market LLC
responsibilities among all the one of the SRO participants. Generally,
under the plan, the SRO participant (‘‘NASDAQ’’), NASDAQ OMX BX, Inc.,
participants in a more equitable [the New York Stock Exchange LLC
manner.13 On February 5, 2004, the responsible for conducting options-
related sales practice examinations of a (‘‘NYSE’’),] the NYSE MKT LLC, the
parties submitted an amendment to the NYSE Arca, Inc., the NASDAQ OMX
plan, primarily to include the BSE, firm, and investigating options-related
customer complaints and terminations PHLX LLC, ISE Gemini, LLC, and EDGX
which was establishing a new options Exchange, Inc., hereinafter collectively
trading facility to be known as BOX, as for cause of associated persons of that
firm, is known as the firm’s ‘‘Designated referred to as the Participants, is made
an SRO participant.14 On December 5, this [8th]2nd day of [October]February,
2007, the parties submitted an Options Examining Authority’’
(‘‘DOEA’’). Pursuant to the plan, any 201[5]6, pursuant to the provisions of
amendment to the plan to, among other Rule 17d–2 under the Securities
things, provide that the National other SRO of which the firm is a
member is relieved of these Exchange Act of 1934 (the ‘‘Exchange
Association of Securities Dealers Act’’), which allows for plans among
(‘‘NASD’’) (n/k/a FINRA) and NYSE are 15 See Securities Exchange Act Release No. 55532 self-regulatory organizations to allocate
Designated Options Examining (March 26, 2007), 72 FR 15729 (April 2, 2007). regulatory responsibility. This
16 See Securities Exchange Act Release No. 57987 Agreement shall be administered by a
10 See Securities Exchange Act Release No. 12935 (June 18, 2008), 73 FR 36156 (June 25, 2008). committee known as the Options Self-
(October 28, 1976), 41 FR 49091 (November 8, 17 See Securities Exchange Act Release No. 61589
Regulatory Council (the ‘‘Council’’).
1976). (February 25, 2012), 75 FR 9976 (March 4, 2010).
11 See Securities Exchange Act Release No. 20158 18 See Securities Exchange Act Release No. 66974
This Agreement amends and restates
mstockstill on DSK4VPTVN1PROD with NOTICES
(September 8, 1983), 48 FR 41256 (September 14, (May 11, 2012), 77 FR 29705 (May 18, 2012). the agreement entered into among the
1983). 19 See Securities Exchange Act Release No. 68363 Participants on [June 21, 2013]October
12 See Securities Exchange Act Release No. 42816 (December 5, 2012), 77 FR 73711 (December 11, 8, 2015, entitled ‘‘Agreement by and
(May 23, 2000), 65 FR 34759 (May 31, 2000). 2012). among BATS Exchange, Inc., BOX
13 See Securities Exchange Act Release No. 46800 20 See Securities Exchange Act Release No. 70051
Options Exchange, LLC, the Chicago
(November 8, 2002), 67 FR 69774 (November 19, (July 26, 2013), 78 FR 46644 (August 1, 2013).
2002). 21 See Securities Exchange Act Release No. 76309 Board Options Exchange, Incorporated,
14 See Securities Exchange Act Release No. 49197 (October 29, 2015), 80 FR 68361 (November 4, C2 Options Exchange, Incorporated, the
(February 5, 2004), 69 FR 7046 (February 12, 2004). 2015). International Securities Exchange, LLC,
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![Federal Register / Vol. 81, No. 34 / Monday, February 22, 2016 / Notices 8777
Financial Industry Regulatory anniversary date of the commencement investigation or enforcement
Authority, Inc., Miami International of operation of this Agreement, each proceeding.
Securities Exchange, LLC, the New York Participant shall submit in writing to IV. The Council shall be composed of
Stock Exchange LLC, NYSE MKT LLC, FINRA and each DEA performing as a one representative designated by each of
the NYSE Arca, Inc., the NASDAQ DOEA for any members of such the Participants. Each Participant shall
Stock Market LLC, NASDAQ OMX BX, Participant any revisions to Exhibit A also designate one or more persons as its
Inc., the NASDAQ OMX PHLX, Inc., ISE reflecting changes in the rules of the alternate representative(s). In the
Gemini, LLC and [Topaz Exchange, Participant, and confirm that all other absence of the representative of a
LLC]EDGX Exchange, Inc., Pursuant to rules of the Participant listed in Exhibit Participant, such alternate
Rule 17d–2 under the Securities A continue to meet the definition of representative shall have the same
Exchange Act of 1934.’’ Common Rules as defined in this powers, duties and responsibilities as
WHEREAS, the Participants are Agreement. Within 30 days from the the representative. Each Participant
desirous of allocating regulatory date that FINRA and each DEA may, at any time, by notice to the then
responsibilities with respect to broker- performing as a DOEA has received Chair of the Council, replace its
dealers, and persons associated revisions and/or confirmation that no representative and/or its alternate
therewith, that are members 1 of more change has been made to Exhibit A from representative on such Council. A
than one Participant (the ‘‘Common all Participants, FINRA and each DEA majority of the Council shall constitute
Members’’) and conduct a public performing as a DOEA shall confirm in a quorum and, unless specifically
business for compliance with Common writing to each Participant whether the otherwise required, the affirmative vote
Rules (as hereinafter defined) relating to rules listed in any updated Exhibit A are of a majority of the Council members
the conduct by broker-dealers of Common Rules as defined in this present (in person, by telephone or by
accounts for listed options, index Agreement. Notwithstanding anything written consent) shall be necessary to
warrants, currency index warrants and herein to the contrary, it is explicitly constitute action by the Council. The
currency warrants (collectively, understood that the term ‘‘Regulatory representative from FINRA shall serve
‘‘Covered Securities’’); and Responsibility’’ does not include, and as Chair of the Council. All notices and
WHEREAS, the Participants are each of the Participants shall (unless other communications for the Council
desirous of executing a plan for this allocated pursuant to Rule 17d–2 shall be sent to it in care of the Chair
purpose pursuant to the provisions of otherwise than under this Agreement) or to each of the representatives.
Rule 17d–2 and filing such plan with retain full responsibility for, each of the V. The Council shall determine the
the Securities and Exchange following: times and locations of Council meetings,
Commission (‘‘SEC’’ or the (a) Surveillance and enforcement with provided that the Chair, acting alone,
‘‘Commission’’) for its approval; respect to trading activities or practices may also call a meeting of the Council
Now, therefore, in consideration of involving its own marketplace, in the event the Chair determines that
the mutual covenants contained including without limitation its rules there is good cause to do so. To the
hereafter, the Participants agree as relating to the rights and obligations of extent reasonably possible, notice of any
follows: specialists and other market makers; meeting shall be given at least ten-
I. As used herein the term Designated (b) Registration pursuant to its business days prior thereto.
Options Examining Authority (‘‘DOEA’’) applicable rules of associated persons; Notwithstanding anything herein to the
shall mean: (1) FINRA insofar as it shall (c) Discharge of its duties and contrary, representatives shall always be
perform Regulatory Responsibility (as obligations as a DEA; and given the option of participating in any
hereinafter defined) for its broker-dealer (d) Evaluation of advertising, meeting telephonically at their own
members that also are members of responsibility for which shall remain expense rather than in person.
another Participant or (2) the Designated with the Participant to which a VI. FINRA shall have Regulatory
Examination Authority (‘‘DEA’’) Common Member submits same for Responsibility for all Common Members
pursuant to SEC Rule 17d–1 under the approval. that are members of FINRA. For the
Securities Exchange Act (‘‘Rule 17d–1’’) III. Apparent violations of another purpose of fulfilling the Participants’
for a broker-dealer that is a member of Participant’s rules discovered by a Regulatory Responsibilities for Common
a more than one Participant (but not a DOEA, but which rules are not within Members that are not members of
member of FINRA). the scope of the discovering DOEA’s FINRA, the Participant that is the DEA
II. As used herein, the term Regulatory Responsibility, shall be shall serve as the DOEA. All
‘‘Regulatory Responsibility’’ shall mean referred to the relevant Participant for Participants shall promptly notify the
the examination and enforcement such action as the Participant to which DOEAs no later than the next scheduled
responsibilities relating to compliance such matter has been referred deems meeting of any change in membership of
by Common Members with the rules of appropriate. Notwithstanding the Common Members. A DOEA may
the applicable Participant that are foregoing, nothing contained herein request that a Common Member that is
substantially similar to the rules of the shall preclude a DOEA in its discretion allocated to it be reallocated to another
other Participants (the ‘‘Common from requesting that another Participant DOEA by giving thirty days written
Rules’’), insofar as they apply to the conduct an enforcement proceeding on notice thereof. The DOEAs in their
conduct of accounts for Covered a matter for which the requesting DOEA discretion may approve such request
Securities. A list of the current Common has Regulatory Responsibility. If such and reallocate such Common Member to
Rules of each Participant applicable to other Participants agree, the Regulatory another DOEA.
the conduct of accounts for Covered
mstockstill on DSK4VPTVN1PROD with NOTICES
Responsibility in such case shall be VII. Each DOEA shall conduct an
Securities is attached hereto as Exhibit deemed transferred to the accepting examination of each Common Member.
A. Each year within 30 days of the Participant and confirmed in writing by The Participants agree that, upon
the Participants involved. Each request, relevant information in their
1 In the case of BOX Options Exchange, LLC
Participant agrees, upon request, to respective files relative to a Common
(‘‘BOX’’), NASDAQ OMX BX, Inc. (‘‘BX’’) and
NASDAQ members are those persons who are
make available promptly all relevant Member will be made available to the
options participants (as defined in the BOX, BX and files, records and/or witnesses necessary applicable DOEA. At each meeting of
NASDAQ Options Market Rules). to assist another Participant in an the Council, each DOEA shall be
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![8778 Federal Register / Vol. 81, No. 34 / Monday, February 22, 2016 / Notices
prepared to report on the status of its representative on the Council at the XVI. No Participant nor the Council
examination program for the previous Participant’s then principal office or by nor any of their respective directors,
quarter and any period prior thereto that email at such address as the governors, officers, employees or
has not previously been reported to the representative shall have filed in writing representatives shall be liable to any
Council. with the Chair. other Participant in this Agreement for
VIII. Each DOEA will promptly XII. The Participants shall notify the any liability, loss or damage resulting
furnish a copy of the Examination Common Members of this Agreement by from or claimed to have resulted from
report, relating to Covered Securities, of means of a uniform joint notice any delays, inaccuracies, errors or
any examination made pursuant to the approved by the Council. omissions with respect to the provision
provisions of this Agreement to each XIII. This Agreement may be amended of Regulatory Responsibility as provided
other Participant of which the Common to add a new Participant provided that hereby or for the failure to provide any
Member examined is a member. such Participant does not assume such Responsibility, except with respect
IX. Each DOEA’s Regulatory Regulatory Responsibility, solely by an to such liability, loss or damages as
Responsibility shall for each Common amendment by FINRA and such new shall have been suffered by one or more
Member allocated to it include Participant. All other Participants of the Participants and caused by the
investigations into terminations ‘‘for expressly consent to allow FINRA to willful misconduct of one or more of the
cause’’ of associated persons relating to add new Participants to this Agreement other participants or their respective
Covered Securities, unless such as provided above. FINRA will directors, governors, officers, employees
termination is related solely to another promptly notify all Participants of any or representatives. No warranties,
Participant’s market. In the latter such amendments to add new express or implied, are made by any or
instance, that Participant to whose Participants. All other amendments to all of the Participants or the Council
market the termination for cause relates this Agreement must be approved in with respect to any Regulatory
shall discharge Regulatory writing by each Participant. All Responsibility to be performed by each
Responsibility with respect to such amendments, including adding a new of them hereunder.
termination for cause. In connection Participant, must be filed with and XVII. Pursuant to Section 17(d)(1)(A)
with a DOEA’s examination, approved by the SEC before they of the Securities Exchange Act of 1934
investigation and/or enforcement become effective. and Rule 17d–2 promulgated pursuant
proceeding regarding a Covered thereto, the Participants join in
XIV. Any of the Participants may
Security-related termination for cause, requesting the Securities and Exchange
manifest its intention to cancel its
the other Participants of which the Commission, upon its approval of this
participation in this Agreement at any
Common Member is a member shall Agreement or any part thereof, to relieve
time by giving the Council written
furnish, upon request, copies of all those Participants which are from time
notice thereof at least 90 days prior to
pertinent materials related thereto in to time participants in this Agreement
the effective date of such cancellation. which are not the DOEA as to a
their possession. As used in this Upon receipt of such notice the Council
Section, ‘‘for cause’’ shall include, Common Member of any and all
shall allocate, in accordance with the Regulatory Responsibility with respect
without limitation, terminations provisions of this Agreement, any
characterized on Form U5 under the to the matters allocated to the DOEA.
Common Members for which the
label ‘‘Permitted to Resign,’’ petitioning party was the DOEA. Until * * * * *
‘‘Discharge’’ or ‘‘Other.’’ such time as the Council has completed REVISED [October 8, 2015] February 2,
X. Each DOEA shall discharge the the reallocation described above; the 2016
Regulatory Responsibility for each petitioning Participant shall retain all its
Common Member allocated to it relative EXHIBIT A
rights, privileges, duties and obligations
to a Covered Securities-related customer hereunder. RULES ENFORCED UNDER 17d–2
complaint 2 unless such complaint is AGREEMENT
XV. The cancellation of its
uniquely related to another Participant’s
participation in this Agreement by any Pursuant to Section II of the
market. In the latter instance, the DOEA
Participant shall not terminate this Agreement by and among BATS
shall forward the matter to that
Agreement as to the remaining Exchange, Inc. (‘‘BATS’’), BOX Options
Participant to whose market the matter
Participants. This Agreement will only Exchange, LLC (‘‘BOX’’), the Chicago
relates, and the latter shall discharge
terminate following notice to the Board Options Exchange, Incorporated
Regulatory Responsibility with respect
Commission, in writing, by the then (‘‘CBOE’’), C2 Options Exchange,
thereto. If a Participant receives a
Participants that they intend to Incorporated (‘‘C2’’), the International
customer complaint for a Common
terminate the Agreement and the Securities Exchange, LLC (‘‘ISE’’),
Member related to a Covered Security
expiration of the applicable notice Financial Industry Regulatory
for which the Participant is not the
period. Such notice shall be given at Authority, Inc. (‘‘FINRA’’), Miami
DOEA, the Participant shall promptly
least six months prior to the intended International Securities Exchange, LLC
forward a copy of such complaint to the
date of termination, provided that in the (‘‘MIAX’’), The NASDAQ Stock Market
DOEA.
event a notice of cancellation is received LLC (‘‘NASDAQ’’), NASDAQ OMX BX,
XI. Any written notice required or
from a Participant that, assuming the Inc. (‘‘BX’’), [the New York Stock
permitted to be given under this
effectiveness thereof, would result in Exchange LLC (‘‘NYSE’’),] the NYSE
Agreement shall be deemed given if sent
there being just one remaining member MKT LLC (‘‘NYSE MKT’’), the NYSE
by certified mail, return receipt
mstockstill on DSK4VPTVN1PROD with NOTICES
of the Council, notice to the Arca, Inc. (‘‘NYSE ARCA’’), the
requested, or by a comparable means of
Commission of termination of this NASDAQ OMX PHLX LLC (‘‘PHLX’’),
electronic communication to each
Agreement shall be given promptly ISE Gemini, LLC (‘‘ISE Gemini’’), [and]
Participant entitled to receipt thereof, to
upon the receipt of such notice of EDGX Exchange, Inc. (‘‘EDGX’’) and ISE
the attention of the Participant’s
cancellation, which termination shall be Mercury, LLC (‘‘ISE Mercury’’) pursuant
2 For purposes of complaints, they can be effective upon the effectiveness of the to Rule 17d–2 under the Securities
reported pursuant to Form U4, Form U5 or RE–3 cancellation that triggered the notice of Exchange Act of 1934 dated [October 8,
and any amendments thereto. termination to the Commission. 2016] February 2, 2016 (the
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![Federal Register / Vol. 81, No. 34 / Monday, February 22, 2016 / Notices 8779
‘‘Agreement’’), a revised list of the SUITABILITY—Continued CUSTOMER STATEMENTS
current Common Rules of each
Participant, as compared to those of PHLX ........... Rule 1026. NYSE MKT .. Rules 419 and 930.
NYSE ARCA Options Rule 9.18(c) and Eq-
FINRA, applicable to the conduct of BATS ........... Rule 26.7.
uities Rules 9.18(c) and 8.5. BOX ............. Rule 4070.
accounts for Covered Securities is set BX ............... Chapter XI, Section 9.
forth in this Exhibit A. CBOE .......... Rule 9.12.
NASDAQ ..... Chapter XI, Section 9. C2 ................ CBOE Rule 9.12.
EDGX .......... Rule 26.7.
OPENING OF ACCOUNTS ISE .............. Rules 613.
DISCRETIONARY ACCOUNTS FINRA ......... Rule 2360(b)(15).
NYSE MKT .. Rules 411, 921 and 1101. MIAX ........... Rule 1312.
BATS ........... Rule 26.2. NYSE MKT .. Rules 421, 924 and 1103. ISE Gemini .. Rule 613.
BOX ............. Rule 4020. BATS ........... Rule 26.5.3 ISE Mercury Rule 613.
CBOE .......... Rule 9.7. BOX ............. Rule 4050. [NYSE ......... N/A].
C2* .............. CBOE Rule 9.7. CBOE .......... Rule 9.10. PHLX ........... Rule 1032.
EDGX .......... Rule 26.2. C2 ................ CBOE Rule 9.10. NYSE ARCA Options Rule 9.18(j) and Equi-
ISE .............. Rule 608. EDGX .......... Rule 26.5.3 ties Rule 9.18(j).
FINRA ......... Rules 2360(b)(16) and 2352. ISE .............. Rule 611. BX ............... Chapter XI, Sections 12.
MIAX ........... Rule 1307. FINRA ......... Rules 2360(b)(18) and 2354. NASDAQ ..... Chapter XI, Section 12.
[NYSE ......... N/A]. MIAX ........... Rule 1310.
ISE Gemini .. Rule 608. ISE Gemini .. Rule 611.
ISE Mercury Rule 608. ISE Mercury Rule 611. CONFIRMATIONS
PHLX ........... Rule 1024(b) and (c)1. [NYSE ......... N/A].
NYSE ARCA Options Rules 9.2(a) and PHLX ........... Rule 1027. NYSE MKT .. Rule 925.
9.18(b) and Equities Rules NYSE ARCA Options Rule 9.18(e) and Eq- BATS ........... Rule 26.6.
9.18(b) and 8.4. uities Rules 9.18(e) and 8.6. BOX ............. Rule 4060.
BX ............... Chapter XI, Section 7. BX ............... Chapter XI, Section 10.
NASDAQ ..... Chapter XI, Section 7. CBOE .......... Rule 9.11.
NASDAQ ..... Chapter XI, Section 10. C2 ................ CBOE Rule 9.11.
1 FINRA shall not have any Regulatory Re- 3 FINRA shall not have any Regulatory Re- EDGX .......... Rule 26.6.
sponsibility regarding foreign currency option sponsibility to enforce this rule as to time and ISE .............. Rule 612.
requirements specified in any of the PHLX price discretion in institutional accounts. FINRA ......... Rule 2360(b)(12).
rules in this Exhibit A. MIAX ........... Rule 1311.
CUSTOMER COMMUNICATIONS ISE Gemini .. Rule 612.
SUPERVISION (ADVERTISING) ISE Mercury Rule 612.
[NYSE ......... N/A].
NYSE MKT .. Rules 411, 922 and 1104. PHLX ........... Rule 1028.
BATS ........... Rule 26.3. NYSE MKT .. Rules 991 and 1106. NYSE ARCA Options Rule 9.18(f) and Equi-
BOX ............. Rule 4030. BATS ........... Rule 26.16. ties Rule 9.18(j).
CBOE .......... Rule 9.8.2 BOX ............. Rule 4170. BX ............... Chapter XI, Section 11.
C2 ................ CBOE Rule 9.8.2 CBOE .......... Rule 9.21. NASDAQ ..... Chapter XI, Section 11.
EDGX .......... Rule 26.3. C2 ................ CBOE Rule 9.21.
ISE .............. Rule 609. EDGX .......... Rule 26.16.
FINRA ......... Rules 2360(b)(20), ISE .............. Rule 623. ALLOCATION OF EXERCISE
2360(b)(17)(B), FINRA ......... Rules 2220 and 2357. ASSIGNMENT NOTICES
2360(b)(16)(E), 2355 and MIAX ........... Rule 1322.
2358. ISE Gemini .. Rule 623.
ISE Mercury Rule 623. NYSE MKT .. Rule 981.
MIAX ........... Rule1308. BATS ........... Rule 23.2.
ISE Gemini .. Rule 609. [NYSE ......... N/A].
PHLX ........... N/A. BOX ............. Rule 9010.
ISE Mercury Rule 609. CBOE .......... Rule 11.2.
[NYSE ......... N/A]. NYSE ARCA Options Rules 9.21(a) and
9.21(b). C2 ................ CBOE Rule 11.2.
PHLX ........... Rule 1025.
BX ............... Chapter XI, Section 22. EDGX .......... Rule 23.2.
NYSE ARCA Options Rules 9.2(b) and
NASDAQ ..... Chapter XI, Section 22. ISE .............. Rule 1101.
9.18(d)(2)(G) and Equities
FINRA ......... Rule 2360(b)(23)(C).
Rules 9.18(d)(2)(G) and 8.7.
MIAX ........... Rule 701.
BX ............... Chapter XI, Section 8.
CUSTOMER COMPLAINTS ISE Gemini .. Rule 1101.
NASDAQ ..... Chapter XI, Section 8.
ISE Mercury Rule 1101.
2 FINRA shall not have any Regulatory Re-
NYSE MKT .. Rules 932 and 1105. [NYSE ......... N/A].
sponsibility regarding receipt of written reports BATS ........... Rule 26.17. PHLX ........... Rule 1043.
by April 1 of each year pursuant to CBOE NYSE ARCA Options Rule 6.25(a).
Rule 9.8(g). BOX ............. Rule 4190.
CBOE .......... Rule 9.23. BX ............... Chapter VIII, Section 2.
C2 ................ CBOE Rule 9.23. NASDAQ ..... Chapter VIII, Section 2.
SUITABILITY EDGX .......... Rule 26.17.
ISE .............. Rule 625. DISCLOSURE DOCUMENTS
NYSE MKT .. Rules 923 and 1102. FINRA ......... FINRA Rules 2360(b)(17)(A)
BATS ........... Rule 26.4. and 2356.
BOX ............. Rule 4040. MIAX ........... Rule 1324. NYSE MKT .. Rules 921 and 926.
CBOE .......... Rule 9.9. BATS ........... Rule 26.10.
mstockstill on DSK4VPTVN1PROD with NOTICES
ISE Gemini .. Rule 625.
C2 ................ CBOE Rule 9.9. ISE Mercury Rule 625. BOX ............. Rule 4100.
EDGX .......... Rule 26.4. [NYSE ......... N/A]. CBOE .......... Rule 9.15.
ISE .............. Rule 610. PHLX ........... Rule [1070]1028. C2 ................ CBOE Rule 9.15.
FINRA ......... Rule 2360(b)(19) and 2353. NYSE ARCA Options Rule 9.18(I) and Equi- EDGX .......... Rule 26.10.
MIAX ........... Rule 1309. ties Rules 9.18(l) and 8.8. ISE .............. Rule 616.
ISE Gemini .. Rule 610. BX ............... Chapter XI, Section 24. FINRA ......... Rule 2360(b)(11).
ISE Mercury Rule 610. NASDAQ ..... Chapter XI, Section 24. MIAX ........... Rule 1315.
[NYSE ......... N/A]. ISE Gemini .. Rule 616.
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![8780 Federal Register / Vol. 81, No. 34 / Monday, February 22, 2016 / Notices
DISCLOSURE DOCUMENTS— SHARING IN ACCOUNTS— IV. Solicitation of Comments
Continued Continued Interested persons are invited to
ISE Mercury Rule 616. BX ............... Chapter XI, Section 19.6
submit written data, views, and
[NYSE ......... N/A]. NASDAQ ..... Chapter XI, Section 19.6 arguments concerning the foregoing.
PHLX ........... Rule 1024(b)(v), 1029. Comments may be submitted by any of
NYSE ARCA Options Rule 9.18(g) and Eq- 5 FINRA shall not have any Regulatory Re-
the following methods:
uities Rule 9.18(g). sponsibility regarding ISE’s, [and] ISE Gemi-
BX ............... Chapter XI, Section 15. ni’s and ISE Mercury’s requirements to the ex- Electronic Comments
tent its rule does not contain an exception to
NASDAQ ..... Chapter XI, Section 15.
permit sharing in the profits and losses of an • Use the Commission’s Internet
account. comment form (http://www.sec.gov/
BRANCH OFFICES OF MEMBER
6 FINRA shall not have any Regulatory Re-
rules/sro.shtml); or
sponsibility regarding NASDAQ’s, BX’s, • Send an email to rule-comments@
ORGANIZATIONS BATS’s, and EDGX’s requirements to the ex-
sec.gov. Please include File Number S7–
tent such rules do not contain an exception
addressing immediate family. 966 on the subject line.
NYSE MKT .. Rule 922(d).4
BOX ............. Rule 4010(b). Paper Comments
CBOE .......... Rule 9.6. REGISTRATION OF ROP
C2 ................ CBOE Rule 9.6. • Send paper comments in triplicate
ISE .............. Rule 607. NYSE MKT .. Rule 920. to Secretary, Securities and Exchange
FINRA ......... Rules 2360(b)(20)(B) and BATS ........... Rule 17.2(g)(1), (2), (6) and Commission, 100 F Street NE.,
2355. (7). Washington, DC 20549–1090.
MIAX ........... Rule 1306.
BOX ............. Rule 2020(c)(1), (e)(1) and All submissions should refer to File
ISE Gemini .. Rule 607.
ISE Mercury Rule 607. IM–2040–4 and IM–2040– Number S7–966. This file number
[NYSE ......... N/A]. 5(b). should be included on the subject line
PHLX ........... N/A. CBOE .......... Rule 9.2. if email is used. To help the
NYSE ARCA Options Rule 9.18(m) and Eq- C2 ................ CBOE Rule 9.2. Commission process and review your
uities Rule 9.18(m). EDGX .......... Rule 17.2(g)(1), (2), (6) and comments more efficiently, please use
BX ............... Chapter XI, Section 6. (7). only one method. The Commission will
NASDAQ ..... Chapter XI, Section 6. ISE .............. Rule 601. post all comments on the Commission’s
FINRA ......... NASD Rules 1022(f), IM–
4 FINRA shall only have Regulatory Respon- Internet Web site (http://www.sec.gov/
sibility for the first paragraph and shall not 1022–1, & 1250(a)(1).
rules/sro.shtml). Copies of the
have any Regulatory Responsibility regarding MIAX ........... Rule 1301.
ISE Gemini .. Rule 601.
submission, all subsequent
the requirements for debt options.
ISE Mercury Rule 601.
amendments, all written statements
with respect to the proposed plan that
PROHIBITION AGAINST [NYSE ......... N/A].
PHLX ........... Rule 1024(a)(i). are filed with the Commission, and all
GUARANTEES written communications relating to the
NYSE ARCA Options Rule 9.26 and Equi-
ties Rule 9.26. proposed plan between the Commission
NYSE MKT .. Rule 390.
BATS ........... Rule 26.13. BX ............... Chapter XI, Section 2 and and any person, other than those that
BOX ............. Rule 4130. Chapter II, Section 2(g). may be withheld from the public in
CBOE .......... Rule 9.18. NASDAQ ..... Chapter XI, Section 2 and accordance with the provisions of 5
C2 ................ CBOE Rule 9.18. Chapter II, Section 2(g). U.S.C. 552, will be available for Web
EDGX .......... Rule 26.13. site viewing and printing in the
ISE .............. Rules 619. Commission’s Public Reference Room,
FINRA ......... Rule 2150(b). CERTIFICATION OF REGISTERED 100 F Street NE., Washington, DC
MIAX ........... Rule 1318. PERSONNEL [7] 20549, on official business days
ISE Gemini .. Rule 619.
ISE Mercury Rule 619. between the hours of 10:00 a.m. and
NYSE MKT .. Rule 920. 3:00 p.m. Copies of the plan also will be
[NYSE ......... Rule 2150(b)].
BATS ........... Rule 2.5 Interpretation .01(c) available for inspection and copying at
PHLX ........... Rule 777.
and 11.4(e). the principal offices of FINRA and ISE
NYSE ARCA Options Rule 9.1(e).
BOX ............. IM–2040–3.
BX ............... Chapter XI, Sections 18 and Mercury. All comments received will be
19. CBOE .......... Rule 9.3.
posted without change; the Commission
NASDAQ ..... Chapter XI, Sections 18 and C2 ................ CBOE Rule 9.3.
does not edit personal identifying
19. EDGX .......... Rule 2.5 Interpretation .01(c)
and 11.4(e). information from submissions. You
ISE .............. Rule 602. should submit only information that
SHARING IN ACCOUNTS FINRA ......... NASD Rule 1032(d). you wish to make available publicly. All
MIAX ........... Rule 1302. submissions should refer to File
NYSE MKT .. Rule 390. ISE Gemini .. Rule 602. Number S7–966 and should be
BATS ........... Rule 26.14.6 ISE Mercury Rule 602. submitted on or before March 14, 2016.
BOX ............. Rule 4140. [NYSE ......... N/A].
CBOE .......... Rule 9.18(b). V. Discussion
PHLX ........... Rule 1024.
C2 ................ CBOE Rule 9.18(b). NYSE ARCA Options Rule 9.27(a). The Commission continues to believe
EDGX .......... Rule 26.14.6
mstockstill on DSK4VPTVN1PROD with NOTICES
BX ............... Chapter XI, Section 3 and that the proposed plan is an
ISE .............. Rule 620.5 achievement in cooperation among the
Chapter II, Section 2(h).
FINRA ......... Rule 2150(c).
MIAX ........... Rule 1319. NASDAQ ..... Chapter XI, Section 3 and SRO participants. The Plan, as
ISE Gemini .. Rule 620.5 Chapter II, Section 2(h). amended, will reduce unnecessary
ISE Mercury Rule 620.5 regulatory duplication by allocating to
[7 FINRA shall not have Regulatory Respon-
[NYSE ......... Rules 2150(c)]. sibility with regard to the Series 56 Examina- the designated SRO the responsibility
PHLX ........... N/A. tion under any exchange rules, as this exam- for certain options-related sales practice
NYSE ARCA Options Rule 9.1(f). ination is not recognized by FINRA.] matters that would otherwise be
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![Federal Register / Vol. 81, No. 34 / Monday, February 22, 2016 / Notices 8781
performed by multiple SROs. The plan SECURITIES AND EXCHANGE compliance by, its members and persons
promotes efficiency by reducing costs to COMMISSION associated with its members with the
firms that are members of more than one Act, the rules and regulations
[Release No. 34–77149; File No. 4–551]
of the SRO participants. In addition, thereunder, and the SRO’s own rules,
because the SRO participants coordinate Program for Allocation of Regulatory unless the SRO is relieved of this
their regulatory functions in accordance Responsibilities Pursuant to Rule 17d– responsibility pursuant to Section
with the plan, the plan promotes, and 2; Notice of Filing and Order 17(d) 4 or Section 19(g)(2) 5 of the Act.
will continue to promote, investor Approving and Declaring Effective an Without this relief, the statutory
protection. Amendment to the Plan for the obligation of each individual SRO could
Allocation of Regulatory result in a pattern of multiple
Under paragraph (c) of Rule 17d–2, examinations of broker-dealers that
the Commission may, after appropriate Responsibilities Among NYSE MKT
LLC, BATS Exchange, Inc., BOX maintain memberships in more than one
notice and comment, declare a plan, or SRO (‘‘common members’’). Such
Options Exchange LLC, C2 Options
any part of a plan, effective. In this regulatory duplication would add
Exchange, Incorporated, the Chicago
instance, the Commission believes that Board Options Exchange, unnecessary expenses for common
appropriate notice and comment can Incorporated, the EDGX Exchange, members and their SROs.
take place after the proposed Inc., the International Securities Section 17(d)(1) of the Act 6 was
amendment is effective. The primary Exchange LLC, ISE Gemini, LLC, ISE intended, in part, to eliminate
purpose of the amendment is to add ISE Mercury, LLC, Financial Industry unnecessary multiple examinations and
Mercury as a Participant, and remove Regulatory Authority, Inc., NYSE Arca, regulatory duplication.7 With respect to
the NYSE as a Participant, to the Plan. Inc., The NASDAQ Stock Market LLC, a common member, Section 17(d)(1)
By declaring it effective today, the NASDAQ OMX BX, Inc., the NASDAQ authorizes the Commission, by rule or
amended Plan can become effective and OMX PHLX, Inc., and Miami order, to relieve an SRO of the
be implemented without undue delay.22 International Securities Exchange, LLC responsibility to receive regulatory
The Commission notes that the prior Concerning Options-Related Market reports, to examine for and enforce
version of this plan immediately prior to Surveillance compliance with applicable statutes,
this proposed amendment was rules, and regulations, or to perform
February 16, 2016. other specified regulatory functions.
published for comment and the Notice is hereby given that the To implement Section 17(d)(1), the
Commission did not receive any Securities and Exchange Commission Commission adopted two rules: Rule
comments thereon. Furthermore, the (‘‘Commission’’) has issued an Order, 17d–1 and Rule 17d–2 under the Act.8
Commission does not believe that the pursuant to Section 17(d) of the Rule 17d–1 authorizes the Commission
amendment to the plan raises any new Securities Exchange Act of 1934 to name a single SRO as the designated
regulatory issues that the Commission (‘‘Act’’),1 approving and declaring examining authority (‘‘DEA’’) to
has not previously considered. effective an amendment to the plan for examine common members for
allocating regulatory responsibility compliance with the financial
VI. Conclusion
(‘‘Plan’’) filed on February 9, 2016, responsibility requirements imposed by
This order gives effect to the amended pursuant to Rule 17d–2 of the Act,2 by the Act, or by Commission or SRO
Plan submitted to the Commission that NYSE MKT LLC (‘‘MKT’’), BATS rules.9 When an SRO has been named as
is contained in File No. S7–966. Exchange, Inc., (‘‘BATS’’), the BOX a common member’s DEA, all other
Options Exchange LLC (‘‘BOX’’), C2 SROs to which the common member
It is therefore ordered, pursuant to Options Exchange, Incorporated (‘‘C2’’), belongs are relieved of the responsibility
Section 17(d) of the Act, that the Plan, the Chicago Board Options Exchange, to examine the firm for compliance with
as amended, filed with the Commission Incorporated (‘‘CBOE’’), the EDGX the applicable financial responsibility
pursuant to Rule 17d–2 on February 3, Exchange, Inc. (‘‘EDGX’’) the rules. On its face, Rule 17d–1 deals only
2016, is hereby approved and declared International Securities Exchange LLC with an SRO’s obligations to enforce
effective. (‘‘ISE’’), ISE Gemini, LLC (‘‘Gemini’’), member compliance with financial
It is further ordered that those SRO ISE Mercury, LLC (‘‘ISE Mercury’’), responsibility requirements. Rule 17d–1
participants that are not the DOEA as to Financial Industry Regulatory does not relieve an SRO from its
a particular common member are Authority, Inc. (‘‘FINRA’’), NYSE Arca, obligation to examine a common
relieved of those regulatory Inc. (‘‘Arca’’), The NASDAQ Stock member for compliance with its own
responsibilities allocated to the common Market LLC (‘‘Nasdaq’’), NASDAQ OMX rules and provisions of the federal
member’s DOEA under the amended BX, Inc. (‘‘BX’’), NASDAQ OMX PHLX, securities laws governing matters other
Plan to the extent of such allocation. Inc. (‘‘PHLX’’), and Miami International than financial responsibility, including
Securities Exchange (‘‘MIAX’’) sales practices and trading activities and
For the Commission, by the Division of (collectively, ‘‘Participating practices.
Trading and Markets, pursuant to delegated Organizations’’ or ‘‘parties’’). To address regulatory duplication in
authority.23 these and other areas, the Commission
Brent J. Fields,
I. Introduction
Secretary. Section 19(g)(1) of the Act,3 among 4 15 U.S.C. 78q(d).
[FR Doc. 2016–03533 Filed 2–19–16; 8:45 am]
other things, requires every self- 5 15 U.S.C. 78s(g)(2).
mstockstill on DSK4VPTVN1PROD with NOTICES
regulatory organization (‘‘SRO’’) 6 15 U.S.C. 78q(d)(1).
BILLING CODE 8011–01–P
registered as either a national securities 7 See Securities Act Amendments of 1975, Report
exchange or national securities of the Senate Committee on Banking, Housing, and
22 On January 29, 2016, the Commission approved Urban Affairs to Accompany S. 249, S. Rep. No. 94–
ISE Mercury’s application for registration as a
association to examine for, and enforce 75, 94th Cong., 1st Session 32 (1975).
national securities exchange. See Securities 8 17 CFR 240.17d–1 and 17 CFR 240.17d–2,
1 15 U.S.C. 78q(d).
Exchange Act Release No. 76998, 81 FR 6066 respectively.
(February 4, 2016). 2 17 CFR 240.17d–2. 9 See Securities Exchange Act Release No. 12352
23 17 CFR 200.30–3(a)(34). 3 15 U.S.C. 78s(g)(1). (April 20, 1976), 41 FR 18808 (May 7, 1976).
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Document Created: 2016-02-19 23:57:20
Document Modified: 2016-02-19 23:57:20
| 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 | 81 FR 8775 |
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